- Details
Bitcoin has been the king of the crypto sector since its launch. Long live the king! As would its supporters say. But will it live long? New crypto projects come to life daily, and many threaten its status with innovations and unique use cases. Bitcoin responded to the new wave of pretendants with improvements in the blockchain, leading to a more functional market.
You don’t have to be an experienced crypto trader to know that Bitcoin has been the king of the cryptocurrency market thanks to its status as the founder of the sector. Years later, it remains the most valuable digital currency by market cap, and at one point, Bitcoin price reached $20,000 for a single Bitcoin. Due to the crypto winter, it might have lost some of its value over the last few years, but it continues to be the number one choice of traders.
As blockchain technology advances, the number of crypto tokens available increases, and everyone wonders what the sector could accomplish. The cryptocurrency projects created with the purpose of providing extra features use the same technology, but they take things a few steps further with their unique characteristics. Ethereum, the most well-known altcoin, introduced the concept of smart contracts, which are codes that execute agreements automatically when particular conditions are met.
Altcoins gained popularity in the sector. After all, they improve the overall functionality of cryptocurrency because they process transactions faster than the oldest cryptocurrency and have additional use cases. And considering that their market is expanding, it’s important to understand the differences between them and Bitcoin.
The take on Bitcoin
Bitcoin was created as an alternative decentralized digital currency that could replace traditional money like the euro, pound or dollar. Therefore, Satoshi Nakamoto created it using a peer-to-peer consensus mechanism that puts the power in the hands of the network that verifies blocks and adds them to the chain. However, some crypto enthusiasts have argued that Bitcoin’s payment mechanism falls short of some payment tools and methods. In addition, they highlighted that mining new Bitcoin is an expensive and resource-intensive process.
Altcoins use different mechanisms that reduce the use of power and complexity of the mining process and allow for more transactions per second. Some altcoin projects also use innovative technology like smart contracts that allow developers to create apps directly in the blockchain. Alternative coins like Dash and Ripple also offer a new take on the speed of transactions and the concept of transactability. Dash was designed to enable one transaction per second, promote superior security, and provide traders with an easy ecosystem where they can manage their resources. Ripple was created to facilitate centralized cross-border transactions between institutions and large organizations.
Bitcoin was the first cryptocurrency ever launched and designed to serve other purposes, so it cannot compete with these features. Altcoins are more focused coins, and many were developed to solve particular drawbacks Bitcoin has shown over the years. Bitcoin was created to serve as a digital currency, but its creator didn’t take advantage of the several other use cases of blockchain technology. This lack of features has led pundits to claim that Bitcoin might lose its status as the most important coin in the crypto sector.
Can Bitcoin overcome the challenges?
Even if several crypto enthusiasts have predicted Bitcoin’s end over the years, it seems that the rumors were just rumors and greatly exaggerated because the first digital coin has remained investors’ first choice. Instead of fading into obsolescence, it evolved and expanded its usability. Bitcoin has the largest user base, making it quite appealing to beginner and seasoned investors. And at present, it fights off altcoins by adding new functionalities and tools that broaden its utility cases.
Instead of searching for the next Bitcoin, many investors have chosen to build on the well-known Bitcoin blockchain, improving its architecture and adding new features that could make it more usable in a more diverse context.
For example, the Lighting network enables traders to take their Bitcoin transactions off the chain, removing the burden of the primary network and speeding up the speed at which peripheral transactions are completed. The new features don’t change Bitcoin’s original purpose but allow it to remain competitive in the market against altcoins that claim to bring better characteristics and want to claim the spotlight.
Why do investors prefer Bitcoin?
Bitcoin is the first digital currency, and its first-mover status brought it a great success. Over the years, it built a diverse community worldwide, and at present, thousands of nodes connect to create its network, making it the largest ecosystem when measured by market capitalization, hash rate, or volume. The sector dominance creates a brand for the coin, despite the similarity of some alternative crypto’s names or even logos.
Bitcoin is considered the safest cryptocurrency because it enables traders to verify their coins, and no one has ever managed to counterfeit a Bitcoin. The blockchain also registered an uptime unparalleled by any other one, it has remained accessible and active since 2013 without any interruption. Not even well-known organizations like Facebook, Google, or Microsoft achieved this. The oldest digital currency survived several external attacks, government initiatives to ban it from some countries, and internal disputes regarding its protocol.
Over the years, Bitcoin, similarly to other digital currencies, has witnessed several price climbs and drops, and the crypto winter triggered a decline in its volatility. But at this point, Bitcoin is the only crypto project with over a decade of experience in the sector, which survived several bear markets.
The numerous challenges it has overcome have made it more resilient. In the beginning, it had a central leader, which could have turned into its point of failure. But its creator yielded the project’s control to a decentralized group of developers that continued the ecosystem’s decentralization efforts and took the network to the level it is today, with an unknown number of miners and tens of thousands of nodes.
No government or another party can take Bitcoin down, which we cannot say about most altcoins.