First there was Bitcoin: The Coca-Cola of Cryptocurrency. Unsurprisingly, Bitcoin was the poster-child of the blockchain revolution.
With so much global media attention around this exciting new prospect, Bitcoin became a household name in the aftermath of the 2008 financial crash.
The world was beginning to see the cracks in the traditional financial system. Crypto is more important than ever. The altcoin market is changing…
Since this time, Bitcoin has dominated the crypto market in terms of market capitalization. Before Bitcoin alternatives had gained any sort of attention, the momentum of the cryptocurrency market was dictated by BTC.
Bitcoin was the first large-scale use of blockchain technology to gain any real public attention, but people were not educated in the technology behind the revolution.
Many entered the crypto market for the first time during a bull run, hoping for a 100-1000x return on their investment. Few took the time to appreciate what made Bitcoin and blockchain special and there was little understanding of the principles and variables involved. There was a huge Bitcoin buzz globally, but the reason for this excitement was not the same as it is today.
The prospect of removing trust from finance and replacing it with mathematical verification seemed quite lofty to some.
The start of something exciting...
Enter the Ethereum network. The Ethereum network was designed to be a platform which would allow developers to build applications using blockchain technology. The design and protocol of Ethereum was informed by some of the shortcomings experienced by developers when building applications on the Bitcoin blockchain.
Ethereum expanded on the Bitcoin model, adding exponential scope for use cases.
The currency of the Ethereum Network – ETH, has been the second most popular cryptocurrency on the majority of popular exchanges for much of the last decade, both in terms of market capitalization, public attention and speculation over the potential for widespread adoption.
Little public awareness...
Ethereum, in many ways, brought blockchain into the conversation when the whole world was talking about Bitcoin and the dark web and how risky they might be.
At this time, there was little public awareness of the benefits and potential applications of this technology. Ethereum birthed a revolution of decentralised applications and smart contracts, removing trust and middlemen from the transaction process and instead relying on an automated verification system.
From agriculture, construction, manufacturing and decentralised finance, to international sports teams and healthcare, smart contracts took the blockchain and revolutionised it.
ETH appears to be the strongest and most successful altcoin. The laying of the foundation for defi (decentralized finance) has created a bright future for Ethereum and dramatically improved the risk/reward ratio for ETH when compared to some other altcoins with much lower market volume.
The bullish potential for ETH may no longer be as high as that of some newer more exotic altcoins, but the strength of the Ethereum Network and its role in the community has likely reduced risk for investors significantly.
ETH is currently so far behind it’s all-time highest value in 2018 that many consider it to be seriously undervalued, increasing speculation of bullish behaviour for ETH and other altcoins in the near future as the halving event approaches.
Though Ethereum may be the safest, highest performing and well established altcoin on the market, the infancy of the altcoin market suggests that many altcoins are yet to show their full potential in market value and use cases.
The Ethereum Network and it’s various projects have propelled the use of blockchain technology within industry and enterprise.
New altcoins known as tokens have appeared everywhere, with the most successful usually serving a particular function, powering a specific network or mediating public and private data access through verification in smart contracts. The Chainlink project uses the token LINK to power its decentralised oracle network.
Chainlink or LINK, bridges the gap between public off-chain data and valuable private information held on the blockchain and allows users of the network to access information in a secure, efficient and verifiable way. Hence the Chainlink token – LINK.
The most valuable data sources aren’t freely accessible and usually require some form of verification for access. This is where oracles and smart contracts come into play.
Oracles form a database management system used for online transaction processing, data warehousing and building of smart contracts.
Chainlink’s decentralized oracle network allows smart contracts built on Ethereum to connect securely to external data sources and payment systems, bridging the gap between information held privately on the blockchain and less sensitive publicly accessible data.
Oracles verify off-chain data and help integrate them into smart contracts.
LINK is one of the most highly adopted Ethereum tokens in the cryptocurrency market. The prospect of using mathematical verification for transactions with smart contracts is becoming increasingly attractive to businesses and enterprises who are rushing to adopt new and exciting applications of blockchain technology.
When coins or tokens are used to power entire ecosystems, their perceived value can no longer be held in the same regard as Bitcoin, which to many is still considered a form of liquid gold.
When businesses are designed around the blockchain, cryptocurrency enters a whole new and exciting paradigm.
Altcoins have traditionally become more active in value when Bitcoin has reached its highest peaks, but this correlation has decreased over time with each halving cycle as altcoin tokens have seen higher implementation.
This is causing a decoupling of price movement between bitcoin vs altcoins.
To some seasoned traders and investors, the huge number of altcoins available across different exchanges, wallets and platforms could spell opportunity and excitement.
However for the crypto newbie, with so many different exotic assets being hodled in anticipation of dramatic price action, it can become difficult to keep track of your portfolio if your assets are spread across multiple exchanges and wallets.
Bitcoin may have been the most attractive crypto asset to investors up until now, but the Ethereum project has carved out an entirely new landscape. All kinds of companies have dipped their toes in to blockchain, with many creating their own initial coin offerings (ICOs) to power their projects.
Projects such as Chainlink, XRP and Tezos to name a few, began incorporating blockchain technology into enterprise and practical applications, forming the foundation of a brand new industry which operates in the realm of cryptocurrency.
During the crypto-revolution there have been many different types of coins or tokens on the market, all with different functions. Some simple and some which we are yet to see the full extent of their potential uses.
While cryptocurrencies such as Bitcoin or ETH can operate outside of their native platform, tokens are platform specific. A token is usually representative of an asset or utility of a business.
The use of non-native tokens is at the apex of much of the excitement around blockchain adoption.
ICO’s have been revolutionary in business.
They act in a similar way to crowdfunding for startups and have been a game changer in decentralized application (Dapps) funding, allowing developers to implement Dapps quicker. Anyone that might be interested in the start up can invest in it by purchasing the relative ICO’s.
The role that a token plays and its purpose often determine its perceived value. This may be adding to the growing speculation about the the adoption of Ethereum tokens such as LINK which is causing widespread excitement in the crypto-sphere.
So what is an altcoin?
As more blockchain startups emerged and the technology was explored, thousands of new cryptocurrencies have been created. Only this time, many of these startups have a clearly defined purpose and function, giving them investment value beyond just speculative monetary gain.
This is where the term ‘altcoin’ originates from. An altcoin is simply any cryptocurrency other than Bitcoin. The most successful altcoins are those that serve a function and have created value outside of the market and within the community of developers at the forefront of these exciting new projects.
Some altcoins were made just for fun, like dogecoin (though dogecoin was instrumental in helping Venezuelans during recent economic turmoil). Some were designed to evolve with developments in commerce and technology. The altcoin list is ever expanding!
In the past week or so Tether (USDT) has reached over $7 billion in market capitalisation, more than doubling this figure from the same time last year, according to data aggregator Nomics.
Stablecoins like Tether aim to be as close as possible in price to fiat currency. At the time of writing, Tether is the largest stablecoin in the cryptocurrency market, however with speculation of the future of stable coins growing, this could soon change.
The Financial Stability Board (FSB) outlined recommendations to central banks for the regulating of stablecoins, which could result in outright prohibition.
According to cryptopolitan, “the banks are worried that the coins are a threat to the global finance sector. These institutions have only two options; overly regulate the sector or ban the coins altogether” creating a crypto nightmare.
The FSB provides suggestions on the global financial system and is made up of central banks and finance ministries from major G20 economies.
Stablecoins which could be at risk include USDT, USDC, TUSD, DAI and PAX amongst others.
The crypto market’s reliance on stablecoins suggests that a ban could spell disaster for Bitcoin and the wider cryptocurrency market. However, considering the importance of stablecoins in processing transactions and their adoption by global enterprise, the future of ‘crypto-fiat’ is far from clear, as stablecoin market volume continues to swell and the dependence on their utility increases.
Bitcoin vs Altcoin Market: The Future
Perhaps strong players like Chainlink (LINK) and Ethereum (ETH) could step in to fill the void should the worst happen. Maybe we will see a shift of power where the most unlikely altcoins prove thier worth and claim a substantial share of the market?
Historically, altcoin investment havs been somewhat of an afterthought in the shadow of Bitcoin, but during the shifting landscape of blockchain technology, the increasing incorporation of new crypto technologies built on Ethereum platforms may suggest a turning of the tables and an emerging altcoin market.
If you look at the price correlation between the Bitcoin vs Altcoin markets historically, and compare them to now, you can see that the altcoin market share is increasing dramatically.
Major contributing factors point toward their use cases and design principles as they cater to enterprise and industry in a way that Bitcoin might not, and may never be able to.
Bitcoin looks set to be here for a very, very long time. It’s interesting to consider however, what role it will play in years to come and how it will compete in a shifting landscape, one which was impossible to foresee at the time of Bitcoin’s inception.
With many other cryptocurrencies redefining the meaning of value within the market, the altcoin buzz is accelerating while Bitcoin’s dominance in the crypto world may slowly be diminishing.
This is NOT financial advice. Beginners Crypto Guide does NOT OFFER formal nor informal financial advice and accepts no liability for such service. You should always do your own research before making any financial decisions.