Altcoin refers to any cryptocurrency other than Bitcoin. In 2017, altcoins primarily included Bitcoin competitors such as Litecoin and Dogecoin and pump-and-dump schemes with fancy modern websites.
Now, with the explosion of decentralized finance (DeFi) and the mainstream acceptance of smart contracts, the best altcoins belong to the best projects and companies in the blockchain space.
Blockchain companies issue their own cryptocurrency tokens and make those tokens a requirement to interact with their platforms. If a platform adds value and people want to use it, they will need to purchase their respective token, driving up the price of the asset.
Take a look at our top altcoin picks for 2021. They include a few of the most promising ideas in the blockchain space today.
The Best Altcoins Right Now
The modern market for altcoins continues to expand. The rise of smart contracts and new DeFi products have continued to weaken Bitcoin’s cryptocurrency market cap dominance, which currently sits around 60% compared to its 2017 highs above 85%.
Check out a list of the most promising altcoins and DeFi projects in the crypto space.
Ethereum, a smart contract platform for creating decentralized apps (DApps), was created by Vitalik Buterin in 2013 and comes with its own programming language, Solidity. To run your Solidity smart contracts on Ethereum’s blockchain, you pay a network gas fee in Ethereum’s token, Ether.
Ethereum laid the foundation for what is now known as decentralized finance (DeFi). Ethereum’s early success has led to a large portion of the DeFi space relying on Ethereum’s blockchain.
As Ethereum converts to version 2.0 over the coming year, fees will decrease dramatically and a whole host of new DApps will get their chance to shine.
The ticket to ride on the Ethereum blockchain is the Ether token (ETH), which is becoming more useful each day.
Tokens currently represent the vast majority of smart contract applications. Chainlink aims to bring the power of smart contracts to the real world.
Chainlink brings outside data into smart contracts. Ethereum Smart contracts can now act on other asset prices, global occurrences and make calls to other APIs. Chainlink makes smart contracts really smart.
It also incorporates real-world data. For example, it allows farmers to hedge against a bad season. The smart contracts filtered through Chainlink pay out insurance claims if values in the contract like share price, temperature or rainfall do not meet a certain standard. Instant payments deploy as soon as the program receives the appropriate weather data. Chainlink’s potential seems limitless and many of the top DeFi apps pay huge amounts for the LINK token to use their platform.
Uniswap is an Ethereum-based DApp for exchanging Ethereum tokens through liquidity pools. Uniswap provides 2 core products: providing and using liquidity.
Uniswap offers users the ability to exchange Ethereum-based cryptocurrencies instantly by tapping into its smart contract liquidity pools. These liquidity pools are filled by other users, who earn the exchange fees for providing liquidity.
Uniswap fees must be paid with the UNI token, making it one of Benzinga Crypto’s top picks for this market cycle.
Stellar Lumens (XLM)
Stellar, a decentralized platform for uniting the world’s various banking systems, uses different, disconnected payment methods (ACH, SEPA, SPEI, etc). Stellar’s network connects these systems through a decentralized ledger, with on-off ramps for every payment method.
Stellar’s closest competitor, Ripple, faces SEC investigation. Stellar has a prime opportunity to seize the moment and take its best shot at becoming the global payment network.
To prevent spam on the Stellar Network, users must pay a transaction fee and meet a margin requirement in Stellar’s token, Lumens (XLM).
Decentralized lending offers higher interest rates than centralized lending with better security and anonymity. Aave, one of the leading lending protocols around today, means borrowers must offer collateral greater than the amount they borrow into the loan smart contract. The smart contract safely holds collateral in escrow throughout the term of the loan, replacing the need for a trusted middleman.
Should the borrower default, the lender gets automatically paid by the smart contract.
Aave offers 10% APY for certain stablecoin loans with no know-your-customer (KYC) required, a product truly unheard of in traditional finance.
The trading platform you choose will determine the altcoins that you have access to. There is no centralized entity or standard separating viable altcoins from complete trash — each exchange is free to make its own decisions of what to list. Make sure that you choose a platform that you trust with altcoins that you want to invest in.
Prime Time for the Alternate
Bitcoin can certainly be your introduction to the crypto industry in the same way that buying a share of Apple is an easy introduction to the securities market. However, there is so much more under the surface. This could be the year that many altcoins hit prime time. As people begin to understand altcoins through their real-world use cases, you can bet that their implementation will rise with the price of their currencies and tokens.