Morning Brew’s guide to altcoins
Bitcoin has long been the mainstream go-to in a crowded crypto market: the McDonald’s in a neighborhood full of promising but untrustworthy dives. For more aggressive investors that uncertainty could mean a chance at getting rich quickly with an unexpected gem. To others, the risk can be enough to steer them toward the safety of McNuggets.
Enter the altcoin—the term for essentially any cryptocurrency that isn’t bitcoin. (Yes, even well-known coins like ether.) There are thousands of altcoins in circulation, made for everyone from impulsive crypto dreamers to the ever-nervous crypto doubter.
Altcoins haven’t been exempt from the crypto winter that’s sent digital currency prices plummeting. There’s a lot of uncertainty around altcoins, but the freeze presents interesting possibilities: Each coin is effectively competing for the least disastrous dip into the red and the quickest bull run when the market bounces back.
So, which altcoin would be right for you? It depends on your priorities and appetite for risk. This is where some of the most popular altcoins stand:
Baby’s First Altcoin: Avalanche (AVAX)
Avalanche could be a really good choice for altcoin beginners. AVAX runs on a blockchain platform with an emphasis on quick transactions and low costs.
Many users choose to use AVAX, the native cryptocurrency of the Avalanche blockchain, as currency that sits and passively grows. In a market with heavy hitters that can cost you thousands of dollars per coin and penny coins that struggle to be worth a Lincoln, AVAX draws a pretty good line between affordable and worthwhile.
The Conservative Investor’s Altcoin: Binance USD (BUSD)
This might be the one to write your grandpa about—if your grandpa is a crypto enthusiast. Launched in 2019, binance USD offers a good balance of easy-to-use functionality and overall security. Plus, it’s traded on the already established Ethereum blockchain and is pegged to the US dollar, placing it among the ranks of other stablecoins. (ICYMI—stablecoins are cryptocurrencies that are pegged to a stable asset, like the US dollar or gold.)
Unlike most digital currencies, it’s also regulated by a government agency: the New York State Department of Financial Services, which makes sure crypto offerings are fair to consumers. (That same department has actually been investigating the crypto exchange platform Coinbase since February for potentially defying the Bank Secrecy Act.)
While stablecoins offer a less anxiety-inducing crypto experience, they are still subject to market volatility and aren’t comparable to commonly accepted stable assets, like bonds. Still, this might be desirable, especially as the current bear market drags on.
The Coin with a Mission: Cardano (ADA)
Created in 2017 by Charles Hoskinson, one of the founding members of the Ethereum platform, ADA coin is promising: It’s a proof-of-stake crypto, which means no crypto mining is involved, but other users on the network are incentivized to validate transactions by “staking” their own ADA on it’s reliability, and it’s a rising star. Cardano’s framework has been backed up with over 100 peer-reviewed papers.
According to crypto fanatics who say its blockchain is superior, Cardano even carries the distinction of being an “ethereum killer.” Its mission is to build a connected, decentralized system for its users and for those without access to proper banking services. The coin has been trading around 50 cents since the crypto freeze, but it’s always been pretty affordable.
Stablecoin’s Alt Brother: Dai (DAI)
The dai stablecoin is a cryptocurrency that runs on the Ethereum blockchain and has emerged as a pretty stable choice in a market plagued by memecoins. The MakerDao organization, which generates the coin, pegs the coin’s value to its collateral in order to try and keep its value as close to $1 as possible. (MakerDao users vote on Ethereum-based assets to use as collateral for the dai coin.)
Despite its basis in the Ethereum blockchain, dai is much more consistent than ether: Users can rest easier since transactions operate on verifiable code, not mutual agreement between people as with ether. MakerDao’s mission with dai is to give investors and consumers a nonvolatile alternative to other cryptocurrencies, and while dai has had an impressive run staying extremely close to one dollar, it’s still susceptible to the same volatility as other altcoins.
The One for Aspiring Edgelords: Dogecoin (DOGE)
The meme-turned-memecoin-turned-surefire investment-turned-memecoin again remains one of the most popular altcoins.
Dogecoin started as a meme in 2014 to poke fun at bitcoin, but after rallying cries to boost the crypto by infamous subreddit r/WallStreetBets, and a shoutout from Elon Musk, the coin quickly rose to the top five cryptocurrencies by market cap. It runs on its own proof-of-work blockchain, but because there’s no cap on how many dogecoins can be created, it’s subject to strong inflation.
Despite its recent drop in value, Musk has remained supportive. On June 21 he said, “I intend to personally support dogecoin because I just know a lot of people who are not that wealthy who have encouraged me to buy and support dogecoin, so I’m responding to those people.”
The internet buzz around the coin is truly all it has going for it, though, since it’s been a frequent target of user inflation. In 2021, CoinDesk outlined the top five dogecoin pump-and-dump schemes, so common with the coin that there could be a top five list. Dogecoin was started as a joke and a coin to play around with, not a legitimate investment, and that’s what it largely remains. Despite Musk’s support, it’s worth remembering that he’s come under fire for using his fame to profit off of dogecoin’s inflationary mechanism.
The “Their first album was better” Coin: Ethereum (ETH)
Once considered a bitcoin killer, ether has earned its spot as the most popular altcoin in the seven years since its official launch. Next month, it will transfer from a proof-of-work concept to a proof-of-stake concept, freeing it from the energy-intensive mining that’s fallen out of favor among government skeptics and energy enthusiasts. Still, the powerhouse remains vulnerable to the chill of crypto winter: Despite returning to a price point around $1,700, NextAdvisor data shows ethereum is down 77% YTD, as of July 8.
The Futurist’s Altcoin: Polkadot (DOT)
Founded by Gavin Wood, an instrumental member of Ethereum’s founding team, DOT is a proof-of-stake cryptocurrency that’s focused on switching up the ways that blockchains can be used. While other cryptocurrencies try to juggle the three blockchain variables—decentralization from major financial institutions, speedy processes, and security of transactions—they usually only successfully handle two at a time. Polkadot hopes to tackle all three by allowing different blockchains to work together with each other in a secure and speedy way (for example, users on Polkadot’s blockchain can interact with users on a different blockchain while staying on Polkadot’s secure network ).
After it survived crypto winter better than most other cryptocurrencies, Polkadot’s technology gives investors hope that the coin will remain a power player. As of now, it’s pretty affordable, too: One DOT coin probably won’t run you more than $10.
The Frivolous Investor’s Altcoin: Shiba Inu (SHIB)
Don’t get SHIB confused with dogecoin, which uses the same dog breed as its mascot—in fact, SHIB coin calls itself the “dogecoin killer.” Noticing a trend? In the multiverse of cryptocurrencies, every coin is a killer and has a killer.
But the price of a single SHIB coin is way less than a penny, and trillions of the coin are currently in circulation. The coin hit its peak in October 2021, but has lost nearly 70% of its value as of July 2022. The company’s move to cut ties with Ethereum and the rollout of their NFT-minting service was supposed to be the future hope of SHIB, but NFTs are now suffering from their own freeze. OpenSea, the largest NFT marketplace, announced earlier in Julythat 20% of their employees would be laid off.
“Crypto is the new Venmo” Coin: Solana (SOL)
Despite recent bumps in the Solana platform’s efficiency, SOL coin offers an important alternative to altcoin leader ether. It’s miles ahead of ETH in transaction time: SOL can process thousands of transactions in a single second.
That’s because of Solana’s proof-of-history blockchain, upon which existing functions called Verifiable Delay Functions (VDFs) predict transaction times and are verified after the fact. This makes SOL transactions look more like a Venmo to your friend and less like a lengthy bank transaction.
Plus, solana doesn’t need the mining procedures that come with proof-of-work models, so it avoids the environmental damage that comes with traditional mining. This opens up the platform to bugs and platform issues though, which over the past few months have led to steep decreases in the coin’s price. Investors are still holding out hope for this innovative coin.
Daredevil’s Coin: Tether (USDT)
Developed in Hong Kong in 2014 as realcoin, tether is an aptly named “stablecoin” that works on a number of different popular blockchains. Stablecoin is in quotes because tether is kinda a stablecoin and kinda not.
The company once claimed that each USDT coin was backed by one US dollar. But after catching heat from the New York attorney general, the company released a list of what the coin was pegged to: a large amount of cash reserves, commercial paper (money that companies owe Tether), and money-market funds (funds with cash and other low-risk securities). The inclusion of commercial paper, which can be hard to convert to cash, is a bit concerning.
In May, investors withdrew close to $10 billion in tether in just a week and a half after concerns about its stability. Still, the coin’s price dropped less than two cents.
The Nervous Investor’s Coin: USD Coin (USDC)
USDC coin, not to be confused with Tether’s USDT, is the light in the dark for investors who are too cautious to dip their feet into crypto. Every unit of USDC is pegged to one US dollar through cash reserves and bonds, strengthening the coin against the volatility of speculation and trends.
The coin has never moved more than three cents in value since it was made. But making money isn’t the only benefit of holding crypto—it also allows you to eliminate the middlemen between transactions. Whether you’re paying a friend back after a night of too many Moscow mules or doing something we won’t mention here, USDC is a great way of keeping that between the two beneficiaries.
If you’re turned off by the “get rich quick” or “get broke quick” nature of more unstable altcoins and just want a decentralized currency to use for reasons, USDC is it.