With their high volatility, ability to grow fast and break new records every week, cryptocurrencies, especially mainstream ones like Bitcoin and Ethereum are quite different than government issued fiat monies. They are issued (mined) by computers, decentralized and have no third party involved between transactions other than “retail” traders.
Add all those benefits together and you get something whose value increases year after year, and week after week in a row.
Despite the tech billionaire Mark Cuban’s criticisms and mockings on Bitcoin and so much still on-going discussions whether it’s a bubble or not, Bitcoin has just hit the $3K new all high valuation for the first time in history.
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It’s not just Bitcoin
Bitcoin’s appreciation in value is also followed by Ethereum with $350 valuation as well. But, ETH has a not-so-well-known advantage over Bitcoin, its market share, followed by few other altcoins, is actually growing, unlike BTC! Sure, Bitcoin might be trading at an all-time-high value at the moment, but the flip side of the coin is, it has some flaws that can’t be ignored and drives its market share quite down;
Despite the growing value, Bitcoin’s market share in terms of proportion of total cryptocurrency market cap has just dropped under 50% for the first time in history.
“The inflows into ‘alts’ are greater than those into bitcoin. In other words, bitcoin is growing at a very nice pace, but non-bitcoin cryptocurrencies are growing even faster,” cryptocurrency hedge fund manager Tim Enneking told CoinDesk.
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Why people are running away from Bitcoin?
There are new Initial Coin Offerings every other day
Just like the companies’ initial public offerings, when a new currency wants to go public, it creates a roadmap and introduces its plan usually on a whitepaper and tells the public what the project is all about. Those new currencies add value to the cryptocurrency market every other day and all kinds of early investors, enthusiasts and believers in the currency usually jump in to not miss the early days of a possibly the next big trend. For example, Ethereum raised 18 million dollars IN BITCOIN with its initial coin offering (ICO) and traded around 0.40 cents per ETH back in 2014. In other words. Bitcoin is used to trade with other currencies and naturally each transaction takes some money away from Bitcoin’s market cap and grows another newly founded currency’s total market cap.[blockquote cite=”investor Sean Walsh states”]Bitcoin still seems like the dominant gateway to alternative digital assets[/blockquote]
It has scaling issues[blockquote cite=”me”]Bitcoin’s biggest asset, is also its biggest enemy.[/blockquote]
Since it’s totally decentralized and nobody owns or controls it, also nobody can really set the direction for it. Even though Bitcoin core is the most talented dev team out there, according to tech investor Nick Tomaino, still no clear method for moving beyond the current state has been introduced. Meanwhile, as we wait for the next step to be introduced, transaction costs have gone up to $1.5 – 2 and confirmation of the transfer could take up to 5 hours, in some cases.
Which makes people look for an alternative;
Ethereum is a quite worthy opponent
In Ethereum the block time is set to 14 to 15 seconds which allows you to send/receive Ethereum much faster and it’s currently the second biggest cryptocurrency out there in terms of total market size share.
As you might already have noticed, I intentionally avoided addressing “Why the heck its price goes up as the market share goes down” because I don’t have any satisfying answer. Do you have one, other than it’s a “bubble”? Or, would just agree with Mark Cuban?
I think it’s in a bubble. I just don’t know when or how much it corrects. When everyone is bragging about how easy they are making $=bubble https://t.co/hTrV5DeWNd
— Mark Cuban (@mcuban) June 6, 2017
Let me know below in the comments.