The Effect of Other Cryptocurrencies on Bitcoin
Bitcoin was the very first cryptocurrency that was created in this industry. Therefore, it has a lot of weight and market value. Furthermore, everything going on in the crypto world is all thanks to bitcoin. So it is expected that it would have a higher market value.
Moreover, bitcoin was the currency that paved the way for others. So is there a way that any other currency could take its place? Or is it possible that any other currency would surpass bitcoin? This has not happened yet but what can we say about the future? We have not seen the future therefore, it is not right to say anything just yet. It is only enough that despite so many years, no other currency was able to surpass bitcoin.
So if you are new to the crypto world and do not know anything about it, it is only right for you to question that whether it is right for you to invest in bitcoins. Yes, there are a lot of crypto currencies, so we can understand why it would be difficult for you to make your decision. We will tell you about the details later on in this article.
So you can go to www.coconuts.co and have a quick view of things that you need to know to get started. Investing in cryptocurrencies is one of the best ways to earn profits. But you have to be careful with the selection of the crypto that you choose.
There isn’t a significant impact of other currencies on the market performance of Bitcoins. It is still the top cryptocurrency in the world. Therefore, it has the highest price. However, not much apart, there is Ethereum which is just behind Bitcoin.
Despite the very narrow difference between the two, Ethereum has not yet surpassed Bitcoin. This is because of various factors.
For example, one factor is the security provided by Bitcoin. This is the only currency that provides the best security network for transactions. This is also the reason for it being a famous currency in the industry. Furthermore, it is based on its proof-of-work mechanism. So the coins of all the miners are safe there.
In addition to this, Bitcoin also has its decentralized network, which is called Blockchain. So not only your coins but all your transactions will be safe from any theft and mishappening. You do not need to tell anyone about your income and do not need to pay taxes on it.
The market impact of other cryptocurrencies
Although Bitcoin is still at the top position and no other cryptocurrency is yet able to surpass it, but for how long? There might come a time when another currency would surpass it and reach the top. Furthermore, the top position is not the only thing. The other currencies have also impacted in other regards. These include;
1 – Creating market competitiveness
A major impact of other cryptocurrencies on Bitcoin is market competitiveness. At first, it was only bitcoin in the crypto world and everything belongs to it only. However, things change with time. The same happened with Bitcoin. As soon as bitcoins got some popularity and attracted some investments, other cryptocurrencies started to emerge. This created competition in the market.
So at first, all the investors and entrepreneurs were investing in Bitcoin. They were buying bitcoins and were doing business through it. So the currency gained a lot of value and interest from the public. The common people started to invest in Bitcoins because there wasn’t anything to fear about. This seems just like the stock market.
The plus point is that the risks were low. The currency was on a continuous rise and thus, the investors made huge profits. But soon after that Ethereum came into the market. This divided the investments. More people were attracted to the new currency because it was a bit cheaper. However, those who wanted to play it safely remained with bitcoin. Thus, it retained its position but lost a lot of investment that could be its, if there wasn’t any other currency. Bitcoin could have been the only favorite child.
2 – Limitless availability of coins
A major setback for bitcoin is its limit. Although bitcoin is in the top position but it is not possible for it to retain it for a long time. At first, there wasn’t anything like a cryptocurrency. Furthermore, there were technological restrictions and a lot of other factors. All such factors put restrictions on this. Therefore, there is a limit to bitcoins.
For now, our market has 18 million coins and it can never go beyond 21 million. So once it reaches its maximum, the other currencies will soon overcome it. There will be new currencies that will allow you to do much more than just trading and buying and selling.
So the limitless availability of other currencies has put bitcoin under a lot of pressure. So unless it brings some major upgrades and changes, things won’t be the same for bitcoin.
3 – The controlling factors
The other cryptocurrencies present in the industry offer no host. For example, Ethereum. It has a worldwide software platform and there is also no host. Thus, it allows the developers to build their own applications based on blockchain. This means that no one can control the market performance of Ethereum.
This is a good thing because it can reduce the market volatility factor.
We already know the political involvements and shareholders’ requirements that can result in huge losses to companies. Therefore, stock trading is a tough job. And the losing point for bitcoin is the same. It has a very volatile market. A mere rumor can cause people to sell their coins.
However, things are not the same as other cryptocurrencies. Just like Ethereum, many others are also trying to become host-less. Thus, there won’t be a monopoly in the market.