It can get very messy on crypto-twitter when the bitcoin maximalists respond to what is often deliberate trolling and provocation, and frequently demonstrate the worst standards of human behavior and debate. But if you blindly insist that bitcoin is the final word on cryptocurrency and not simply the first of an entire universe of digital assets, tokens, and currencies, then you are also suggesting that a market as important as “information aged money” won’t be one of the most competitive markets we’ve ever seen.
Competition drives innovation. When maximalism becomes fundamentalism, we lose the ability to think as big as we need to, about the potential manifest in this space.
Bitcoin was where it all began, as a protocol and as a new kind of currency. But it is no longer the whole story whether people like that idea or not, a fact that is demonstrably true already as bitcoin’s dominance ebbs and flows with the tide of institutional money that now sits on its shores. The big money likes big daddy bitcoin, that’s no surprise — as the all-time, crypto market leader it is the quintessential blue chip in everyone’s crypto portfolio. It has the most volume, the most liquidity, the easiest on-ramps and off-ramps, the most advanced options in terms of available financial instruments, and basically everything you’d expect a first mover in any field to have. So it’s the logical point of entry for fund managers taking their initial forays into digital asset investment, just as it is for many retail investors.
Indeed with a 10 year head start, it’s always been bitcoin’s race to lose.
With the privilege of pole position, comes some inevitable ossification, and a detriment in terms of usability and innovation. Meaningful network upgrades or improvements are now few and far between, and the very decentralization which revolutionized the idea of money with its inception, makes nimble decision-making a great challenge.
This makes Bitcoin the protocol something of a static target for competitors to address (at least from a technical standpoint). Right now, off the top of my head I can list a dozen networks that are more interesting to me from this point of view, and some of them have even outperformed bitcoin at market (ATOMS for example is soundly outperforming bitcoin by precisely 27,362.65% on the 1yr chart as of the end of June 2019).
Yet the retail market and the institutional money will, for the time being, focus entirely on big daddy bitcoin and with good reason. The truth is if bitcoin wins, we all win anyway — so Bitcoin dominance showing volatility is a wonderful thing.
Traders making big gains on their BTC holdings will often look to secure that value in a number of ways, diversifying over a wide array of investments. Certainly, the bulk of this is locked up in national currencies and stable coins, where it will mostly trade back and forth ad infinitum (at least until the trader decides to move on to a different market). However, a percentage has historically leaked down market into the secondary players (most notably into smart contract platforms such as #ETH, #CARDANO, #TRON, #NEO, #STRATIS, and #LISK).
With #WAVES also adding smart contract capabilities, together they make up 7 of the top 14 performing digital assets of all time. Together they have delivered an average lifetime return of 16,507.66%, much of it as a result of BTC value leaking down market as spillover every time the market increases in size.
Ignoring this aspect of the market and pretending there’s “nothing to see here” would be equivalent to believing there was only ever going to be one website. Bitcoin is the first and most important entry into the industry, no doubt. However, it will never be the last entry, because an entire movement based on decentralization is never going to put all of its energy into a single point of failure, even if effective second-layer tools change the user experience considerably.
It’s the industry as a whole that will disrupt modern banking as we know it, and further bring our civilization into the information age — this is a foregone conclusion. What we don’t know is what shape this new economy will take, what technologies will we need to make the leap palatable to the masses, what kind of end user interfaces will actually be viable, nor how end users will manage all this newly added complexity.
It’s an exciting time to be innovating and developing in this space for sure!