Recently, I’ve been pondering a question: why do we always call cryptocurrencies other than Bitcoin "altcoins"? Actually, this term is a bit outdated now.

In the early days, it was indeed like that; most projects were just directly copying Bitcoin’s code and changing some parameters before launching, which is why the term "altcoin" was born. But the situation now is completely different—various public chains are showcasing their unique features, with huge differences in functionality. Using the term "altcoin" now seems a bit disrespectful to innovation. Nowadays, more people prefer to call them "mainstream coins" or describe them with specific categories.

Speaking of classifications of altcoins, I think it’s necessary to clarify the thinking process. Stablecoins are the easiest to understand; USDT, USDC, and similar tokens are pegged to the US dollar, making trading and settlement very convenient. Then there are meme coins, which are purely community-driven products, with no real practical application but very strong cohesion. Next are governance tokens and utility tokens—the former allows participation in protocol decision-making, while the latter is essential for maintaining blockchain operation.

Regarding specific projects, USDC is backed by dollar reserves and can be used on major exchanges. Dogecoin has been around since 2013, relying on low price and unlimited supply; it started as a joke project. Uniswap’s UNI token is one of the purest governance tokens I’ve seen; holding it allows voting on the exchange’s development. ETH, of course, needs no explanation—it’s the infrastructure of the Ethereum ecosystem. Aave’s governance token is a bit more complex; it not only allows voting but also staking to share platform revenue, but at the cost of becoming a risk bearer for the protocol.

Interestingly, each bull market cycle tends to follow the same rhythm. Bitcoin and Ethereum rise first, attracting incremental capital, then some of that capital flows into riskier altcoins. I remember the most疯狂 periods in history—2017’s ICO boom, 2020’s DeFi Summer, 2021’s Meme Coin wave—each time stories of people making huge fortunes through altcoins emerged. But the problem is, after these Alt Seasons end, they often come with sharp corrections. Because of their small market caps and high volatility, altcoins can fall just as fiercely.

The biggest risks in investing in altcoins are twofold. First is volatility—small-cap coins can double or halve in a day, and those holding through bear markets often suffer heavy losses. Second is scams, which I want to emphasize most. Now anyone can issue tokens on DEXs, and scam and rug pull incidents are everywhere. The most memorable was the Squid Game token—its price plummeted from $3,000 to just $0.0033, with the team pretending to be hacked when in fact they ran off with the funds. Many projects initially look promising, but after you invest, you find the administrators gradually disappear, and hype quickly fades—then you realize you’ve been duped.

But data shows that altcoins are actually becoming more important in the overall market. In 2014, altcoins accounted for 6% of the total market cap; by 2022, that figure had risen to 58%. This indicates that market demand for altcoins is genuinely growing. Bitcoin’s original purpose was peer-to-peer payments, but now we need more diverse functions—stablecoins make payments more convenient, governance tokens allow ordinary people to participate in protocol governance, and meme coins, despite lacking practical use, foster strong community spirit. The emergence of these innovative applications enables us to experience richer decentralized financial services.

So, I believe that altcoins themselves are neither good nor bad; it depends on how you treat them. Since investing in such high-risk assets requires proper research, you need to understand the project background, team strength, and open-source code status. Allocate your assets according to your risk tolerance, and don’t let FOMO cloud your judgment. Opportunities in altcoins definitely exist, but the traps are equally deep.