Thanks to Ethereum, “altcoin” is no longer a dirty word

Altcoin originally meant “Bitcoin alternative” because in the early stages of cryptocurrency development, any blockchain-based currency was viewed as a bitcoin (BTC) imitation of some sort. Cryptocurrencies were then mainly used for payments, such as Litecoin (LTC), XRP (XRP) and Peercoin (PPC). Altcoin has been used as a collective term for cryptocurrencies other than Bitcoin.

That has changed since 2011. With the emergence of more than 20,000 cryptocurrencies, each associated with different types of crypto projects and tokens. We’ve also seen the dexterity of coins stretch across sectors of public chains, decentralized finance (DeFi), Layer 2, decentralized autonomous organizations (DAOs), stablecoins, and more.

If “altcoin” refers to non-bitcoin cryptocurrencies with the same characteristics as bitcoin, that definition certainly no longer fits all 20,000.

The evolved definition of an altcoin is now much more precise and generally refers to an alternative coin within a given lane. Altcoins are often more advanced in technical features or ecosystem applications, but to date no altcoin has even come close to surpassing Bitcoin in terms of consensus, ubiquity, or market cap.

So, all in all, does Ether (ETH) still fit in this box?

Ethereum’s changing altcoin status

Even Ethereum was first noticed as another Bitcoin wannabe in the eyes of investors when it first launched in 2015 – so much so that Ether didn’t even make the top ten cryptocurrencies for that same year. At that point, Ethereum would have absolutely fit the old description of what was considered an altcoin.

Shaking off that stigma is another story. Ethereum’s status as a preeminent altcoin arose from new developments both in the broader crypto ecosystem and in its own operational capabilities. Technically, Ethereum overcame Bitcoin to become the first public chain to support smart contracts, essentially catalyzing DeFi.

Related: Taxes on income you never earned? It is possible after the merger of Ethereum

Suffice it to say that we found that the decentralized application and community aspects of Ether’s growth created a much more vibrant community. It is not only a currency but also an ecosystem platform. This growth has been fueled by the Initial Coin Offering (ICO) boom of 2017, the DeFi summer of 2020, and the launch of numerous public chains supporting the Ethereum Virtual Machine. By flexing its muscles in various applications, Ether has become a viable alternative for building legitimate consensus and community support.

Granting the altcoin title to Ethereum in 2015 made sense, but the widespread applications and growth since then make that classification somewhat limiting. And we haven’t even mentioned the merger.

The game changer

The Ethereum Merge, a milestone in Ethereum’s Proof-of-Work to Proof-of-Stake consensus mechanism, was actually just the first step in a six-part process. The next steps are all aimed at enabling Ethereum to “Processing 100,000 transactions per second”.

While the merger changed several things for the better — including a sharp drop in energy consumption and increased security — investors didn’t expect an immediate price spike. Instead, it was merely laying the groundwork for more infrastructure that could solve its problems for years to come.

We can also expect that part of this infrastructure will include more disruptive currencies that will emerge as market challengers to Ethereum and Bitcoin. Although ETH holders are now eyeing a possible flippening, with ETH market value overtaking BTC to end altcoin classification once and for all, that doesn’t mean the gates are closed to other blockchain players. After all, cryptocurrency is not meant to be an oligopoly.

Related: Post-merge ETH has become obsolete

The dominance of a few big players like Bitcoin and Ethereum in the blockchain space should not deter the entrepreneurial spirit of other blockchain developers or alternative networks. It’s really not as simple as the bitcoin camp versus the ether camp. Networks such as Polygon or Kusama already show that community building and diverse blockchain applications are not only reserved for the big players in the crypto space.

If bitcoin’s position as the native cryptocurrency means that all other coins will forever be considered altcoins, then no amount of Ethereum improvement — merge or anything else — can change that. But if the title is just a matter of semantics, then altcoins have an opportunity to prove that the name doesn’t matter. Removing the stigma associated with altcoins will not only benefit Ether, but the broader community of blockchain and crypto developers as well.

James Wo founded in 2015 was CEO of Digital Finance Group, where he manages $1 billion in digital assets. He was an early investor in companies like LedgerX, Coinlist, Circle and 3iQ. He is also a founder and board member of the Licensed Matrix Exchange in the United Arab Emirates and holds a master’s degree in applied statistics from Columbia University’s Teachers College.

This article is for general informational purposes and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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