In 2013, the first blockchain transaction emerged. Even though it’s been 13 years, Bitcoin still holds its title as the most valuable cryptocurrency project.
Creators founded Bitcoin in 2009 in response to the global financial crisis. It was the first effective execution of a decentralized electronic peer-to-peer cash system using blockchain technology. There were more than 8 million Bitcoins mined by the time a new cryptocurrency came out in about two years. At that point, Bitcoin had an important first-mover advantage.
Since then, Bitcoin and other cryptocurrencies have seen a huge surge in global interest and mainstream media coverage. This has led to the development of a multi-trillion-dollar industry and a growing impact on traditional markets and financial institutions.
Industry’s Public Face
Bitcoin is the digital asset that most people think of when they think of cryptocurrencies. A Google Trends search comparing searches for Bitcoin, Ethereum, and Cryptocurrency around the world over the last five years shows that Bitcoin is a lot more popular than other digital assets and the whole industry as a whole.
This became clearer by the fact that Bitcoin is the most valuable cryptocurrency in the world, with a market value of more than $1 trillion. To put this into perspective, Ethereum, the second-largest cryptocurrency, only makes up about 20% of the market.
Innovation & Network Effects
As the crypto market grows, we are becoming more able to use traditional valuation metrics to help us make decisions. Using a network is more useful if there are twice as many people as there are people on it. This is called Metcalfe’s Law. Networks with a lot of users are more valuable than networks with a few.
Metcalfe’s Law is often used as a way to value communication networks, like social media platforms. If there were only a few people on Instagram, it didn’t seem like it was worth anything. However, now that there are billions of people on the platform, it has become very useful and valuable.
In the case of Bitcoin, early adopters had to have Bitcoin wallets that were hard to get to and had a long transaction process. Today, the network is much easier to use. Even though you can’t buy Bitcoin through Automated Teller Machines or brokerage accounts, the rise of centralized exchanges and the adoption of crypto by payment services like Cash App and Venmo have led to mainstream adoption, which has led to an exponential rise in total Bitcoin addresses.
In contrast, Ethereum only has about 140 million users, even though it is the second-largest cryptocurrency. This shows how different the two assets are.
In 2001, El Salvador gave up its own currency and started using the US Dollar instead. Recently, Bitcoin joined the list of legal tenders. If you need debt settlement or commercial services, you cannot pay with anything but legal tender, which means Bitcoin and the US Dollar can’t be used as payment.
The adoption of Bitcoin as a legal currency makes it stand out from other currencies. This helps it achieve its original goal, which was to be an alternative to fiat. Due to Bitcoin’s decentralized nature, there are no financial intermediaries, which means there is less red tape for cross-border transactions without having to worry about exchange rates. Furthermore, its anti-inflationary nature, which comes from a limited supply of 21 million coins, helps make it a good store of value.
Bitcoin and how it affects the market are very important. The fact that it is the only cryptocurrency that is legal tender has caused a lot of people to be angry. When institutional investors start investing billions in the space, Bitcoin’s problems will keep getting solved by passionate developers and community members. This will keep it as the true King of Cryptocurrencies for a long time.
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