Since bitcoin’s significant price rise, altcoins have been brushed off to the side as bitcoin’s dominance climbed to 87.4 percent. Altcoin interest has waned as each alternative digital asset has lost market capitalization over the past two months. There are various reasons.
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All Eyes Focused on Bitcoin
Let’s face it: all eyes are on bitcoin’s price movements at the moment. A couple of years ago, altcoins were all the rage as a bearish price decline brought bitcoin to the sub-$200s. Now, as the price of bitcoin increases drastically, many altcoins are suffering from a price decline and lack of interest. This is a stark contrast to the 2013 price rise when some altcoins — most notably Litecoin — received a value lift from bitcoin’s increase. This time cryptocurrencies such as Ethereum, Dash, and others have seen their markets drop in value.
The top ten cryptocurrencies in the digital asset space have held their positions for quite a few months. Many of them still hold significant value and some believe these tokens offer something bitcoin cannot provide. Monero has done well for itself hovering at around $9 per XMR and is gripping the 5th highest market capitalization. This is due to people speculating on its development of anonymity features and its current black market acceptance. However, the trend of concentration towards bitcoin is very noticeable. For instance, today one commenter on Bitcointalk.org asked: “It seems as a whole most of the major altcoins have been declining in value recently. What will reverse this trend?”
Another community member acknowledges the trend stating:
Since there is currently a price surge happening in bitcoin, expect most crypto traders are active in bitcoin since they don’t want to miss the train. So just wait until there is bearish activity in bitcoin that will lead to a correction in price. In most cases, when bitcoin was on the pumping scene expect some slow price movements in alts and sometimes resulting in so much dip.
Can an Altcoin Hold Value in the Future?
Certainly, there is a lot of development in the altcoin space, and many projects are testing new features. Litecoin plans on testing the soft fork Segregated Witness before bitcoin. Ethereum has released a new version of the Geth client with its Swarm alpha implementation. With Swarm, the Ethereum network hopes to become more of a Web 3.0 rather than just a cryptocurrency. These features attribute to many people believing in the merits of some altcoins sticking around for the long haul.
Even though some altcoins have merit as experiments, many people are skeptical of their usefulness. Not one altcoin network has the sizable infrastructure bitcoin has, and many just use these coins to day-trade. This past September the bitcoin-based payment processor Bitwala wrote a notable blog post exclaiming “nobody uses” altcoins. The company explained the harsh reality by referencing the company’s numbers of processing volumes. Bitwala explained in its recent blog post:
So here’s our experience with Altcoins: Nobody is using them!
Bitcoin Remains Dominant and Some Believe it Always Will
Bitcoin remains the dominant cryptocurrency for the time being, and there’s little to show this will change anytime soon. Currently, as bitcoin climbs to an all-time record high in three years and breaks the $14 billion market capitalization, it will be harder for altcoins to compete. Most altcoins are uninteresting forks of bitcoin merely designed to pump and dump.
Other crypto-tokens may have use cases in the future, but bitcoin’s significant lead has trumped thus far. And there are also some bitcoin community members such as Paul Sztorc, and Daniel Krawisz who believe altcoins will never be useful. Krawisz explained in his editorial titled “The Problem with Altcoins” stating:
“The Bitcoin community is not just overwhelmingly larger but of overwhelmingly better quality as well. Bitcoin is surrounded by real entrepreneurs working hard to create new and useful services for Bitcoin,” wrote the Satoshi Nakamoto Institute founder. “Altcoins are surrounded by loud-mouthed pretenders with irrational hopes of duplicating Nakamoto’s success. This does not mean that there is anything intrinsically wrong with altcoins: the problem is simply that once Bitcoin exists, then there is no additional value, from a monetary standpoint, of creating knock-offs.”
What do you think about the lack of interest in the altcoin index? Do you think altcoins will compete or complement the bitcoin network? Let us know your opinions in the comments below.
Images courtesy of Coinmarketcap.com, Bitwala, and Pixabay.
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