Recently the crypto-community has falsely attributed the characteristics of alternative currencies (altcoins) such as DASH, LTC, and others to the platform of Ethereum. Bitcoin maximalists have legitimate points to make about altcoins that are heavily reiterated in defense of Bitcoin’s reign over the crypto-market. The first-mover advantage enjoyed by Bitcoin and its time-proven utility as a cryptocurrency cannot be discounted. Despite altcoins attempting to usurp the throne, Bitcoin has remained the unwavering leader. Even in light of recent Ether price jumps, a correlated Bitcoin drop has yet to be seen. However, if you think Ethereum is just another “altcoin” you have your definitions confused.
In order to be defined as an “altcoin” the purpose of the coin must be primarily as a store of value. Consider a quote from dash.org for a moment:
Dash (DASH) is an open sourced, privacy-centric digital currency with instant transactions. It allows you to keep your finances private as you make transactions without waits, similar to cash.
There is no question about the motives of Dash in this statement. The mission statement affirms the assertion that it is an alternative store of value to Bitcoin and therefore an “altcoin”. While Dash attempts to provide a element of privacy the primary focuses on “currency,” “finances,” and claims that it is “similar to cash” make it clear Dash is an altcoin.
The same is true of Litecoin. Litecoin.org states:
Litecoin is a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world. Litecoin is an open source, global payment network that is fully decentralized without any central authorities.
Again, Litecoin pronounces itself as a “payment network” and its focus is almost expressly on being a store of value. These are just statements of fact.
In order to not be an altcoin a blockchain must have a distinguishable purpose beyond being simply a store of value. The purpose of Ethereum is definitively NOT to store value, but to create a platform for developing on the blockchain. We can prove this because, unlike Bitcoin’s Proof-of-Work (PoW), Ethereum developers are actively working on a Proof-of-Stake (PoS) system. This is an important distinction in that Proof-of-Work is an inherently miner-centric system in which miners have much to gain. As we have seen with Bitcoin, this also causes inherent problems concerning scalability since miners are unlikely to desire change from the highly profitable status quo. A PoS system is not catered to miners at all. In fact, among the hundreds of thousands of people using Ethereum only a small percentage will become randomly selected “stakers”. Instead of the miners’ priorities superseding the progression of the technology (as is the case with Bitcoin), PoS moves the focus to the platform. This is because PoS allows for transaction times exponentially greater than what could possibly be accomplished with a PoW system. Even in Ethereum’s current state as a PoW system it is uniquely designed to process transactions, not cater to the miner. If it isn’t clear now that Ethereum’s goal is not to be a simply a store of value then maybe the description on ethereum.org can clear things up. Note the lack of terminology concerning “value”, “currency”, “finance” or “payments”:
Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.
Ironically, this makes Ethereum an arguably better store of value. Consider that Bitcoin’s value, as is the case with all fiat currencies, is based purely on the user’s belief. Ethereum, by contrast, has demand created through the functional use of its currency whether through ‘gas’ or other Dapp affiliated transactions. As such, it is wrong for investors and dissenters alike to conflate Ethereum’s value to that of any other currency. For instance, a common argument of skeptics is, “well DASH and LTC tried this and look what happened to them.” For the reasons heretofore described, we have already proven that DASH and LTC are not legitimate parallels to Ethereum. Ethereum is a uniquely different project with uniquely different goals. It’s time to wake up and realize Ethereum is in new, unexplored territory. One small step for decentralization, one giant leap for mankind.