Bitcoin is open-source which means developers can play with blockchain technology and make their own altcoin. Personally, I welcome diversity in cryptocurrencies because this adds to decentralization and more choices lead to greater freedom. That said, everyone and their grandmother is pumping out new coins and some of them are outright scams.
Occasionally there’s an altcoin that gains traction and becomes popular. The popularity usually coincides with a strong bull run and positive media hype. Supporters get worked up in an overexuberant bullish frenzy and make wild eyed claims about the death of Bitcoin. Everyone wants the king’s crown!
As much as I love a good rally, altcoins and “private bankchains” need to show a little respect to their roots. Here are ten reasons why Bitcoin is still king:
#1: First Mover Advantage
Bitcoin is the first functioning model of a blockchain and has the advantage of having a head start. There are only a few million cryptocurrency users in the world and the majority of them own and use bitcoin. The Bitcoin industry has had more time to mature than any other coin.
#2: The Network Effect
People naturally gravitate towards what’s popular. Money is a medium of exchange within a society and faith between its participants is the only thing that gives it value. The network effect is an important factor for money because we all want to trade and hold what the majority of participants feel is valuable.
In order for a currency to function properly the markets need to have liquidity. Healthy markets mean that miners can pay expenses, merchants can easily convert into fiat and serious traders can place large orders.
Bitcoin has the highest trading volume which technically includes any altcoins paired against it. Altcoin values are generally measured in satoshis, which makes bitcoin a sort of reserve currency for the crypto markets. New users who want to buy altcoins usually need to buy BTC first.
#4: Brand Recognition
Bitcoin is a popular brand. Even people who don’t use Bitcoin still likely know its name. Blockchain tech is respected in legacy finance and you can’t explore it without first having looked at Bitcoin.
#5: Altcoin Dilution
There are many interesting altcoin projects that once had their moment of glory. The problem is that new altcoins are pumped out every week, which pulls users and liquidity from more established projects. The altcoin markets are diluted and many of them are used as pump and dump schemes.
#6: Store of Value
Bitcoin is being established as an alternative asset class to store value. Its limited supply makes it a form of digital gold. Individuals who own bitcoins are in full control of their money which makes it a nice hedge against a faltering banking system.
Bitcoin has its bull and bear markets just like precious metals but it’s the only cryptocurrency that’s proven to be a good store of value. Altcoins may be profitable markets to trade but have a poor history of losing value over the long haul. Any serious crypto trader knows to lock their profits in bitcoins.
Bitcoin is the most secure blockchain in the world. It has more peer review and testing than any other coin. Bitcoin has paved the way for blockchains and is on the front lines taking a beating for the ecosystem. It’s been declared dead at least 99 times and subject to multiple attacks and yet it still stands today. Every time Bitcoin survives an attack it becomes more resilient.
#8: Matured Industry
The Bitcoin industry has matured greater than any other altcoin or private bankchain that exists. Bitcoin has the highest rate of merchant adoption, services, ATM’s, exchanges, fiat pairings, users and wallets. As a result most new users are first exposed to bitcoin before exploring other coins.
Bitcoin is sometimes referred as “the Myspace of blockchains”, as in first to the market doesn’t necessarily guarantee future dominance. While it’s true that Bitcoin could one day be replaced by another form a crypto, by no means has it become outdated.
There are some valid concerns about slower transactions and the network’s ability to scale. That said, Bitcoin has very talented developers who are working to solve these problems.
Innovations such as sidechains, rootstock and lighnting network will help secure Bitcoin’s place as #1. Since the ecosystem is open-source, any new features from an altcoin can one day be integrated into Bitcoin.
#10 Media Attention
Love it or hate it, Bitcoin tends to have the most media hype. The epic tales of fortune and tragedy provide journalists with a constant stream of sensational news pieces. Many marketers know that any press is good press. Even bad news puts Bitcoin on the radar of more people.
Bitcoin attracts its fair share of trolls but the irony is that they’re still obsessing over it. I’ve seen more energy and passion invested in Bitcoin from trolls than I see from most enthusiasts. Some say that the opposite of love isn’t hate, it’s apathy.
News pieces that talk about other blockchains tend to mention Bitcoin at least once. Bitcoin is a tech legend that changed the way we think about finance. Banks that praise blockchains while trash talking Bitcoin show signs of cognitive dissonance. Respect.