Bitcoin secures a whole 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.
Cryptocurrency trading is not regulated in the UK. You would not receive any compensation in the event of a loss. Your capital is at risk, which means you may lose some or all of your investment.
1. Ether (ETH)
Ether is the native token of Ethereum and the second largest cryptocurrency in the world. Ethereum is a global software platform that runs decentralized applications, smart contracts and financial transactions, as well as mining and storing Non-Intangible Tokens (NFTs).
Launched in 2015, ETH has amassed a market cap of over £164.5 billion as of February 2023. The cryptocurrency peaked at £3,815 in August 2021, and each token is now worth £1,344.
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 similar to bitcoin, meaning that miners are rewarded for verifying transactions using raw processing power, rather than staking. However, Litecoin is faster than bitcoin.
As of 3 February 2023, a single Litecoin was worth an all-time high of £80.43 in May 2021, with each coin worth £326.41.
3 Dogecoin (DOGE)
Dogecoin is the most famous memecoin in the world ie a crypto asset 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 Elon Musk’s tweet about buying Tesla merchandise with Dogecoin.
Since January 2023, the value of Dogecoin has fallen to around 7p.
4. Bitcoin Cash (BCH)
Bitcoin Cash was created as a fork of the original bitcoin in 2017 because a group of users wanted more transactions by blocks in the blockchain.
Functionally, BCH is otherwise the same as bitcoin. It uses the same proof of work agreement mechanism and limits its supply to a total of 21 million.
As of 3 February 2023, one Bitcoin Cash token is worth £112.
5. Tether (USDT)
Tether is a stablecoin – a crypto asset tied to a fiat currency, in this case, the US dollar. For each Tether coin issued, its creators keep $1 as a reserve, and one Tether coin is destroyed for every dollar minted.
In theory, Tether always maintains a value of around $1 (82p Sterling). This stability makes Tether a good choice for transferring value between exchanges, since Tether holdings are more likely to maintain a stable value than other more volatile coins.
However, coins are not always stable. In early May 2022, Terra USD crashed – dropping from $1 to just $0.30 a coin. Investors broke the millions of dollars they put into other stablecoins, including Tether. As a result, Tether’s market capitalization fell from £65.6 million to £57.7 million.