What are Altcoins? (Best Bitcoin Alternatives)
By: Steven Hay | Last updated: 1/16/23
With thousands of cryptocurrencies around, it’s hard to separate the chaff from the wheat. In this post, I’ll cover the best Bitcoin alternatives around (also known as altcoins), and show you how I evaluate different coins.
Best Bitcoin Alternatives Summary
There are four main factors to take into account when evaluating a cryptocurrency – Adoption, security, innovation, and incentives. In my opinion, the most promising cryptocurrencies around today, aside from Bitcoin, are:
Those are the main Bitcoin alternatives in a nutshell. For a more detailed review keep on reading, here’s what I’ll cover:
- What are Altcoins?
- How to Evaluate a Cryptocurrency
- Best Bitcoin Alternatives
- Frequently Asked Questions
This post should not be taken as investment advice. I focus on the best coins in terms of actual use and adoption—not from a financial or investment perspective.
1. What are Altcoins?
Altcoins, or alts for short, are cryptocurrencies that are not Bitcoin. The word altcoin is an abbreviation of alternative coin. Litecoin, XRP, Ethereum or any other non-Bitcoin cryptocurrency all fall under the category of altcoins.
You may ask yourself, “Why do we even need altcoins in the first place?” The answer is simple: Bitcoin is not perfect. Usually, altcoins will try to create a better or different version of Bitcoin.
For example, Litecoin is an alt that confirms transactions faster than Bitcoin. Dash and Monero are altcoins that focus on the anonymity aspect, making transactions virtually impossible to trace. Each altcoin has its own “unique thing” it does best.
Until today, thousands of altcoins have been introduced to the market, but only a handful have managed to gain a significant following like Bitcoin. Let’s go over how to evaluate any new altcoin you’ll encounter.
2. How to Evaluate a Cryptocurrency?
There’s no doubt that the number one cryptocurrency today is Bitcoin.
Bitcoin has the highest price, the widest adoption, the most security (thanks to extensive Bitcoin mining), the most recognizable brand identity (just take a look at how many businesses accept Bitcoin) and the most active development.
It’s also the only coin so far that’s represented in traditional markets, in the form of Bitcoin futures trading on the American Chicago Mercantile Exchange.
Bitcoin remains the prime mover; the performances of all other coins are highly correlated with Bitcoin’s performance. My personal expectation is that the gulf between Bitcoin and most other coins (if not all) will widen.
However, if you’re looking for an alternative payment method or a cryptocurrency to speculate on its price, there are a few factors that tend to win out over hype and price pumps over the long term:
While a cryptocurrency’s technology or an ICO’s business plan may seem amazing, without users, they’re just dead projects.
It’s often forgotten that widespread acceptance is an essential property of money. In fact, it’s estimated that over 90% of Bitcoin’s value is a function of its number of users.
Whereas fiat acceptance is mandated by the state, the acceptance of cryptocurrencies is purely voluntary. Many factors play into the decision to accept a coin, but perhaps the most important consideration is the probability that others will accept the coin.
How do you measure adoption?
- Try to see if businesses and services accept this cryptocurrency as a payment method.
- Take a look at the market cap of the coin. While market cap doesn’t equal adoption, it’s usually correlated.
- Read news about the coin, especially government related debates.
Remember, there’s a thin line between hype and adoption. Adoption is usually measured in real life use cases and not the amount of news stories written about a coin.
Security / Decentralization
Decentralization is critical to the trustless model of a true cryptocurrency. Without decentralization, one has something more akin to a fiat currency than a true cryptocurrency.
Coin centralization of governance is exactly what cryptocurrencies aim to solve. Without it, the coin can easily be manipulated.
If a coin’s mining operation or some central controller can alter the transactional record, this calls into question its basic security. The same is true for coins with unproven code that hasn’t been thoroughly battle-tested over the years.
The more the code can be relied upon to function as described, regardless of human influence, the higher the coin’s security.
How do you measure decentralization?
- Is the code for the coin open source? What’s the criticism about it online?
- How many independent nodes are running the code and participating in the mining operation? The more, the better.
- What “trials by fire” has the code faced for its governance? A good example for Bitcoin is the Bitcoin Cash hard fork.
Worthwhile coins strive to improve their technology, but not at the expense of security. Innovation can be a hard factor to assess, particularly for nontechnical users. However, here are some aspects to consider:
- Has the coin’s code grown stagnant or isn’t receiving updates that address significant issues?
- What features is this coin bringing to the table that aren’t available in other coins?
A coin’s inherent economic incentives are easier for the average person to grasp. If a coin had a major pre-mine (i.e. coins were created in an unequal manner), or its team holds a significant share of tokens, then the primary motivation for the coin may just be profit for the founders.
Make sure to understand the incentive model for the coin you’re evaluating and check to see if there are some exclusive advantages to early adopters. Most credible coins offer the same opportunities to all participants.
3. Cryptocurrency Alternatives to Bitcoin
Litecoin (LTC) is a clone of Bitcoin with a different hashing algorithm. While Litecoin has only recently moved to implement more anonymity technology than Bitcoin, surprising reports have revealed that Litecoin’s adoption on darknet marketplaces is now second only to Bitcoin’s.
A privacy-focused coin, such as Monero, would seem far more suitable for the role of buying illicit goods and services. This may be due to Litecoin’s longevity, which was launched in late 2011.
Another factor in Litecoin’s favor is that it integrated Bitcoin’s SegWit technology, meaning that Litecoin is prepared for the Lightning Network. Litecoin may thus benefit from atomic swap trading (the secure peer-to-peer trading of coins without any third party involvement).
Since Litecoin keeps its code largely synced with Bitcoin’s, it’s well-positioned to benefit from Bitcoin’s technological progress.
To sum it up, while Litecoin doesn’t bring a lot of technological innovation to the table, its adoption and security are well suited to serve as a Bitcoin alternative.
Ethereum (ETH) has been around since 2014. While Ethereum’s main purpose is a DIY blockchain platform and not a payment method, its currency, Ether, has gained extreme popularity.
Ethereum has gained much attention from regulators similar to Bitcoin. Additionally, most ICOs, STOs, and IEOs run on the Ethereum network.
In the near future, Ethereum will be facing its long-delayed switchover to a new hybrid Proof of Work/Stake system. This means that Ethereum mining will no longer be done through GPUs. It remains to be seen just how successful any such change will be.
Summing it up, when it comes to innovation and adoption, Ethereum seems to have a case. While Ethereum also scores high on the decentralization criteria, some would question its governance, especially after the DAO incident which created Ethereum Classic.
Monero (XMR) remains the premier privacy coin. Its reputation and market capitalization are still beyond those of its rivals (Dash and Zcash) – for a good reason.
The use-case for a privacy coin is pretty clear, given the fact that Bitcoin is far from anonymous.
When it comes to innovation, Monero’s code requires less trust than Zcash’s “trusty” key ceremony. Also, unlike DASH, Monero had a fair launch.
Additionally, the fact that Monero changed its mining algorithm to prevent the development of an ASIC miner for its algorithm confirms the coin’s commitment to mining decentralization.
It seems, for now, that Monero is winning the race for the best privacy coin. This can be seen by its position on the cryptocurrency charts as well.
Ripple (XRP) is the institutional Bitcoin alternative. Designed to help banks and financial institutions optimize the way they transact, Ripple and its currency, XRP, aren’t aimed at day to day transactions.
Ripple brings a lot of added value to the table, trying to fix the fragmented banking system and slow and inefficient payment protocols used today.
Ripple is far from decentralized, although some would argue that some degree of decentralization exists.
Ripple has been adopted by some big banks and financial institutions. However, most of these institutions use Ripple products like xRapid and not the XRP currency itself.
Libra is by far the most anticipated cryptocurrency out there. Originally planned to launch sometime during 2020, Libra is a stablecoin that aims to serve Facebook’s 2.4 billion users.
Libra is backed by some of the biggest names in the industry like Shopify, Xapo, Spotify and Uber. There’s no doubt – adoption would be an easy task when so many B2C companies are on board.
While Libra claims to have a vision of decentralization, there’s a small chance that a cryptocurrency issued by a company like Facebook and regulated by the SEC would reach a decentralization level that’s anywhere near Bitcoin.
Having said that, Libra brings massive value to the table by making cryptocurrencies accessible to people who might not be eligible for their own bank account. On top of that, Libra is backed by financial assets in order to avoid price volatility like most cryptocurrencies.
4. Frequently Asked Questions
How Many Cryptocurrencies Are There?
Since starting your own cryptocurrency requires nothing more than a computer, it’s impossible to say the exact count of cryptocurrencies available. The estimated amount is in the thousands.
5. Conclusion – What’s The Next Big Cryptocurrency?
While I don’t have a specific recommendation for another coin, I do have a conviction that once Bitcoin starts rallying again and achieving mass adoption, a lot of money will flood into “the next big thing”.
So far, we’ve seen crazes in altcoins, smart contracts, ICOs, and forkcoins—all of which were based around a kernel of utility and a potential profit but were massively inflated by people hoping for a time machine back to the earliest days of Bitcoin investment.
The main thing you can take away from this post is this:
Do your own research and make your own decisions. Sure, you can use various references, but in the end, it’s your money and you need to decide if you want to invest in something. Don’t blindly follow any investment guru or publication.
Keep in mind the 4 pillars of evaluation of a cryptocurrency and see how your potential Bitcoin alternative lives up to each one.
What are your thoughts about the best cryptocurrency out there? Let me know in the comments section below.
Yes I already
Hi hello company how are you feeling now the hear about the this Altcoins the explanation I think I love it If I get it’s well
Steven, Can’t believe you didn’t mention DGB (Digibyte): DigiByte is a public, rapidly growing, highly decentralized blockchain. DigiBytes are digital assets that can’t be destroyed, copied or hacked. making them ideal for protecting objects of value like currency, information, property or digital data.
hi i thought of a coin that registered in bank system in all the countries and it would me more exiting thing and the world of business will be so smooth
Hello, I think that webchain.network is a great alternative, this coin has really good features, that we can read in their whitepaper. The most that I like it’s that can be mined with CPU.
Hi, Steven. Have you come across SYScoin (SYS)? As we speak right now they have delivered SYS 3.0 upgrade, a pretty revolutionary development in many regards – using video and file storage with the blockchain, highest transactions per second for a cryptocurrency, as well as working product Blockmarket for trading goods and services on the blockchain. There is a great article for them in the UK newspaper Telegraph:
What is your impression, if you have observations, how do you think they will fare?
Nope, haven’t really looked into it before but I read through your link…
I don’t know if that highest tps claim still holds true. In a centralized environment, tps can be extremely high. If Syscoin gets that level of throughput without sacrificing decentralization (which I doubt, due to the mention of masternodes) then I’d be very surprised…
That said, on-chain tps doesn’t seem very relevant to me now that 2nd layer solutions are nearly ready for prime time. I like the approach of having the base layer be all about security, immutability and censorship resistance, with scaling done on higher layers.
The article also claims that SYS introduced the first decentralized market, which is another claim in need of fact checking. OpenBazaar would be my guess for that title, although there was probably earlier, if cruder, software which came first. Amir Taaki’s DarkMarket on which OB was based, perhaps? He did that in 2014…
I’m not sure why you’d want to store video or files on a blockchain either. Not too sure on the detail of SYS but what’s the benefit over something like BitTorrent? Not sure how SYS does storage but my assumption is that files are distributed among nodes. Depending on how this is handled, there are legal issues with forbidden content and storage issues too if you can’t prune the size of stored content. Probably SYS has handled these issues but even so, I’m not seeing any huge benefit over torrents…
I’d say the article read more like a PR piece than an in-depth analysis. I’m left with questions and doubts, but no compelling reason to get into SYS.
Hello Steven, I am really sorry to have read your reply, I was really surprised and disappointed by your negativity and superficiality.
So you think that hosting Masternodes by hundreds if not thousands of people who don’t know each other and don’t trust each other is centralized?
Is DASH centralized, the original masternodes project? How decentralized was the decision that Ethereum devs took to roll back the blockchain to fix the damage caused by DAO token?
It seems that you are too focused on pure idealistic solution for blockchain the way Bitcoin Cash proclaim it. That is unsustainable. If it was technically feasible to achieve high TPS on the existing blockchain without sacrificing security, immutability and functionality, would Bitcoin, the oldest, most scrutinized and most supported by volunteer developers all over the world go into the direction of Lightning Network – off-chain solution and sidechains? I wish I can fly too, but it ain’t gonna happen. The thing with Bitcoin is who will host 2nd layer solutions and take care of them. They don’t sound very decentralized, do they?
Videos and file storage in SYS project will NOT be stored on the blockchain, they will be used WITH the blockchain. Masternodes will store them encrypted in chunks decentralized with multiple copies on different nodes. They will be able to get pruned LOL. It’s taken care of illegal content – improper ads will be hidden from seeing or finding without having the exact link to it (because of immutability, what’s on the blockchain, stays there), also blockchain is public and open, unlike your favorite coin Monero, where you didn’t mention anything about illegal issues and pending government scrutiny. It seems from your article, preferring OpenBazaar roots, you don’t have much against dark markets, as long as they bring revenue and infuse cash into crypto.
OpenBazaar are NOT a blockchain solution, they are Peer-to-Peer, similar to torrents and that necessitates centralized server infrastructure to host people’s ads and offers, otherwise they would go down unavailable when the seller or buyer shuts down his PC. And it needs these centralized servers to host the ads, because there is no incentives for regular guys to host others’ stuff like on the blockchain. Public blockchain is the optimal decentralized solution.
Amir Taaki made OpenBazaar first of the trade/market-related projects, yeah? No. You have checked in Wikipedia for it and it says, initial release 4. April 2016. Syscoin brought out a working product in August 2014. OB prototype in April 2014, who cares? Syscoin idea and prototype was founded in 2013, but does it matter? All those scammy ICOs lately have prototypes and ideas, but no product whatsoever will be delivered in the end. Final working product is what counts for most people.
It seems you don’t know that the first prototype of a market trading solution was suggested by Satoshi Nakamoto himself and was looking forward at implementing in Bitcoin itself…before leaving the project to the community.
I am in disbelief that one can sense in your words that you are putting higher OpenBazaar without knowing much about it at all, just for the sake to contradict my words or to slash the achievements of SYScoin project, also without having the slightest idea of the latter.
And last but not least – of course the article in mass media publisher UK newspaper Telegraph is a PR piece – most articles in any newspaper on any technology is. Does it decrease the achievement of the project? It doesn’t even hype it. You want an in-depth analysis? There you go, and I’d like to add that I really, really didn’t want to shill the project:
So please don’t invest in SYS. The project doesn’t need egomaniac people like you. Because without investigating things deeper, which you asserted, to make such final and emphatic conclusions that something should suck simply because you didn’t know about it, is outrageous and flagrant, if you call yourself an expert.
I get that you’re emotionally (if not financially) invested in Syscoin, so we’ll just have to agree to disagree. I don’t see great value in it personally but hey, I could be wrong. Ultimately, the market will decide whether Syscoin has value or not.
Hi Steven, yes I am invested in the coin, but it doesn’t matter. You could just say that you like other coins more or you don’t see the value for now. No probs. But the way you decided to formulate your negative stance – via badly grounded reasoning about crypto centralization in general, masternodes, torrents, etc. started me up. As you see, I also know a thing or two about crypto. I wish you all the best.
Well, you asked for my opinion and I gave it to you. I did try to base it on as much factual information as possible. I didn’t have time to examine Syscoin in depth but I stand by my original statement…
What it boils down to is this: why do filesharing on a blockchain?
Bitcoin solved a major problem, the issue with centralized, trust-dependent money. This is why Bitcoin is huge; it’s the solution to a massive global problem.
I just don’t see how Syscoin is solving a problem which torrents (and other decentralized file-sharing apps) haven’t already solved, and so I don’t see the value.