What Are Altchains? Blockchain Network Layers

What Are Altchains? Understanding Crypto Network

When the word "altchains" comes up, it is quite usual to feel a little mystified, especially if you are not familiar with blockchain technology or have dealt only with the most popular coins like Bitcoin (BTC) or Ethereum (ETH). This guide aims at a very soft introduction to the concept, so that everybody, no matter their background or previous crypto knowledge, could be at ease with the exploration of altchains and their significance.

What Are Altchains?

Alternative blockchains, often referred to as altchains, are any blockchain that is not Bitcoin or Ethereum. Altchains started gaining popularity in 2021 primarily due to the issues of Ethereum's scalability and high transaction fees. In order to compete with Ethereum, developers built altchains that would be less expensive and more scalable blockchain alternatives. Some of the altchains are Terra, Avalanche, and Solana.

Differences Between Layer 0, 1, and 2 Blockchains

Layer 0

Layer 0 serves as the foundation for Layer 1 (L1) blockchains to convene in a single network through a protocol that commands them. It is the platform where all blockchains are constructed. One of the Layer 0 protocols, for instance, is the Polkadot network.

Layer 1 (L1)

Layer 1 appears to be the foundational blockchain network within a decentralized ecosystem. The major L1 blockchains are Bitcoin, Ethereum, and Solana, among others. These are the main blockchains that process transactions at the base layer.

Layer 2 (L2)

Layer 2 solutions are basically third-party integrations that are designed to work on top of Layer 1 blockchains. These solutions not only considerably enlarge the mainnet but also earn their way by processing a large number of transactions outside the main blockchain while preserving the main chain's security and decentralization. One of the most popular sidechains, which is parallel to the Ethereum network, is Polygon which is linked to the main chain but operates with its own consensus method.

Altcoins and Tokens

Altcoins, also known as alternative coins, refer to all cryptocurrencies that are not Bitcoin. They consist of different kinds of tokens like DeFi tokens, meme tokens, utility tokens, NFT tokens, and stablecoins. A large number of altcoins are created on altchains instead of being developed on their own separate blockchains.

Role of Ethereum Virtual Machine (EVM)

The Ethereum Virtual Machine (EVM) is a virtual platform that enables developers to write and deploy contracts on the Ethereum network. EVM also allows smart contracts to be more functional without the addition of complexity.

Getting Started with Crypto Wallet and Crypto Exchange

There exist two methods for acquiring funds in crypto: either through a crypto exchange or by creating a private wallet. It is advisable to acquire initial crypto funds from a trustworthy centralized crypto exchange (CEX). Assessing resources such as the CoinGecko CEX Trust Score Ranking can aid in discovering dependable exchanges.

Beginners are suggested to begin on an Ethereum Layer 2 or sidechain, such as Polygon or Arbitrum, or on Layer 1 blockchains with low fees, because of the high transaction costs associated with Ethereum.

Blockchain Wallet

To start working with the blockchain, the first step is to make a wallet that is compatible with it. For those who are new to it, browser wallets are the most convenient option. One such good option is the Solana Phantom wallet, which works best with the Chrome browser.

Exchange Funds

Copy your wallet’s public address and send tokens from the CEX to this address. Make sure the wallet address and blockchain on the CEX match your wallet’s information, as sending tokens to the wrong address or blockchain can result in loss of funds.

Wallet Choices for Different Chains

EVM chains work well with wallets like MetaMask, while other blockchains need specific wallets like Phantom for Solana or Terra Station for Terra.

Transaction Fees and Using Native Tokens

Usually, transactions on blockchains are subjected to fees that must be paid in the native tokens of the blockchain. For instance, on Solana, the payment of fees is done in SOL tokens. If you have SOL tokens in your wallet, then you can use dApps or swap tokens on the platform.

Using Altcoins on dApps

As an example, on Solend, a lending protocol on Solana, you can deposit SOL or stablecoins like USDT or USDC as collateral. If a token is not listed, use a custom Token Contract Address, but be cautious to avoid scams by verifying tokens on CoinGecko.

Bridging Tokens Across Blockchains

Many crypto users transfer funds between blockchains, often with limited budgets for experimenting with multiple chains. There are two main methods:

1. Tokens of the original blockchain, or stablecoins, are converted to native tokens. then sent to the CEX wallet, swapped to the tokens of the new blockchain, and finally transferred to the new blockchain wallet.

2. You can use a reliable cross-chain bridge for this purpose. First, you will connect your wallet to the bridge application, then enter the information regarding the token and the destination blockchain, and finally, you will confirm the transfer. The transfer might take a while.

Altchains and Blockchain Layers Data Explanation

Comparison of Blockchain Layers

Popular Altchains and Key Features

Common Wallets for Major Blockchains

Famous Quotes on Blockchain and Crypto

• “Blockchain is the tech. Bitcoin is merely the first mainstream manifestation of its potential.” —Marc Kenigsberg, Bitcoin Chaser Founder.

• “You can’t stop things like Bitcoin. It will be everywhere, and the world will have to readjust.” — John McAfee, Founder of McAfee

Who Benefits Most From This Content

• Crypto Beginners and Students

• Tech Professionals Seeking Career Growth

• Small Business Owners and Entrepreneurs

• Investment Enthusiasts

What People Learn From This Content

• Basic Crypto Knowledge Without Confusion

• Smart Investment Decisions

• Practical Wallet Management

ClipsTrust Perspective

ClipsTrust considers the comprehension of altchains and blockchain layers to be of utmost importance for everyone who wants to get into the cryptocurrency market in the year 2025. Such insight not only prevents novices from making costly mistakes but also secures them the advantage of taking the right decision on the investment they make, which is, by that time,a  very smart ones​.

Frequently Asked Questions (FAQs)

Q1. What is the difference between a blockchain and an altchain?
A. Altchains are alternative blockchains that are not Bitcoin or Ethereum. They are created to solve scalability, cost, and efficiency challenges of established blockchains.

Q2. What are blockchain layers?
A.Blockchain layers define the structural hierarchy of the blockchain ecosystem — from the base Layer 0 protocol to Layer 1 mainnets and Layer 2 scaling extensions.

Q3. Why are transaction fees different across blockchains?
A. Transaction fees depend on network congestion and consensus methods. Layer 1 chains like Ethereum often have higher fees, while Layer 2 solutions offer faster, cheaper transactions.

Q4. Can altchains interact with Ethereum or Bitcoin?
A. Yes, through cross-chain bridges or interoperability protocols like Polkadot and Cosmos, users can transfer assets or data between different networks.

Q5. Are sidechains and Layer 2 the same?
A. No. Sidechains are separate blockchains connected to mainchains but with their own consensus mechanisms, whereas Layer 2 solutions directly depend on the mainchain’s security.

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