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Bitcoin is the first cryptocurrency of its kind and is widely cited as the flagship coin of the cryptocurrency space. For this reason, all other cryptocurrencies are collectively referred to as altcoins.
However, as the convergence between the digital and physical worlds continues to evolve, more and more cryptocurrencies and types of digital assets are emerging. The following discussion examines whether Bitcoin can survive and remain relevant over the long term as the cryptocurrency industry evolves.
Is Bitcoin here to stay or just a fad?
The cornerstone of the cryptocurrency community is the deployment of decentralized finance (DeFi). In terms of this narrative, Bitcoin is the undisputed gold standard. Bitcoin is a new financial system that cannot be controlled or manipulated by politics or human greed – a fair and transparent money for a divided world. It is not intended for buying coffee; it is set to become the next global reserve currency.
Technically, Bitcoin is the most decentralized cryptocurrency in the world and the largest cryptocurrency by market cap. Additionally, Bitcoin is the only leading cryptocurrency that has an anonymous creator, had purely organic growth, and has been tested multiple times, leading to it being the best performing cryptocurrency on the market.
In short, Bitcoin is extremely unique. The biggest difference to bitcoin and other cryptocurrencies is what bitcoin stands for in terms of shifting power away from a few to as many people as possible.
What is Bitcoin?
Bitcoin is a layer 1 blockchain, a type of project that represents the backbone network or underlying infrastructure in a blockchain-based financial system. Layer 1 blockchains can complete and validate transactions without the help of another network. They also have their own native token that is used to pay transaction fees.
Bitcoin is a form of digital currency and is used by many as a speculative store of value. It is decentralized, meaning it is not controlled by a central authority. Instead, Bitcoin is powered by thousands of computers distributed around the world. Although bitcoin is not accepted as legal tender in most parts of the world, it is popular because it cannot be censored, has a limited supply of 21 million, and allows transactions by anyone, anytime, anywhere.
Like most cryptocurrencies, bitcoin is backed by a technology known as blockchain — a decentralized, distributed ledger that records the lineage of a digital asset. The blockchain secures cryptocurrency transactions by creating incentives to make manipulation unprofitable for malicious users. The implication is that ownership of crypto is probabilistically held through trustless enforcement, as opposed to certainty.
From an investment perspective, Bitcoin is most comparable to digital gold. Bitcoin can be viewed as a speculative supercommodity whose value proposition is based on being an absolutely scarce, portable, immutable and shareable savings technology.
These factors mean that Bitcoin can remain largely unaffected by factors that could affect its value, such as inflation, seignorage, and failing monetary policy. Bitcoin does not rely on a central bank; Instead, it is managed by programmed algorithms that are managed in a decentralized and democratic manner.
BTC history
Bitcoin was created out of the turmoil of the Great Recession of 2008, when distrust of centralized financial institutions grew. An individual or group of people by the name of Satoshi Nakamoto has published a white paper to address centralized control of money and the requisite trust that citizens place in the hands of centralized authorities.
The purpose of Bitcoin was to cut out the middleman in financial transactions, reduce costs, improve efficiency, and increase financial accessibility.
On January 3, 2009, the Bitcoin blockchain was launched when the first block, commonly referred to as the Genesis block, was mined. In the first few months, Bitcoin had no real monetary value. About a year later, however, the first economic transaction took place when a Florida man negotiated delivery of two $25 pizzas from Papa John’s for 10,000 bitcoins on May 22, 2010. This act established Bitcoin’s (BTC) first real starting price at 4 bitcoins percent.
Fast forward today and this amount of Bitcoin is estimated to be close to $400 million. This iconic day is referred to as Bitcoin Pizza Day (May 22) by cryptocurrency fans around the world. Since first becoming available on exchanges in 2010, BTC is now listed on over 600 exchanges worldwide.
Pros and Cons of Bitcoin
Despite Bitcoin’s strong reputation in the cryptocurrency space, Bitcoin also shares its mix of strengths and weaknesses compared to other cryptocurrencies.
advantages
- The most decentralized cryptocurrency
- Strong reputation, concrete goal and worldwide recognition
- Higher trust and stability than many other cryptocurrencies
Disadvantages
- Proof-of-Work (PoW) mining process not environmentally friendly
- Serious scalability issues
BTC competition
As a Layer 1 blockchain, Bitcoin’s biggest competitors are other Layer 1 blockchains like Ethereum. All competitors aim to solve the blockchain trilemma (scalability, security and decentralization) more effectively than Bitcoin. Despite being the most decentralized blockchain, bitcoin is easily outperformed by competitors in terms of functionality and scalability.
Bitcoin’s biggest competitor is Ethereum, the second largest cryptocurrency by market cap. You can think of Ethereum as a public, shared global computer network. It doesn’t run on a single device, but on thousands of devices around the world at the same time. People all over the world contribute the processing power of their computers to the network and get paid for it.
Unlike Bitcoin, the Ethereum blockchain allows developers to build and launch decentralized applications (dApps) and is faster than Bitcoin. This goal is achieved through the use of smart contracts that allow users to interact and develop dApps that cannot be censored or shut down. For this reason, Ethereum is commonly referred to as a decentralized computing platform or decentralized internet.
Other competitors alongside Ethereum include Solana, Cardano, and Polkadot, all of which aim to differentiate themselves from other Layer-1s by tackling the blockchain dilemma more effectively.
How to make money with bitcoin
Aside from buying BTC at one price and selling at a higher price, you can make money from BTC through interest-bearing platforms like Coinbase.
However, it is important to note that you cannot earn BTC by staking as Bitcoin does not use a Proof-of-Stake (PoS) consensus mechanism like Layer 1 blockchains like Ethereum or Cardano.
How to Buy Bitcoin (BTC)
getting started
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Disclosure: eToro USA LLC; Investments are subject to market risk, including the possible loss of capital.
1 minute recap
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best for
- US-based cryptocurrency traders
- Investors who want to copy other traders
- Simple user interface
advantages
- Several major cryptocurrencies and altcoins
- Extensive network of social trading features
- Large customer base for new traders to emulate
BTC can be traded on major exchanges such as Coinbase Global Inc. (NASDAQ:COIN), Gemini, Crypto.com and eToro. Many of these platforms allow you to buy bitcoin using your credit card, through exchange functions, or through various trading pairs such as BTC/USDT.
Has Bitcoin come to stay?
Bottom line, Bitcoin is the longest-established cryptocurrency with an untouchable value proposition and fundamentals that suggest it is the best-performing cryptocurrency in the world. Additionally, Bitcoin has a unique network effect as it is the first cryptocurrency of its kind, making it less vulnerable to easy exchange and being the first point of contact for newcomers to the cryptocurrency industry.
To reiterate, all other cryptocurrencies are called altcoins, and with good reason. Bitcoin is truly unique and the epitome of what the cryptocurrency movement stands for.
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