The rise of Bitcoin brought credibility to the cryptocurrency space — but the explosion of thousands of altcoins has led some to believe that all altcoins are scams. This belief is rooted in past events: failed projects, rug pulls, and hype-driven tokens that went to zero. While it’s true that many altcoins have no real utility or intention to deliver value, the idea that all altcoins are scams is a myth. In reality, a significant portion of altcoins are legitimate projects solving real problems in decentralised finance, scalability, governance, and beyond.

This article explores where the myth comes from, how to distinguish scams from substance, and why lumping all altcoins together is both inaccurate and limiting.

Why people believe all altcoins are scams

1. History of pump-and-dumps and rug pulls
From BitConnect to Squid Coin, the crypto space has seen many coins launched with misleading promises and no underlying utility.

2. Lack of regulation
With few barriers to entry, anyone can create a token and hype it — making scams easy to deploy and hard to trace.

3. Overpromising, underdelivering
Many projects raise millions with ambitious whitepapers and fail to launch anything usable — damaging trust in the ecosystem.

4. Social media hype and influencer manipulation
When influencers shill low-quality tokens for personal gain, it reinforces the narrative that every altcoin is a trap.

5. Survivorship bias
For every Ethereum or Solana, there are hundreds of coins that faded into irrelevance — leading traders to assume all altcoins are destined to fail.

Why not all altcoins are scams

1. Many altcoins serve real utility

• Ethereum (ETH): Smart contract platform underpinning DeFi, NFTs, and dApps
• Chainlink (LINK): Decentralised oracle network enabling real-world data on-chain
• Polygon (MATIC): Layer 2 scaling solution for Ethereum
• Uniswap (UNI): Automated decentralised exchange protocol
• Arbitrum (ARB): Layer 2 rollup scaling Ethereum with growing adoption

2. Real adoption and user base

Projects with high Total Value Locked (TVL), active users, and developer contributions are clearly delivering real-world functionality.

3. Institutional involvement

Funds like a16z, Pantera, and Coinbase Ventures have invested in altcoin projects — signalling thorough due diligence and legitimacy.

4. Open-source, transparent development

Legit altcoins publish code on GitHub, allow community governance, and undergo regular security audits.

5. Regulatory compliance in development

Many altcoin teams are working to meet global compliance standards — including KYC, securities laws, and decentralised governance protocols.

How to spot the difference between scams and serious altcoins

Yes, there are many scams — but not all

According to recent research, over 60% of new tokens launched on decentralised platforms have questionable intent or lack substance. But that also means nearly 40% show signs of real development, funding, or utility. A nuanced approach — not blanket assumptions — is needed.

Conclusion

Saying all altcoins are scams is simply not true. While caution is absolutely warranted in the crypto space, there are many altcoins building real infrastructure, solving meaningful problems, and earning the trust of both users and institutions. The key is due diligence, not dismissal.

To learn how to identify legitimate crypto projects, analyse fundamentals, and avoid traps — enrol in our Trading Courses at Traders MBA, where smart decisions are built on skill, not speculation.