Bitcoin spawned an entire market of alternative cryptocurrencies. Today there are more than 5,000 of these ‘altcoins’.
Altcoins can be a good way to diversify your crypto holdings, especially given the additional functionalities they offer. Here are some of the most well known, and how they are performing.
Cryptocurrency trading is not regulated in the UK. You would receive no compensation if something went wrong. Your capital is at risk, which means you may lose some or all of your investment.
1. Ether (ETH)
Ether is Ethereum’s native token and the world’s second-biggest cryptocurrency. Ethereum is a global software platform that runs decentralised applications, smart contracts and financial transactions, as well as minting and storing Non-Fungible Tokens (NFTs).
Launched in 2015, ETH has amassed a market cap of over £176 billion as of July 2023. The crypto’s value peaked at £3,815 in August 2021, and each token is now worth £1,469.
2. Litecoin (LTC)
Launched in 2011, Litecoin was one of bitcoin’s earliest competitors. It was developed by entrepreneur and computer scientist, Charlie Lee.
Litecoin uses a Proof of Work consensus mechanism like bitcoin, which means miners are rewarded for verifying transactions using raw processing power, rather than staking. Litecoin is faster than bitcoin, however.
As of 20 July, one Litecoin was worth £73.21. The crypto reached its all-time high in May 2021, with each coin valued at £326.41.
3. Dogecoin (DOGE)
Dogecoin is the world’s best-known memecoin i.e. a crypto asset that was created as a kind of in-joke.
Dogecoin was created in 2013 using blockchain technology derived from Litecoin, . The coin has an unlimited supply.
Dogecoin saw its value rocket to an all-time high of 58p in 2022, partly in response to an Elon Musk tweet about buying Tesla merchandise with Dogecoin.
As of 20 July, Dogecoin’s value has plummeted to about 0.056p.
4. Bitcoin Cash (BCH)
Bitcoin Cash was created as a fork of the original bitcoin in 2017 because a group of users wanted blocks in the blockchain to contain more transactions.
Functionally, BCH is otherwise the same as bitcoin. It uses the same proof of work consensus mechanism and limits its supply to a total of 21 million.
As of 20 July, 2023, one Bitcoin Cash token is worth £193.82.
5. Tether (USDT)
Tether is a stablecoing - a crypto asset which is tied to fiat currency, in this case, the US dollar. For every Tether coin issued, its creators keep $1 in reserve, and for every dollar cashed out, one Tether coin is destroyed.
In theory, Tether retains a value of around $1 (77p Sterling) at all times. This stability makes Tether a good option for transferring value between exchanges, since Tether holdings are more likely to retain a stable value than other, more volatile, coins.
However, stablecoins are not always stable. In early May 2022, Terra USD crashed — dropping from $1 to just $0.30 a coin. Investors cashed out millions of dollars they had put into other stablecoins, including Tether. Consequently, Tether’s market capitalisation dropped from £65.6 million to £57.7.
Tether’s current market capitalisation, as of July, 2023 is more than £64 billion.
