The Great Altcoin Depression

The Great Altcoin Depression

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The altcoin markets are crashing at a rate that has never been seen in cryptocurrency and is only comparable to the stock market crash of the 1930's we call the Great Depression. 

Bitcoin maximalists insist this was inevitable because the only true cryptocurrency is bitcoin. In response to one users twitter post saying no one saw this coming, bitcoin maximalists went on defensive mode flooding the post with comments about how wrong the claim is.

The truth is I am not a bitcoin maximalist but rather a blockchain maximalist, however even I have said in a few posts that this was coming - if anyone was paying attention. However unlike the bitcoin crowd, I have reasons beyond just "bitcoin is the only one true coin". 

I stated that centralized currencies will never be trusted by the cryptocurrency industry in my post Bitcoin vs Corporate Cryptocurrency and the truth is very few if any token based projects are decentralized.

I mentioned the power of scarcity being a driving force for bitcoin in my post Bitcoin and the power of scarcity, something projects like Ripple and Ethereum don't have.

I talked about bitcoin market control in my post Bitcoin controls the market and this is why.

I don't believe this altcoin depression is the end of altcoins but I do believe it's the beginning of what I mentioned in my last post, Altcoins are NOT tied to bitcoin, about the altcoin market bubble popping.

Altcoins - whats the point?

One of the problems of altcoins is that the serve no real purpose. 

Image result for lightning

One can arguably say they open up the possibilities of competition for blockchain based currencies, but the problem is, they don't open up the possibility for alternative currency options. One is not limited to only use bitcoin. An entire forex market exists.

Users are not restricted to merely using bitcoin. There are countless fiat currencies that exist, there are countless credit cards that exist, there are things like Apple Pay and Google Pay - choices in terms of payments nor currencies are limited at all. 

This makes the job of altcoins very hard. 

In the early days the common reasons for altcoins were to fix problems incurred by bitcoin. Most notably was the number of transactions possible per second, as bitcoin is very limiting. However with the release of lightning network this is a thing of the past. 

The truth is lightning network doesn't have nearly as many problems as people predicted it would have back in 2017. This is so much true that one can merely download a lightning network wallet such as Lightning Peach and they will never experience any sort of issues with transactions per second.

It is so fast that it far exceeds networks like Syscoin and their ability to do nearly 150,000 transaction per second. In fact it is so fast it can arguably surpass even that of credit card transactions per second.

In many ways, this completely stomps out all the competing altcoins reasons for existing.

Why don't utilities just use bitcoin?

This has been one of the biggest arguments against tokens since day one. Whats the real point of a utility token? Why don't they simply make their apps with integrated bitcoin payments or fiat currency payments.

Related image

The rebuttal has always been that these apps need smart contracts to properly work. However the argument is mostly nonsense. One doesn't need a smart contracting language such as solidity for anything really.

Properly integrating with the bitcoin blockchain and using standard languages can achieve a nearly identical things. The main difference is that smart contracts are said to be "written in stone" meaning that after deployment the contracts cannot be changed. This may be true, but no project I have found makes any sort of valid argument for why this is so important. 

It is correct a contract cannot be changed (depending on how its coded) however it doesn't prevent a company from creating a new token with the exact same name, switching an old contract with a new contract inside their applications, and carrying on under a new contract. There are very few if any real use cases on why a smart contract is so important to the current state of money.

People have been waiting for the past 5 years to see something ground breaking in this arena and so far, nothing has been shown that I have found.

So what about the image I have displayed about involving housing sales? As I stated in Bitcoin controls the market and this is why:

The reality is, smart contracts are not legally binding.

This means despite the image painting a rosy image, there are truthfully mountains of paperwork that actually have to be done and no real savings is taking place... so why bother and still, just as with above, all of this could be done through standard programming and transfers of funds using bitcoin. 

So will altcoins ever succeed?

It all boils down, once again, to the same arguments I used in my previous post. It will come down to market dominance. Those coins and tokens who are able to become strong industry leaders in their market industry will succeed.

In my opinion their is no real reason to use anything except bitcoin however that doesn't mean it won't happen. The success or failure will be determined solely on a projects ability to gain market dominance.

Projects such as Ethereum that exist as token networks will succeed if they maintain a market dominance over the token industry, but the token industry will very likely change within and of itself. Instead of tokens existing as tokens, they will exist solely for the usage of incubators. 

What I mean when I say that is that tokens will exist to create a model, also called an MVP or Minimum Viable Product which I have talked about before. They will solely exist to work within a first run of a project to show investors. When its time for that project to launch to the masses, the tokens will be swapped to currencies on their own blockchain.

So I expect a couple token networks to survive a crashing market despite having massive value loss, but overall I expect very few project that rely solely on tokens to last.

I expect projects will have to already moved to their own chains if they expect to succeed because major corporations and major companies within industries are not going to see a desire to partner with token projects - and again, projects without major corporate partnerships are going to have a heck of a time trying to claim industry dominance. 

The truth is, I think we are staring to see the alt market bubble popping. It won't happen overnight. However I do think after the bitcoin halving next year, we will come out seeing a very different market than we see today.



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