Since the introduction of ETH, all cryptocurrencies other than BTC have been referred to as ‘Altcoin’. Many altcoins, on the other hand, no longer qualify as such.
In the beginning, altcoins were just initiatives that copied and pasted the source code of Bitcoin. Initially, there was insufficient differentiation to merit a specific title; therefore, “altcoin” (alternative coins) was the best descriptor. Because of Bitcoin’s potential advancement — its future price increase, use cases, mainstream adoption, and so on. The community at the time did not give much thought to competing cryptocurrencies. Until recently, it was the most prominent figure in cryptography.
The Ethereum smart contract framework has changed the game for cryptocurrencies like bitcoin by allowing the creation of intelligent coins.
This resulted in the community defining cryptocurrencies and tokens as distinct entities. The cryptocurrencies developed on smart contract platforms are altcoins and tokens. They are called “altcoins.’ Additionally, several blockchain initiatives are growing rapidly, which is reducing Bitcoin’s sway.
Other exciting new ventures appeared, prompting the crypto community to reevaluate its opinion of cryptocurrency.
Each cryptocurrency has unique transaction management, programming language, mining, and consensus techniques. While altcoins’ prices may be superior to Bitcoin’s, they are still entirely dependent on its market cap.
Some Bitcoiners are now imagining an alternate future in which several cryptocurrencies (not just Bitcoin) may upend the global order. Now that Ether (ETH) is gaining market share, it’s evident that Ethereum is the crypto industry’s innovation leader. The majority of today’s tokens are Ethereum ERC-20 smart contracts, making project categorization simple.
Significance of Ethereum
This is partly due to Ethereum’s ecosystem. It has disrupted the initial public offering model by allowing anyone to buy a project’s token at launch. This is responsible for all crypto advancements and mainstream attention.
The attention that ICOs have brought to the technology has led to many ERC-20 token use cases. Concentrating on developers designing their next coin as an Ethereum-based token and crypto users curious. Human nature has to intervene to categorize and relate ERC-20 tokens with each other.
When it comes to decentralized finance, the word “altcoin” is no longer appropriate because it’s vague (DeFi). As a result, individuals are curious about the coin’s type, whether an investment instrument or a utility token. They understand that cryptocurrencies can do far more than simply transfer money between people.
“Meme Tokens”
Because of Elon Musk’s tweets on Dogecoin, the term “meme token” is well-known among crypto enthusiasts (DOGE). The crypto community had to make a distinction between tokens and meme tokens. Because cryptocurrencies are capable of high-level intellectual activity, there is a need for another classification for social media content-based tokens.
When NFTs began to rise in popularity, it was clear that the crypto community was ready to embrace new concepts. Pretend NFTs were called “alternative coins.” NFTs are, by definition, but what they can do sets them apart. The community recognizes NFTs as ERC-721 tokens and their capabilities.
Cryptocurrencies are first and foremost designed to ensure that no two tokens have the same value.
Furthermore, there is the addition of “GameFI” (gaming DeFi) to the crypto lexicon. Liquidity mining, NFTs, and other DeFi protocols are all part of this project’s scope. As a result, people are able to play games and earn and sell cryptocurrency. There’s a risk that a new trend will emerge in the GameFi market and lead to other subcategories.
People in Cryptosphere
Cryptocurrency is becoming more and more accessible to the public. In addition, content creators, influencers, and YouTubers are adept at simplifying technical jargon for their audiences. Correctly identifying cryptocurrencies improves the odds of spotting promising new projects before they become widely available. A revolutionary NFT could have a skewed first impression if described as an altcoin.
Comparing cryptocurrencies is easier when there is a categorization. It’s important to know what cryptocurrencies are before comparing them to others. ADA is a utility token in a proof-of-stake smart contract ecosystem, whereas Dash is a payment currency.
Another reason for the demise of the Bitcoin vs. altcoins classification is the fluctuating relationships between BTC and other cryptocurrencies. Some pairs have a strong correlation, while others have a weaker dependence on one another. For example, ADA and XRP have a lower correlation than other cryptocurrencies. However, stablecoins like Tether (USDT) have a negative correlation.
Classifications facilitate diversification as well. You can spread your crypto among multiple coins. But, don’t put all your eggs in one basket if they’re all categorised as the same.
Despite the proliferation of new crypto concepts, we may still identify DeFi, GameFi, NFTs, and meme tokens as altcoins. Altcoins could grow in value in the future, but traders are divided on this point.
