—TechRound does not recommend any crypto, financial, trading or gambling advice, practices or operators. All articles are purely informational—
If you asked the average person, cryptocurrency lover or not, to name a digital token, Bitcoin is likely the name that will spring to mind. There is a good reason for this as Bitcoin is definitely the most famous crypto in the world and the most valuable.
But why exactly is this? After all, there are thousands of cryptocurrencies available at any given time, and more are released every day. Why has Bitcoin, a decade and a half into its existence, remained the most powerful crypto? In this article, we explore the phenomenon.
Use Cases of Bitcoin as a Cryptocurrency
Bitcoin has remained dominant because of its several use cases. Take gambling, for example, which has seen a bigger presence of cryptocurrency over the last few years. The most commonly accepted cryptocurrency on gambling sites is Bitcoin, which drives up its demand.
As Wilna van Wyk writes, many of these sites allow you to spend Bitcoin to place wagers and even withdraw in Bitcoin after playing your games. Because Bitcoin is most accepted in these online gambling circles, it remains the most dominant token.
The same applies to things like buying food, paying for flights, paying bills, and so on. If you polled a hundred merchants that accept cryptocurrency for various use cases, virtually all of them will accept Bitcoin. This creates a cyclical effect of sorts where bitcoin is the most accepted, so it remains the most dominant, and as more use cases open up, it dominates them as well.
Financial Viability
Another reason why Bitcoin has remained at the top of the crypto food chain is the fact that it is simply the most financially viable. As of this article, Bitcoin is worth approximately $82,000, which is tens of thousands of dollars more than its closest competitor, Ethereum.
The many use cases that Bitcoin enjoys see its demand rise. And as its demand rises, the market value of the token goes up as well. Just like with the use cases, it creates a cyclical effect where Bitcoin is the most valuable token because there are so many use cases which birth more, continuously boosting the price. Most people looking to invest in cryptocurrency will turn to Bitcoin because it offers the most profit and has for a long time.
Security of Bitcoin
Another reason why Bitcoin reigns supreme as the king of the cryptos is that it enjoys a very high level of security. Bitcoin, like all cryptos, is based on distributed Ledger technology, which sees network power divided across a large mass of different computers. Bitcoin operates on a proof-of-work consensus, which means that users who want to mine new tokens have to confirm transactions on the blockchain. But at the scale that Bitcoin operates, this networking power is shared across millions of devices all over the world.
This essentially means that Bitcoin is decentralised to its very core, with no single person having control over the network. Anyone looking to control Bitcoin at this point would need millions of devices working at the same time, and that is not feasible. This level of network security means that investors and those looking for blockchain for non-financial reasons trust Bitcoin inherently and will continue to turn to it for their needs.
Token Mechanism
Bitcoin has successfully kept its demand high over several years, partially because of its existing token mechanism. Every four years or so, Bitcoin undergoes what is called a halving, which sees its rewards per block mind cutting in half. As such, the supply of Bitcoin shrinks every few years, even while the demand continues to increase.
Naturally, a situation where there is less supply and more demand means that the value of Bitcoin will only continue to increase, drawing more people into the ecosystem. In fact, the halving is almost always followed by a spike in value and this has happened consistently over several years. And while other cryptocurrencies experience halvings as well, they do not reach the level of hype that Bitcoin enjoys.
Current Trajectory of Bitcoin
While Bitcoin clearly has several factors that have kept it on top for a long time, its current trajectory also indicates that it will remain at the top of the crypto food chain. First, there is its massive market price, which towers over all of its competitors. There is also the fact that there are more avenues to invest in cryptocurrency than ever before. Last year, for example, saw Bitcoin and Ether become the only tokens with spot ETFs approved in the United States.
These have seen billions of dollars of investment flow into the asset class, and this shows no signs of stopping. Investors, especially the institutional ones that have come on board the crypto train in the last year, are already prepping for the next major bull run, which is due in about three years. If it follows the same trajectory as the bull runs before it, Bitcoin will end up fetching a massive profit for its investors and becoming even more visible. With all these factors considered, we can expect Bitcoin to remain the king of cryptos for a long time.
—TechRound does not recommend any crypto, financial, trading or gambling advice, practices or operators. All articles are purely informational—
