In 2009, Satoshi Nakamoto released Bitcoin, an open-source technology for a peer-to-peer electronic cash system that disrupted existing financial networks. Bitcoin is the first cryptocurrency, and its success has sparked the creation of numerous powerful projects as its brainchildren face vastly different fates. In this article, we’ll explore why Bitcoin’s brainchildren are not all created equal.
Bitcoin: The Groundskeeper Of Cryptocurrency
In the more than a decade since Satoshi Nakamoto released Bitcoin, it’s been the de-facto groundskeeper of cryptocurrency projects. Any new project must be compared with the original in the “Bitcoin test”. Bitcoin remains the most valuable and widely used cryptocurrency with a market capitalization of around 200 billion US dollars. Bitcoin also has a significant first-mover advantage and its developers have ironed out much of the kinks, leading to it having the most reliable network. This has allowed it to become the world’s first global digital currency encompassing almost all major exchanges and payment networks across the world.
Success Of Ethereum’s Smart Contract Functionality
One of the most popular Bitcoin offspring is Ethereum. Ethereum launched in 2015 and quickly gained popularity for its smart contract functionality. Smart contracts enable users to carry out transactions in a trust-less and secure manner. Ethereum’s smart contract platform enables people to build applications in a trust-less and secure manner. This has enabled them to launch decentralized applications (DApps) such as decentralized finance (DeFi) platforms. Ethereum has also become the de-facto platform for launching new crypto projects as it provides a ready-made infrastructure than can host token-based projects. Ethereum’s market cap stands at around 150 billion US dollars, making it the second most valuable crypto project.
Failure Of Litecoin’s Transaction Benefits
Another offshoot of Bitcoin is Litecoin. Litecoin was created in 2011 with the intention of making digital payments similar to the traditional ones. The project was successful in simplifying the process of completing digital payments and reducing transaction costs. However, it failed to gain mass-adoption and has seen a decline in its market capitalization. This is because Bitcoin’s protocol improvements such as the Lightning Network have rendered Litecoin’s transaction-focused solutions redundant.
Rise Of Privacy Coins
One sector that has seen a boom in popularity is privacy coins. Privacy coins such as Zcash, Monero, and Dash provide users with a high level of transaction privacy and anonymity. These coins have gained significant popularity due to their ability to protect user data and prevent traceability. The downside of these coins is they are often associated with illegal use cases due to their cloaking of source information. This has raised the ire of governments and banks, leading some of them to put pressure on crypto exchanges to delist these coins.
Stablecoins: Financial Super Tool
One of the most significant innovation in cryptocurrency are stablecoins. These coins are pegged to a pre-defined asset and maintain their value. Stablecoins enable traders to maintain their positions in the volatile crypto markets without experiencing large losses due to price-fluctuations. They’ve also allowed people from all socio-economic classes to participate in global trade and commerce, and have enabled the financial system to reach its highest levels of complexity.
Bitcoin has spawned numerous projects in the crypto space, but not all of them are created equal. Bitcoin remains the most valuable and widely used crypto asset with a robust infrastructure. Ethereum has gained significant traction due to its smart contract functionality, while privacy coins such as ZCash, Monero and Dash have become popular due to their cloaking of source information. On the other hand, projects like Litecoin have been deemed redundant with Bitcoin’s protocol improvements. Lastly, stablecoins have allowed financial power to reach its highest levels of complexity and enabled people of all economic backgrounds to participate in global trade and commerce.
