The head of the Six Nines data center Sergey Troshin explained why the cryptocurrency continues to lose market share, and how you can make money on it?
Bitcoin is over. There is little doubt that this thesis runs counter to the public, but there are a number of reasons for it. Bitcoin was the most popular of all for two reasons. First, it was the first token around which physical infrastructure was built, such as bitcoin ATMs. Secondly, the media focused on Bitcoin. It was they who formed the belief that bitcoin is the entire crypto market, and everything else is altcoins, that is, alternative.
What’s wrong with Bitcoin?
The situation has started to change dramatically since the beginning of this year, and now it is already becoming obvious that BTC will not remain the leader for long.
Technologically, bitcoin lags behind many competitors. The quantity, speed and cost of a transaction, as well as the convenience of its completion, will never satisfy the broad masses. If earlier miners could process a transaction within a few minutes, now they can wait a day. This is in no way comparable to the speed and convenience of Visa and Mastercard. Their operations take place in a split second versus tens of minutes. Huge transactions while limiting the block size is a Bitcoin problem, and a solution is not foreseen yet.
Why Bitcoin is still # 1
The infrastructure of cryptocurrencies has changed significantly over the past few years. She no longer needs ATMs; now integration with other payment systems is important, right down to banking structures. The emergence of the actual application is its real value.
The decline in the share of bitcoin to 43% from 70% at the beginning of the year suggests that participants can start thinking in a different direction and invest in other tokens. For investors who are now entering the market, the statement “bitcoin equals cryptocurrency” is no longer so obvious. All the advantages of bitcoin are in the past, except for one – it is a digital asset available to institutional investors.
Bitcoin remains at the forefront of relationships with regulators and other oversight bodies. Clients of funds want to invest in cryptocurrency, but, based on regulatory standards and possibly acceptable risks, they only have “verified” tokens. For now, it is a magnet for both institutional and retail investors.
Institutions are known for their stable approach to assets, they do not sell them out in a panic attack. If they feel that the trend has reversed, they will leave quietly, in English, so as not to bring down the price. As the major players leave, bitcoin will gradually begin to fall in price. A decline of 50% over the year in relation to altcoins is a very realistic scenario. For a month now, many altcoins have been growing against bitcoin, among them ETH, ADA, EOS, XLM and LTC.
It is important to note that the process of replacing bitcoin has already started, and sooner or later it will be replaced. This can take from a year to three. Benefits don’t disappear in a week – they’ve been built over the years.
New generation investor
There is little doubt that bitcoin will soon be supplanted by other more technologically advanced tokens. The next generation investor will no longer take into account the number of Bitcoin ATMs. He understands that cryptocurrencies have moved to the next level, when the most important thing is the number of countries that accept the token and the banks that integrate it into their systems. These investors go beyond news feeds, they study the specs and white papers to understand the benefits of these tokens.
Over time, more technological, larger and less volatile tokens will attract more and more funds. Do not forget that, all other things being equal, manufacturability provides a significant potential for expanding the scope of application, consolidation in the economy and, as a result, price growth. Official adoption by the authorities will follow the choice of large investors, as Bitcoin has already paved this path.
Which currencies should you choose?
There is another truth worth keeping in mind.
-Manufacturability in the interval up to a year does not play a major role. Often, people care about the emotional color of a token (this explains the Dogecoin phenomenon). When buying for a short time, you don’t have to “bother” with technical details, but simply follow the trends in the market.
-Manufacturability alone does not guarantee anything. There are a lot of such tokens on the market, and there is rather intense competition between them. Not all will be accepted – a lot depends on marketing, “pumps”, offline agreements. For example, the VEO token, despite its advancement, could not gain a foothold in the market.
The ether has already shot, and it is already quite expensive. Due to the innovation that has been waiting for several years (the transition to POS), it has grown a lot. But if your investment is from a year, then you need to look at other assets.
For myself, I single out Monero (XMR) with its super anonymity, which is both a plus and a minus (the token is always under pressure from government agencies). Litecoin (LTC) repeats Bitcoin in everything, but it is more technological and faster. EOS, in terms of technology, is even better than Ethereum, it has its own language and operating system. Cardano (ADA) is a fast-growing project that runs on its own blockchain.
In fact, the selection of applicants has already been made by the market. It is enough just to look at those currencies that are most popular on crypto-exchanges or Coin market cap and discard the most dubious ones.
But what if bitcoin is still not the end?
There is also an alternative scenario. In 2017, there was a very similar situation, when in May, transactions on the bitcoin network became long, and ether almost exceeded it in market share. The developers decided to fork, and the community made sure that the team was ready for reforms. After that, bitcoin was back on top. This time, nothing prevents them from going down this path again.
Moreover, it is also disadvantageous for institutionalists to be uncertain about which currency will become the leader. They have a motivation to keep Bitcoin “afloat” so that there is no dual power. The establishment has secured the places of gold and silver for bitcoin and ether – silver is industrially more applicable than gold, but still less popular. Uncertainty is always bad for investors, especially those who manage hundreds of millions.
A significant drop in Bitcoin due to capital flows into other currencies would be a big blow to the community. It is possible that in this case, investments will come to the fore, not even in individual tokens, but in index funds, as is now happening in the stock market.
