Since its inception, and the introduction of thousands of cryptocurrencies later – people still wonder whether bitcoin will remain the dominant cryptocurrency. This argument doesn’t die as we may have witnessed many instances where the “flippening” almost happened. The “flippening” is a term coined by crypto pundits who think that one day, another cryptocurrency with more users, and more use cases can replace Bitcoin.
It started with the Bitcoin Cash theory; infact at one time, 2 Bitcoin Cash could exchange for 1 Bitcoin, and it definitely didn’t end when Ethereum or Ripple nearly beat out Bitcoin’s market capitalisation.
Understanding why Bitcoin is dominant
Despite not being the most technologically-advanced cryptocurrency at this time, Bitcoin still has the highest market capitalization and value. Why is it that cryptocurrencies like Ethereum, which are backed by complex blockchains capable of supporting smart contracts and an entire underlying token economy, is valued at less?
Originally, Bitcoin has been designed as a peer-to-peer electronic cash system, or a way to quickly and efficiently send money to anyone around the world – without the need for banks, or regulatory approval and consent. With the passage of time, the market has changed its expectations. The cryptocurrency community is now unsure whether bitcoin should be viewed as a form of digital cash, or as an asset. It is true, that holding onto a currency which is meant to be spent will not increase its utility (and therefore its value), but early investors who brand themselves as Bitcoin Maximalists argue otherwise.
But truth be told, it doesn’t really matter. Apart from the technical reasons we’re all familiar with, it was the first relevant digital currency, and was placed in the centre of media and public attention. It also had a major shock-factor, as it skyrocketed to values above $20,000, thus seemingly an attractive instrument for speculation and perhaps a good store of value. Additionally, Bitcoin has also been through about handful of crashes and booms, setting it up as a gold standard. Other cryptocurrencies which crashed did not even recovered.
Will it maintain its dominance over the crypto market?
The point we’re trying to make is that Bitcoin isn’t simply ONLY a cryptocurrency, BUT it’s the FIRST. Despite its disadvantages, it stands above the rest. Replacing it with another coin may only be possible after, and if Bitcoin fails. The reasons that could fuel bitcoin’s failure include a high-profile security breach, loss of trust in the network, or lack of adaptability to what the future might entail. Take the email protocol for example. It’s crude and outdated, but still being used today. Infact, your friends might laugh at you if you said you didn’t have an email. The same will be for Bitcoin.
Does that mean people will stop trying to beat Bitcoin? NO, not at all. For instance, Ethereum, thanks to its smart contracts functionality quickly beaten out the other tokens to sit rightly at the second place. This is just 1 functionality. What about other tokens with multiple functionalities? However, one should also bear in mind that functionalities alone is not enough to become MONEY in the eyes of the masses. It finally boils down to trust, and track record– which until now only Bitcoin alone has. No one has been able to hack Bitcoin, like unlike the unfortunate DAO hack which affected Ethereum. Also, Bitcoin has been through a series of booms and busts, and still came up on top – while other coins such as Litecoin, Ethereum HAS NOT.
The moment another cryptocurrency proves its mettle, that possibility of dethroning Bitcoin increases.
Cover photo by: bitcoinist