Altcoin means any cryptocurrency that is not Bitcoin. The name comes from alternative coin. Some altcoins try to improve on Bitcoin's speed, privacy, or programmability. Others exist for completely different purposes: stablecoins, governance tokens, memes, and tokenized real-world assets all fall under the label.

Ethereum is the largest altcoin by market value. It introduced smart contracts, which let developers build applications on top of a blockchain. Solana, Cardano, and Avalanche compete on transaction speed and cost. Stablecoins like USDT and USDC peg their value to the dollar. Utility tokens grant access to a protocol's services. Governance tokens give holders voting power over protocol changes. The category is enormous and not particularly useful for making investment decisions. Treating all altcoins as one asset class is like treating penny stocks and blue-chip equities as the same thing.

Altcoin categories worth knowing

• Layer 1 coins — native assets of independent blockchains like Ethereum or Solana
• Stablecoins — pegged to fiat, used for trading and settlement
• Utility tokens — access a specific service or product
• Governance tokens — voting rights in a decentralized organization

Altcoins move harder than Bitcoin in both directions. A 20 percent Bitcoin drop can send smaller altcoins down 40 percent or more. The upside is equally exaggerated.