Altcoin Full Explanation: From Definition, Categories to Practical Trading Guide

Since the advent of Bitcoin, the world of cryptocurrencies has not come to a halt. On the contrary, it has spawned a vast and diverse ecosystem—Altcoins.

This term itself is a key to understanding the evolution of the crypto world.

01 Origin and Definition: Why Are There “Altcoins”?

The term “Altcoin” is a combination of “alternative” and “coin,” literally meaning “alternative token.” Its emergence directly stems from the desire to supplement and surpass Bitcoin.

When Bitcoin was launched in 2009, it was primarily viewed as a peer-to-peer electronic cash system and a store of value. But as its philosophy and technology gained widespread acceptance, developers began to consider: Can we implement more diverse functions on Bitcoin’s blockchain, or create entirely new blockchains?

Thus, Litecoin (LTC) was born in 2011, aiming to be a “lighter” or “payment supplement” version of Bitcoin by changing the hash algorithm and block time.

This marked the beginning of the Altcoin era. From then on, any cryptocurrency other than Bitcoin could be classified as an “Altcoin.”

02 Core Categories: How to Differentiate the Complex Array of Altcoins?

Today, there are thousands of types of Altcoins, but based on their main functions and design goals, they can be roughly divided into the following core categories:

Payment Tokens: The primary goal of these tokens is to serve as a medium of exchange. Besides Litecoin, Ripple (XRP) is a typical example, aiming to provide fast, low-cost cross-border payment solutions for financial institutions.

Platform Tokens: This is currently the most abundant ecosystem category. They offer a programmable blockchain platform that allows developers to build decentralized applications (DApps). Ethereum is the undisputed leader, with its native token ETH used not only for paying transaction fees (Gas) but also as the foundation of the entire DeFi and NFT ecosystems.

DeFi Tokens: Decentralized finance, thriving on platforms like Ethereum, has spawned numerous tokens dedicated to lending, trading, insurance, and other financial services. Examples include Uniswap (UNI), Aave (AAVE), and others.

Memecoins: These tokens usually lack complex technical backgrounds or clear practical use cases. Their value mainly derives from community culture, internet memes, and celebrity influence. Dogecoin (DOGE) and Shiba Inu (SHIB) are representatives, with their prices often experiencing more volatility.

Other Subfields: Additionally, there are countless tokens focusing on privacy protection (e.g., Monero XMR), storage (e.g., Filecoin), gaming (e.g., Axie Infinity’s AXS), and more.

03 Opportunities and Risks: How to Rationally View Altcoin Investment?

Investing in Altcoins is like exploring the frontier of digital innovation—opportunities and risks coexist.

Opportunities lie in their huge growth potential. Bitcoin, as the largest market cap cryptocurrency, has a relatively stable growth rate. Some Altcoins with innovative technology or strong community support may achieve exponential growth within specific cycles. For example, according to Gate Research Institute’s report on December 24, 2023, cloud infrastructure token ICNT surged 16.73% in 24 hours, priced at $0.48522.

However, risks are equally significant. Many Altcoin projects may fail, be eliminated by the market, or turn out to be scams (“rug pulls”). Their liquidity is usually much lower than Bitcoin and Ethereum, making their prices easier to manipulate and more volatile. Investors need stronger research capabilities and risk tolerance.

04 Practical Guide: How to Trade Altcoins on Gate?

For investors eager to explore the world of Altcoins, choosing a reliable and diverse exchange is the first step. Gate, as a leading global cryptocurrency trading platform, offers over 4,100 trading pairs and is an important gateway to access various Altcoins.

Step 1: Register and set up security. Visit the official Gate website or download the official app, complete registration, and enable two-factor authentication (2FA) and other security measures to safeguard assets.

Step 2: Understand the market and select targets. Before trading, it’s crucial to utilize the platform’s research tools and market data. For example, as of December 24, 2025, you might see:

• Bitcoin (BTC) fluctuating between $86,500 and $88,000, with a current price of about 86,873 USDT.
• Ethereum (ETH) stabilizing around $2,900, with a current price of about 2,924 USDT.
• Some hot Altcoins, such as AI narrative project PIPPIN, trading at $0.46686, up approximately 28.85% in 24 hours.

These real-time data help you grasp overall market sentiment and specific token dynamics.

Step 3: Start trading. Gate offers spot trading, leverage trading, and more. For beginners, it’s recommended to start with spot trading—directly using fiat or other cryptocurrencies to buy your preferred Altcoins.

Step 4: Asset management. After purchasing, you can store tokens in Gate’s platform wallet for trading, but for large assets not frequently traded, transferring to a personal hardware wallet is safer.

05 Future Outlook: Where Are Altcoins Heading?

The future of Altcoins will be closely tied to the overall evolution of blockchain technology. With developments in Layer 2 scaling solutions, cross-chain interoperability, and modular blockchains, we may see more Altcoin projects focusing on specific verticals, with real users and cash flows emerging.

Meanwhile, the gradual clarification of regulatory frameworks may eliminate some non-compliant projects but also provide a clearer growth path for those with solid fundamentals.

For investors, this means shifting from chasing hot trends to conducting in-depth research on project technical feasibility, team backgrounds, tokenomics, and real-world implementation.

Future Outlook

The volatility of the crypto market has never ceased. As of the morning of December 24, 2025, Gate’s market data shows the Fear & Greed Index remains at 24, in the “Fear” zone.

This reminds us that whether Bitcoin or Altcoins, the crypto market remains uncertain. But it is precisely in this uncertainty that Altcoins, with their incredible diversity and innovation, continue to inject vitality into the industry.

Understanding Altcoin is not just about grasping a term, but about understanding an ongoing decentralized technological and social experiment.