What Is Altcoin? Unveiling the World of Mainstream Cryptocurrencies Beyond Bitcoin

In the field of Crypto Assets, alts generally refer to all encryption assets other than Bitcoin. This term originated after the success of Bitcoin and is used to describe those alternative Crypto Assets that attempt to replace or improve upon Bitcoin. As blockchain technology has developed, alts have evolved from mere imitation to a mature asset class with independent technological routes and ecosystems.

Core Differences Between Alts and Bitcoin

1. Innovation in Consensus Mechanisms: Bitcoin uses an energy-intensive Proof of Work (PoW), while most alts explore more efficient mechanisms. For example, Ethereum has transitioned to Proof of Stake (PoS), and Solana employs Proof of History (PoH), significantly reducing energy consumption and enhancing transaction speed. These improvements address issues like Bitcoin network congestion and high transaction fees.
2. Functional Extensibility: Bitcoin’s core positioning is as a “peer-to-peer electronic cash system,” whereas alts focus more on multifunctionality:
   • Ethereum introduces smart contracts, supporting the development of decentralized applications
   • ChainLink provides off-chain data oracle services
   • Decentraland The MANA token is used to purchase virtual land and build the metaverse economy.
3. Technical experimental field: altcoins often serve as a testing ground for cutting-edge blockchain technologies. For example, Cardano By adopting a layered architecture to enhance scalability, Polkadot achieves cross-chain interoperability through parachains. These innovations continuously drive the evolution of the entire Crypto Assets ecosystem.

Main Types of Alts and Representative Projects

• Mainstream Public Chain Tokens: Ethereum (ETH), Solana (SOL), Cardano (ADA), etc., providing underlying infrastructure
• Exchange Platform Coins: Binance Coin (BNB) used for fee discounts and participating in ecological governance
• DeFi Protocol Tokens: Uniswap (UNI), Aave (AAVE) empowering decentralized finance applications
• Metaverse and GameFi Assets: Decentraland (MANA) driving the virtual economy
• Stablecoins: Although classified as alts, they are pegged to fiat currency values to reduce volatility

Why Altcoins Have Become a Key Part of Investment Portfolios?

1. Diversifying Risk: Allocating funds to different tracks of altcoins can reduce the risk brought by the volatility of Bitcoin alone.
2. Capturing Industry Trends: Emerging fields such as DeFi, NFT, and AI + Blockchain often materialize first through altcoins. In 2023, the AI token sector saw a growth of 200%, far exceeding Bitcoin’s increase.
3. Altcoin Season: When Bitcoin’s market cap exceeds 65%, there is often a rotation of funds into altcoins. At this time, leading tokens like ETH and BNB typically start to surge, followed by mid and small-cap tokens that then explode.

Essential Knowledge for Investing in Alts

• High Volatility: Most alts experience price fluctuations far exceeding Bitcoin, requiring risk tolerance.
• Project Identification: Analysis shows that only 8% of alts remain active after three years, necessitating thorough research.
• Regulatory Dynamics: The SEC’s classification of certain alts as securities may impact liquidity.

Conclusion

Alts are by no means simple “knockoffs”; they are the core engine driving the application of blockchain into reality. From supporting DeFi lending to constructing metaverse economies, from optimizing supply chains to transforming the creator economy, alts are embedding encryption technology into the capillaries of the real world. For investors, understanding the technical logic and application scenarios of alts has become essential for participation. Web3 A required course of the era.