Crypto enthusiasts often find themselves limited to the well-known giants of the blockchain world: Bitcoin and Ethereum. But there are also many alternatives offering unique advantages. Enter altchains — lesser-known blockchain networks that challenge the status quo. Here’s what to know about alternative blockchains in 2025.
KEY TAKEAWAYS
• Altchains, or alternative blockchains, are steadily gaining traction as users seek more scalable, environmentally friendly alternatives to Bitcoin and Ethereum.
• Altchains can be categorized into different layers: Layer-1 (self-sufficient blockchains like Cardano), Layer-0 (protocols enabling cross-blockchain interaction like Polkadot), and Layer-2 (scaling solutions like Polygon).
• While altchains offer promising opportunities, they also present challenges, particularly regarding security. Lesser-known altchains may lack reliable security protocols, making them more vulnerable to attacks.
What are altchains?
A blockchain is a cryptographically secured and continually updated public ledger. An “altchain” or “alternative blockchain” simply refers to any blockchain that isn’t one of the “big 2” — Bitcoin or Ethereum.
These two blockchains are by far the most popular and well-known in the crypto space at present. The main Bitcoin blockchain was launched in 2009, while Ethereum’s first iteration came in 2015.
Altchains have existed since the early days of crypto. The Litecoin blockchain was launched as a Bitcoin competitor back in 2011. Dogecoin and Ripple followed in 2013. Yet, the number of altchains really exploded when the Ethereum blockchain began to run into scaling problems in 2017.
Users began searching for more dynamic, nimble, and environmentally friendly alternatives to Ethereum. Where gaps appear, the market is often quick to respond: the likes of the BNB Smart Chain, Ripple, Cardano, Dogecoin, Polkadot, and Solana subsequently emerged.
This growth in competition is likely one of the reasons behind the development of Ethereum’s second iteration — Ethereum 2.0. In September 2022, the network merged from a proof-of-work (PoW) to a proof-of-stake (PoS) network — dramatically reducing the chain’s environmental impact and hastening transaction times.
How do altchains and altcoins differ?
Altchains are blockchain networks, while altcoins are the native tokens of those networks. For example, ADA is an altcoin that powers the Cardano blockchain, an altchain.
The native tokens of altchains are altcoins or alternative coins. For example, BNB, XRP, ADA, DOGE, DOT, and SOL are all altcoins. The term altcoin includes any cryptocurrency that isn’t Bitcoin or Ethereum. Some Bitcoin supporters also disparagingly refer to Ethereum as an altcoin.
Not all altcoins have their own altchain. In fact, the vast majority do not. Most altcoins are tokens running on top of a pre-existing cryptocurrency network.
For example, one of the largest cryptocurrencies currently in circulation is Shiba Inu, which originally rose to prominence as a meme coin. SHIB is an ERC-20 token that runs on top of the Ethereum network. When users trade SHIB, they pay gas fees to the Ethereum blockchain to have their transactions processed.
Altcoins can also exist on altchains. Just as users are allowed to trade their own cryptocurrencies and NFTs on top of the Ethereum network, many altchains also allow the same thing. Cardano and Solana, for example, both allow users to create their own crypto tokens and non-fungible tokens (NFTs) to run on top of their blockchains.
Did you know? Altchains are seeing increased use in decentralized finance (DeFi) platforms and blockchain-based gaming. For instance, Flow blockchain is gaining traction due to its hosting of popular NFT applications like NBA TopShot, NFL, and UFC, which suggests that altchains could become central to the future of blockchain-based applications.
Different types of altchains
Altchains are primarily segregated into three types:
- Layer-1 protocols or altchains
- Layer-0 protocols
- Layer-2 protocols or sidechains
Let us now dive deeper:
Layer-1 protocols
The Bitcoin and Ethereum blockchains are both examples of layer-1 blockchain protocols. These are self-sufficient blockchains that can validate and execute transactions without support from any other crypto network. Layer-1 blockchains function by incentivizing network validators (called miners on Bitcoin and stakers on Ethereum) with the promise of transaction fees and new tokens.
Many of the most popular altchains are also layer-1 blockchain protocols, like Cardano and Solana. Both are original, self-developed, and self-sufficient blockchain ecosystems. Some layer-1 altchains originate as forks of a pre-existing major blockchain. For example, the Bitcoin Cash blockchain is a fork of the original Bitcoin blockchain. Ethereum Classic, meanwhile, is a fork of the original, pre-DAO hack Ethereum blockchain.
Though they share a common ancestry, forked altchains and their original chains can grow to differ substantially over time. For example, the main Ethereum blockchain has transitioned to a proof-of-stake consensus mechanism, while the Ethereum Classic blockchain remains on proof-of-work.
Layer-0 protocols
There is also the layer-0 blockchain protocol, which allows separate layer-1 blockchains to interact as part of the same, broader crypto network.
Essentially, a layer-0 protocol allows multiple interoperable and interacting blockchains to be built simultaneously. Polkadot is currently the best-known example of a layer-0 protocol.
Layer-2 protocols and sidechains
Just as layer-1 blockchains can be built on top of layer-0 protocols, layer-2 blockchain solutions can be built to run parallel to or on top of layer-1 blockchain protocols. These layer-2 protocols come in a few different flavors. Some aim to boost the scalability of the underlying layer-1 blockchain, allowing transactions to take place off-chain.
Arbitrum and Polygon are both examples of layer-2 scaling solutions built on top of the Ethereum network. These types of layer-2 solutions still rely on the underlying layer-1 protocol’s security and consensus algorithm. An alternative to layer-2 scaling solutions is a sidechain.
A sidechain is an entirely separate blockchain. While connected to the main blockchain, sidechains have their own security and consensus algorithms. They operate by locking up funds on the main chain and depositing them onto the sidechain. These funds can then be freely traded by sidechain users. While this can reduce congestion on the main blockchain, critics point out that using sidechains can be less secure than main chains.
How to use altchains
Want to use altchains? Here are the quick steps to follow:
- Set up a wallet
- Buy crypto
- Interact with the ecosystem
- Use blockchain explorers
- Secure assets
Let us break down each step in more detail:
Set up a wallet
Using most altchains feels similar to using the Bitcoin or Ethereum blockchains. To interact with an altchain, users first must set up a wallet that allows the storage, transfer, and receipt of tokens, using the altchain.
Exodus Wallet and Coinbase Wallet are two crypto wallets that can interact with a diverse range of different blockchains, including many of the most prominent altchains.
Use altchains to buy crypto
Users looking to buy altchain-based cryptocurrencies (altcoins) have two options. The first is to create an account with a centralized exchange, such as Binance. Users can then deposit fiat currency, and use this to purchase cryptocurrency. In terms of fees, this is likely the least costly option for most users.
Alternatively, most major crypto wallets provide direct fiat-to-cryptocurrency on-ramps. This allows crypto to be purchased in fiat currency and delivered instantly to a wallet without requiring the use of a centralized exchange.
In most cases, users must still provide some personal information to use a fiat-to-crypto payment service provider. That means Know Your Customer (KYC) requirements are difficult to avoid. Fees associated with buying crypto in this manner are usually higher compared to buying crypto via fiat deposits on a centralized exchange.
Interact with the blockchain ecosystem
Users can now send or receive crypto and interact with various decentralized applications (DApps). These might include decentralized finance (DeFi) platforms, allowing users to generate crypto yield. Alternatively, these DApps might include blockchain-based games, where the user can utilize their crypto to enhance in-game experiences.
Use blockchain explorers to verify transactions
Just like Bitcoin and Ethereum, all major altchains allow users to explore the transactions taking place on their blockchain. For example, Cardano has the Cardano Explorer; Solana has the Solana Explorer. Anyone can utilize these tools to monitor transactions taking place on the altchain networks.
Take measures to secure crypto assets
Users should be aware that lesser-known altchains may not have developed security protocols as effectively as some of the better-known chains.
When interacting with DApps, it’s important to always triple-check the URL of the website. Malicious websites often pose as popular DApps with very similar URLs, in an attempt to snag crypto wallet information.
It is also worth investing in a cold wallet. These wallets keep your private wallet keys separated from the internet and your computer. This makes it practically impossible for crypto hackers to steal this information, and subsequently any crypto.
Stay safe while transacting on altchains
As crypto adoption increases, altchains are expected to play increasingly important roles within decentralized ecosystems. While some altchains are able to offer faster transactions and lower fees than Bitcoin or Ethereum, it’s important for prospective users to keep security in mind at all times. Avoid engaging with malicious websites and choose a cold wallet to store your assets for maximum protection.
Disclaimer: This article is written for informational purposes only and should not be considered investment advice.
Frequently asked questions
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