altcoins tied to ethereum

In 2021, the total worth of altcoins other than Bitcoin hit over $1 trillion. This marked a big moment for these digital assets, showing their growing use and value. Many of these altcoins work on the Ethereum blockchain. Known as ERC-20 tokens, these are digital assets that tap into Ethereum’s network power for various apps and services.

The word “altcoin” includes all digital currencies outside Bitcoin and sometimes Ethereum. Development teams create these altcoins to enhance or compete with existing cryptocurrencies like Bitcoin. The Ethereum blockchain offers them a ground to add unique functionalities. This helps meet the changing demands of the cryptocurrency world.

Key Takeaways

  • Altcoins tied to Ethereum are digital assets built on the Ethereum blockchain, offering unique features and use cases for decentralized applications (dApps) and services.
  • The term “altcoin” refers to all cryptocurrencies other than Bitcoin, and in some cases, Ethereum.
  • Altcoins are designed to improve upon the perceived limitations of the cryptocurrencies they are forked from or competing with, such as Bitcoin.
  • Ethereum-based tokens, or ERC-20 tokens, leverage the Ethereum blockchain’s smart contract functionality to create a wide range of digital assets.
  • The diverse applications of Ethereum-based altcoins include decentralized finance (DeFi), non-fungible tokens (NFTs), and governance tokens for decentralized autonomous organizations (DAOs).

Understanding Altcoins

The term “altcoin” combines “alternative” and “coin.” It means any cryptocurrency other than Bitcoin and sometimes Ethereum, for some. Developers create altcoins with unique visions or uses. They try to fix what they see as faults in existing cryptocurrencies or compete with them.

Types of Altcoins

Altcoins vary in purpose, with each type serving a distinct function:

  • Payment Tokens: These altcoins act as a way to buy goods and services, like Bitcoin does.
  • Stablecoins: Stablecoins aim to keep a steady value, often by tying their worth to assets like the US dollar. This helps reduce the price swings seen in other cryptocurrencies.
  • Security Tokens: Security tokens represent ownership in an asset, like part of a company, and follow specific rules such as securities laws.
  • Utility Tokens: Utility tokens provide rights to use something, like a service on a decentralized network.
  • Meme Coins: Meme coins are inspired by online jokes or fame. They usually lack practical use but can have value based on speculation.
  • Governance Tokens: Governance tokens offer voting power in a Decentralized Autonomous Organization (DAO). A DAO is a blockchain-run group owned and controlled by those within it.

It’s important to know about altcoins and their roles to navigate the cryptocurrency world. This way, you can make smart choices about buying or using these digital currencies.

types of altcoins

Unlock Your Crypto Potential

Whether you're a beginner or an experienced trader, our insights and tips will help you navigate the ever-evolving crypto landscape with confidence.

Explore the World of Crypto: Begin Your Journey Today!

Altcoins Tied to Ethereum

Altcoins tied to Ethereum are called Ethereum-based or ERC-20 tokens. They are digital assets on the Ethereum blockchain. These tokens use Ethereum’s smart contracts to make different dApps and services.

Ethereum-Based Tokens (ERC-20)

ERC-20 tokens are like a guide for Ethereum-based tokens. They help these tokens work well with the whole Ethereum system. These tokens can do lots of things, like show ownership or give access to dApps on Ethereum.

DeFi Tokens

Decentralized finance (DeFi) tokens are another kind of Ethereum token. They allow for financial services on the blockchain. This includes things like lending, trading, and making interest. DeFi uses Ethereum’s smart contracts to build these services.

NFT Tokens

Non-fungible tokens (NFTs) are unique digital tokens on Ethereum. They can be digital art, collectibles, or other unique items. NFTs use Ethereum’s smart contracts to make one-of-a-kind digital goods. People can buy, sell, and trade them.

DAO Governance Tokens

Governance tokens are special Ethereum tokens. They let owners vote on the future of a DAO. DAOs are community-owned organizations on the blockchain. Members manage them together.

Pros and Cons of Altcoins

Altcoins have their own unique benefits and drawbacks. It’s important for investors and users to understand these. Below, we’ll dive into this topic.


Altcoins offer improved features over Bitcoin, the original cryptocurrency. They bring faster transaction speeds, lower fees, and more privacy. Some even serve very specific functions like DeFi or NFTs. This variety lets people pick the altcoin that meets their needs best.

Unlike Bitcoin, altcoins also show higher survivability in the market. Even though Bitcoin is the major player, many altcoins have grown in popularity over time.


However, altcoins can struggle with lower popularity than Bitcoin. This can mean they’re not as easy to trade and their prices can be unpredictable. Also, the sheer amount of altcoins out there has brought its own share of problems, including scams and failures. This makes people less trusting of cryptocurrencies as a whole.

Advantages Disadvantages
Improved features Lower popularity
Higher survivability Less liquidity
Diverse options Uncertain use cases
Scams and failures

Pros and Cons of Altcoins


In conclusion, altcoins linked to Ethereum bring many functions for decentralized apps and services. These are called ERC-20 tokens. They use Ethereum’s smart contracts to make digital assets. This includes DeFi apps, NFTs, and tokens for DAOs.

As blockchain and crypto grow, these altcoins will be key in a new web. They will give new chances for owning digital and financial items. Even with risks, their innovation shows big promise in the crypto world.

For altcoins to succeed, they must solve real problems in an easy way. As this field grows, it’s vital for everyone to keep learning and getting involved with these new blockchain techs.


What is the purpose of altcoins tied to Ethereum?

Altcoins tied to Ethereum, known as Ethereum-based tokens or ERC-20 tokens, work on the Ethereum blockchain. They use Ethereum’s smart contracts to make dApps and services.

What are the types of altcoins?

Altcoins have different types like DeFi tokens, NFTs, and governance tokens for DAOs. Each type serves a unique function.

What are Ethereum-based tokens (ERC-20)?

Ethereum-based tokens, or ERC-20 tokens, operate on the Ethereum blockchain. They use smart contracts to offer a wide variety of services and dApps.

What are DeFi tokens?

DeFi tokens are used for financial services like lending and trading. They rely on Ethereum’s smart contracts to function. This creates alternatives to traditional banks.

What are NFT tokens?

NFTs represent one-of-a-kind digital items on the Ethereum blockchain. They include things like digital art and collectibles. NFTs use Ethereum’s smart contracts for buying and selling.

What are DAO governance tokens?

Governance tokens give holders a vote in a DAO’s decisions. DAOs are owned and run by members. These tokens are on the Ethereum blockchain.

What are the advantages of altcoins?

Altcoins have benefits like better features, wider use, and more choices for people. They offer options beyond the original cryptocurrency, Bitcoin.

What are the disadvantages of altcoins?

Yet, altcoins face challenges. They might not be as well known or easy to trade. Some undergo scams, may fail, or have unclear purposes.

By Eric

I am Eric, the creator behind Block Brilliance. As a cryptocurrency enthusiast, I have dedicated myself to empowering investors at all levels with comprehensive knowledge in this dynamic field. At Block Brilliance, we believe in the fusion of in-depth research, practical trading strategies, and innovative educational resources. Our platform is designed to cater to aspiring and seasoned investors alike, providing them with the tools necessary to succeed. Join me on this exciting journey as we explore the world of cryptocurrency trading and unlock the potential for financial brilliance together. Welcome to Block Brilliance, where education meets innovation.