On October 6, 2018, Bitcoin had a coin market capitalisation of $114 million, trading at over $6,600 per Bitcoin. This cryptocurrency has been termed “Digital Gold” for a reason. Since its inception in 2008 and being the first application of blockchain technology, it has been a roller coaster ride for Bitcoin. It touched a price of over $19,500 in December 2017, followed by significant volatility. The number of people trading Bitcoin and other cryptocurrencies has also increased significantly in recent times.
Today, some 2,000 cryptocurrencies are available for trade on various crypto exchanges across the world. Yet, Bitcoin remains #1 among all the coins. Here’s why.
How Bitcoin Works
Bitcoin is the largest trading digital currency in the market and has earned its position by pioneering the facility of anonymous transactions. Bitcoins are generated through the execution of complex algorithms, although the total number of coins has been limited to 21 million. The more people use it, the greater will be its demand and its value will rise as a result.
Here’s a look at some of the reasons that make Bitcoin popular amongst traders:
- It is the oldest and most established cryptocurrency in the market, with investors who had preferred investing in traditional stocks now investing in Bitcoin.
- It was the first source of anonymous transactions in the world. It allowed users to process transaction cheaply, with complete anonymity.
- It provides stability to investors. Despite the roller coaster ride it has been on, Bitcoin is the most stable cryptocurrency.
- It provides a fast means of cross-border transactions.
- Its decentralised database makes it one of the most secure cryptocurrencies. Due to its high coin market capitalization, a huge resource is being focused to enhance the security of Bitcoin and its processes.
- It is based on blockchain technology and is a peer-to-peer distributed ledger. It eliminates the risk of single point failure and breach of data.
Why Bitcoin Has the Highest Market Cap
Every new altcoin or ICO promises to be the next big invention providing an effective solution for problems faced by Bitcoin users. However, the fact is that the biggest invention has already taken place in the form of Bitcoin. All the other additional features are only add-ons to the foundation created by Bitcoin. Here’s a look at the key factors that account for Bitcoin enjoying the highest share in the crypto coin market:
· Largest User Base
There are more than 10 million Bitcoin users around the globe as of 2018. A lot of people have invested in Bitcoin innovation and have started using its easy and cost-effective transaction services. With increasing demand, the value of Bitcoin has increased. The large user base adds to the credibility of the currency, attracting a large number of traders, investors and businesses.
· Wider Acceptance Globally
Bitcoin is poised to be adopted in mainstream business systems as well. Multinational giants like Amazon, Starbucks and McDonalds have hinted at incorporating Bitcoin and other cryptocurrencies into their payment framework. This increasing adoption and use of the cryptocurrency will further solidify its market position over other digital currencies.
· First Mover Advantage
Bitcoin is the first practical application of blockchain technology and the first digital currency. This gives it a prime position in the cryptocurrency market. When new investors head towards the crypto market, they may consider investing in Bitcoin due to its longevity and relative stability, as compared to other alt coins. The addition of new traders and investors will only enhance the value of Bitcoin.
· Dependable Infrastructure
Bitcoin is credited with the success of blockchain and opening the doors to a whole new market. The infrastructure and services offered by the cryptocurrency have been useful for entities and individuals by keeping their transactions safe and private. It has brought in the decentralisation of databases, eliminating the risk of data breach from a single point of failure.
The potential offered by Bitcoin is vast, which is what makes this currency so attractive. And, although there are some shortcomings that later platforms like Ethereum have worked to address, it is likely to hold on to its dominant position among alt coins in the foreseeable future.