Currently, you can find hundreds of various cryptocurrencies, but Bitcoin still has the largest market cap of more than 42 billion dollars, as well as the highest exchange rate and it is the most well-known among people who are not even interested in cryptocurrency and bitcoin trading. What is the reason for such a vast popularity among hundreds of other digital currencies? Why almost everyone knows about Bitcoin, while the word “cryptocurrency” still remains unknown to most people? Let’s start from the very beginning.
The early days of cryptocurrency
It is a well-known fact that Bitcoin is the first cryptocurrency ever. Although the word “cryptocurrency” is broader than Bitcoin, making it only one of many other representatives of its kind, Bitcoin is not just a cryptocurrency or a form of digital money. It is the very concept to introduce the notion of cryptocurrency to the world. Bitcoin wouldn’t be the hero of the occasion if it was not for the unique blockchain mechanism in place. It was slightly obscure in the year 2009 (the year of Bitcoin’s emergence) but extremely fundamental and popular now.
After the course of eight years, Bitcoin is now considered a sort of a backbone for the brand new industry and any business, that has at least something to do with blockchain and cryptocurrency. As you can see, this is already enough to realize that Bitcoin is more than a cryptocurrency. It caused a chain reaction, that cannot be stopped now. A chain reaction that has shifted the way we communicate and trust each other. An autonomous system, where everything is under control, especially because no one entity, but everyone controlls it. There is no trust thing in the blockchain, because there is no need for this. Maybe you know the fact that the creation of blockchain is believed to be more significant than the invention of the internet at the time. So, as the current generation we have a chance to see the emergence of a technology that changes the way how finances have worked for hundreds of years and the way we communicate with each other (either as a simple chat, call for a taxi, or trading things like they do on Amazon).
Firstly, being perceived as yet another digital currency, Bitcoin is now the greatest breakthrough of the 21st century.
The market of Bitcoin and Altcoins
The cryptocurrency market consists of the two main categories of coins: Bitcoin and Altcoins (any cryptocurrency different from Bitcoin). Such a “role distribution” already shows us clearly that Bitcoin calls for special attention in its field. Although the main point of buying any cryptocurrency is similar, you can almost definitely say that Bitcoin and Altcoins have different niches of the market.
Now here’s what it looks like in real life. Imagine a newcomer who has just become acquainted with cryptocurrency and is ready to invest some of his finances. Would he choose to acquire something alternative from the start? Probably, not. He would choose Bitcoin. So, in which case does one invest in other cryptocurrencies? The most popular scenario would be to earn money by trading various coins, so that the difference in price results in your personal profit. Well, you can do that but this way is too tough for a novice. Even if he spends enough time researching, and eventually buys altcoins and gains profit, he is more likely to keep it in Bitcoin, or fiat, but not any other cryptocurrency. Because he believes that, despite its volatility, Bitcoin is more stable than Litecoin, Dogecoin, or any other Altcoin.
It doesn’t mean that all other cryptocurrencies are worse, it’s just that the awareness is considerably less. Thereafter the majority of people prefer Bitcoin to other cryptocurrencies. It’s like a rolling snowball – people invest in Bitcoin, because they know there will always be a demand for it, respectively there is always demand since it is highly invested. On this basis, you can see that the market cap of Ethereum – the next cryptocurrency after Bitcoin is 29 billion dollars (which is an enormous sum of money, but is still almost twice as little cap than Bitcoin), while the ETH/USD exchange rate is almost ten times lower.
At the time, Bitcoin has cracked the ice (which is our unawareness of cryptocurrency) and cleared the path for others on the way. The fact that Bitcoin was the first on this unexplored territory, has in return given it all the popularity, trust and a vast audience.
Will Bitcoin keep dominating the cryptocurrency market?
This is a tough question, because the industry of cryptocurrency is developing extremely fast, and no one knows precisely what is going to happen next. Still there are a few things we can speculate about.
Think about what is required for a cryptocurrency to control the top of the list. The first thing that comes to mind is its functionality. There is no doubt as for Bitcoin’s quality and stability. Although there have been no major updates in Bitcoin’s blockchain, it is still up and running. So it’s not a question of quality, it’s more a question of the wide functionality.
Eight years proved to be a long term for a fast-developing industry, so you can find more and more cryptocurrencies that aim to be an upgraded version of Bitcoin with a vast variety of options. But you could barely find a successful implementation of the following ideas. At the moment Ethereum appears to be the best candidate to compete with Bitcoin. Although the distance between these cryptocurrencies is still quite considerable, Ethereum is probably the most conspicuous Altcoin and is traded on almost every major cryptocurrency exchange. As a result of high demand the exchanges are now expanding the range of fiat currencies for ether trading. For example, CEX.IO has recently introduced new ETH/GBP pair to serve larger audiences and facilitate trading within their platform.
So basically, it’s hard to say if Bitcoin will or will not stay the number one cryptocurrency in years to come, but there is one thing that is evident. No matter what, Bitcoin will always remain the merit index of cryptocurrency and blockchain.