*The author has holdings in cryptocurrencies mentioned in this article. The author doesn't care whether you invest or not and has written this article in as objective manner as possible based on opinions, facts and speculative forward looking inferences based on technology, talent and resourcefulness. This author is not an expert in the field. This article is not to be construed as investment advice and is for entertainment and knowledge purposes only*
Bitcoin's price is rising today, 10/20/2020, up 1.3% around 4pm when the general market for other cryptocurrencies is down. What is causing bitcoin to rise while other cryptocoins are falling? Why is Bitcoin's price per coin so high relative to other cryptocurrencies? One possible suggestion is the involvement of institutional investors in bitcoin (Michael del Castillo, 2020). These institutional investors are like giant whales in the ocean, swallowing up food without really knowing what they're even eating. Another possibility is that there are fewer bitcoins in existence relative to the supply of other cryptocurrencies, which will be examined later in this article.
If Bitcoin is likened to a company in the stock market, it is extremely overvalued compared to other 'companies' in the market. In fact, it is questionable if Bitcoin has comparable technology, research and development invested in the cryptocurrency as other Cyrptocoins. The term 'altcoin' should be a misnomer, as although Bitcoin is the 'first' widespread and adopted coin to spread through various networks, it is questionably a well-developed cryptocurrency from a foundational or technological computer science code or systematic structure standpoint.
What is interesting about Bitcoin is the fact that it is often compared to 'digital gold' which in a sense it is digital gold. But gold as a commodity generally is only worth what people pay for it or believe it is worth. Anything above its functional or practical application value in building computer circuits or jewelry or other functional offerings is speculative value, or value that people ascribe to it based on its inherent properties of desirability. This 'digital gold' value of bitcoin is currently the speculative nature the individual and institutional investors believe will be the price of bitcoin.
Proof of Work (PoW) coins have certain advantages and disadvantages over Proof of Stake (PoS) coins and vice versa. PoW coins tend to be less susceptible to network attacks, especially on a quantum computing level (Kelly et al., 2018). These advantages lend itself to the strength of energy that is invested in the random computational problems solved by a giant network of computers. Quantum computers then solving such random equations equally lends itself to the strength of the network. If Bitcoin will transition itself into an operator which can handle proof of work stability such as Quantum mining, then it can reasonably sustain its level of power in the cryptosphere. It all depends on the level of investment that communities put into their various currencies.
PoS coins contain significant advantages in terms of resources and energy saved. PoS coins also have certain algorithms and investments that can protect themselves from certain Quantum computing attacks against the network, but it is harder given the nature of the network participants staking coins and the hash computing power of quantum computers attacking the network to reverse engineer and stream random participants or coin protocols to confuse the network.
One particular PoS cryptography coin has been working on protecting itself from hostile quantum computing attacks, Cardano (Research program to work on hardening Cardano against quantum computers - IOHK Blog, 2018). Cardano differentiates itself from other cyrptography currencies in that it is building a strong foundation for itself to launch itself in a strong position in the cryptosphere over the next ten, twenty, and fifty years. This is the kind of long-term thinking that benefits both users, adopters and long-term investors in any kind of enterprise, business or application. It is entirely possible that entire governments will depend on well-positioned crypto currencies in the future to protect their currencies and economies as the world transitions to the digital age.
While it is possible for Bitcoin to rise in value, the community does not seem to be as forward thinking or evolving as some of these alternative cryptocurrencies seem to be. This may be due to a number of factors, such as the anonymous nature of the projects foundation and founder(s), the lack of incentive for the community to evolve the coin or platform, or the overall height of the coin's value in terms of its underlying code. This may lead to a great fall in the price of each bitcoin.
The current market cap of Bitcoin is $221,194,729,794 (Cryptocurrency Prices, Charts And Market Capitalizations | CoinMarketCap, 2020).
The current market cap of Cardano is $3,208,463,948 (Cryptocurrency Prices, Charts And Market Capitalizations | CoinMarketCap, 2020).
The current market cap of Ethereum is $41,878,806,811 (Cryptocurrency Prices, Charts And Market Capitalizations | CoinMarketCap, 2020).
From this perspective of market cap, it appears that Cardano has approximately 1.45% of the market cap of Bitcoin. A Ethereum has a loosely 1/5th of the market cap of Bitcoin, yet it could be argued Ethereum has significantly more capabilities and projects associated with the similar PoW coin, although Eth 2.0 will transition this coin to a similar PoS coin. These market caps suggest the potential of dollar based movement from one coin to another, as investors shift and change based on precedent attitudes of following the market herd.
Bitcoins price is possibly high because it is the most widely talked about cryptocurrency. As more investors gain knowledge of the value of other crypto-currencies, it is likely other cryptocurrencies will rise higher in comparison with Bitcoin, as investors pull their money out of Bitcoin it may spark a panic wave of selling for the Bitcoin, causing the price to rapidly fall and other coins to rise rapidly in value. Only time will tell if, or when, this will happen.
I'm not a financial advisor, I'm a student writing about my own financial journey through cryptocurrency. The information in this article was written based on my opinion and what has worked for me so far. In almost all cases you should always talk to a financial advisor before making any type of investment. I am not liable for any monetary damages caused by reading this information.
Cryptocurrency Prices, Charts And Market Capitalizations | CoinMarketCap. (2020). CoinMarketCap. https://coinmarketcap.com/
Kelly, J., Lauer, M., Prinster, R., & Zhang, S. (2018). Investigation of Blockchain Network Security Exploration of Consensus Mechanisms and Quantum Vulnerabilities. https://courses.csail.mit.edu/6.857/2018/project/Kelly-Laurer-Prinster-Zhang-BlockchainNetSec.pdf
Michael del Castillo. (2020, August 6). 20 Institutional Bitcoin Investors Revealed, But Soon The List May Vanish. Forbes. https://www.forbes.com/sites/michaeldelcastillo/2020/08/06/valuable-sec-data-on-20-institutional-bitcoin-investors-could-soon-disappear/#5fbc19d21de2
Research program to work on hardening Cardano against quantum computers - IOHK Blog. (2018). IOHK. https://iohk.io/en/blog/posts/2018/02/01/research-program-to-work-on-hardening-cardano-against-quantum-computers/