Bitcoin is the most popular cryptocurrency yet, but as most of us know, it is not without its flaws.
No one would want to pay two Bitcoins (worth ~S$127,000 now) for a car, only to find out that they could have gotten it for much cheaper when the price of Bitcoin falls.
This is where newer, alternative cryptocurrencies (altcoins) come in that seek to address the issues with the original cryptocurrency, Bitcoin.
Here are the top 10 cryptocurrencies based on market capitalisation and what they do.
Disclaimer: The information provided by Seedly serves as an educational piece and does not constitute an offer or solicitation to buy or sell any investment product(s). It does not take into account the specific investment objectives, financial situation or particular needs of any person. Readers should always do their own due diligence and consider their financial goals before investing in any investment product(s).
What Are Altcoins (Alts)?
Altcoins or alts for short are simply cryptocurrencies that are not Bitcoin.
The word altcoins is a portmanteau for the words alternative coins.
According to leading data cryptocurrency data aggregator CoinMarketCap, there are over 18,510 altcoins that are currently listed.
Typically, altcoins will attempt to make a superior version of Bitcoin or create a coin with different functionality.
Categories of Altcoins
When it comes to altcoins, you should know that there are different categories of altcoins and that some altcoins might fall into multiple categories.
These categories include:
- Mining-based cryptocurrencies: Coins created by a mining process where new coins are minted by solving complex math puzzles to unlock new blocks ala Bitcoin.
- Stablecoins: Coins that are pegged to external currencies in a bid to reduce volatility.
- Security Tokens: Coins that are a digital tokenised form of traditional stock/security/equity. These coins are connected to a business and are often released via initial coin offerings. Like traditional stocks, these coins tend to payout some kind of dividend or represent a stake in a business.
- Utility Tokens: These coins can be exchanged for services or products and are typically sold during an ICO.
Before you invest in altcoins, here are some cons you should be aware of.
Risks of Altcoins
- High Risk: Altcoin investing is extremely risky as most altcoins tend to lose their value over time.
- Hugely Volatile: The price of altcoins is almost entirely dependent on demand and supply that is independent of any real-world asset or medium. This means that you can expect huge price movements in the short-term.
- More Susceptible to Price Manipulation: Altcoins tend to be more susceptible to price manipulation as the small market capitalisation and trading volume of these altcoins mean that inflows and outflows of smaller amounts of capital can greatly move the price.
- Loss of Functionality: Altcoins might lose their value and become obsolete when the technology behind these altcoins becomes outdated or replaced.
- Consumer Protection: Unlike traditional banks, cryptocurrency doesn’t have any official safeguards or insurances.
- Regulatory Issues: Because the asset class is so new, governments and banks have not yet formed a coherent fiscal policy for them. Therefore, there’s always a risk that their taxation status, trading rules, or even outright legality, could change overnight.
- Scam and Fraud Risk: As altcoins are unregulated, they might be more susceptible to scams and fraud. Take this Singaporean who lost $130,000 to a fake bitcoin trader for example.
- Interdependence with Bitcoin: Research has shown that the price of altcoin and Bitcoin are closely interlinked. This interdependence is more pronounced in the short run compared to the long run.
Potential Rewards of Altcoins
- Risk-Return Tradeoff: The higher the risk the higher the potential reward. But, that is a big IF as it is generally harder to calculate the risk-return tradeoff with altcoins.
- High Returns: On balance, if you do your research well, you will be handsomely rewarded It is not uncommon to find altcoins that go up more than 100x in a few months. But,it is challenging to identify the right projects that will grow exponentially in the future.
It is not advisable to invest in something that you’re not familiar with, so I would encourage you to read beyond this article if you are interested in investing in cryptocurrencies.
Before deciding to invest in altcoin do your due diligence and research the altcoin thoroughly before investing in any altcoin.
With that out of the way, here are the top five non-Bitcoin cryptocurrencies by market capitalisation (as of 20 Feb 2021) for you to consider and do your due diligence on.
FYI: Altcoin market capitalisation = Total circulating supply of altcoins X the price of each coin (based on the exchange rate with fiat currencies like the USD).
These are also some of the more popular altcoins which are generally more stable and have a large community behind them.
Information is accurate as of 21 Feb 2021.
1. Ethereum (ETH)
Founded in 2015, Ethereum is a decentralised open-software platform based on blockchain technology that allows users to execute smart contracts and build applications.
Unlike Bitcoin which serves the purpose of electronic cash, the Ethereum platform focuses on running code for any decentralised application deployed on its network.
In other words, you can think of Ethereum as an ‘app store’ that lowers the barrier of entry for developers to build new applications.
Ether (ETH) is the Ethereum platform’s native token that fuels the network.
And is often referred to as the silver to Bitcoin’s gold as it is the next biggest cryptocurrency by market capitalisation after Bitcoin.
Market Capitalisation: US$396.6 billion
Volume (How Much Traded in 24 hours): US$14.6 billion
Circulating Supply: 120.1 million ETH
Current Price: US$3290.45
2. Tether (USDT)
Tether is a stablecoin that is pegged to the US dollar (USD) at a 1:1 ratio and issued by a Hong Kong-based company, Tether.
This means that Tether supposedly has 1 USD for every USDT in their reserves as collateral.
As the most popular stablecoin, USDT is used the most for trading and making payments on blockchain networks.
However, there have been some controversies surrounding Tether that you can read about here.
How can we make money then if we invest in stablecoins?
While not strictly an investment per se, you can earn rewards from loaning out your stablecoins.
But, do note that this process comes with its own set of risks.
You can read more about some of the best Crypto lending platforms here.
Market Capitalisation: US$81.4 billion
Volume (How Much Traded in 24 hours): US$63.1 billion
Circulating Supply: 81.3 billion USDT
Current Price: US$1.00
3. Binance Coin (BNB)
Binance coin (BNB) was created back in July 2017 and currently functions as the in house token for the Binance cryptocurrency exchange.
Initially, the coin was operating on the Ethereum blockchain with the token ERC-20. Subsequently, the coin became the internal currency of the Binance Smart Chain blockchain.
Like Ethereum, the Binance Smart Chain blockchain allows users to execute smart contracts and build applications.
In terms of functionality, you can use BNB to trade and pay transaction fees on Binance.
To incentivise users, you can save on trading fees when you use BNB on the Binance exchange.
Plus, you may also use BNB to pay for services such as Canva at a discounted rate.
Market Capitalisation: US$71.0 billion
Volume (How Much Traded in 24 hours): US$1.6 billion
Circulating Supply: 165.1 million BNB
Current Price: US$428.66
4. USD Coin (USDC)
Another stablecoin pegged to the USD, USD Coin (USDC) is an Ethereum based cryptocurrency by a consortium named Centre, founded by Circle and Coinbase.
USDC is mainly used as a hedge when the market dips or to trade other cryptocurrencies while keeping their funds on the platform to avoid fees for fiat on-ramps and off-ramps.
When compared to USDT, USDC is seen as a safer stablecoin as Centre makes a greater effort to comply with audits and governmental regulation, and has more transparent, fully-backed reserves.
Market Capitalisation: US$52.1 billion
Volume (How Much Traded in 24 hours): US$3.4 billion
Circulating Supply: 52.1 billion USDC
Current Price (As of 20 Feb 2021): US$0.99
5. XRP (XRP)
XRP is the native cryptocurrency of Ripple, a cryptocurrency payment system by Ripple Labs that offers a cheaper and more efficient alternative to the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system, which processes international transactions.
Currently, international transactions take three to four days and incurs high transaction fees, especially when changing currencies.
To solve this problem, XRP allows users to send money at a very low cost and claims to finalise transactions within just five seconds.
However, unlike other cryptocurrencies, XRP is centralised and runs on a “Unique Node List” where a list of people that Ripple trusts gets to decide what transactions go through.
Market Capitalisation: US$41.7 billion
Volume (How Much Traded in 24 hours): US$1.6 billion
Circulating Supply: 48.1 billion XRP
Current Price: US$0.8619
6. Cardano (ADA)
Cardano was launched in 2017 by Ethereum and BitShares co-founder Charles Hoskinson, and is a proof-of-stake public blockchain platform and cryptocurrency network for smart contract development.
In other words, it functions as a social and financial operating system.
The internal token for Cardano is ADA, named after English mathematician Ada Lovelace.
ADA looks to resolve the flaws of other cryptocurrencies by focusing on interoperability, scalability and sustainability.
This means that ADA can be traded with other cryptocurrencies seamlessly and will be able to meet demand for transactions as more users use it.
Market Capitalisation: US$39.8 billion
Volume (How Much Traded in 24 hours): US$1.4 billion
Circulating Supply: 33.7 billion ADA
Current Price: $1.16
7. Solana (SOL)
Solana is another open-source project with the purpose of facilitating decentralised app (DApp) creation.
Its uniqueness stems from its proof of history mechanisms which incorporates timestamps into the blocks.
As such Solana can process transactions much faster than alot of other cryptocurrencies and even the VISA payment system.
However, there have been outages reported in the past which impairs its aspirations to be the “VISA” of the crypto world.
Market Capitalisation: US$34.5 billion
Volume (How Much Traded in 24 hours): US$1.7 billion
Circulating Supply: 325 million SOL
Current Price: US$105.73
8. Terra (LUNA)
Lauched in 2019, Terra is a blockchain protocol that uses fiat-pegged stablecoins to power price-stable global payments systems.
Terra’s native token, LUNA, is used to stabilise the price of the protocol’s stablecoins and to perform transactions on the Terra ecosystem.
One of these stablecoins is the TerraUSD (UST). UST and LUNA are mutually dependent since the success of the Terra ecosystem depends on the adoption of UST.
As a result, when more users use Terra’s ecosystem for payments, LUNA stakeholders earn fees which in turn makes LUNA more valuable.
Market Capitalisation: US$33.4 billion
Volume (How Much Traded in 24 hours): US$1.1 billion
Circulating Supply: 356.4 million LUNA
Current Price: US$93.09
9. Avalanche (AVAX)
Avalanche (AVAX) is a direct competitor to Ethereum and seeks to dethrone Ethereum as the most popular blockchain for smart contracts.
It aims to do so by having a much higher transaction output of up to 6,500 transactions per second without compromising on scalability.
While it does not have a broad ecosystem like Ethereum currently, Avalanche already has integration with Ethereum-based projects such as SushiSwap and TrueUSD.
Market Capitalisation: US$23.9 billion
Volume (How Much Traded in 24 hours): US$810 million
Circulating Supply: 267.3 million AVAX
Current Price: US$88.79
10. Polkadot (DOT)
DOT is the native token of the Polkadot platform which was founded in 2016.
The token was created for the purpose of carrying out the key functions of the heterogeneous blockchain Polkadot platform.
The key functions of DOT include:
- Providing governance for the network,
- Operating the network
- Creating parachains by bonding DOT.
The protocol for this platform was developed by Dr Gavin Wood, the co-founder of Ethereum. Essentially, the Polkadot platform was created to enable private customised side chains to link to public blockchains
Market Capitalisation: US$22.2 billion
Volume (How Much Traded in 24 hours): US848.8 million
Circulating Supply: 987.6 million DOT
Current Price: US$22.41
This article serves as an overview of the top cryptocurrencies other than Bitcoin.
As always, do your own research prior to making a high-risk investment such as this.
It is also advisable to look up any controversies surrounding these projects before making a decision.
Once you have done your due diligence you might want to check out our guide to buying Bitcoin and other cryptocurrencies in Singapore!