As Bitcoin is the first cryptocurrency that captured the world’s imagination, all other coins were subsequently termed “altcoins,” as in “alternative coins.”
Altcoins are all cryptocurrencies other than Bitcoin and Ethereum. Bitcoiners like to stress that Bitcoin is not a cryptocurrency but its own category. However, there is no difference between crypto and altcoins.
There are several different types of altcoins.
Payment tokens focus on payments as their main use case. These tokens are often not considered to be "real" cryptocurrencies since they tend to be more centralized.
Layer 1 protocols are the foundational blockchains upon which entire ecosystems of decentralized applications (dApps) are built. While Bitcoin was the first L1, many altcoins have emerged with innovations that go beyond simple peer-to-peer payments. Ethereum, for instance, introduced smart contracts, enabling programmable assets and DeFi.
Other prominent L1s like Solana, Avalanche, Aptos, and Sui aim to solve the scalability trilemma—balancing decentralization, security, and speed—through unique consensus mechanisms and architectural optimizations. Each of these Layer 1s often has its own native token used to pay for transaction fees, secure the network via staking, and participate in on-chain governance.
As competition intensifies, L1 altcoins continue to evolve by integrating zero-knowledge proofs, modular components, and cross-chain interoperability to attract developers and users seeking performance and lower fees.
Layer 2 scaling solutions are protocols built on top of existing Layer 1 blockchains—most notably Ethereum—to improve scalability, reduce transaction costs, and increase throughput without compromising the base layer's security and decentralization. These solutions process transactions off-chain or in batches before settling them on-chain, dramatically increasing efficiency.
With the rise of “rollup-centric” roadmaps and Ethereum’s proto-danksharding (EIP-4844), Layer 2 ecosystems are becoming increasingly central to the future of blockchain usability.
Real-World Assets (RWAs) refer to the tokenization of tangible and off-chain financial instruments—such as government bonds, real estate, invoices, and commodities—on a blockchain. By bringing RWAs on-chain, projects aim to unlock liquidity, improve transparency, and enable 24/7 global access to traditionally illiquid or restricted markets.
As regulatory clarity improves and real-world institutions explore blockchain rails, RWAs are emerging as a bridge between traditional finance (TradFi) and DeFi, positioning them as a key narrative in crypto’s maturing market cycle.
Altcoins have several different pros and cons.
Variability: There are thousands of altcoins, each with its own unique use case.
Innovation: Altcoins bring new and innovative solutions to the market.
Volatility: Altcoins are much more volatile than Bitcoin or Ethereum.
Illiquidity: Altcoins are also much more illiquid and can drastically oscillate in value.
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