The entrance of bitcoin in 2009 catalyzed the development of many digital assets. As the first digital currency, Bitcoin has remained the top cryptocurrency till now based on popularity, adoption, dominance, usage, and market capitalization.
But then, bitcoin is not the only digital asset in the crypto space. Thousands of altcoins with various value propositions also exist. These assets also facilitate virtual transactions, cross-border payments, remittances, and other things money can do.
This article explores the top 10 alternatives to bitcoin in terms of market cap, usage, benefits, mode of operation, etc. Keep reading to make the right financial decision when investing.
Understanding The Meaning Of Cryptocurrencies
Cryptocurrencies are decentralized virtual money in the form of tokens or coins. The “crypto” is the cryptography that enables developers to create and process digital currencies and transactions on diverse, decentralized ecosystems.
While the government issue and manage fiat currencies, cryptocurrencies are developed on the blockchain and managed by peer-to-peer computer networks running as open-source software. The virtual assets serve as alternatives to fiat currencies and facilitate value transfer through smart contracts eliminating intermediaries' intervention.
The most popular cryptocurrency today is Bitcoin. But others are modeled after it, known as altcoins, memecoins, and shitcoins. Some include Ethereum, Shiba Inu Shib, Litecoin, Bitcoin Cash, DOGE, and Stablecoins such as USDT, USDC, and BUSD.
These cryptos, plus others, serve as a form of money on the internet. They enable individuals to control their assets digitally without government intervention.
Cryptocurrency networks rely on a consensus model to verify all transaction records before adding them to an immutable ledger, the blockchain. Every crypto asset operates on its blockchain distributed across the network participants. No one can change any transaction record verified and added to the blockchain. This process keeps crypto networks secure even without the government.
What makes cryptocurrencies valuable?
To understand cryptos further, here are some benefits that guide their existence and make them unique.
- Cryptocurrencies facilitate seamless and fast transfer of value all over the world.
- The use of crypto assets in transactions ensures the privacy of the parties involved.
- Digital assets are secured by blockchain technology, an immutable ledger for transaction records.
- Crypto assets are easily accessible globally without restrictions
- Transactions with cryptocurrencies are transparent, eliminating manipulations and rule adjustments
Different Types Of Altcoins To Know
Altcoins mirror the mechanisms of Bitcoin but are yet to overtake it in crypto rankings. These coins are divided into cryptocurrencies and tokens.
Cryptocurrencies serve as means of payment and transmission of value across many users. But tokens serve different purposes. They can be ICO tokens representing users' stakes in a decentralized finance project. Also, they can serve as security tokens linked to the project or company value.
Other important altcoins have specific use cases, such as Namecoin, a utility token that offer decentralized DNS service for internet addresses. There are also Web3 Tokens, Non-Fungible Tokens NFTs, stablecoins, and Privacy tokens.
So many exchange tokens also exist now, such as Binance BNB token, Huobi token HT, Bibox Token BIX, KuCoin Shares, KCS, etc. But whether a cryptocurrencie or token, a user can trade any altcoin on a crypto exchange.
So, let’s consider the popular options in the market right now.
Ethereum is the second largest digital asset in capitalization after Bitcoin. Its market cap sits at $164,437, 973,187. The trading volume in 24 hours shows $10,368,555,747, while the current price as of October 25 is $1,343.72.
Ethereum emerged in 2015 and has expanded its functionalities. Now, Ethereum is a hub for decentralized applications and smart contract developers. The native token ether ETH facilitates seamless transactions across multiple platforms.
It enables developers to create and run applications on the network. Ether also serves as a means of buying other digital currencies for investors. Currently, many DeFi protocols are built on Ethereum, pushing its utility and value.
Ethereum aims to offer diverse financial products for everyone globally. Now, it facilitates access to other cryptos, DeFi projects, NFTs, etc. Being decentralized, all transactions on the network operate without third-party control.
The cryptocurrency network relies on a proof of stake consensus mechanism to validate transactions before adding them to the blockchain. The transition from a proof-of-work model occurred on September 15. Now, the network uses validators instead of miners to issue new tokens.
Tether USDT is a stablecoin pegged to U.S. dollars and a blockchain-enabled platform. The developers have maintained their peg by keeping an equivalent amount of USD to the circulating USDT in reserve.
Tether is the largest stablecoin since its launch as Realcoin in July 2014. Also, it is now the third cryptocurrency after Ethereum due to its market cap. As at October 25 Tether capitalization is $68,476,431,952.64. USDT's current price is still $1, and its trading volume sits at $32,550,597.526.07.
Stablecoins serve a major purpose-stability of asset value. Investors rely on Tether to protect their portfolios during market volatility and quickly move their assets from one to another.
Even though Tether recorded a de-pegging event following the crash of LUNA, it has managed to reclaim its peg to USD.
USD coin (USDC)
USD Coin is the second largest stablecoin now in the crypto market. It is pegged in a 1:1 ratio to the USD, and investors also use it to hedge price fluctuations. USDCs in circulation are fully backed by an equivalent amount of USD in reserve. These accounts are under the financial authorities of the United States, ensuring the security of the reserve assets.
As at October 25, the market cap of USDC stands at $43,822,211,419.60 with a trading volume of $2,652,713,010.00. The stablecoin is the second largest among its kind but ranks number 4 in the overall cryptocurrency list
USDC emerged in 2018 as the brainchild of the Center Consortium, consisting of Coinbase and Circle. Coinbase is the most popular crypto exchange in the world, while Circle is a P2P payment service. Circle operates in the United States under strict regulation, making USDC a regulated stablecoin.
Binance coin (BNB)
BNB is the native token of the Binance exchange. It facilities all forms of trading fee payments on the exchange, and using it offers discounted trading. As of October 25, BNB ranks number 5 based on its market cap of $43,695,511,536.27. Its trading volume is $520,635,495.31, and its price is $273.26.
Binance Coin BNB started on the Ethereum blockchain as part of the ERC-20 tokens before its mainnet launch. The network validates transactions with the proof-of-stake consensus mechanism.
Notably, since September, the token has continued to control its price volatility to the barest. Its price data shows that it remained above $260 even when other top coins struggled in price.
Ripple created XRP Ledger in 2012 as a payment system. The native token for the network is XRP, and it facilitates transactions at a low cost. XRP relies on a model known as the “XRP Ledger Consensus Protocol” to validate transactions. Also, using the XRPL boosts the speed of completing transactions.
As of October 25, the XRP price stands at $0.4468. Its current market cap sits at $22,308,379.692.72, placing at number 6 in the market ranking, while the trading volume shows $1,140,324,390.94.
It's important to note that Ripple Labs have been in a court battle with the U.S SEC over arguments that XRP is a security. This ongoing battle has caused massive value loss for the crypto.
Thankfully, the tide seems to be turning in Ripple's favor, given the release of the Hinman document. A ruling in favor of Ripple might push the XRP value up. Being a
Cardano is a proof-of-stake cryptocurrency currently ranking number 8 in market capitalization at $12,448,216,389.91. As of October 25, the price of its native token ADA is $0.3629.
Charles Hoskinson, an Ethereum co-founder and a group of cryptography experts, mathematicians, and engineers, launched the crypto in 2017. By September 12, 2021, the Cardano team launched smart contracts on the network via the Alonzo hard fork.
Cardano has borne the name “Ethereum Killer” for a long time due to its potential to overtake the second-largest crypto. It implemented the PoS successfully even when Ethereum was still using the PoW model and now added smart contracts.
The developers behind the network are well-versed in blockchain technology, with over 120 papers to show for it. More plans for the network are to become a hub for DeFi applications and to provide solutions to facilitate legal contract tracing, chain interoperability, voter fraud tracing, etc.
Even though the team hasn't achieved all, the network operates efficiently after the Vassil hard fork on September 22, 2022.
Solana is a blockchain-based cryptocurrency platform for decentralized finance solutions. The network emerged in 2017, competing with its predecessors by unmatched transaction speed and support for cutting-edge applications. The network uses a PoS consensus mechanism, making it energy-efficient from the beginning.
The native token on Solana is SOL, currently ranking number 9 on CoinMarketCap. As of October 25, SOL’s market cap sits at $10,203,237,013.57 and its 24 hours trading volume is $527,454,821.47. The SOL price today is $28.7.
Many people call it an "Ethereum killer” due to its speed and support for DeFi apps. The Solana network completes transactions faster at lower fees than Ethereum. Moreover, it uses smart contracts facilitating the development of NFTs too.
Avalanche is another decentralized cryptocurrency with an impressive value proposition. The founder Ava Labs, launched the mainnet in 2020 to support the development of smart contracts, decentralized apps(dApps), and decentralized finance (DeFi).
As of October 25, the native token, AVAX, ranks number 16 based on its market cap of $4,770,662,977.74. The price of AVAX today is $16.09 after gaining 2.24% in 24 hours.
This network operates a three-chain structure to facilitate seamless and speedy transaction validations. The three chains include C-Chain, P-Chain, and X-Chain. Each chain uses different consensus mechanisms matching their use cases.
The constant development of the Avalanche network has facilitated interoperability between its ecosystem and Ethereum via bridges. Also, the development of three chains has enabled Avalanche to solve the blockchain trilemma, the inability of blockchains to achieve scalability, decentralization, and security together.
Tron emerged in 2017 as a blockchain-based system for content creators. The aim is to help targeted users gain more from their work. The network supports the development and use of smart contracts, decentralized apps, and other blockchain-enabled systems.
Users can create a decentralized app on the network and offer content to gain digital asset compensation. Notably, the network doesn't charge fees for this process; instead, users gain for putting their intellectual knowledge to good use.
Tron operates like Bitcoin using a similar transaction model known as UTXO. This system allows users to track the history of different operations on a public ledger. Also, Tron relies on a delegated proof-of-stake consensus model making it more energy efficient than the top cryptos.
As of October 25, the native token TRX is trading at $0.06168. The asset ranks number 14 with a market capitalization of $5,694,474,928.19. Its 24-hour trading volume sits at $266, 320,863.09.
Polkadot is an important cryptocurrencie because it facilitates the interoperability of blockchains. It emerged to make diverse blockchains and oracles work together for efficient systemic operations. The network is fast and scalable since it processes many transactions on many parachains.
By enabling the transfer of all asset types and data amongst blockchains, Polkadot has become a reliable open-source sharded multichain network with four components, Relay Chain, Parachains, Bridges, and Parathreads.
The Web3 Foundation, with DR. Gavin Wood as President, developed Polkadot. Wood co-founded Ethereum and many other solutions, such as Solidity, a coding language for smart contracts.
The native token DOT currently ranks number 12 with a capitalization of $6,871,038,400.96. Its current price today, October 25, stands at $6.13.
Why Are Many Cryptocurrencies Existing In The Industry?
Crypto developers build on blockchain technology, an open-source software. So, they can copy the code, tweak it and develop a new crypto without restrictions. That’s why thousands of cryptocurrencies are circulating today.
As of July 2022, the number of cryptos created was 20 268. But 9315 projects out of this number are dead already, while the coins in existence are 10,953
Another reason for the influx of crypto projects is that developers can use the source code of existing crypto to build a new one. Also, there have been hard forks splitting an existing network into 2, creating a new cryptocurrencie.
For instance, Ethereum Classic was a hard fork of Ethereum on July 30, 2015. Ethereum POW or ETHW is the recent hard fork of Ethereum after the merge on September 15. Bitcoin Cash was the hard fork of the Bitcoin blockchain that launched in 2017 due to disagreements.
Another reason many cryptos spring up is that the blockchain is also decentralized, attracting developers to continue expanding it. As interest in the user-controlled system of financial asset ownership increases, more cryptos will emerge.
What Makes Bitcoin More Important
Than Other Cryptocurrencies?
Bitcoin was the first crypto to emerge in 2009, earning it more recognition, trust, and adoption. The cryptocurrency has maintained its position as the most used cryptocurrency in existence. Many companies and countries have adopted BTC for payment and legal tender. As a result, Bitcoin keeps growing in utility, value, and adoption.
The Bitcoin market capitalization of $395 991 244, 813.70 is still higher than other cryptos. Moreover, today, October 26, 2022, the BTC price is higher than other cryptos.
FAQ- Common Question About Types Of Cryptocurrencies
Find answers to more questions about the types of cryptocurrencies and their regulations.
Is it good to invest in different types of cryptos?
The choice of crypto to invest in depends on your plans. But it is ideal for creating a portfolio of various cryptos against market volatility.
If you plan for long-term investment, Bitcoin is good for HOLDling. For short-term gains, altcoins with the potential to fluctuate offer more opportunities to leverage the price volatility in trade. But if you aim to protect the value of your portfolio, consider stablecoins.
When did cryptocurrencies become popular?
Cryptocurrencies became popular in 2008 when the pseudonymous Satoshi Nakamoto introduced Bitcoin. Even though cyber currencies had existed since the 1980s, they weren't recognized globally until Bitcoin emerged.
Is the Securities and Exchange Commission (SEC) regulating cryptocurrencies?
Currently, the Securities and Exchange Commission is not regulating cryptocurrencies. While the SEC would love to do so, its powers are limited to handling securities, and cryptos are not recognized as such. That’s why there have been a lot of arguments about whether cryptocurrencies are securities or not. For now, they haven’t been declared as such.