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The definition of an altcoin has evolved since the early days of cryptocurrency, when there were only a handful of crypto assets. Back then, everything except Bitcoin (BTC) was considered an altcoin.
Today, the world of crypto assets is much broader. There are a variety of coins and tokens with use cases well beyond a medium of exchange, meaning they are not necessarily Bitcoin competitors.
However, in the absence of a better term currently available, the basic definition of an altcoin is any crypto asset other than Bitcoin.
Here’s a look at the top 10 altcoins by market cap, excluding stablecoins. We have excluded stablecoins as they are designed to maintain a stable price and are not typically viewed as speculative investments.
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1. Ethereum (ETH)
Of the $1 trillion representing the total market cap of the more than 20,000 crypto assets available today, around $200 billion is held in Ethereum, the largest altcoin on the market.
Unlike Bitcoin, which has been dubbed a “decentralized currency,” think of Ethereum as a distributed computing network where users can use the blockchain to run decentralized applications (dApps) and host smart contracts.
“BTC is a store of value, while ETH is a decentralized playground for builders to determine the future of technological innovation in blockchain technology,” says Walker Holmes, VP of Metaverse platform MetaTope.
Ethereum critics point to high fees for making transactions. But with the thousands of apps and other altcoins powered by its blockchain, Ethereum is here to stay.
2. Binance Coin (BNB)
- Market Cap: $48.8 billion
Binance Coin is a utility token that can be used to pay trading fees and get discounted trades on the Binance exchange. You can even use BNB outside of the Binance crypto exchange for payment processing, e.g. B. for booking travel arrangements.
Critics say BNB is not as decentralized as other altcoins. Another risk is a reported Securities and Exchange Commission (SEC) investigation into whether Binance should have registered BNB as a security during its initial coin offering.
3. XRP (XRP)
- Market Cap: $17.2 billion
XRP can be used to facilitate the exchange of different types of currencies with digital technology and payments processing company Ripple Labs. Although this altcoin has extremely low transaction fees, critics note that it faces legal challenges.
Ripple and two of its executives are embroiled in an SEC lawsuit alleging they should have registered XRP as a security, and the company says XRP is a currency instead.
4. Cardano (ADA)
- Market Cap: $15.6 billion
Cardano was an early adopter of the Proof-of-Stake consensus mechanism, which speeds up transaction time by removing the highly competitive and energy-intensive problem-solving dimension of platforms like Bitcoin.
“Cardano is a thought leader in the industry that paved the way for proof-of-stake consensus mechanisms,” says Holmes. “ADA is a blockchain solution that promises low fees with a higher level of security than many of its counterparts.”
But Daniel Logvin, CEO of blockchain network provider and consulting firm LedgerByte, says the altcoin has overpromised and has yet to deliver.
5. Sunshine (SUN)
- Market Cap: $12.5 billion
Designed to support decentralized finance and apps as well as smart contracts, Solana runs on a unique hybrid proof-of-stake and proof-of-history mechanism to process transactions quickly and securely.
Solana is one of the fastest blockchains out there. Still, it’s also been criticized for being overly centralized compared to Ethereum and having very few validation nodes, says Whitney Setiawan, research analyst at digital assets exchange Bitrue.
Holmes says Solana is a highly scalable blockchain solution with very low fees but has experienced outages and downtime.
6. Dogecoins (DOGE)
Dogecoin is the original meme coin that started as a joke in 2013. Despite this, it has quickly become a prominent cryptocurrency thanks to a dedicated community and creative memes.
Richard Gardner, CEO of financial software provider Modulus Global, points out that DOGE has had some big supporters but remains riskier than Bitcoin.
“Altcoins like DOGE can swing to extreme bottoms and tops depending on market volatility as they have yet to prove real-world use cases,” says Garry Kruglyakov, CEO of 0VIX Protocol, a decentralized app that enables crypto lending and borrowing .
7. Polka Dot (POINT)
This altcoin powers the Polkadot ecosystem, where developers can build purpose-built blockchains as spokes that connect to Polkadot’s main blockchain hub, says Max Thake, co-founder of peaq, a blockchain network built on top of Polkadot. DOT is the native token for Polkadot.
“[There is]a continued demand for DOT from projects that aim to build on Polkadot,” he says.
This altcoin has better shared security and is a leader in developer activity and many projects, says James Wo, CEO of blockchain and cryptocurrency investment firm Digital Finance Group. But project progress has been slow, and it lacks star applications to boost the ecosystem, he says.
8. Shiba Inu (SHIB)
- Market Cap: $7.8 billion
Like DOGE, this is another meme coin. Dubbed the “Dogecoin killer,” it’s a joke based on a joke. Despite being based on the Ethereum blockchain, Shiba Inu is an altcoin not to invest in for one use case, although there are SHIB-based non-fungible tokens (NFTs).
That doesn’t mean there isn’t an investment case. Speculators can make a lot of money from this highly volatile crypto asset but lose it all.
9. Polygon (MATIC)
Polygon is an Ethereum-based scaling platform that allows developers to build dApps with low transaction fees.
“It allows people to process transactions on the Ethereum network,” says Logvin. “This solution increases efficiency and saves tons of money on gas (transaction fees).” Gas fees, a transaction fee, are typically cheaper on Polygon than on Ethereum.
10. Avalanche (AVAX)
Avalanche is one altcoin that could emerge as a leader given its strong developer community, says Latif Peracha, who leads financial technology and crypto investments at M13, a consumer technology venture capital firm.
The crypto offers two important features: fast transaction speeds and low transaction fees. AVAX also has a healthy total value (TVL) or amount of money deposited in decentralized finance. TVL is the total value of crypto assets deposited in a decentralized finance (DeFi) protocol such as staking, lending or liquidity pools.
A high TVL indicates the popularity of a protocol and the rate of adaptation of a particular cryptocurrency. Currently, AVAX’s TVL is $2.1 billion.
*Market caps and prices are from coinmarketcap.com as of August 25, 2022.
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