The Problem With Crypto’s Overwhelming Menu
Imagine walking into an ice cream shop expecting chocolate and vanilla, but finding 20,000 flavors. Some are delicious innovations. Some are vanilla with a different name. Some might actually poison you.
That’s the altcoin world. For every Bitcoin and Ethereum, there are thousands of “alternative coins” promising to be faster, cheaper, better, or just different. How do you tell genius from garbage?
Here’s the truth most people won’t tell you: 95% of altcoins will go to zero. But the 5% that survive might change the world. The trick is knowing how to spot the difference.
The Restaurant Menu Analogy
Think of cryptocurrencies like a massive restaurant menu:
Bitcoin: The steakhouse classic. Everyone knows it, always solid.
Ethereum: The chef’s special platform. Other dishes built on top.
Stablecoins: The bread and water. Boring but essential.
Altcoins: Everything else on the menu. From gourmet innovations to leftover experiments.
Some altcoin “dishes” are:
- Genuine innovations (molecular gastronomy)
- Slight improvements (steak with different seasoning)
- Copies with marketing (store-brand cereal)
- Complete scams (food poisoning waiting to happen)
Let’s learn to read this menu.
The Main Categories of Altcoins
Platform Coins: The Ethereum Competitors
Purpose: Run smart contracts and applications
Examples:
- Solana (SOL) – “Ethereum but faster”
- Cardano (ADA) – “Ethereum but more academic”
- Polkadot (DOT) – “Connect all blockchains”
- Avalanche (AVAX) – “Ethereum but more scalable”
The Analogy: Like different operating systems (iOS vs Android vs Windows)
Real Use: Each attracts different developers and applications
Utility Tokens: The Tool Coins
Purpose: Specific functions within applications
Examples:
- Chainlink (LINK) – Connects blockchains to real-world data
- Filecoin (FIL) – Decentralized storage
- The Graph (GRT) – Indexes blockchain data
- Basic Attention Token (BAT) – Rewards for viewing ads
The Analogy: Like tokens at an arcade – each game needs specific tokens
Real Use: Powers specific services you might actually use
Meme Coins: The Internet Jokes
Purpose: Started as jokes, some gained real communities
Examples:
- Dogecoin (DOGE) – The original meme
- Shiba Inu (SHIB) – The “Dogecoin killer”
- Thousands of others
The Analogy: Like viral TikTok dances – fun but usually temporary
Real Use: Mostly speculation and community building
Privacy Coins: The Digital Cash
Purpose: Anonymous transactions
Examples:
- Monero (XMR) – Complete privacy
- Zcash (ZEC) – Optional privacy
- Dash (DASH) – Fast private payments
The Analogy: Like cash vs credit cards – sometimes you want privacy
Real Use: Privacy-conscious users, controversial but legitimate needs
Exchange Tokens: The Casino Chips
Purpose: Benefits on specific exchanges
Examples:
- Binance Coin (BNB) – Discounts on Binance
- Cronos (CRO) – Crypto.com benefits
- KuCoin Token (KCS) – KuCoin rewards
The Analogy: Like airline miles – useful if you use that service
Real Use: Traders save fees, holders get perks
How to Evaluate Any Altcoin
The Five-Question Test
1. What Problem Does It Solve?
- Good: “Ethereum is too expensive for small transactions”
- Bad: “We’re like Bitcoin but with a dog logo”
2. Who’s Behind It?
- Good: Experienced team with track records
- Bad: Anonymous team, excessive marketing
3. Is Anyone Using It?
- Good: Real applications, growing users
- Bad: Only traders, no actual utility
4. What Makes It Special?
- Good: Unique technology or approach
- Bad: “We’re faster” (everyone claims this)
5. Can It Survive a Bear Market?
- Good: Strong community, real revenue
- Bad: Depends entirely on hype
Red Flags: Scam Detection 101
Guaranteed Returns: “Earn 1000% APY!” = Run away
Celebrity Endorsements: Paid promotions, not investment advice
“Next Bitcoin” Claims: Nothing is the next Bitcoin
Pressure to Buy Now: “Limited time offer” = Scam tactic
Unrealistic Promises: “Will replace all banks by December” = Delusion
Copy-Paste Websites: Low effort = Low legitimacy
Green Flags: Signs of Legitimacy
Open Source Code: Anyone can verify what it does
Active Development: Regular updates and improvements
Real Partnerships: Actual companies using it
Community Governance: Token holders have real say
Transparent Team: Real names, real experience
Working Product: Not just promises, actual functionality
The Altcoin Success Stories
Chainlink: Started 2017, now essential Web3 infrastructure. Connects smart contracts to real-world data. Used by hundreds of projects.
Polygon: Solved Ethereum’s speed problem. Processes millions of transactions daily. Major brands building on it.
Uniswap: Created decentralized trading. No company, just code. Processes billions in volume.
These succeeded because they solved real problems, not because they had good marketing.
The Altcoin Graveyard
Remember these “sure things”?
- BitConnect (2018): Ponzi scheme, went to zero
- Iron Finance (2021): Algorithmic stablecoin, collapsed
- Luna (2022): Was top 10, lost 99.9% in days
- Thousands of others you’ve never heard of
The Lesson: Even “blue chip” altcoins can fail. Diversify and never invest more than you can lose.
Your Altcoin Strategy
For Beginners: The 80/20 Rule
- 80%: Bitcoin/Ethereum/Stablecoins
- 20%: Maybe 2-3 researched altcoins
For Explorers: The Research Method
- Find problem you understand
- Research solutions
- Test the product yourself
- Invest only if convinced
For Everyone: The Survival Rules
- No FOMO buying
- No investing based on Reddit tips
- No more than you can afford to lose
- No believing in guarantees
The Future of Altcoins
Most Will Die: Like dot-com bubble, few survivors
Innovation Continues: Real problems need solutions
Categories Will Merge: Multi-purpose chains emerging
Regulation Coming: Securities laws will apply
Quality Will Win: Eventually, utility beats hype
Your Altcoin Action Plan
- Master the Basics First: Understand Bitcoin and Ethereum before exploring
- Research One Category: Pick area that interests you (gaming? privacy? DeFi?)
- Use Before Investing: Try the actual product if possible
- Start Tiny: $50 experiments teach more than $5000 gambles
- Track and Learn: Write down why you bought, review in 6 months
Remember: Altcoins are venture capital investing for regular people. Most ventures fail, but winners win big. The key is research, patience, and never betting the farm.
In the gold rush, some found gold. But many more made money selling shovels. Sometimes the boring investments (Bitcoin, Ethereum, stablecoins) beat the exciting altcoin lottery tickets.
Next Step: Confused by those price charts everyone stares at? Read “Reading Crypto Prices: What Those Charts Actually Mean” to decode the matrix.