Kinds of crypto

Thousands of coins came after Bitcoin. This lesson covers where they came from, how they move with bitcoin, why a low price doesn't mean cheap, and what stablecoins and memecoins are for.

Bitcoin's code is open: anyone can download it, change the rules and launch a new coin. A modified copy like that is called a fork. Nobody set out to invent the other coins. They kept appearing this way and got the nickname altcoins, short for "alternative coins".

Namecoin, from 2011, is usually named as the first. That same year programmer Charlie Lee copied Bitcoin, made blocks four times faster and the cap four times larger, and launched Litecoin. Ethereum, in 2015, was not a copy: it brought the idea of running programs on the blockchain. In 2017 thousands of projects created their own tokens to raise money, and most of them later disappeared.

Copy Bitcoin and change two rules.

Some altcoins have their own blockchain, like ETH on Ethereum and SOL on Solana. They are the network's coin, and fees are paid in them.

Others are tokens, coins created on top of someone else's blockchain. USDT, LINK and PEPE, for example, move on the Ethereum network. Creating a token takes far less work than building a blockchain, which is why there are so many. Whoever moves a token pays the fee in the network's coin, so sending USDT over Ethereum costs a little ETH.

Pick a blockchain to see its coin and a few tokens that run on it.

Altcoins have their own prices, but they almost always move with bitcoin. When BTC falls hard, most of them fall too, and usually by more. The smaller the coin, the bigger the swing.

From a distance it looks like a stock market: thousands of tickers, each with a price, volume and market cap, and the big ones less risky than the small ones. The difference is in what you buy. A share is a piece of a company. A token gives you no piece of any company, no profit and no dividend, and its price depends only on what other people will pay.

Switch the altcoin and compare the month's drops.

The bots here watch nine large coins on Binance. Each started with a different idea, and the price of one unit goes from cents to tens of thousands of dollars.

Prices come from the live feed. Click a coin to see where it came from and what it's for.

One DOGE costs cents and one BTC costs tens of thousands of dollars, but that doesn't make DOGE a bargain. There are about 155 billion DOGE and about 20 million BTC.

To compare coins, use market cap: the price of one unit times how many exist. It's what all the coins would be worth together.

Raise DOGE's price and see what it would be worth in total, next to all the bitcoin.

A stablecoin is a token designed to stay close to $1. The largest are USDT, from Tether, and USDC, from Circle. The companies that issue them say they hold reserves, in cash and bonds, for every token.

They play the part of the dollar on exchanges and blockchains. You can leave a coin that swings around without taking your money off the exchange, which is why so many pairs end in USDT.

The risk is losing the peg. In March 2023 USDC fell to $0.88 over a weekend, after Circle had $3.3 billion stuck at Silicon Valley Bank when it failed. In May 2022 UST, which had no dollar reserves, went almost to zero.

A memecoin starts from a joke, an animal or a celebrity. DOGE, from 2013, was the first famous one; SHIB, PEPE and thousands of others came later.

There's usually no product behind them, and the price follows people's attention. Many shoot up in a few days and lose almost everything soon after. In some, the creators sell everything at once and disappear with the money, which is called a rug pull.

The chart is a simulated launch. Pick the day you bought and see what was left of $100 at the end.

Three quick questions, then a challenge.

There are eight coins. Say whether each is the coin of its own blockchain, a stablecoin, a memecoin or a service token.