How Bitcoin Compares to Other Cryptocurrencies?

We get asked a lot — how Bitcoin compares to other cryptocurrencies, especially those that have been growing like crazy in recent months (i.e. Ethereum). So we decide to prepare an article to describe what every contender to the crypto-throne is up against.

It won’t be easy to de-crown Bitcoin, and at the end of the day — we think that doesn’t matter that much. With the entire world joining in the cryptocurrency market, there is room for multiple players.

But I’m getting ahead of myself. Here are 5 reasons behind Bitcoin’s continuous reign in the cryptocurrency space…

1. The network effect

This is the key point — as the world’s first cryptocurrency, Bitcoin has more users than all other cryptocurrencies combined. It has been around since 2008, and has ever since managed to gather a large following, including individuals, startups, and major organizations (more on that in a moment).

And it’s not just the user base, competing with Bitcoin also means competing with development teams and mining operations all around the world. That’s a large ecosystem of startups, open source projects and entrepreneurs all of which are heavily vested in Bitcoin.

2. Bitcoin is a digital gold standard

Related to the previous point, because of the network effect and the fact that it was the first cryptocurrency, Bitcoin is considered a digital gold standard. In other words, it is the safest investment in the [cryptocurrency] space, especially during world’s socio-economic challenges.

While Ethereum and a few other cryptocurrencies have managed to attract the attention of the media in the last few months, they are still not as worth as much as Bitcoin. Furthermore, some exchanges will only take your bitcoins for other cryptocurrencies; in contrast, you can buy bitcoins with your credit card and PayPal, among other payments methods, on most cryptocurrency exchanges on the internet.

Bitcoin is also by far the single most accepted cryptocurrency in the world, which in a way makes it a U.S. dollar of this market. And when a new cryptocurrency is issued in the so called ICO (Initial Coin Offering) — which is the IPO (Initial Public Offering) for cryptocurrencies — you typically need bitcoins to buy in.

3. World’s turmoils work in Bitcoin’s favor

The age of global uncertainty works in favor of all cryptocurrencies, but Bitcoin is the one that is considered the digital gold standard, thus it tends to appreciate in value more than other crypto-coins.

In the past, we have seen Bitcoin growing on the news that some Argentineans were buying bitcoins to protect their savings against high inflation or the possibility that their government could confiscate savings accounts.

Something similar has happened during the 2012-2013 Cypriot financial crisis when bitcoin purchases in Cyprus rose due to fears that savings accounts would be confiscated or taxed.

Both situations caused the surge in bitcoin’s price, and the same happened on the news of Brexit when, obviously, the British Pound was down.

Other cryptocurrencies have grown in this period as well, but not as nearly as much as Bitcoin. Ethereum is a different “beast” which grew at an even faster pace than Bitcoin, but reasons behind its appreciation were different.

4. Limited commodity

The Bitcoin algorithm is designed in such a way to reward miners with 12.5 bitcoins per block (approximately every ten minutes) until mid-2020. After that, miners will be earning 6.25 bitcoins per block for 4 years until next halving, which will continue until 2110-40, when 21 million bitcoins will have been issued. If nothing is changed in the meantime, no new bitcoins will be issued afterwards, making them that much more valuable.

In comparison, many other cryptocurrencies — including Ethereum — don’t have such limitation. While that potentially makes them more useful for other things, their wide availability also works in Bitcoin’s favor (value-wise).

Zcash is an exception — it too is programmed to top at 21 million coins. Its value, however, doesn’t come even close to that of Bitcoin.

5. Major corporations are on board

Today, many major corporations are accepting Bitcoin payments, including the likes of Microsoft, Dell, Expedia, TigerDirect, Sacramento Kings, Newegg, Overstock.com, and Time Inc. In addition, some of the world’s biggest banks are looking to take advantage of Bitcoin and its underlying technology (blockchain).

It was Bank of America Merrill Lynch that stated in its report from 2013 that bitcoin can “become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money-transfer providers.” A year after, the first bank that converts deposits in currencies instantly to bitcoin without any fees was opened in Boston.

We must also add that Ethereum too is grabbing attention of big companies due to its ability to run apps inside a blockchain, but again — it’s just getting started whereas Bitcoin already has a wide ecosystem around it.

Conclusion

Over the years, Bitcoin has a proven use case as a store of value. While some of the newer cryptocurrencies have shown resilience, they still can’t come close to the “power of Bitcoin.” It was the first “game” in town and will remain the dominant cryptocurrency in the foreseeable future.

That being said, we don’t think the world need just one cryptocurrency; quite the contrary — with the entire world participating, there is room not just for two, but perhaps even a dozen cryptocurrencies. In the meantime, we would agree that Bitcoin is king!