- >Bitcoin Feels Heat of Surging Altcoins
Bitcoin Feels Heat of Surging Altcoins
Since its emergence in 2008, Bitcoin has been the top cryptocurrency in terms of market cap and brand recognition. In the meantime altcoins have been becoming increasingly popular due to their potential use cases and have begun to compete with Bitcoin in terms of year over year gains. Coins such as Tezos and Chainlink both grew at a quicker rate than Bitcoin over the first couple months of 2020 but can they, or any other cryptocurrency, dethrone the king?
Evan Jones | Oct 12, 2020
Bitcoin has long dominated the world of cryptocurrency, and over 60 percent of the cryptocurrency market is comprised of Bitcoin buying and selling. A large portion of this is due to the liquidity of Bitcoin, and its seemingly endless pairings with nearly every altcoin you can think of. Generally speaking, to buy any cryptocurrency you need to start by buying either Bitcoin or Ethereum and then using that to purchase your altcoin of choice. This alone creates demand for Bitcoin and helps it maintain liquidity regardless of market conditions.
But that is essentially all that can be done with Bitcoin, regardless of being able to make transactions faster using the Lightning Network, Bitcoin is solely a digital currency, it has no other use case at this time. Because of this, more avid cryptocurrency pundits like to speculate on altcoins that they believe will have mainstream appeal and use separate from being a digital currency, though likely in conjunction with being one.
However, there is an upcoming soft fork for Bitcoin that may not only increase the Lightning Network’s potential but also allow smart contracts to be executed on the Bitcoin blockchain. This update is expected to be completed in the last quarter of 2020.
Altcoins Waiting for Their Chance
The difficulty that altcoins face is not their utility, but their project development. Many altcoin blockchain products are still being constructed, and therefore the only thing that actually drives up their price is speculation. When altcoins release products though, they can start to grow at a faster rate than Bitcoin. This was seen in early 2020 as Tezos and Chainlink, both of which have working products, started to outgain Bitcoin in terms of growth. With Tezos, holders could begin to stake and earn passive income, and Chainlink’s oracle network is being increasingly used as it gains partners, meaning demand for both currencies began to rise.
Altcoins are essentially racing to create a blockchain that can solve all of the issues which Bitcoin has run into, centered around scalability, decentralization, and privacy. Even an established blockchain project such as Ethereum is looking to upgrade in order to solve these problems with the upcoming release of Ethereum 2.0 because in its current build Ether fees would become unsustainable with mainstream adoption.
Projects such as Stellar, Cosmos, and Cardano are all looking to create blockchain ecosystems that not only solve the main issues faced by Bitcoin, but also create the ability to communicate with other blockchains seamlessly. The altcoin project that is able to do all that, may be the one that pushes cryptocurrency into all households and dethrones Bitcoin.