Can Bitcoin Lose its Dominance?
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When looking at the market caps of popular cryptocurrencies, one of the things a lot of people like to focus on is Bitcoin’s status relative to the other coins. While it’s a great way to see which coins are climbing up the ranks and increasing in adoption and value, the fact is that Bitcoin is not likely to lose its status as the dominant cryptocurrency – at least right now.
First-Mover Advantage
Bitcoin has the first-mover advantage, being that it is the first and oldest cryptocurrency. It’s where the adoption started, and is arguably why cryptocurrencies actually have value. Because of this, there are many, many holders, and if you follow the news, it’s clear that there are a lot of major backers. On top of this, more people know the name “Bitcoin” than any other coin. And let’s face it: people dislike change. Bitcoin is what current users are accustomed to, and breaking out of that is difficult. With things that involve finance, especially when it’s both semi-anonymous and irreversible, it’s hard to build the trust needed in an altcoin. Some have shown that it’s absolutely possible to make it, but it takes time to build that backing and grow.
It’s the Easiest to Trade for Fiat
If you hold something like Ethereum, Litecoin, or Dogecoin, getting it traded in to fiat is a lot more difficult than with Bitcoin. Altcoins simply don’t have the same backing by exchanges, governments, and banks. Yes, there are some that will allow you to swap between altcoins and fiat, but relative to how many exist for Bitcoin, it’s not even a close battle. As such, Bitcoin has become the cryptocurrency most move into, even if they want to ultimately own altcoins. And going back to fiat will usually involve swapping the altcoin to Bitcoin and then Bitcoin to fiat. As time has gone on, more services have popped up for altcoins, but even then, most of the new ones also support BTC as a payment method.
It’s Where Regulation is Focused
Regulation, whether you are for or against it, is part of cryptocurrency. The more regulated it becomes, the more the general public takes it as being a real contender to the currency system we’re used to. Regulation shows that the government thinks crypto has a place and is essentially them endorsing it. In a lot of cases, the endorsement comes to one of two major coins, Ethereum or Bitcoin, and not others. China, for example, has been openly hostile lately towards ICOs, and many other governments have warned against getting involved with them, though Bitcoin is often still allowed (though there are a lot of warnings about the risks).
This also helps get businesses on board, as well. Many companies are fearful of getting involved with things that are risky – if they lose money due to accepting a new type of money, it could potentially tank them. And in an unregulated market, it increases the risk even more, as there’s no telling what will happen to their profitability in the future, nor their existing funds. The volatility of the coin doesn’t help this, but it’s something that’s experienced in all other coins as well (other than Tether, which has its own issues), so Bitcoin wins that war fairly easily.
Is it a Possibility Down the Line?
This is absolutely possible, but it will take a lot of work. As the crypto ecosystem continues to grow, more and more coins will come out. They will continue getting a backing, and Bitcoin could absolutely be dethroned. That said, the chances of this happening are fairly small for the near-term, as it just has way too many backers that have the power to help get it adopted. From governments and investors to businesses, it just has too much power behind it.
Even coins like Bitcoin Cash (BCH) that wanted to dethrone it via “the Flippening” have failed to do so, but nothing is ever impossible in crypto, and that’s something to always keep in mind when holding or investing in coins. While it’s the undisputed king at the moment, one major event could send it spiraling, with another taking its place.