Is Bitcoin still relevant
At the recently concluded Blockchain Cruise Asia, Wall Street investor turned cryptocurrency investor, Ronnie Moas shared a perspective that sent a sense of alarm around the Bitcoin camp of the conference. He said, “Bitcoin is the champion of the cryptocurrency world. But know that champions fall. We all know what Facebook did to MySpace, what Amazon did to brick and mortar retail. The only way to be safe in this market is to diversify your holdings.”
The conference was all about altcoins and upcoming ICO, prompting a discussion among crypto investors – is Bitcoin still relevant? While Satoshi’s white paper envisions Bitcoin as a peer to peer, permission less currency, the sudden surge in demand has dramatically increased transaction times and the problem of miner fees keeps increasing over time. Add to the mix that there are new cryptocurrencies which has exhibited great growth, as well as powerful scaling technology, and this leaves investors and cryptocurrency enthusiasts wondering if Bitcoin is still relevant.
In this article, we will try to look at the features that made Bitcoin famous in the first place and if they still hold true to day.
Bitcoin – the transaction currency
As I spoke with developers in the blockchain cruise, the one insight I could derive was that the technology behind Bitcoin was still the gold standard for the cryptocurrency. One England based developer told me, “You look at the top cryptographers and engineers in the world. They’re not working on Ethereum or Bitcoin Cash or any other coin for that matter. The best of the best are working on Bitcoin.”
The promise of a highly inexpensive and instant mode of transaction was one of the biggest USPs of Bitcoin. But 8 years since the inception of the genesis block, the Bitcoin network is seeing scale that it didn’t anticipate. The 1 MB block size has limited the number of transactions to 6-7/second. The transaction confirmation times has become more than an hour.
Newer altcoins, including Bitcoin forks like BCH have presented solutions that may overcome the scaling issue. Ripple is another contender. But the benchmark for both these metrics is Visa, that confirms transactions almost instantaneously and can scale upto 60,000 transactions per second. It is safe to say that any cryptocurrency is far away from achieving this kind of performance and scale.
Cryptocurrencies have failed spectacularly when it comes to addressing scaling issues. Ethereum, for all its hype, was brought to its knees by the crypto kitties game. Another interesting fact shared by prolific YouTuber and former derivatives investor, Tone Vays, is that the cost of transactions with Bitcoin Cash is much higher than what it was for Bitcoin when it saw the same trading volume. This is despite the higher block size. Now of course, the BCH team is even experimenting with Giga-bit block sizes, but nothing as of now has a solution to scale.
If the problem of scaling hasn’t been solve, and given the trading volume of Bitcoin, the first cryptocurrency may be the best we have. Which brings us to the next parameter.
Bitcoin – As a store of value
When it comes to market cap and unit price, nothing comes close to Bitcoin. In the last year alone, Bitcoin grew almost 20x, before dropping back to 11,000 US dollars. The investor interest in Bitcoin is unprecedented and bitcoin exchanges like Coinbase have added millions of users in the past year alone. This increase in value has caught the attention of the investing world.
Bitcoin is considered to be Gold 2.0 and it exhibits all the properties that make Gold such an interesting prospect. It’s not just scarce, its fixed in its supply. Its transferability is unprecedented and it is next to impossible to counterfeit. And when compared to Gold’s 6-7 trillion dollar market, Bitcoin’s 200 billion market cap only shows that there is a long way to go for bitcoin the asset.
As of now, it is possibly the most successful asset because it has a global speculation. And as people continue to buy lambo’s with it, it also seems to have an intrinsic value that merchants are willing to pay for too. Its speculative value to so high, that John McAfee, another attendee at the Blockchain Cruise Asia, said that he would go on a limb if Bitcoin doesn’t hit a million dollars in 4-5 year’s time.
When you come back to the original question, it sure does look like the market is nowhere close to rendering bitcoin irrelevant. It is still the benchmark cryptocurrency and will continue to be for a long time to come. But with competitors hot on its heels, it is only a matter of time before existing and future players might stake a claim to the throne.
But until then, Bitcoin it is.
Hitesh Malviya is the Founder of ItsBlockchain. He is one of the most early adopters of blockchain & cryptocurrency enthusiast in India. After being into space for a few years, he started IBC in 2016 to help other early adopters learn about the technology.
Before IBC, Hitesh has founded 4 companies in the cyber security & IT space.