Altcoins and memecoins: what you're really buying

An altcoin is any cryptocurrency other than bitcoin. There are millions of them, from large networks to jokes. This lesson is about asking one question first: what am I actually buying?

A wide range

The word altcoin covers very different things:

Network coins, such as ether, that pay fees on their own blockchain
Stablecoins, covered in Lesson 10
Project tokens tied to an application, often giving votes or access
Memecoins, built around a joke, an image or a trend

Treating them as one group hides the differences that matter.

What a token usually is not

Buying a company's shares gives you legal ownership and a claim on its profits. Most tokens give you neither.

A token may let you vote on a project or pay for its service. Its price is set by what the next buyer will pay. Before buying, ask:

What can I do with this token, apart from sell it?
Who created it, and how much do they and other insiders hold?
Can more be created, and who decides?
If the team stopped working tomorrow, would anything still use it?

Lesson 19 turns these questions into a research method.

Memecoins

Dogecoin was launched on 6 December 2013 by two software engineers, Billy Markus and Jackson Palmer. They built it as a joke about crypto speculation. It has no supply cap: about 5 billion new coins are added every year. In May 2021 its market value briefly passed $85 billion.

That history inspired a flood of imitators. In February 2025, staff at the US Securities and Exchange Commission described memecoins this way:

They "typically have limited or no use or functionality".
Their value is "driven primarily by market demand and speculation".
Their buyers are not "protected by the federal securities laws".

That is the regulator saying you are on your own.

How people lose money

Insider supply. Creators often hold a large share and sell into the excitement.
Rug pulls. Creators remove the funds that allow trading, and the token cannot be sold.
Pump and dump. Groups promote a token, then sell to those who arrive late.
Thin trading. On a small token, your own sell order can push the price down.

A few early buyers make spectacular gains, and those stories travel. The losses of those who bought later are much less visible.

A sober rule

A low price per coin does not mean a coin is cheap, as Lesson 17 shows. And fame does not make a coin safe. If you cannot explain what gives a token its value, you are betting that someone will pay more later.