Charting Bitcoin dominance
Eleven years on, Bitcoin is still the king by a myriad of economic and social metrics
Bitcoin, during the course of its eleven year history, has inspired a wave of experimental variations known by the umbrella term of cryptocurrency.
The most well-known way to measure “Bitcoin dominance” over other cryptocurrencies is by calculating relative market capitalization, i.e. comparing the total supply of circulating tokens multiplied by current price. Against a basket of fifteen cryptocurrencies listed on U.S. exchanges, Bitcoin was hovering at ~80% dominance with a market cap of ~$137 billion according to CoinMetrics as of April 22nd, 2020.
At its lowest, on June 20, 2017, Bitcoin dominance dropped to ~51%. On that day, Bitcoin ceded much of its market cap to Ethereum. Today however, Ethereum hovers at only ~10% of total relative market cap.
Altogether, these assets have transferred over $3.7 trillion of value on-chain since 2010², a remarkable milestone for the history of decentralized financial systems. In terms of relative value transferred on-chain, Bitcoin similarly dominates over other cryptocurrencies by ~70% today. From 2017 to 2018 however, Bitcoin ceded significant ground to Ethereum.
As a more complete picture of BTC vs. ETH dominance, we can account for the larger ecosystem of ERC-20 tokens and stablecoins operating upon Ethereum’s blockchain. By combining ETH, ERC-20 tokens and ETH stablecoins, BTC processes only ~40% of relative value on-chain today. Stablecoins are booming in recent days, accounting for much of the new volume upon Ethereum’s blockchain.
In terms of global Google Search interest for five major crypto assets this past year, Bitcoin dominates at >80% relative interest.
Wikipedia pageviews also corroborate ~70% BTC dominance, although Ethereum pageviews spiked around January 2020. Bitcoin’s wiki has been translated into 99 different languages, with over 10 million total pageviews since the start of 2019.
Which languages are most dominant for Bitcoin pageviews on Wikipedia? A majority of the pageviews are for languages other than English, indicating globally diverse interest in Bitcoin.
By analyzing crypto Twitter keyword volume, in March 2020 there were 1.8 million tweets mentioning “btc” followed by 891K tweets mentioning “eth.” Bitcoin currently hovers at ~50% of relative Twitter Keyword Volume compared to six major cryptocurrencies.
Similarly, Bitcoin garners ~50% of the relative total subscribers on Reddit. Bitcoin’s subreddit has nearly doubled since 2018 to ~1.3 million subscribers today.
Past interest across the Internet, which of these cryptocurrencies experience the most volatile price movements? Despite these cryptocurrencies being highly correlated to BTC, Bitcoin is the least volatile of all, meaning its price is more stable compared to other cryptocurrencies. Measuring from 2019 until today, Bitcoin’s average volatility is the lowest of nineteen assets surveyed. While not technically a measure of relative dominance, being the most stable crypto is advantageous. Among the most volatile cryptocurrencies are KNC, LINK, XTZ, and BCH.
Speaking of Bitcoin Cash, or BCH, since its fork from Bitcoin in August 2017, how has it fared against its parent chain? In terms of BTC’s dominance over BCH by market capitalization and mining power (hash rate) backing the network, Bitcoin is the overwhelming winner. As of April 12th, Bitcoin maintains 98% of the total mining power and 96% of the total market capitalization relative to Bitcoin Cash.
Bitcoin’s dominance over its crypto-progeny is one thing. To conclude with a macro metaphor, how does Bitcoin compare to global fiat currencies and gold? Notably, Bitcoin surpasses the “market capitalization” of many global fiat currencies (i.e. a country’s base money in circulation valued by its current USD exchange rate)³. However, a more apt comparison is likely drawn between Bitcoin and gold’s market caps. As of February 29th, 2020, gold’s market cap (i.e. the estimated total above ground stock multiplied by current price per ounce) was ~$10 trillion compared to Bitcoin’s ~$156 billion.
So is Bitcoin best compared to gold or emerging market currencies? Bitcoin is globally accessible, portable, volatile, scarce, independently verifiable, easily divisible, operates 24/7, and does not require a trusted third party to transfer.
In the end, Bitcoin is in a class of its own.
- Note: Exempts stablecoins, EOS, Atom, Algorand, OXT, XRP and XLM.
- Trading Economics: “M0 is the most liquid measure of the money supply including coins and notes in circulation and other assets that are easily convertible into cash.”