Currently, there are 705 cryptocurrencies out in the wild being traded every single day. For seven years, Bitcoin has remained the top gun of all the various altcoins within the industry, and there are many reasons why this is the case. Let’s take a look at why there’s a good chance this will continue for a while.
Bitcoin Will Remain in the Lead for Years to Come
When Satoshi Nakamoto released the first Bitcoin client in 2009, it changed the way the world looks at money and exchange for the better. Because the digital cryptocurrency is so innovative, it has spurred large swathes of clones, and hundreds of banks have tried to co-opt its underlying technology. With the vast amount of alternative cryptocurrencies and the creation of federated blockchains, Bitcoin remains stronger than ever and continues its path of growth and maturity.
Most altcoins don’t last very long and typically are surrounded by intense marketing campaigns and little novelties within the protocol such as anonymity. Some of them get hyped up so much they gain a significant amount of capital and later dump as price plummets to less than a penny.
One thing for sure is that Bitcoin doesn’t have an official marketing team or its own PR crew and has always stood out on its own. Additionally, most people don’t realize that Bitcoin can be updated with any novel features offered by altcoins such as enhanced anonymity, smart contracts, transaction speed, asset creation, and so much more.
What I think of altcoins: fast hype-fueled peak followed by fade to obscurity. https://t.co/uoU5w1lyil
— David A. Harding (@hrdng) May 29, 2016
Satoshi is Gone
One of Bitcoin’s first significant characteristics is the fact that Satoshi Nakamoto has left the public atmosphere and has allowed the development to continue organically. Some people find this element of the network strange and hard to understand why it’s important Satoshi left the community and development process.
An excellent example of this is decisions being made by those in the altcoin space; most notably Ethereum’s community. Some developers within Ethereum’s Foundation decided they should step in and deal with the DAO attack by implementing changes to the Ethereum blockchain with a hard fork or a soft fork. This type of action could never happen as fast as it did with the Ethereum network as a majority of community members sided with the core leaders of this infrastructure almost immediately. The Ethereum community has yet to make a decision concerning whether or not they will fork but its creators hold a lot of sway when it comes to decision making.
With Satoshi gone there is no grand leader of Bitcoin. There is no person known that could be persuaded to be swayed one way or another. When Bitcoin needs change implemented it takes a very long time as there are many developers with differing opinions, and there are many industry executives, miners, app makers, and the entire community itself that all hold individual subjective valuations towards the network.
The idea of the protocol having a benevolent dictator or even someone looked up to as highly as Satoshi could be bad for Bitcoin. Satoshi was never around to bail out the situation that happened with Mt Gox. He never said the cryptocurrency was designated for legacy enterprise institutions. No, he gave Bitcoin to all of us and it’s used in the black, white and red markets with no leaders behind it tailoring it for Microsoft.
Bitcoin’s network externality is quite vast and larger than the 705 cryptocurrencies behind it combined. For seven years, the digital currency has continually attracted a broad array of merchants, applications, standards, and more that makes the entire cryptocurrency environment dependent on its protocol. Even the creation of all the altcoins below it shows its demand-side of economic scale.
Some of the most important aspects of Bitcoin’s dominance has to do with the effects it has on the global atmosphere. Things such as speculation, merchant and consumer adoption, its vast array of miners churning machines, security, open standards for development, and it’s free market approach to the paradigm of exchange. These aspects are far superior within Bitcoin’s network, and there is no cryptocurrency to date that can match it at the moment and most likely for years to come.
The Bitcoin network is secured by the multitudes of mining pools, organizations and individuals processing transactions for an incentive. Bitcoin’s hashrate is by far the largest of all the cryptocurrencies in this landscape processing at 1,540,181,708 GH/s. Mining is an integral operation of the network that is incentivized by resources, reward, and tamper-resistant architecture that ensures it’s the strongest network possible.
Alongside this, some say mining altcoins can also make the network even more robust as every altcoin under the sun flows in and out of the Bitcoin network most of the time. It is the number one on/off ramp for these various cryptocurrencies even though some of them offer their own exit points without it. Merged mining itself allows low hash currencies to bootstrap off the Bitcoin network, which in turn secures it even more so.
A lot of Bitcoin miners merge mine and the cost to perform this functionality is basically nothing as it only takes a few toggles within the person’s software. There are those that disagree with the concept of piggybacking off of Bitcoin as people could adopt a different type of economic system or monetary incentive if the majority overwhelmed the largest chain.
Bitcoin is as anonymous as you want it to be and can be as transparent as one wants it to be as well. The cryptocurrency works for both types of people or organizations that either would like to remain anonymous or showcase every transaction they have ever completed. It’s up to the individual or group to choose which aspect they prefer. Currently, there are many methods a user can use to anonymize transactions such as coin shuffling, using VPN’s to hide IP addresses and more concepts are being planned for the future.
At the moment, a Bitcoin transaction can be obfuscated to a degree by using a plugin like JoinMarket a derivative of the CoinJoin concept. There are a few versions of this idea implemented throughout various areas in the visible and unseen web. Basically, a group of two users or more shuffle their funds together, so it is harder to tell where the original funds came from.
Another concept regularly discussed within the cryptocurrency community is Schnorr signatures. Using the Schnorr signature algorithm within the Bitcoin protocol can add a security based incentive with the implementation of hard to trace discrete logarithm problems. Lately, the conversation of integrating a Schnorr signature algorithm has become a hot topic and could be added to the network if developers give it enough attention.
Alongside the Schnorr protocol discussion is the possibility of an introduction of ring signatures in the future. Ring signatures are currently the integral aspect of the CryptoNote digital currencies such as Monero. A while back in the paper “Toward Unlinkable Bitcoin Transactions,” written by Andrew Poelstra and Gregory Maxwell, the idea of Bitcoin and ring signatures was tossed around within the two developer’s research along with “Schnorr Signatures for Threshold Circuits.” Many ideas are being discussed to add more privacy-centric features to the cryptocurrency to address fungibility concerns in the future.
Additionally, Bitcoin can be 100% transparent for any individual or organization as well. Individuals raising funds could keep transactions in the public eye, or a corporation could publish its entire revenue coming into the business. The Bitcoin blockchain can be used for voluntary verification and proof that things are just the way they should be within the business model. Charitable organizations could benefit the most from this method as they could be completely transparent unlike many of the major charities out there today.
The cryptocurrency Bitcoin holds the element of digital scarcity, which is one of the first protocols in the software realm that cannot be copied, duplicated, printed on a whim and holds an ultimatum of finite quality like no other in the online universe. The blockchain also allows other goods, products, media, documents and other assets besides Bitcoin’s monetary supply to be held within its immutable ledger. This unchangeable universe can create application specific tokens, decentralized media outlets, decentralized domains, storage and a vast array of applicable development protocols.
The fact that Bitcoin is digitally scarce worries some people (mostly Keynesians) because of frightening propaganda called deflationary spirals. Those with Austrian economic backgrounds often refer to deflationary spirals as a myth. Some Austrians would say that deflation produces more savings, increased entrepreneurship, and with bitcoin being divisible by 100,000 units, it can curb the fear of a shrinking money supply. Being scared of a shrinking monetary supply has always been the backbone of economists who prop up the idea that inflation is a good thing.
However, by adjusting the supply by printing vast amounts of fiat, central planners have caused severe busts and booms within our world economy. Inflation is wasteful when it comes to resource allocation by the central banks and bureaucrats and has done nothing but spur economic turbulence and recurring recessions.
Bitcoin’s Head Start
Throughout Bitcoin’s life since inception, there has been no altcoin that has come close to its magnitude. Altcoins are said to be useful for testing and experimentation, and some say they could be utilized if Bitcoin was ever to be attacked and wounded indefinitely. One could assume that if the government or a secret entity found serious vulnerabilities users could hop onto another chain.
However, in many cases altcoins tarnish the public image of cryptocurrency. You can see this by merely observing the pumpers and shills trying to beat Bitcoin by using any means necessary. This includes attacking Bitcoin core developers, scamming people, instamines, fraudulent claims, and outright shady activity throughout their illusionary communities.
Alongside this, altcoin’s have leading developers and foundations that act like central planners pushing buttons trying to control the organics of economics. Bitcoin is the top gun of economic experiments and has lasted because of integrity, security, its vast network effect and a community that knows these characteristics are the very foundations of sound money.
What do you think about the opinion that Bitcoin is far superior to the 705 cryptocurrencies within the global economy? Let us know in the comments below.
Images courtesy of Crypto-graphics.com, Pixabay, Wiki commons
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