Altcoin originally meant “Bitcoin alternative” because, in the early stages of cryptocurrency development, every blockchain-based currency was seen as a sort of Bitcoin (BTC) knockoff. Cryptocurrencies back then were mainly used for payments, such as Litecoin (LTC), XRP (XRP) and Peercoin (PPC). Altcoin was used as a catchall term for cryptocurrencies other than Bitcoin.
That’s changed since 2011. With the emergence of more than 20,000 cryptocurrencies, each linked to different types of crypto projects and tokens. We have 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, this definition certainly no longer suits all 20,000.
The evolved definition of an altcoin is now far more pinpointed — generally referring to an alternative coin within a particular track. Altcoins are often more advanced in technical features or ecosystem applications, but so far, no altcoin has come close to surpassing Bitcoin in consensus, ubiquity, or market capitalization.
So all things considered, does Ether (ETH) still fit in this box?
Ethereum’s shifting altcoin status
Even Ethereum was first perceived as yet another Bitcoin wannabe in the eyes of investors when it first launched in 2015 — so much so that Ether didn’t even land in the top ten cryptocurrencies that same year. At that stage, Ethereum would have absolutely fit the old description of what was considered to be an altcoin.
Shaking off this stigma is another story. Ethereum’s status as the preeminent altcoin emerged from new developments in both the wider crypto ecosystem and its own operational capabilities. Technologically speaking, Ethereum hurdled over Bitcoin to become the first public chain to support smart contracts, essentially catalyzing DeFi.
Suffice to say, we have noticed the decentralized application and community aspects of Ether’s growth have created a much more vibrant community. It is not only a currency but also an ecosystem platform. This growth has only compounded from 2017’s initial coin offering (ICO) boom, the DeFi Summer of 2020 and the launch of numerous public chains supporting Ethereum Virtual Machine. By flexing its muscles in diverse applications, Ether has become a viable alternative in forming a legitimate consensus and community support.
Bestowing the altcoin title on Ethereum back in 2015 made sense, but its expansive applications and growth since then make that classification a bit constricting. And, we haven’t even mentioned the Merge yet.
The game changer
The Ethereum Merge, a milestone transition of Ethereum’s consensus mechanism from proof-of-work to proof-of-stake, actually only represented the first step in a six-part process. The next steps all aim to enable Ethereum to “process 100,000 transactions per second.”
While the Merge changed several things for the better — including a sharp drop in energy consumption and heightened security — investors did not expect an immediate price boost. Instead, it merely laid the groundwork for further infrastructure that could solve its problems in the years to come.
We can also expect that part of this infrastructure will include more revolutionary currencies to emerge as market challengers to Ethereum and Bitcoin. Though ETH holders now have their sights set on a potential flippening, in which the ETH market value overtakes that of BTC, to truly kill the altcoin classification once and for all, it 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 realm shouldn’t dissuade the entrepreneurial spirit of other blockchain developers or alternative networks. It really isn’t as simple as the Bitcoin camp versus the Ether camp. Networks like Polygon or Kusama already illustrate how community-building and diverse blockchain applications are not only reserved for the big shots in the crypto space.
If Bitcoin’s position as the original cryptocurrency means all other coins are eternally considered altcoins, then no improvement to Ethereum — Merge or otherwise — can change that. But if the title is simply a matter of semantics, then altcoins have an opportunity to prove that the name doesn’t matter. Removing the stigma associated with altcoins, not only benefits Ether but the wider community of blockchain and crypto developers.
James Wo founded has served as the CEO of Digital Finance Group in 2015, where he oversees $1 billion in digital assets. He was an early investor in companies including LedgerX, Coinlist, Circle, and 3iQ. He is also the founder and a 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 information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.