Alternatives To Bitcoin
Alternatives to Bitcoin are becoming increasingly popular as the crypto market grows and commentators start to ask: is Bitcoin dead? For traders interested in better alternatives to the world’s largest cryptocurrency by market cap, altcoins, stablecoins and other emerging assets have a lot to offer.
This guide lists the best alternatives to trading Bitcoin, from their respective merits and drawbacks to key considerations for online traders.
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Why Trade Alternatives To Bitcoin?
Launched in 2009 by an anonymous creator known by the pseudonym Satoshi Nakamoto, Bitcoin (BTC) was the first cryptocurrency.
It has grown rapidly to become a popular investment for traders due to its high volatility and increasingly liquid market. For example, on 20 January 2021, the price of BTC jumped from $20,968 at midday to $22,676 at midnight (GMT). Such rapid price swings have provided opportunities for savvy day traders.
Bitcoin is also the cryptocurrency with the largest market capitalization at more than $475 billion in 2023 – more than double that of Ethereum, the second largest.
But while Bitcoin is the most popular cryptocurrency, that doesn’t mean it’s the best option for traders. In fact, there are several reasons why traders and investors may look for Bitcoin alternatives:
- Lower Growth Potential – In some ways, the high market capitalization works against Bitcoin as it limits this crypto’s potential for growth. Many in the cryptocurrency sphere prefer to look for up-and-coming tokens which can multiply many times in value during a bull run – something that Bitcoin and other established cryptocurrencies are less likely to do.
- Less Volatility – Similarly, Bitcoin’s higher market capitalization lends it a degree of stability (compared to other cryptos). While it is still a volatile asset, lower market cap alternatives to Bitcoin can experience more volatility, which can appeal to active day traders in search of large profits.
- Limited Function – Bitcoin was originally intended to be used as a digital currency to exchange for goods and services, and it is now more commonly used as a store of value. It lacks the same flexibility to use in online transactions, smart contracts and other functions that Ethereum and many other altcoins are used for.
- Environmentally Unfriendly – Bitcoin has raised concerns among many environmentally conscious traders and investors over its carbon footprint. It takes a lot of processing power to mine Bitcoin, and this in turn uses astronomical amounts of energy – around 0.5% of global electricity consumption in recent years. Many view this as unacceptable when environmentally friendly alternatives to Bitcoin exist.
So, what are the most promising alternatives to Bitcoin in 2023?
Ethereum (ETH) is the second-largest cryptocurrency by market cap, and one of the best-known alternatives to Bitcoin albeit one that serves a very different purpose.
Launched in 2015, Ethereum was created as an expansive network where ETH holders can learn coding, develop their own decentralized apps and facilitate trading.
Plans are afoot to convert the Ethereum blockchain protocol from an energy-intensive proof-of-work model to a proof-of-stake method that consumes 99% less energy than it currently does, making it a green alternative to Bitcoin.
Solana (SOL) was first proposed in 2017 and launched in 2020. Since then, it has grown to become a popular cryptocurrency and a viable investment opportunity. In 2023, SOL had a market cap of around $8.5 billion, which is the 11th largest of all cryptos.
Similar to Ethereum, Solana has created an entire network where holders of SOL can create applications for a range of purposes and services.
Additionally, Solana is one of the top low-carbon Bitcoin alternatives. For each SOL transaction, 3,290 joules of energy are consumed, which is 1.5 million times less than the amount required for a single BTC transaction.
Dogecoin (DOGE) was created as a joke by Jackson Palmer and Billy Markus, but since its launch in 2013, it has grown dramatically, partly thanks to high-profile backers including billionaire Elon Musk and an army of social media meme-makers.
In early 2021 its price rocketed from around $0.004 at the beginning of January to a peak of $0.4243 in April, an increase of around 8500%. In 2023, Dogecoin had a market cap of around $11.5 billion, making it the 10th largest cryptocurrency.
As well as being a surprise competitor to Bitcoin, Dogecoin is also a good option for day traders as one of the most volatile major cryptos on the market. This meme coin’s price can be impacted by news and events which do not affect other assets in quite the same way. A prime example of this was seen on the morning of 18 July 2020 when Elon Musk tweeted about DOGE and its price jumped by almost 20% in less than 90 minutes.
Binance Coin (BNB) is a dedicated token that offers benefits to users of the Binance Exchange platform. Its current market cap is over $50 billion and it was launched in 2017.
A key reason to invest in BNB as an alternative to Bitcoin is the advantages that come with trading on Binance, one of the world’s most popular crypto exchanges. If you use BNB on the exchange, spot trading fees and margin trading fees are both reduced by 25%. This provides day traders with a more cost-effective way of trading more than 350 Bitcoin alternatives available on the exchange.
Cardano (ADA) is another one of the best green, low-energy alternatives to Bitcoin. It was created in 2015 by Charles Hockinson and uses a low-carbon Proof-Of-Stake model called Ouroboros whereby one transaction uses the same amount of power as a few searches on Google.
Additionally, it is a faster transaction method as the network can support up to 1,000 transactions per second whereas Bitcoin is limited to only seven per second. This may help it attract further commercial and industrial uses.
Chia (XCH) is one of the greenest related alternatives to Bitcoin. While it is relatively small compared to other cryptocurrencies – its market cap was only around $275 million in 2023 – it could be a worthwhile investment. Its high volatility means that there are regular swings to take advantage of. For example, on 20 January 2023, the value of XCH grew from $39.23 at 7 AM to $45.75 at 11 PM.
Furthermore, to help reduce the power consumption for adding blocks to the blockchain, Chia has adopted a crypto-mining alternative called Proof-Of-Space-Time. This method makes use of spare space on hard drives to facilitate blockchain transactions as an alternative to using CPUs as a Bitcoin miner.
Other Alternatives To Bitcoin
Additional alternatives to Bitcoin trading include:
- NFTs – One of the biggest stories in the crypto space in recent years was the rise of non-fungible tokens, or NFTs – unique blockchain-based tokens that denoted ownership of assets, most commonly digital art. NFTs exploded in value during the ’21 bull run, with the highest-priced artworks from popular collections like Crypto Punks and Bored Apes Yacht Club selling for tens of millions of dollars.
- Stablecoins – Digital assets such as Tether (USDT) and USD Coin (USDC) which are pegged to the value of the US dollar or other currencies are known as stablecoins. Many find these digital assets are a useful way to switch out from Bitcoin and other cryptos during high volatility without cashing out of the market.
- Meme Stocks – The stratospheric rise of GameStop (GME) and other meme stocks in recent years has proved that there is still some excitement left in traditional stock markets. Thanks largely to a buying frenzy stoked by social media, GME’s price rose 1500% – an explosion in value to match many crypto bull runs.
How To Trade Alternatives To Bitcoin
Traders looking for real alternatives to Bitcoin can follow a few easy steps to kickstart their journey:
- Choose a crypto broker – Crypto exchanges may have the widest range of assets, but high-profile collapses have shown them to be higher risk, with scams and mismanagement prevalent. Instead, leading crypto brokers provide a good range of alternatives to Bitcoin that are tradeable with derivatives products – all with more consumer protection. Essentially, traders can speculate on established and emerging tokens without needing to own and store the cryptos – they simply speculate on the rise or fall in price.
- Sign up to an NFT marketplace – If you want to trade NFTs as an alternative to Bitcoin, you will need to have an account with a platform that sells them. Some exchanges include NFT marketplaces, but one of the largest and most popular on the web is Nifty Gateway.
- Register with a stockbroker – To speculate on the latest meme stocks or other equities, sign up with reputable stock brokers. The best firms are regulated by a trusted authority like the FCA, CySEC or SEC, offer commission-free trading, and provide a stable desktop platform and mobile app. Also check whether a free demo account is available for new traders.
Final Word On Alternatives To Bitcoin
While Bitcoin may be the most well-known with the largest market cap and value, the top cryptocurrency alternative investments could prove to be just as profitable. Traders may also find real value by trading meme stocks or NFTs, and the availability of Bitcoin alternatives with a low carbon footprint means there are excellent options for conscientious traders.
To get started, head to our ranking of the best brokers that offer alternatives to Bitcoin trading.
What Is The Best Alternative To Day Trading Bitcoin?
There are many cryptocurrencies that are suitable for intraday trading and as each investor is different, a particular crypto may suit one trader better than the next. To help you determine which alternative to Bitcoin is the best for you, create a shortlist according to factors such as price, function, accessibility and how green it is. Alternatively, consider the crypto tokens with the most volatility, such as Ethereum, Dogecoin, or Solana.
How Many Alternatives To Bitcoin Are There?
There are thousands of alternatives to Bitcoin for online traders. The top alternatives such as Ethereum and Tether are available from crypto brokers around the world. Generally, the top platforms offer trading on dozens of the best alternatives to Bitcoin. For example, FXOpen facilitates the trading of more than 40 cryptocurrencies.
What Are The Best Ways To Trade Alternatives To Bitcoin?
You can trade alternatives to Bitcoin on a range of sites. However, to avoid the scams and the dangers of untrustworthy online exchanges, crypto brokers are a good option, as they facilitate crypto trading through derivatives and often provide a layer of consumer protection that you won’t find on exchanges claiming to sell crypto gold.
What Are Popular Bitcoin Alternatives?
There are various alternatives to Bitcoin, including cryptos known as altcoins, which can serve a number of purposes ranging from facilitating day-to-day transactions to permitting users to access a decentralized network. Other alternatives to Bitcoin include NFTs and meme stocks, which also offer high-risk, high-reward trading opportunities.