Altcoins Are Not Like Bitcoin: Why You Should Stay Away

Short answer: Should you be buying altcoins? As a long-term saver, better not. Altcoins are not like bitcoin: behind almost every one stands a team that got in early and cheaply and earns from your purchase. Most new coins are built to be worthless after a short while. On top come hacks, tax on every swap and the constant urge to switch to the next coin. Bitcoin alone is simpler, safer and has done better over the long run.

You already own bitcoin, but every exchange flashes thousands of other coins, and someone has just made twenty times their money with one of them. Isn't it careless to miss that? This article explains why, as a long-term saver, you should stay away from altcoins, and what to do if you already have some.

How bitcoin differs from other coins at its core, that is launch, supply, rules and security, is covered in detail in Bitcoin vs. Altcoins: Why Bitcoin Is Different. Here the question is what buying an altcoin means for you and your money.

Altcoins are not like bitcoin

Many coins look like bitcoin: a price, a wallet, a blockchain. The difference lies behind them.

• Bitcoin belongs to no one. There was no presale, no company and no reserve for founders. Whoever buys bitcoin today buys from other savers, not from its issuers.
• An altcoin is a product. A team created it, holds a large share and can change its rules and supply. It earns when you buy.
• Bitcoin's supply is fixed. At most 21 million, and no one can change that alone. With altcoins, a small circle usually decides.

The reasons to stay away follow from this.

Seven reasons to stay away from altcoins

1. You buy from those who got in before you

Many new coins launch with a trick: only a small part, often 10 to 20 %, can be traded from the start. The rest belongs to founders, the team and venture investors who got it cheaply. It is locked for one to four years and then released in instalments.

Because so little can be traded at first, the price looks high and the coin valuable. With every release new coins reach the market, and the insiders can sell. Binance Research looked at this in May 2024: between 2024 and 2030, tokens worth about 155 billion dollars will be unlocked. For prices to hold, new buyers would have to absorb that sum.

You are then one of those buyers. Bitcoin has no such locks: new bitcoin go to the miners on a fixed schedule, in return for electricity and computing power. How that works is explained in Bitcoin Mining Explained.

2. Most new coins are made to be sold

Issuing your own coin today takes a few minutes and a few euros. Accordingly many are created, and most have only one purpose: to attract buyers quickly and then sell to them.

The firm Solidus Labs examined more than 7 million tokens created on the memecoin platform Pump.fun between January 2024 and March 2025. 98.7 % showed the signs of a rug pull or pump-and-dump. Only about 97’000, just over 1 %, ever kept trading worth at least 1’000 dollars.

In a rug pull, the issuers pull the money out as soon as enough buyers are in, and the price falls to almost zero. According to Chainalysis, rug pulls cost investors about 2.8 billion dollars in 2021 alone, 37 % of all crypto scam revenue that year. How to spot such schemes is shown in How to Spot Bitcoin Scams.

3. You see the winners, not the losers

You hear about the coin that rose a hundredfold. Nobody talks about the thousands that vanished. This is survivorship bias: if you only see the winners, the game looks easier than it is.

Looking back shows it soberly. Of the ten largest coins at the end of 2017, eight were down in dollars on 13.11.2026; only bitcoin and Ethereum rose. And even Ethereum, the largest altcoin, has lost against bitcoin: at the end of 2017 one ether cost 0.053 BTC, today 0.028 BTC. The full table is in Bitcoin vs. Altcoins.

Even if you catch the right coin, you also have to sell in time. In boom phases altcoins often rise faster than bitcoin and then fall deeper. Many never recover.

4. More technology means more to attack

You can buy bitcoin, send it to a hardware wallet and leave it there for years. With many altcoins it is not that simple. To use them you often need extra apps, browser wallets, smart contracts or so-called bridges between blockchains. Each of them is a program that can have bugs.

The biggest thefts in crypto history hit exactly this technology:

• Ronin (March 2022): attackers stole about 625 million dollars through the bridge of the game Axie Infinity.
• Wormhole (February 2022): a bug in a bridge to Solana cost about 320 million dollars.
• Terra (May 2022): the algorithm of the stablecoin UST failed, and the coin LUNA fell from over 80 dollars to practically zero within days.

Bitcoin has no such layer you need to understand. How to store bitcoin simply and safely yourself is shown in Storing Bitcoin Safely.

5. "Yield" from staking is mostly dilution

Many altcoins advertise interest: you "stake" your coins and get a few percent more each year. That sounds like income, but mostly it is not. The reward consists of newly created coins. The supply grows, and whoever does not take part holds a smaller share afterwards.

On top come risks you do not have with bitcoin: your coins are often locked for a time, you hand them to a provider who may lend them on, and in Germany and Switzerland every reward is income you pay tax on when you receive it. Why bitcoin needs no yield but your own keys is explained in Bitcoin-Only App or Crypto Exchange.

6. Every swap costs tax and fees

Whoever holds altcoins swaps. From one coin to the next, back into bitcoin, out again. Every swap costs fees and, depending on the country, tax:

In Germany, whoever buys and holds bitcoin sells tax-free after one year under current law. Whoever switches back and forth between coins never reaches that point. The details for your country: Bitcoin Taxes in Germany, Austria and Switzerland, and Professional Securities Trading.

7. Altcoins distract you from your goal

The biggest damage is often not the loss on one coin but the restlessness. Whoever holds altcoins checks prices daily, reads rumours and wonders whether they are missing the next winner. That quickly turns into trading on feelings: buying high, selling low. How this cycle runs and how to stop it is shown in FOMO, Panic and Capitulation.

A clear goal in bitcoin, a savings plan and your own wallet, on the other hand, need almost no attention. That is exactly what makes them sustainable over years.

"But ...": the most common objections

You already hold altcoins: what now?

Many people come to their first altcoins through an exchange, a friend or an advert. That is no reason to panic. Go about it calmly:

1. Ask yourself for each coin: would I buy it again today at this price? If not, holding is just hoping.
2. Check the taxes before you swap. In Germany a swap after more than a year is tax-free. A loss within the year can be offset against gains from other private sales if you declare it in your tax return.
3. Move into bitcoin, not into the next coin. You can swap everything at once or in instalments over a few months. What worked better historically is shown in Savings Plan or Lump Sum.
4. Take the bitcoin off the exchange. An exchange can go bankrupt, as Crypto Exchange Bankrupt shows. How to set up your own wallet is explained in How to Set Up a Bitcoin Wallet.
5. From now on, buy where there is only bitcoin. A bitcoin-only app does not even show you thousands of other coins.

Such a rule belongs to a goal you set yourself: