Investment case: Altcoins

While Bitcoin remains the flagship digital asset, it represents only one slice of the cryptocurrency landscape. Thousands of other cryptocurrencies—collectively called altcoins (“alternative coins”)—have emerged to address different challenges, unlock new capabilities, and power the next generation of blockchain applications.

The altcoin investment thesis is fundamentally different from Bitcoin’s. Whereas Bitcoin is increasingly viewed as a digital store of value, altcoins are innovation-driven ventures. Many will disappear, much like early internet startups, but a select few (such as Ethereum, Solana, Sui, Sei, and others) are building real-world use cases and attracting genuine on-chain economic activity from enterprises and developers. These networks are not just speculative tokens; they are functioning platforms where companies conduct real business.

Understanding altcoins

Altcoins cover a vast spectrum of blockchain networks and tokens, from payments-focused projects like Litecoin to smart contract platforms such as Ethereum. Ethereum’s 2015 launch was a turning point: it introduced programmable blockchain infrastructure, enabling decentralized applications (dApps) that run without central control. Today, Ethereum remains the largest smart contract platform, with a market cap exceeding $400 billion (as of July 2025).

Solana, launched in 2020, is a high-speed Layer 1 blockchain designed for scale, capable of processing thousands of transactions per second at low cost. Despite setbacks linked to the FTX collapse, Solana has rebuilt momentum, with $85 billion in market cap (as of July 2025), growing developer activity, and increasing adoption by payment processors, NFT marketplaces, and DeFi platforms.

Sui and Sei represent a newer wave of infrastructure chains, optimized for throughput, parallel execution, and institutional-grade finance. These platforms are already piloting real-world use cases in supply chain management, tokenized securities, and on-chain settlement for trading firms.

Growth potential and selectivity

Altcoins can deliver higher upside than Bitcoin because they are tied to innovation-led growth sectors: decentralised infrastructure, tokenised assets, and next-generation internet applications. However, they also carry higher risk:

• Many projects have unproven business models or fragile governance.

• Regulatory scrutiny and security vulnerabilities can derail adoption.

• Market data shows that more than 50% of cryptocurrencies launched since 2021 are now inactive, with over 3 million tokens abandoned in 2024–2025.

This high attrition rate is not a reason to ignore altcoins but a reason to be selective. Like early-stage venture investing, the winners can become foundational technologies for decades to come.

Innovations made on-chain with smart contracts

Altcoins like Ethereum, Solana, Sei and Sui enable functionality that goes far beyond digital money. Their key innovation is the smart contract: a piece of self-executing code stored on the blockchain that runs when predefined conditions are met. Basically, code running without middlemen. 

Smart contracts eliminate the need for intermediaries (like banks, brokers, or lawyers) in a wide range of transactions. Once deployed, the code is usually immutable, meaning it cannot be altered, and fully transparent, allowing any user to verify the logic and conditions. This makes smart contracts especially useful in finance, real estate, supply chain management, digital identity, and intellectual property.

Originally proposed in 1994 by cryptographer Nick Szabo, smart contracts are now powering a new era of trustless, automated systems: a core building block of what many call the “future of finance.”

Infrastructure for decentralized apps  

Smart contracts are the foundation for decentralized applications (dApps)—apps that run on blockchain networks without central control. These applications replicate and, in many cases, improve upon services offered by traditional financial institutions, while also extending to sectors like gaming, identity, and media.

The most developed use case is Decentralized Finance (DeFi). As of July 2025, over $114 billion in assets are locked in DeFi protocols, according to DeFiLlama. One of the leading dApps, Uniswap, facilitates token trading and rewards users for providing liquidity, without the need for a central exchange. Platforms like Uniswap have become liquidity hubs rivaling mid-sized traditional exchanges.

Beyond finance, GameFi applications (market cap $13B) let players earn tokens with real-world value, while decentralized social media and on-chain identity solutions are emerging to challenge Web2 giants. Many of these sectors rely heavily on high-performance altcoins like Solana or Sei, which can handle transaction volumes comparable to centralized platforms.

Key evaluation criteria

Before investing, apply the same discipline you would to early-stage tech opportunities:

• Real-world utility: is there demonstrable adoption by businesses or consumers?

• Ecosystem growth: are developers and companies building on the platform?

• Tokenomics: is the supply sustainable and aligned with long-term value?

• Governance and transparency: is decision-making open and accountable?

 A balanced approach to emerging crypto assets

Select altcoins, particularly those with strong developer ecosystems, growing real-world use cases, and enterprise adoption can provide exposure to the “picks and shovels” of the blockchain economy. While Bitcoin may remain the bedrock of a digital asset portfolio, altcoins can serve as the innovation growth sleeve, enhancing return potential if sized and managed appropriately. It is also important to remember that, unlike Web2 (the version of the internet we currently use), altcoin protocols allow anyone to actively participate in network activity and be rewarded for doing so, whether by validating transactions, providing liquidity, or voting on governance proposals. On some networks, simply holding the token can be somewhat akin to owning a slice of a submarine internet fiber cable, a model that stands in stark contrast to the FAANG-era internet, where value tends to be concentrated in a few hands.

In other words: Bitcoin may be digital gold, but the right altcoins are the digital railroads, app stores, and infrastructure companies of the next financial era.