Beyond bitcoin: These altcoins are super popular
New York(CNN Business) Bitcoin and ethereum are the Coke and Pepsi of crypto: Their combined value of about $1 trillion accounts for nearly two-thirds of the overall $1.6 trillion in digital currencies worldwide.
But just as some soft drink fans prefer Dr Pepper, there are also plenty of other alternatives in crypto — more than 10,000 of them, according to research site CoinMarketCap.
Many of these "altcoins" have legitimate niche use cases for specific industries. They aren't started-as-a-joke cryptos like Elon Musk's beloved dogecoin and its canine cousin Shiba Inu.
One of the better performing pairs of cryptos this year are two related tokens that are geared toward online content creators — Theta and Theta Fuel. Theta has soared almost 400% in 2021 while Theta Fuel is up an astounding 1,700%.
Both run on a blockchain known as the Theta Network and allow PC users with un-utilized bandwidth to share video streams with others on the network The reward? They're able to mine tokens. Theta has impressive backers from the digital media world, including YouTube co-founder Steve Chen and Twitch co-founder Justin Kan, who are Theta advisors.
Meanwhile, many other altcoins are generating more attention in the crypto investing community — and many of those investors say this is just the beginning.
"This is still the early days for blockchain networks. Many others are getting built out," said Greg King, founder and CEO of Osprey Funds, a firm that is investing in cryptocurrencies. "Not all of them are trying to imitate bitcoin."
King said he's focusing on two smaller coins: polkadot and algorand. King described polkadot as like an internet of blockchains that helps connect different networks and transfer coins between them.
And he said algorand is a more eco-friendly "green" crypto than bitcoin, which has been criticized by many, including Musk, for the massive amount of energy that is used by people who "mine" the crypto on massive servers.
Algorand are distributed in a more energy-efficient way because they are part of so-called proof-of-stake distribution that randomly selects blocks to distribute to users, as opposed to being rewarded to people mining big chunks of the currency.
King thinks investors should focus more on cryptos and tokens like these two, which have legitimate uses — and not get caught up in the hype and noise of things like dogecoin, which is up more than 6,000% this year thanks in large part to tweets from Musk — despite being a joke.
"Meme coins are a little distracting, but I guess it's part of the libertarian side of crypto," King said, referring to the fact that people who are skeptical of goverment-backed currencies tend to flock to digital coins. "There will be a lot of tokens ranging from silly to serious and many in between," he said.
Michael Sikorsky, chairman of Copia Wealth Studios, agreed. He said that his firm does own ethereum and bitcoin but that it also holds several other altcoins that are less mainstream.
Sikorsky said Copia Wealth Studios has positions in cardano and polygon, two other cryptos that are similar to algorand in that they are not mined by energy-hungry supercomputers.
"We're getting our beak wet," Sikorsky said. But he added that investors have to keep in mind that these, and other cryptos, will remain volatile.
So altcoins are not for the faint of heart, but they are not going away either.
"This is becoming a real asset class," said Charlie Silver, CEO of Permission.io, which has a token named ASK that is aimed at e-commerce advertisers.
But he warned that successful "altcoins must have real utility. Those that are just gambles won't be good for the industry," Silver said. "But we do see this as the next big wave of investing."
