What is Bitcoin’s edge among 1,700 cryptocurrencies?
Bitcoin is the most popular cryptocurrency globally, and there are many reasons for that. First, it’s the trailblazing technology in the world of cryptocurrency. No one would understand the concept of peer-to-peer transactions or decentralized ledger if it wasn’t for Bitcoin. After the emergence of bitcoin and the bubble burst that happened in December 2017, more than 1,700 other cryptocurrencies have come into the market with some of them claiming to be Bitcoin. With striking similarities among cryptos, what are the defining features of bitcoin?
How is Bitcoin Different from Other Cryptocurrencies?
There are thousands of cryptocurrencies in existence today, and each of them is acclaimed by its fans or creators as safer, faster, and with better decentralization than Bitcoin. Cryptocurrency experts have never given credit to such crap, but users and other common speculators can be easily swayed by such claims. If the attack on Verge Blockchain in April 2018 is anything to go by, most of these cryptocurrencies are built by quack developers using codes that only introduce vulnerabilities to the blockchain ecosystem.
Many bitcoin imitators come into the market with the promise to offer faster transaction speeds and low fees, improve privacy, and solve mining centralization risks. But has any of them done better than Bitcoin on those fronts?
Faster Transaction Speeds and Low Fees
A number of cryptocurrencies have failed terribly in their attempts to propose anything better in terms of transaction speeds and fees. The issue of scalability is a blockchain technology challenge that arises as more transactions are carried out on the network, which clogs up the system and extends transaction times while introducing network fees. No altcoin has so far succeeded in solving the blockchain scalability issue. Actually, if any of them had the user base that Bitcoin has, they would literally crash. Others like Bitcoin Cash have simply increased the block size while Litecoin and Etherum have reduced the average time difference between the generation of blocks.
If there is any innovation that addresses the scalability issue, it’s the Bitcoins Lightning Network Protocol that is in use, thanks to the SegWit upgrade that happened in August 2017 that was a game-changer in Blockchain.
Bitcoin transactions are public and pseudo-anonymous, meaning that any transaction is fully traceable. By simply checking the first and last names of the last receiver, you can trace the chain and see where the coins came from. Bitcoin developed Monero Ring Signatures to hide bitcoin sent amount and mix transaction inputs with other transactions to make it difficult to link the sender to the receiver. The Stealth Address, on the other hand, makes it impossible to locate the sender’s address by anyone other than the sender and the receiver.
Solve Mining Centralization Risks
There have been concerns that bitcoin mining is centralized, which gives some entities powers to govern the protocol development, censor transactions, or even make double spending. Some altcoins have ridden those voices and launched coins promising centralization protocols, but with comical results. It’s important to understand that no miner or even a group of aggregated miners own a 50 + 1 percent hash rate of the whole Bitcoin network. Even though some companies own a large stake, each pool is composed of thousands of users and it’s very unlikely that they can gang up to support an attack on the Bitcoin network.
Identifying True Bitcoin
As the pioneer cryptocurrency, bitcoin is quite valuable. Some people wonder why a single coin could cost hundreds of dollars; it’s absolutely crazy. So, why is Bitcoin so valuable? Just like gold, Bitcoin is scarce and useful. The amount of gold on the earth’s surface is limited, and as people continue to mine it, the quantity diminishes and mining it becomes more difficult and expensive. Similarly, bitcoin is limited in supply with only 21 million bitcoins in circulation at any given time. Currently, bitcoin is quite difficult and expensive to mine and only entities with dedicated server rooms in warehouses can mine it.
Apart from its scarcity, bitcoin is quite useful as it provides an accurate and predictable monetary policy that allows all players to verify transactions. When new bitcoins are created, all stakeholders are able to see it.
Bitcoin is quite volatile and there is no official bitcoin price. As with any products on a free market, bitcoin’s price is influenced by what people are willing to pay. It’s important to note that Bitcoin remains the most valuable cryptocurrency so it’s safe to say that anything cheap is probably not bitcoin. The good thing is that you can buy a fraction bitcoin to get a taste of bitcoin trading if that’s what you’re after.
Bitcoin may not be a perfectly-finished product as we speak today, but being the pioneer cryptocurrency, there are several upgrades expected over the next couple of years. What remains clear is that none of the Bitcoin imitators offers better solutions but mere proposals that are yet to be implemented.