Bitcoin is the first decentralized cryptocurrency. Since it was created more than a decade ago, several more cryptocurrencies (altcoins) have been launched. Although Bitcoin has remained the market leader in terms of market capitalization, other cryptocurrencies like Ethereum, Litecoin, NEO, Ripple are making huge strides in the industry. As the pioneer of the relatively young crypto industry, Bitcoin has maintained its status as the king of the hill. As the underlying technology of cryptocurrency (blockchain) evolved, so did several other cryptos. These new cryptocurrencies (altcoins) make use of the same decentralized mechanism as Bitcoin.
However, they have taken things a little further with unique features. Ethereum, which is the second most popular cryptocurrency by market capitalization, introduced the concept of “smart contracts.” The smart contract code can automatically execute an agreement between two parties on a blockchain network. This approach opened the floodgates for the development of new use cases and applications for cryptocurrency. These altcoins have improved overall functionality; they process transactions faster than Bitcoin and are generally scaling to meet their services’ demands. As the altcoin market continues to expand, experts wonder if Bitcoin’s lead will be maintained or its end is near. Some believe that Bitcoin is designed and on course to keep up with this new generation of cryptocurrencies.
A New Solution To Solve Old Problems
The original idea for developing Bitcoin was for it to serve as an alternative, a decentralized digital currency with the potential to replace fiat money (e.g., Dollar, Euro, Pound, etc.). Therefore, it was built for simple transactions. It leverages a peer-to-peer consensus mechanism to uphold a network to verify transactions and add them to the main chain collectively. The chain is made up of a string of transactions known as blocks. While functioning as a payment mechanism, Bitcoin still lags behind other credit cards and other digital payment tools. Meanwhile, verifying or mining transactions is energy-intensive and quite expensive.
These altcoins employ different mechanisms to reduce both the cost and complexity of mining. Also, they can process more transactions per second than Bitcoin. Some of these altcoins make use of smart contracts to build innovative apps directly on the Blockchain. Like Ripple and Dash, some of the altcoins offer a new take on payments’ transactibility and speed. Ripple is designed to facilitate a centralized form of cross-border transactions between large corporations and institutions. In its original state, there is practically no way that Bitcoin can compete with these newer and more focused coins. Satoshi likely didn’t envision the multiple use cases of blockchain technology, as we see today. Many pundits and industry veterans opined that Bitcoin might be on its way out at the backdrop of this. Well, they spoke too soon.
Old Coins Can also Learn New Tricks and Reinvent the Wheel.
The predictions and speculations that the altcoins will outdo Bitcoin were anything but correct. Instead of fading into obsolescence, Bitcoin has evolved to catch up to these altcoins by expanding its usability. Bitcoin still controls a larger user base, which comes with a lot of mainstream appeal and substantial interest from developers. Over time, Bitcoin has been adding new functionalities while fighting off newcomers. Instead of creating the new Bitcoin, most of these altcoins have chosen to build on existing Bitcoin architecture. The smart contract has always been Ethereum’s major advantage; now, Bitcoin is encroaching on that territory. With new tools like Lightning Network, Bitcoin network users could take their Bitcoin transactions off-chain. This will take the burden off the main Bitcoin blockchain, hence speeding up how peripheral transactions can be verified. Although these new features do not alter Bitcoin’s original design, they make it more competitive against younger altcoins looking to step into the spotlight. Improving on these features will undoubtedly help to expand Bitcoin’s usability and mainstream popularity.
A good and Flourishing Ecosystem
In theory, Bitcoin can do whatever these altcoins can do. However, the reality is that it still benefits from the constant competition. With a little over a decade of implementation, blockchain technology is still young and needs a thriving ecosystem to truly develop and become more beneficial to society at large. Meanwhile, it is important that Bitcoin “thread” carefully to avoid feature creep and lose its value. The good thing about blockchain technology is that it allows for cryptocurrencies to be used for various things.
A good example is Fishcoin, which tracks fish and seafood from the sea to millions of kitchens worldwide for ethical fishing. It has taken the concept of blockchain to an entirely new dimension. Bitcoin’s original design is to be a digital currency, and from all indications, it’s getting better at it by the day.