Bitcoin is the original cryptocurrency, but “altcoins” — cryptocurrencies other than bitcoin — probably now number more than 20,000. While this number appears impressive, only a fraction of these have significant market capitalisation or meaningful utility.
Born from blockchain technology, these digital assets have proliferated to address various technological challenges, industry-specific needs and investment opportunities.
The performance of a few altcoins in rand has been particularly impressive this year. The top five altcoins on the Luno platform make even bitcoin’s 132% surge look pedestrian — dogecoin (DOGE) is up 327%, Ripple (XRP) 285%, Hedera (HBAR) 274%, Stellar (XLM) 243% and solana (SOL) 210%.
Altcoins can fall into various categories.
Stablecoins are designed to minimise volatility by pegging their value to stable assets such as the dollar. They provide a more predictable crypto experience. Tether (USDT), for instance, is pegged to the greenback. Traders and investors use it as a bridge between traditional finance and crypto exchanges and as a hedge against price swings of crypto and volatile fiat currencies. It is the largest stablecoin by market cap.
Utility tokens provide access to specific blockchain-based services or platforms. Think of them as digital access passes to specialised ecosystems. For example, XRP is a digital asset built for global payments, it facilitates cross-border payments by acting as a bridge between different currencies. An XRP transaction confirmation takes three to five seconds to complete so banks and payment companies can facilitate faster and more efficient cross-border payments.
Governance tokens allow holders to participate in a crypto project’s governance. They can vote on proposals, make decisions and influence the project’s future. Governance tokens are crucial components of decentralised autonomous organisations (DAOs) and facilitate democratic processes. Maker (MKR) allows investors to vote on the operation of the MakerDAO platform.
Despite starting as a joke, dogecoin now has several payment integrations and is increasingly used as money
Meme coins, often dismissed as ridiculous, have in some cases demonstrated surprising market resilience and stellar growth. Dogecoin is the original meme coin, whose creators aimed to build a fun and friendly internet currency based on the “doge” meme. It has gained a devoted following that includes such influential figures as Elon Musk, who have pushed it into the public consciousness. Despite starting as a joke, dogecoin now has several payment integrations and is increasingly used as money.
Should you be investigating altcoins?
By the end of 2023, 10 years after Luno’s launch, just six assets were listed. Initially, we were intentionally selective, offering only a handful of carefully curated cryptocurrencies. There are now 33 available on the platform, with more to come in 2025. As the industry matures, reliable data is more readily available, allowing us to assess and add new digital assets faster.
The potential and speculation are exciting, but the altcoin market may be even more highly volatile than bitcoin. For this reason, thorough research, risk management and a diversified approach are essential.
We recommend customers start small, invest only what they are prepared to lose and grow their crypto knowledge.
De Wit is country manager for Luno South Africa
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