The term ‘altcoin’ refers to all cryptocurrencies with the exception of Bitcoin. Numbering in the thousands, crypto enthusiasts are always on the lookout for the next altcoin to take off. Read more here.
Excluding the top 25, there are also thousands of other projects related to the world of blockchain: they are called altcoins. While most will probably never succeed, as is the case in the real world of small businesses, some cryptocurrencies can turn out to be a pleasant surprise for the future and provide enormous gains. However, you have to be pragmatic and not invest blind in the first project that seems half decent and that you have not even bothered to research in detail. Remember: DYOR.
It is possible to organise these altcoins into several categories according to their industry. The year 2020, for example, shone the spotlight on DeFi (Decentralised Finance), which by the end of the year had exploded and become extremely popular among crypto investors. A DeFi project does without the classic third party intermediaries such as banks, brokers or exchanges and instead uses smart contracts, the majority of which operate on the Ethereum blockchain. Given the enthusiasm generated by this new crypto industry, it’s a safe bet that we will still hear about it in the years to come.
Nevertheless, DeFi is not the only existing crypto industry, there are many more. Let’s take a look at the main ones:
- Currency. These are cryptocurrencies, i.e. bitcoin (BTC), that are mainly used as a means of payment like the pound or the dollar. Some of these digital currencies can also be anonymous, for example Monero (XMR)
- Blockchain infrastructure. These are projects with their own blockchains and ecosystems based on them. For example, you can interact with a dApp by using its blockchain or smart contracts (or equivalent)
- Payments. These are protocols that help improve the speed of real-life financial transactions while reducing their costs
- Stablecoin. We are talking here about tokens which have a value pegged to a real asset. This means that the token’s value follows the price of its related asset. For example, one token can be worth £1 or 1 oz of gold
- Blockchain services. Every cryptocurrency wants to improve the blockchain ecosystem as a whole. For example, some projects want blockchains to communicate with each other, while others add an additional layer to speed up transaction validation times
- Financial services. The aim of cryptocurrency as a whole is to offer financial services to individuals without having to go through the traditional banking system
- Cloud storage. It is possible to store data on the computers of people who have unused hard drive space in return for a fee. Your files are placed on different PCs, which prevents anyone from gaining access to your personal data if they do not have your private key
- Data service. You have the option of using these projects to obtain or sell data
- Gaming. These cryptocurrencies were designed for the video game industry. For example, you can use these assets to make in-game purchases
- IoT. Stands for the ‘Internet of Things’. Once we live in a more technologically advanced world, these cryptocurrencies will automatically perform tasks without us having to lift a finger, such as ordering eggs because there are none left in the fridge
- Advertising. These are digital assets specially designed to enable advertisers and consumers to earn crypto when they see adverts on the internet
- Banking. This unlocks traditional banking services directly in the world of blockchain. You can lend money to an individual or take out a loan using cryptocurrencies
- Cloud computing. You can rent your unused computing power or buy it from people who have some to spare
- Trading and investment. These are projects that allow you to invest or trade using tools specially created for trading, but based on blockchain technology
- Media. Unlike on social networks, where your data belongs to the sites you signed up to, meaning they can do whatever they want with it, you keep full control of your personal information
- Artificial intelligence. These are blockchain-based projects to develop artificial intelligence
The possible crypto industries are numerous and unfortunately it is impossible to list them all. Additionally, some projects may fall under more than one industry, which further complicates the matter. If you would like to know more about the categorisation and classification of tokens, we invite you to consult the excellent book thecrypto.mba, which does well to describe the subject in full detail.
However, out of all these projects, we do have some favourites. Of course, this ONLY reflects our personal opinion and does not constitute investment advice in any form; nonetheless, we are convinced that some of them may become leaders in their respective fields in the near future.
Here are some examples of the crypto projects that we think have great promise for the future:
- Elrond (EGLD). Using a sharding system, the project claims that its blockchain can process up to 15,000 transactions per second at a cost of $0.001
- Avalanche (AVAX). A solution that makes it easy to launch DeFi applications. The Avalanche platform offers users the possibility of obtaining financial assets and has a dedicated trading area, as well as other services
- Algorand (ALGO). A highly scalable blockchain whose blocks are processed in seconds. This makes it possible to receive transactions almost instantaneously
- NapoleonX (NPX). This management company is regulated by the French financial authority and aims to allow institutional investors to enter the crypto market. They offer various investment vehicles whose performance is certified by the blockchain
- iExec (RLC). The goal of the company is to develop a marketplace where individuals can sell or buy cloud computing power
There are ultimately a multitude of different projects out there that are attempting to solve even the most complicated of problems. However, you should be careful before you invest in any of them, because it is highly likely that many will never succeed. Investing is not a game – neither is it for the faint-hearted – and it is important to always do your own research before planning to put any money into a project. It can’t be stated enough: DYOR, always.