10 of the best altcoins to consider in 2024

Diversity keeps life interesting. It can also round out an investment portfolio.

Since Bitcoin's (BTC) introduction in 2009, thousands of cryptocurrencies have emerged. From meme coins to utility tokens, the options available to traders continue to expand as crypto investing becomes mainstream.

Nevertheless, new investors may find choosing between various crypto alternatives challenging. This guide explores the differences between the top-performing crypto projects and highlights the best altcoins of 2024.

What are altcoins?

The term "altcoin" refers tocryptocurrencies outside of Bitcoin (BTC). These crypto projects are considered investment alternatives to BTC.

Altcoins often differentiate themselves from BTC through their functionality. They may use different consensus mechanisms to secure their networks or include new capabilities, such as smart contracts, to help automate blockchain transactions.

The Ethereum network developed the first altcoin, Ether (ETH). Today, ETH is the second-largest cryptocurrency by market cap. Due to its increasing popularity, some traders no longer consider ETH an altcoin. For these traders, altcoins include all alternatives to both ETH and BTC.

Varieties of altcoins and their applications

The variety of cryptocurrencies on the market has exploded over the years, with over 10,000 blockchain projects and countless coins and tokens available to traders on centralized cryptocurrency exchanges. 

Many traders diversify their crypto portfolios by purchasing several altcoins to hedge their BTC investments. Altcoins are often further divided based on their intended purposes and use cases. Here are some of the most recognized altcoin categories:

Stablecoins

Stablecoins, like Tether (USDT), peg the value of their tokens to a fiat currency, such as the U.S. dollar. By tying the value of a stablecoin to another asset, the price of the tokens remains relatively constant. Traders often purchase stablecoins with their gains from other cryptocurrencies to avoid market downturns.

Meme coins

The first meme coin, Dogecoin (DOGE), was introduced in 2013 to poke fun at the still-novel cryptocurrency market. Since then, many meme coins have been developed. Some, like DOGE and Shiba Inu (SHIB), have resulted in astronomical gains for early investors.

Utility tokens

Some companies develop altcoins with specific purposes, such as tipping online or triggering discounts on a crypto exchange. Cryptocurrencies with particular use cases are considered utility tokens. The Basic Attention Token (BAT) is an example of a utility token made for the Brave internet browser; users earn BAT by watching ads and can use their tokens to tip verified content creators.

Play-to-earn (P2E) tokens

Cryptocurrencies are often used in video games to purchase items or level up a character or avatar. Players earn P2E tokens by completing specific quests or ranking high on a video game's scoreboard.

Governance tokens

Many crypto projects govern themselves with their associated cryptocurrency. Holders of governance tokens can vote on the direction a crypto project might take, with each token representing a percentage of the total vote.

Security tokens

Security tokens represent the holder's ownership of another asset, such as real estate or equity in a traditional company. They may also indicate a right to transfer value from that asset to a crypto token. These tokens are subject to securities regulations, which can vary based on the holder's region. Traders should research the rules for their specific location before investing.

Popular altcoins to buy in 2024

Investing in altcoins is easy. Most centralized cryptocurrency exchanges, like Coinbase, have hundreds available to verified traders. Ultimately, the decision to invest in an altcoin is personal and will depend on each trader's investment goals and risk tolerance. 

Here are the details on the top 10 altcoins:

Tether (USDT)

Tether is a stablecoin pegged to the U.S. dollar. Traders consider USDT a good investment during volatile market conditions. Most crypto exchanges offer trading pairs with USDT and other top cryptocurrencies, such as BTC and ETH, making it easy for traders to exit their crypto positions during market downturns.

USD Coin (USDC)

Another popular stablecoin, USDC, also pegs its value to the dollar. Circle, the company behind USDC, regularly audits its reserves to ensure each token remains redeemable for one U.S. dollar.

XRP (XRP)

XRP is an alternative to traditional payment systems developed by Ripple Labs. Banks and large institutions sometimes use it to settle cross-border payments.

Solana (SOL)

Solana specializes in smart contracts, which help automate transactions on a blockchain according to agreed-upon terms. Developers can build their own crypto projects on the Solana blockchain, leveraging its fast transaction speeds and advanced network throughput. The Solana network uses a hybrid consensus mechanism combining proof-of-stake with proof-of-history.

TRON (TRX)

Developed by Justin Sun and the Tron Foundation in 2017, TRX is the altcoin associated with the TRON decentralized blockchain operating system. TRON aims to help digital content creators maintain full ownership rights of their work.

Avalanche (AVAX)

Avalanche is a smart contract platform similar to Solana and Ethereum. It allows developers to create decentralized applications (dApps) and custom blockchain-based networks on its layer-one chain. AVAX is the associated cryptocurrency held by investors.

Chainlink (LINK)

Chainlink is a blockchain abstraction layer that uses a decentralized oracle network to provide data needed by smart contract networks. LINK is the token associated with the Chainlink project.

Fantom (FTM)

The Fantom network uses a unique consensus mechanism in its decentralized smart contract platform. By employing a directed acyclic graph (DAG), Fantom aims to reduce transaction speeds on its network. FTM is the token used to settle transactions on the Fantom network.

Polygon (MATIC)

Polygon is a second-layer network built on top of the Ethereum blockchain. It makes transactions on the Ethereum network more cost-effective and faster. The token MATIC is used for transactions on the Polygon network and for project governance.

Cardano (ADA)

Cardano is a smart contract platform that uses a proof-of-stake consensus mechanism to facilitate the development of dApps. Its modular technology enhances communication between participants, increasing the speed of consensus on the network.

Investing in altcoins: What to know

Not all cryptocurrencies are created equal. Researching the project behind an altcoin is crucial for maintaining a healthy investment portfolio. Here are a few key considerations for traders to ensure they’ve done their due diligence before investing in altcoins:

• Read the project white paper: Nearly every project provides a document that outlines the company's goals and purposes. The value propositions detailed in a white paper can help investors decide if an altcoin aligns with their investment strategy.
• Price history: The crypto market is known for its volatility. Researching an altcoin’s historical performance can give investors insight into potential future price fluctuations.
• Liquidity: Higher liquidity means traders can buy or sell an asset quickly. When more traders invest in an altcoin, its liquidity increases. Conversely, low liquidity can make it difficult to find a buyer when it’s time to sell. 
• Volume: An altcoin's volume measures the value of its transactions. Higher volume often correlates with increased price volatility due to more frequent trading. Tracking an altcoin's volume can help determine its popularity and market activity over time.

Diversify and thrive

Diversification is a great way to protect your investments from market volatility. However, the more altcoins in your portfolio, the harder it becomes to track all your transactions during tax season.

CoinTracker makes crypto taxes easy. By integrating with all your wallets, CoinTracker records every transaction and generates a tax report in minutes. It's also an excellent tool for monitoring your altcoin performance.

With CoinTracker's robust security, you can rest assured your data is safe and your taxes are done right every time. Start for free and discover why over 2 million traders trust this innovative crypto tax software.

Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.