According to cryptocurrency market capitalization aggregators, there are more than 5,000 cryptocurrencies in existence today and over 20,000 different types of markets. Bitcoin (BTC) remains the oldest and most well-known digital asset, while virtually everything else is typically referred to as an “altcoin.” The term encompasses thousands of prevalent cryptocurrencies that aim to work alongside Bitcoin and each other, or compete for ultimate domination.
The Birth of Altcoins: From Namecoin to the Fork Frenzy
Crypto historians widely recognize Namecoin as the first altcoin. Launched on April 18, 2011, Namecoin aimed to decentralize domain registration. The term “altcoin” was first described by developer Andrew Chow. Between 2011 and 2014, the rate of altcoin launches grew exponentially. Following Namecoin, the community witnessed the birth of Ripple, Litecoin, Peercoin, Feathercoin, Mastercoin, Counterparty, and Unobtainium. Thousands of digital currencies now use the Bitcoin codebase with minor modifications, such as Einsteinium, Litecoin, Dash, Zcash, and Novacoin. Ethereum (ETH) spawned numerous forks including Ubiq, Ethereum Classic, and Wanchain. Bytecoin, with its unique codebase, gave rise to Monero, Boolberry, and Electroneum. Forks can be created by tweaking the original code hosted on GitHub, or by a blockchain diverging into two chains due to different consensus rules.
Market Cap Evolution: End of 2013 vs. February 2019
A historical snapshot from CoinMarketCap in December 2013 shows a drastically different top ten compared to February 2019. In late 2013, Bitcoin’s market cap was about $13 billion, and the top ten included LTC, XRP, PPC, NMC, MEC, FTC, WDC, XPM, FRC, and NVC. By February 2019, the top ten had shifted to BTC, ETH, XRP, BCH, BSV, LTC, EOS, USDT, BNB, and XTZ. The total valuation of all 5,000+ coins stood at approximately $285 billion, with Bitcoin capturing about 63% of the market.
Why So Many Altcoins?
Satoshi Nakamoto’s creation opened a Pandora’s box in tech and finance. Altcoins exist primarily because the permissionless environment allows anyone to create and experiment. Developers believe they can build a cryptocurrency that outperforms Bitcoin, or one that offers specific features—such as enhanced anonymity (e.g., Monero), industry-specific applications (e.g., entertainment tokens), or smart contract capabilities and token issuance (e.g., Ethereum). Forking also enables new chains to emerge. Some forks are created by modifying code on GitHub; others result from a blockchain diverging into two separate chains. Although many cryptocurrencies are now considered “dead,” that hasn’t stopped developers from continuing to innovate in hopes of creating a better Bitcoin or serving niche needs.