Is Bitcoin still relevant?
At the recently concluded Blockchain Cruise Asia, Wall Street investor turned cryptocurrency investor, Ronnie Moas shared a viewpoint that sent a feeling of alert around the Bitcoin camp of the conference. He stated, "Bitcoin is the champion of the digital currency world. In any case, realize that champions fall. We as a whole recognize what Facebook did to MySpace, what Amazon did to physical retail. The best way to be sheltered in this market is to expand your possessions."
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 the cryptocurrency as a peer to peer, permissionless 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 have 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 today.
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 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 BCH 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 the transaction was one of the biggest USPs of BTC. 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 up to 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 BCH is much higher than what it was for BTC 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 solved, and given the trading volume of Bitcoin, the first cryptocurrency may be the best we have. Which brings us to the next parameter.
When it comes to market cap and unit price, nothing comes close to Bitcoin. In the last year alone, BTC grew almost 20x, before dropping back to 11,000 US dollars. The investor interest in BTC 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.
BTC 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 BTC the asset.
As of now, it is possibly the most successful asset because it has a global speculation. And as people continue to buy Lambos 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 BTC 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 BTC 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.