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Top 6 alternative currencies to invest in beyond Bitcoin

Peter Terlato avatar
Peter Terlato
- 6 min read
Top 6 alternative currencies to invest in beyond Bitcoin

We’ve all heard of Bitcoin - the world’s iconic cryptocurrency - and how it’s endured booms, busts and bubbles. However, Bitcoin isn’t the only crypto game in town. There are other options to consider.

Altcoins are an alternative crypto investment to Bitcoin. There are over 18,000 coins currently in circulation, according to CoinMarketCap. New digital currencies are constantly being introduced, each attempting to bring something unique to the table.

Although unintentional, the value of altcoins is often inextricably linked to the market performance of Bitcoin. Compliance and regulatory issues discourage cryptocurrency exchanges from allowing fiat to crypto trading. Due to its distinction as the original and largest cryptocurrency by market capitalisation, Bitcoin is the leading market pair traders use when investing in altcoins.

While investing your money in a term deposit could earn you interest at a fixed rate over time, investing some of your wealth in higher-risk assets, like cryptocurrencies, could potentially see you earn higher returns over a shorter term - though there's also an enhanced risk of incurring losses.

Here are six alternatives to Bitcoin that might be worth considering if you’re interested in investing in cryptocurrency.

Ethereum (ETH)

In the crypto world, Ethereum is often considered the number two altcoin behind Bitcoin. It shares many of the same features and benefits, but one of its main points of difference is how it uses its blockchain (the ‘blocks’ of financial data that are cryptographically secured using unique codes that tie each block to the next, creating a chain).

While Bitcoin predominantly uses its blockchain for cryptocurrency purposes, Ethereum’s blockchain has been designed from the ground up to operate as a decentralised network for a range of applications. One prominent example is smart contracts - programs built into the blockchain that trigger certain actions when predefined conditions are met. These could potentially eliminate the need for third parties to administer contracts, such as conveyancers in the real estate and mortgage industries.

Ethereum is planning to merge from a proof-of-work (PoW) to proof-of-stake (PoS) blockchain validation method in September this year. The announcement led to a rise in the coin's market valuation.

Binance Coin (BNB)

Binance is the largest cryptocurrency platform in the world and is powered by the Binance Coin. As such, the value of the coin correlates with the number of transactions on the exchange. Given the recent low volume of trades, performance has slipped over the past year. However, the value of BNB has almost doubled since June 2022 and may be an indicator that the coin, and platform, are rebounding.

Binance Coin was established in 2017 as a utility token for discounted trading fees. Since then its uses have expanded to include payments for transaction fees on the Binance Chain and numerous real-world transactions.

At the time of writing, Binance is one of only five cryptocurrencies with a market cap of more than $70 billion.

Ripple (XRP) and Litecoin (LTC)

Many people are interested in altcoins as investment assets, but there are use cases for them as currencies. That said, it’s much harder to pay for petrol at your local service station with Bitcoin than it is with your credit card

Ripple, created in 2012, is a cryptocurrency that has been designed to be more efficient and less expensive to exchange, so it can be used to conduct a variety of transactions - mostly large trades between banks, businesses and other financial institutions. The coin offers real-time settlement, liquidity management, and access to working capital.

Unlike most other cryptocurrencies, XRP transactions are not verified through PoW or PoS. Rather, transfers are processed by network participants known as validators. Transactions incur a small fee, which constitutes a fraction of one XRP token.

Litecoin, launched in 2011, was one of the first altcoins on the market. It follows similar principles to Ripple but is intended to conduct even faster and simpler peer-to-peer currency exchanges using an algorithm known as Scrypt.

The altcoin hit an all-time high a little over a year ago in May 2021, when it was valued at around $566.

It's also important to note that at the time of writing, Ripple is enduring legal issues with the United States Securities and Exchange Commission (SEC) over whether or not the cryptocurrency can be classed as a security. It remains to be seen how this could affect Ripple, and your investment plans, in the future.

"If Ripple loses the case, does anything change? It’s basically just status quo. Ripple is still growing very, very quickly,” Ripple chief executive Brad Garlinghouse said in a July interview at Axios' Collision 2022.

Dogecoin (DOGE)

This cryptocurrency, created by software engineers Billy Markus and Jackson Palmer, started its journey in 2013 as a meme coin based on a whimsical Shiba Inu dog logo.

Its blockchain design is derived from Litecoin, meaning there is an unlimited supply of coins. This makes it an enticing option for first-time investors hoping to get their foot in the door.

Billionaire Elon Musk has, in recent months, thrown his support behind Dogecoin. Its value jumped in January 2022 when Musk announced that certain Tesla products could be purchased using the once-satirical cryptocurrency.

At the time of writing, Dogecoin’s value has been fluctuating higher since the beginning of August 2022.

Tether (USDT)

We’ve all heard stories of decentralised, unregulated cryptocurrencies enjoying meteoric booms and cataclysmic busts. However, sometimes all it takes is a tweet from the likes of a wealthy Silicon Valley executive to send a coin’s value rocketing skyward or plunging off a cliff.

While this volatility makes cryptocurrency attractive to some investors chasing high rewards from high risks, this instability could put off investors who are less keen on potentially losing everything.

Launched in 2017, Tether is one of approximately 200 stablecoins. A stablecoin's value is "tethered" to fiat currency. In the case of Tether, it's pegged to the value of the US dollar. While this means it’s less likely to see sudden spikes in value like other altcoins, it may be a more attractive prospect for people looking to play a longer game. Its primary purpose is to be a reliable digital medium for cryptocurrency trading.

Avalanche (AVAX)

Avalanche is an open, programmable smart contracts platform for decentralised applications. The altcoin AVAX has been producing high performance gains recently, outstripping most of the leading cryptocurrencies.

However, it hasn't come close to matching its peak value of around $210 in November 2021.

AVAX's latest bullish price action appears to be a result of its successful Avalanche-based non-fungible tokens (NFT) game projects. NFTs are seemingly popular right now. Cryptoart is another asset whose value is tied to NFTs.

Please note – every investment is a risk. Past performance is not a reliable indicator of future performance. Before investing in cryptocurrencies, equities, or any other assets, consider seeking financial advice to determine the best options for your financial situation and goals.

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This information does not reflect any ranking, rating, recommendation or endorsement by RateCity of cryptocurrency or any specific provider. RateCity is providing factual information supplied by providers. Not all providers or products are shown. RateCity will earn a fee from the providers displayed in the table (if a link to the provider's website is shown), and the fee levels determine placement in the table. Cryptocurrencies are speculative, complex and can involve significant risks. RateCity is not providing a recommendation for your individual circumstances.

Product database updated 14 Jul, 2024

This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.