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Picking cryptocurrency investments doesn’t need to be a binary decision. Bitcoin may be the original and most dominant crypto, but many altcoins- as the rest of the universe is generally known- are driving innovation in the Web3 space. Just like the previous iteration of the internet led to the emergence of social media platforms, the evolution of blockchain technology has yielded a range of use cases, some that were barely recognisable five years ago. This article explores the different roles played by Bitcoin and the issuers of two of the leading altcoins, Ethereum and Solana, to help you understand how they can complement each other in a diversified portfolio.
Different pieces of the crypto puzzle
Satoshi designed BTC as a medium of exchange, but several characteristics, primarily scarcity, make it an effective store of value in the eyes of its investors. Satoshi Nakamoto, the pseudonymous founder, capped the total supply at 21M, and the network drip feeds new coins into circulation through rewards paid to miners who validate transactions, which halve roughly every four years. This scarcity is one of the reasons many compare BTC to ‘digital gold’ (other common characteristics include durability, divisibility and portability). Bitcoin is also resilient thanks to the decentralised nature of the network, which is run by thousands of computers known as nodes. It isn’t controlled by a single authority, like banks in the traditional finance system, which can restrict access and censor transactions.
However, the potential for blockchain technology extends much further. Ethereum was the first protocol to realise this potential through the introduction of smart contracts, programs that automatically execute when preconditions are met, allowing decentralised apps (dApps) to operate without intermediaries. Smart contracts have provided the building blocks for a broad range of applications, from decentralised finance (DeFi) to gaming and DePINs.
As Joe Lubin, co-founder of Ethereum, explained, the protocol attracts developers ‘because instead of having an adversarial and exploitative relationship with their users, they can now build of, by and for the community. The paradigm shift to an increasingly decentralized system of the world is accelerating.’
One of the main challenges facing blockchains is combining scalability, decentralisation and security, sometimes referred to as the blockchain trilemma. Some protocols prioritise decentralisation and security, but speedy transactions are key to power the next generation of dApps. While Ethereum addresses this problem with Layer 2 networks, which are built on top of blockchains to enhance their capabilities, Solana uses an innovative timestamping mechanism to order transactions, which has helped it become one of the fastest protocols.
How altcoins are revolutionising finance and industry
So what are some of the use cases that have arisen from blockchain innovation? Let’s start with decentralised finance (DeFi), the biggest to date. While digital wallets have the potential to disrupt the finance sector by replacing bank accounts, decentralised exchanges like Uniswap, which runs on Ethereum, have introduced a new source of income by allowing investors to contribute to the platform’s liquidity. Likewise, Compound Finance, also an Ethereum project, pioneered the concept of yield farming, which involves shifting funds between liquidity pools to maximise rewards.
Lending protocols are another DeFi use case that could transform traditional finance. Aave, which operates on Ethereum, allows users to lend and borrow crypto without having to go through an intermediary like a bank. The amount lenders receive in interest payments varies from token to token, for instance the annual percentage yield on ETH is 1.54% (as of September 2025).
DePINs (decentralized physical infrastructure network) are among the most cutting-edge applications because they combine blockchain technology and physical infrastructure. They replace the players controlling infrastructure such as energy grids, connectivity or storage with distributed networks, decentralised through a set of participants. Blockchains record contributions and reward participation in the form of crypto.
Solana’s speed has helped establish it as a leading DePIN protocol, hosting Render, a decentralised GPU marketplace, and decentralised wifi network Helium, among others. In an interview with CoinShares, the company’s President Lily Liu explained what attracts founders: ‘[Solana] is a performant technology with a robust ecosystem of builders, really focused on building useful products. As a DePin project, I would want thousands of nodes to have a secure network and a built-in ecosystem with builders, users.”
Finally, interoperability solutions, such as Chainlink, overcome the challenges caused by protocols largely operating in siloes. By enabling blockchains to communicate with external data sources, these solutions, sometimes referred to as oracles, play a crucial role in expanding the universe of use cases and driving overall adoption of the technology.
Professional investors prove the point
As we pointed out earlier, crypto investing doesn’t mean choosing between BTC and altcoins. Just like building a diversified portfolio consisting of traditional assets is a sensible strategy, savvy investors spread their money across a range of robust cryptos, understanding that they provide exposure to different sources of value.
This conviction is backed up by research conducted by CoinShares using 13F filings, quarterly reports of holdings that institutional investors must submit to the US financial authorities. At the end of the second quarter of 2025, 93% of institutions holding ETH ETFs also invest in BTC products. Wall Street giant Goldman Sachs has the biggest ETH position, both in terms of value and as a proportion of BTC.
Conclusion
Bitcoin and altcoins are complementary assets that provide exposure to different sources of value: bitcoin serves as a medium of exchange and digital gold, whereas Ethereum and Solana are driving innovation within the technological and financial space, providing programmable finance and scalable infrastructure respectively. Even the US government treats them as equals- it recently published GDP data on all three blockchains (among others), as part of the Trump administration’s efforts to demonstrate its support for crypto.
The CoinShares range of ETPs provides a convenient way to diversify your crypto portfolio. Our products trade on mainstream exchanges, so you can hold them alongside traditional assets, and they can contribute to overall returns.
