Since the creation of Bitcoin, there has only ever been one cryptocurrency at the top of the market cap rankings, despite thousands of competitors being created over the years.
The Bitcoin price defines all other cryptocurrencies. Indeed, altcoins are not only priced in dollar terms, but also in terms of satoshis – their worth in Bitcoin. But why is it that the Bitcoin price defines the cryptocurrency market?
Bitcoin price dominance
When looking at the total market cap of all cryptocurrencies, Bitcoin has always maintained its dominance. While this dominance has shrunk in recent years, even to this day, and despite challenges from all corners of the market, Bitcoin’s dominance of the market remains above 50%.
When the price of Bitcoin rises, generally you can expect altcoin prices to rise with it. Likewise, when the Bitcoin price drops, altcoins also follow. There may be some lag in-between, but the coupling of Bitcoin to altcoins is one that is yet to be truly broken.
The reasons for Bitcoin’s dominance are numerous. To begin with, Bitcoin has had the first-mover advantage over its competitors. Thanks to this, even people who are not interested in cryptocurrency have still usually heard of Bitcoin.
This makes it all the more likely that the first cryptocurrency that newcomers purchase will be Bitcoin as well. On top of this, despite efforts from a variety of communities, there hasn’t been any conclusive evidence that there is a better cryptocurrency out there other than Bitcoin.
People might point to Bitcoin’s slower transaction speed or wasteful Proof-of-Work mechanism, but the core tenants of Bitcoin and cryptocurrencies – namely decentralisation and global money – are still prevalent today.
Practically all cryptocurrencies remain untested and have complex goals. Ethereum and other smart contract platforms have yet to see fully successful projects built on top and are still very much experimental.
Arguments still continue to this day over the possible…