What is an altcoin and how does it work?

Altcoin is short for "alternative coin" and — as the name suggests — is an alternative cryptocurrency to Bitcoin. Altcoins have become a major segment of the cryptocurrency markets, with projects like Ethereum (ETH), Stellar Lumens (XLM), and Uniswap (UNI) distinguishing themselves as platforms with innovative capabilities.

What is an “alternative coin”?

Every cryptocurrency that’s not the original Bitcoin is considered an “alternative” to it, hence an “alternative coin” or altcoin. From this vantage point, an altcoin is every cryptocurrency that’s not Bitcoin. But there’s a caveat to this definition: Not everyone agrees with it.

What was the first altcoin?

The first altcoin was Namecoin, which is based on Bitcoin's code and was released in April 2011. Namecoin is integral to the history of altcoins in that it showed that there's enough room in the crypto markets for more than one kind of coin.

Are all tokens altcoins?

Some tokens are also considered altcoins, even though there’s a technical difference. One of the largest crypto exchanges considers all tokens to be altcoins, yet refers to all crypto assets as (technically) tokens. Is your head spinning? That’s OK; even crypto pros don’t always get it right.