After mining the Genesis Block in 2009, the mysterious Satoshi Nakamoto established the Bitcoin network. Since then, blockchain technology has taken off, with several projects springing up to build on the foundation established by Bitcoin. Despite their best efforts, Bitcoin remains at the top of the rankings, controlling 43 percent of the markets with a market cap of nearly $1 trillion.
Several Sets of Eyes on the Crown
The list of the top five largest cryptocurrencies has changed frequently over the years, with projects rising and falling in the rankings. Nonetheless, Bitcoin has remained at the top of the market since its inception. According to some analysts, Bitcoin may become a “altcoin” in the future, falling to third or fourth place in the rankings.
Proponents of this theory blame the decline on Bitcoin’s glaring lack of advanced smart contract functionality. Smart contracts are essential for the smooth operation of decentralized finance and applications, and their meteoric rise in popularity in recent years has seen Bitcoin miss out on them. Because of its advanced smart contract functionality, Ethereum is being touted as the project with the most potential to flip Bitcoin. Ethereum currently has over 3,000 Dapps built on its network and is home to the majority of the DeFi and NFT rave.
When compared to newer blockchains, Bitcoin’s block time of 10 minutes is considered slow. With speed being a major deciding factor, blockchains designed for speed may pose a threat to Bitcoin. Furthermore, the sheer computing power associated with Proof-of-Work consensus and environmental concerns associated with bitcoin mining cast doubt on the asset’s continued dominance.
Can Bitcoin Survive?
Although far from perfect, Bitcoin still has some advantages. For starters, the network has first-mover advantage and is the world’s most popular cryptocurrency. Nations such as El Salvador have begun to take steps to recognize its legality as a currency, and other countries may be enticed to follow suit.
Bitcoin has performed admirably as an inflation hedge, and the development of the Lightning Network has provided an answer to the question of speed and scalability. In an ironic twist, the network still has the Taproot Upgrade on the card, which is a major technological update that will improve network privacy.
However, unless Bitcoin incorporates smart contracts, DeFi, Dapps, and NFTs, maintaining its lead over other cryptocurrencies will be a herculean task. Ethereum is closing the gap on Cardano, which is hot on its tail, and some are betting that a stablecoin will eventually take the lead.
The ebb and flow of the dominant asset class is frequently followed by the crypto markets. When Bitcoin rises, altcoins ride the wave, making the top spot coveted. Investing in the right altcoin could be akin to striking gold for investors. To displace Bitcoin, the project must have a diverse set of practical capabilities as well as the same global appeal as Bitcoin.