I wanted to take the time to write a quick response to many of the sensationalized pieces that have been coming out about Bitcoin and cryptocurrency lately. Cryptocurrencies have been on everyone’s mind lately, and even though there are clear signs of more widespread adoption, the headlines still seem similar to before. Bubble concerns and fears of criminal use are commonplace, but a newer one I’ve been seeing is “Bitcoin is losing its dominance in crypto’s market cap.” To that I say “good,” and here’s why.
Contrary to what these headlines would have you believe, if any asset were as dominant in the market capitalization of traditional markets, there would be public outcry and trustbusters at the door. That degree of dominance in other asset classes would be intolerable, and for good reason. Such monopolies mean these assets, companies, and products can get lazy because there is no rush to improve. While I deeply love Bitcoin, it is far from perfect. Anyone saying otherwise is being willfully ignorant.
However, Bitcoin and cryptos in general are a completely new asset class that play by their own rules. They don’t behave like ordinary assets, and their markets don’t close or stop trading because of some bell. As such, even when new coins enter the market every day, rather than stealing money from Bitcoin or other alts, they simply seem to add to the industry’s overall market cap. We saw this with the Bitcoin Cash and Gold forks. They didn’t take value away from Bitcoin, but rather made their own. Mind you, this does not mean that there is not fierce competition among altcoins.
In fact, when Ethereum and Ripple were both clawing away at each other to fight for the #2 spot in all of crypto, I kind of wished that something could begin to approach Bitcoin that way. Markets thrive when its users have ample and meaningful choice. Choices have to be more than a random ticker from a basket, so different assets and companies all scramble to offer some sort of innovation. It is this kind of competition that makes markets move.
This is why, even if only slowly, seeing Bitcoin starting to lose that dominance is not bad. To the contrary, it is exciting. It means that there is competition among various cryptocurrencies all vying for users based on new features and other innovations. While I still believe Bitcoin will be king for at least my entire life, I would not be surprised if we see its market dominance continue to slip. Again, I think this is a good thing.
So the next time you see a headline from a media outlet claiming that Bitcoin is losing its foothold in the cryptocurrency marketplace, remember that it is because there are now opportunities elsewhere in cryptocurrency, and not because people are losing faith in Bitcoin.