Chapter 2: Beyond the Giants: Altcoins, Stablecoins, Memecoins & CBDCs

While Bitcoin and Ethereum together make up more than 70% of the total value of the entire crypto market, the remaining 30% of the market consists of tens of thousands of different tokens.

Many of these cryptocurrencies, known as altcoins, have relatively small market caps, ranging from $200 billion to less than $1 million. Regardless of size, they play an important role in the crypto market because they represent new technological innovations and offer opportunities for financial speculation.

In this chapter, we’ll take a deep dive into the world of altcoins.

What Are Altcoins?

The term ‘altcoin’ is a catch-all term for any cryptocurrency other than Bitcoin or Ethereum. In some uses, the term altcoin even includes Ethereum, covering everything but Bitcoin, the oldest and largest cryptocurrency.

There are tens of thousands of altcoins today. Most trade on centralized and decentralized crypto exchanges, but some are fully private or aren’t listed on exchanges for trading. If you want to know more, take a look at our “What are altcoins” explainer.

Why Are Altcoins Important?

Types of Altcoins

There are many different types of altcoins, each with a different purpose. Here’s an overview of the most important types.

You can find our video below that discusses Altcoins in more detail:

A Closer Look at Stablecoins

Stablecoins are a type of cryptocurrency that’s designed to keep a stable value instead of going up and down like Bitcoin or other coins.

They are usually tied (or “pegged”) to something steady, like the U.S. dollar, euro, or gold. For example, 1 USDT (Tether) or 1 USDC is meant to always be worth about $1. You can get an in-depth view in our dedicated “What are Stablecoins” guide. 

How Do Stablecoins Maintain Their Price?

Stablecoins can use a few different approaches to maintain their price. The most common approach is simply to back every token issued with one unit of the asset the token’s price is pegged to.

For example, every USDT issued is worth $1, and Tether actually holds $1 in reserves for every USDT in circulation. The same is true for USDC, the second-largest stablecoin. Both of these stablecoins can be redeemed for dollars, giving holders confidence that 1 USDT or USDC really is worth $1.

Similarly, issuers of gold-backed stablecoins such as Paxos Gold (PAXG) hold an ounce of gold in a vault for every token they issue. When users buy more of that token, the stablecoin manager buys more gold to back up the newly issued tokens.

Stablecoins can vary slightly depending on their nominal price. For example, it’s not uncommon for 1 USDT to be priced at $0.99995 or $1.00005. But these fluctuations are quickly corrected by the market and don’t matter much for most crypto users.

Meme Coins Explained

Meme Coins are another extremely popular class of altcoins. What makes them unique is that memecoins are solely for entertainment purposes. Most of them offer no real utility or technological innovation in the blockchain ecosystem. The value of memecoins is driven by financial speculation and hype. You should read our “What are meme coins” explainer to know more. 

Where Did Meme Coins Come From?

Memecoins came from internet culture and online communities, not from serious financial planning. The very first meme coin was Dogecoin (DOGE), launched in 2013 as a joke based on the popular “Doge” meme of a Shiba Inu dog.

At first, it was created just for fun, but over time, Dogecoin built a strong community and became widely traded. After that, many other meme coins followed, often inspired by jokes, viral trends, or internet communities, like Shiba Inu (SHIB), Pepe (PEPE), and Floki Inu.

Shiba Inu (SHIB), introduced in 2020, became the second major meme coin and sparked a wave of new projects. Early tokens often imitated the Shiba Inu theme made famous by DOGE and SHIB, but over time the space expanded. Today, meme coins can be based on virtually any joke, meme, or trend that captures the attention, and imagination, of the crypto community.

Why Are Meme Coins So Popular?

Central Bank Digital Currencies (CBDCs): The Government’s Crypto

Central bank digital currencies (CBDCs) are a new type of digital asset that’s related to cryptocurrencies. They operate using blockchain technology just like cryptocurrencies, but they’re created, issued, and controlled by central banks. That makes CBDCs fully centralized, whereas many cryptocurrencies are decentralized to varying degrees.

CBDCs maintain a constant value, making them somewhat similar to stablecoins. However, a key distinction is that while stablecoins are privately created assets pegged to a fiat currency, CBDCs are digital representations of a country’s fiat currency and controlled by government authorities. There is effectively no difference between a CBDC and a physical currency note, and both are liabilities on a central bank’s ledger.

CBDCs are designed to enable faster digital payments, prevent money laundering, and provide access to financial services for people who are currently unbanked. They can be offered directly to the general public or only made available to financial institutions to support cross-bank payments.

How CBDCs Are Different From Other Cryptos?

Cryptocurrencies and Central Bank Digital Currencies (CBDCs) are both digital forms of money, but they work in very different ways. While cryptos are decentralized and driven by open markets, CBDCs are government-backed and centrally controlled. Check out this comparison table to understand the differences better.

Chapter Quiz

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Module 2, Chapter 2- Beyond the Giants: Altcoins, Stablecoins, Memecoins & CBDCs

1 / 9

Which of the following best describes the different purposes of these types of digital assets?

Altcoins are jokes, stablecoins are investments, memecoins are payment tools

Stablecoins reduce volatility, Bitcoin stores value, Ethereum enables apps, CBDCs digitalize government money

Altcoins are always scams, CBDCs replace cryptocurrencies, memecoins are official payment methods

Bitcoin and altcoins serve the exact same purpose as CBDCs

Each type of cryptocurrency or token serves a unique role: Bitcoin as “digital gold,” Ethereum as a world computer, stablecoins as stable mediums of exchange, and CBDCs as state-controlled digital currencies.

Each type of cryptocurrency or token serves a unique role: Bitcoin as “digital gold,” Ethereum as a world computer, stablecoins as stable mediums of exchange, and CBDCs as state-controlled digital currencies.

2 / 9

How are Central Bank Digital Currencies (CBDCs) different from cryptocurrencies like Bitcoin?

CBDCs are issued and controlled by governments, while Bitcoin is decentralized

CBDCs always operate anonymously, while Bitcoin is fully transparent

CBDCs run only on the Ethereum blockchain

CBDCs are mined in the same way as Bitcoin

CBDCs are government-backed digital versions of national currencies. While they use some blockchain-like technology, they lack the decentralization that gives cryptocurrencies independence from state control.

CBDCs are government-backed digital versions of national currencies. While they use some blockchain-like technology, they lack the decentralization that gives cryptocurrencies independence from state control.

3 / 9

Why did memecoins like Dogecoin gain popularity?

They are backed by central banks

Their humorous origins and online communities helped them go viral

They were the first type of cryptocurrency ever created

They guarantee constant long-term price growth

Memecoins started as internet jokes but built massive communities that drove hype and adoption. Their fun, approachable branding made them attractive to retail investors and pop culture.

Memecoins started as internet jokes but built massive communities that drove hype and adoption. Their fun, approachable branding made them attractive to retail investors and pop culture.

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What is the main purpose of stablecoins like USDT or USDC?

To maintain a stable value by being pegged to assets like the US dollar

To fluctuate in price rapidly for trading profits

To replace Bitcoin as a scarce digital asset

To operate only on the Ethereum network

Stablecoins are designed to reduce volatility in crypto markets. By pegging their value to stable assets (like the dollar), they provide a reliable medium of exchange and bridge between crypto and traditional finance.

Stablecoins are designed to reduce volatility in crypto markets. By pegging their value to stable assets (like the dollar), they provide a reliable medium of exchange and bridge between crypto and traditional finance.

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What does the term "altcoin" generally refer to?

Any cryptocurrency that is not Bitcoin

Coins issued only by governments

Tokens that are always worth $1

Cryptos used exclusively for memes

Altcoins simply mean “alternative coins” that came after Bitcoin, ranging from Ethereum and Ripple to thousands of other smaller coins. Each usually aims to solve specific problems or build unique features not found in Bitcoin.

Altcoins simply mean “alternative coins” that came after Bitcoin, ranging from Ethereum and Ripple to thousands of other smaller coins. Each usually aims to solve specific problems or build unique features not found in Bitcoin.

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Stablecoins:
Select All That Apply

An official currency issued by a government's central bank to replace their physical currency.

Serve as a bridge between the highly volatile cryptocurrency market and traditional finance, offering a more reliable medium of exchange.

Some are backed by reserves of real-world assets like cash, commodities, or bonds to maintain their peg.

Cryptocurrencies designed to minimize price volatility by pegging their value to a stable asset, such as a fiat currency like the US dollar.

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Memecoins:

Select All That Apply

Cryptocurrencies that derive their value from internet memes, virality, and community hype, rather than a specific technological function.

Cryptocurrencies that are always backed by a physical asset, like gold or silver.

Often have an extremely large or unlimited supply, which keeps the individual unit price very low.

Price is highly volatile and driven by speculative trading and social media trends, making them high-risk investments.

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Central Bank Digital Currencies (CBDCs):
Select All That Apply

Can be programmable, allowing the central bank to potentially attach rules to how and when the money can be spent.

Is a centralized digital currency that is directly backed by the full faith and credit of the government.

Is a digital version of a country's fiat money, issued and regulated by its central bank.

A form of decentralized cryptocurrency, like Bitcoin, designed to operate without a central authority.

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Altcoins:

Select All That Apply

Any cryptocurrencies that are not Bitcoin.

Often created to address a perceived flaw in Bitcoin, such as transaction speed or energy consumption.

Can have unique functionalities and use cases beyond a simple store of value, such as powering decentralized applications or facilitating private transactions.

All use the exact same blockchain technology as Bitcoin.

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