Definition
Altcoin — short for "alternative coin." It refers to any cryptocurrency other than Bitcoin. The term emerged when the first BTC competitors were created.
Altcoin Classification
| Type | Examples | Features |
|---|---|---|
| Layer 1 | Ethereum, Solana, Cardano | Own blockchains |
| Tokens | USDT, UNI, AAVE | Run on other blockchains |
| Stablecoins | USDC, DAI, USDT | Pegged to fiat |
| Memecoins | DOGE, SHIB, PEPE | Created for fun/hype |
Why Invest in Altcoins
Growth Potential
Bitcoin already costs tens of thousands of dollars. Altcoins with small market cap can grow 10-100x, but can also fall 99%.
Technology
Many altcoins solve Bitcoin's problems:
- Ethereum — smart contracts
- Solana — high speed
- Monero — complete anonymity
Diversification
Distribution between different cryptocurrencies reduces risks.
Altcoin Risks
- Volatility — fall harder than Bitcoin in bear markets
- Liquidity — difficult to sell large volumes
- Scam projects — many fraudulent coins
- Regulatory risks — may be classified as securities
How to Choose an Altcoin
- Research the project team
- Check for a real working product
- Evaluate tokenomics (coin distribution)
- Look at development activity on GitHub
- Check liquidity on exchanges
DCA into Altcoins
When using DCA strategy for altcoins:
- Allocate a smaller portfolio share (10-30%)
- Choose projects from top-20 by market cap
- Prepare for 70-90% drawdowns
