Practically everyone has now heard of Bitcoin.
Bitcoin is the most popular cryptocurrency of all and the one that first comes to mind for the vast majority of people.
But there now many other digital currencies besides Bitcoin which are gaining in popularity among users, traders and investors.
Some of these are currencies for conducting transactions, but others are blockchain-based tokens specifically designed for other purposes than serving as a means of transaction.
These non-Bitcoin currencies are often referred to as “altcoins” (from “alternative coins”), in the sense of serving as alternatives to Bitcoin. Some altcoins now have very substantial market capitalizations running into billions of Dollars.
One important feature of these high market value currencies is that their strong market position means they are traded widely and continually on cryptocurrency exchanges throughout the world. This gives holders the advantage of strong market liquidity at all times.
Prices of altcoins can and do fluctuate along with general cryptocurrency market sentiment and general market movements in the same way that Bitcoin does. I probably don’t have to remind you of the strong falls in prices that have taken place throughout the entire cryptocurrency sector during most of 2018, following the wild boom in prices that occurred in 2017.
I’m writing a series of articles which will take a look at the current top 10 cryptocurrencies ranked by total market value or capitalization, I’ll be covering in order of size: Bitcoin, Ethereum, XRP/Ripple, Bitcoin Cash, EOS, Stellar Lumens, Litecoin, USD Tether, Cardano and Monero.
The top 10 cryptos are all well-established currencies backed by strong development teams. This means they are unlikely to suddenly disappear from the sector and they all benefit from a high level of market visibility and a wide base of existing demand.
Let’s kick off the series with a look at the number one coin in the cryptocurrency sector today: Bitcoin.
Bitcoin – The World’s Number One Cryptocurrency
Current BTC Price: $6715
Current BTC Market Cap: $115bn
(Data as at 16 October 2018)
Bitcoin is the original cryptocurrency which everyone has heard of.
Bitcoin was launched back in 2008 and was the first ever blockchain-based cryptocurrency to appear on the scene.
Bitcoin occupies a key position in the cryptocurrency ecosystem, as Bitcoin serves as the first cryptocurrency of choice for trading in so-called altcoins. In effect, Bitcoin can be said to be the unofficial “common currency” of the blockchain cryptocurrency world.
Despite being the first cryptocurrency to emerge on the scene, Bitcoin is not the most innovative of blockchain technologies. Its blockchain transaction processing time is extremely slow. No more than around 8 transactions per second can be processed by the Bitcoin blockchain system.
Bitcoin’s very limited transaction volume capacity makes it unsuited in its present guise to become a payment system for widespread adoption.
Not only that, but Bitcoin’s transaction speeds can vary considerably in practice, as can the processing fees. In the case of low value transactions, the cost of the processing fee can be equal or more than the value of the transaction payment itself which makes no sense.
Another drawback is that all Bitcoin transactions are publicly traceable on the Bitcoin blockchain. Bitcoin offers no anonymity or privacy. Names of businesses or individuals can’t be directly traced on the blockchain, but the Bitcoin addresses and transaction details are all publicly readable and given this information and a little further research it’s not impossible for the transaction partners identities to be traced.
Bitcoin also relies on the Proof of Work (PoW) system of blockchain mining, which requires elaborate and expensive computer hardware and consumes vast amounts of electricity. This makes Bitcoin the very opposite of environmentally friendly.
Another problem is that the Bitcoin blockchain is extremely large and is growing exponentially all the time.
Most Bitcoin wallets and nodes require the blockchain to be downloaded in its entirety and maintained and synchronized by the node or client computer, which consumes considerable storage space and internet bandwidth. The Bitcoin blockchain is currently some 185GB in size and roughly doubles every year.
Despite these drawbacks Bitcoin is still the number one cryptocurrency in the world today, both in terms of name recognition as well as total market value, which currently stands at around $115 billion Dollars.
Of the maximum 21 million Bitcoins that can be mined, some 17.3 million Bitcoins have now been issued. Current market price stands at around $6700, down from an all time peak of just under $20000 at the start of 2018.
Bitcoin is in use by businesses both offline and online for transaction purposes. There are now payment processing gateway services available for Bitcoin, such as Bitpay and Coinbase Commerce, some of which also convert Bitcoin payments into other cyptocurrencies or even directly into fiat currencies such as US Dollar and Euro.
But Bitcoin has been slow to innovate on the technical front, with the system beset by conflicts between different mining groups and node operators which have impeded progress.
The frustration with this state of affairs has resulted in the forking of the Bitcoin blockchain which has spawned new competing currencies also using the Bitcoin name, most notably Bitcoin Cash.
Things may gradually now be looking up for Bitcoin as new developments such as sidechain technology and the innovative Lightning Network start to be implemented. But compared to some other competing altcoins Bitcoin cannot yet be said to be at the bleeding-edge forefront of blockchain cryptocurrency technology.
My Assessment of Bitcoin
My opinion of Bitcoin is that the currency is still not in a position to serve as a mass payment processor for widespread adoption by the general public. Bitcoin’s blockchain technology is simply not up to the task.
Bitcoin is handicapped by its slow transaction speed and inadequate processing capacity. The Bitcoin blockchain is already bloated even at the current low level of take up and the blockchain is set to grow even larger.
Another issue, though not exclusive to Bitcoin, is that the Bitcoin addressing system is not easily human-readable and this makes it error-prone for users.
All these issues first need to be addressed before Bitcoin will be in a position to serve as a digital currency for mass adoption.
Apart from that, there are a number of other issues concerning Bitcoin which mitigate against its take up as a mass means of transaction. For example, the fluctuating value of Bitcoin makes it less suited to serving as a means of payment. No-one wants to receive payment in a currency whose value can easily fluctuate up or down by 10% or more from one day to the next.
And of course, the proof of work mining system used by Bitcoin is fundamentally environmentally hostile and represents a massive waste of energy. Proof of Work is a messy and cumbersome method of restricting currency growth.
Bitcoin has been gradually and continually falling in terms of market dominance and trading volume share on exchanges compared to other currencies such as Ethereum, which has now become a close second in terms of overall transaction acceptance by crypto exchanges.
Nonetheless for now at least, Bitcoin is still the most widely accepted cryptocurrency throughout the world today and its set to still be around and in widespread use for at least the foreseeable future.
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