Definition
An altcoin is any cryptocurrency other than bitcoin. The word combines "alternative" and "coin" and covers everything from large blockchain networks to very small tokens.
How it works
Bitcoin was the first cryptocurrency, so the coins that followed were called alternatives to it. Today the term is used loosely for every other coin and token: the native coins of other blockchains, such as ether on Ethereum, tokens issued on top of those blockchains, meme coins and many more. Some people leave stablecoins out when they talk about altcoins, because stablecoins are built to hold a fixed value rather than to trade freely like other coins.
The label says nothing about quality or size. Altcoins range from networks with large user bases to tokens with a handful of holders, and their market caps can differ by thousands of times. Many altcoins are smaller and trade in thinner markets than bitcoin, meaning fewer buyers and sellers at any moment. As a result, their prices tend to be more volatile, and a single large order can move them sharply.
When looking at an altcoin, it helps to check the same data as for any asset: market cap, circulating and max supply, trading volume, how widely it trades and what the token is actually used for. Many altcoins have lost most of their value or stopped trading altogether, so being listed on an exchange is not a sign of lasting value.
Example (hypothetical numbers)
Suppose Coin P has a market cap of $20,000,000,000 and daily trading volume of $1,000,000,000, while Coin Q has a market cap of $10,000,000 and daily volume of $50,000.
Size: $20,000,000,000 ÷ $10,000,000 = 2,000, so Coin P is 2,000 times larger than Coin Q.
A $25,000 sell order equals $25,000 ÷ $1,000,000,000 = 0.0025% of Coin P's daily volume, but $25,000 ÷ $50,000 = 50% of Coin Q's.
Both are altcoins, yet the same order would barely register in one market and could move the price sharply in the other.
Common mistakes
- Treating all altcoins as one group with similar risk, despite huge differences in size and liquidity.
- Assuming a low unit price makes an altcoin cheap or likely to rise.
- Ignoring thin liquidity, which can make it hard to sell without pushing the price down.
Related calculators
This glossary is for education only and is not investment advice. Examples use hypothetical numbers.