{{|Bitcoin}}’s Rising Dominance Might Cause Altcoins to Bleed Out Beyond Rescue
Bitcoin is the first cryptocurrency in the market, it is the most valuable cryptocurrency by trading price and market capitalization, it is the most popular cryptocurrency, and it is regarded as the most secure blockchain.
The dominance of BTC over Altcoins as at January 1, was a modest 52.39%; however it has grown steadily and it is currently around 65.2%. Bitcoin’s resilience in holding its value makes it the de-facto safe haven cryptocurrency as altcoins continue to bleed out in the face of increasing regulatory concerns.
A quick glance at the cryptocurrency market shows that there are more than 2,400 coins. Some of the oldest altcoins such as Litecoin, Ethereum, Ripple, Stellar, and Monero were designed to fix some real/imagined inadequacies in Bitcoin’s philosophy and source code. Most of the latter coins are variants of the same idea; and the market has seen the rise and fall of a thousand other shitcoins and scam coins.
However, as Bitcoin continues to establish its dominance, its performance often has a correlative effect on altcoins. This piece examines the growing gap between the Bitcoin and altcoins with a view to determining if Bitcoin is enough to deliver cryptocurrency as the future of money.
The Gap Between Bitcoin And Altcoins Widen
In the year-to-date period, the price of Bitcoin has more than tripled from around $3,800 in January to around $13,000 on July 10 before it suffered a reversal in the last few weeks. Many reasons have been advanced for the end of the crypto winter, the subsequent, rally and the recent correction. The influx of new money seems to birth positive sentiments but regulatory concerns about Facebook’s Libra coin seems to be dampening the enthusiasm.
Nonetheless, the performance of Bitcoin so far this year contrasts sharply with the crypto winter of 2017 as seen in the chart below. It is also obvious that Bitcoin is outperforming some of the altcoins that were supposed to be better alternatives in terms of philosophy, network speed, and features.
Ethereum and EOS for instance are supposed to leverage smart contracts to power dApps. IOTA is promoting the DAG Tangle as a better alternative to the Blockchain, and Cardano wants to unlock the mass-market use of Blockchain with a scientific philosophy and a research-first driven approach. However, while Bitcoin has mostly dwarfed the performance of altcoins, many traders and investors are still optimistic about the prospects of Altseason 2.0.
Bitcoin-Powered Smart contracts
The last nail in the coffin of altcoins might be the arrival new projects that are leveraging Bitcoin’s network to build real-world solutions, products, and services. IOV Labs, originally RSK has introduced RSK as a second layer on top of Bitcoin's network as a platform for developing and running smart contracts. IOV Labs believes that it can utilize RSK to synthesize more value from Bitcoin’s blockchain by enabling smart contracts in the Bitcoin network for increased value and functionality. RSK is optimizing for scale at up to 100tps by using probabilistic verification, fraud detection, and Blockchain sharing techniques to reduce storage and bandwidth without sacrificing decentralization.
RSK is an example of the type of a secure smart contract platform that can deliver the Internet of Value especially with its hashing power of over 35% on the RSK Smart Contract Network. In addition, the RSK Infrastructure Protocols can enable broad interoperability and faster time-to-deployment to bridge the gap between blockchain technologies and to enhance the mass-market adoption of Blockchain technology.
However, while traders might be quick to discountenance the potential effects of RSK; miners and pools who share their processing power over a network will find significant value in RSK and RSF Infrastructure Framework (RIF) RIF.
More so, developers and enterprise users could potentially like how RIF is bringing to life the next generation of dApps through an all-in-one, easy-to-use platform might also make developers acutely interested in exploring its Open Blockchain Infrastructure Services.
Is the promise of altcoins exaggerated?
From a trading perspective, the promise of altcoins appears to be exaggerated because the cryptocurrency market is maturing beyond hype and it is gradually being driven by substance. To further compound the woes of altcoins, they didn’t record any significant gains following the latest crash of Bitcoin from around $13,000 to the $9000 range.
In fact, the price of altcoins seems to have fallen lower after Bitcoin tanked; hence, it is becoming increasingly unlikely that altcoins will build up the momentum to emerge from Bitcoin’s shadows, especially if the BTC dominance rises above 70%.
From a technological standpoint, many altcoins have largely overpromised and underdelivered based on the lofty ideals in their whitepapers. Ethereum is struggling with scalability issues and there are divisions within its rank on how best to progress – sounds like a repetition of Bitcoin’s history. More so, many altcoins have been unable to deliver real-world application of their Blockchains and the utility value of their tokens have been hijacked by traders who want to make speculative profits.