Bitcoin (BTC) is invincible by network effect

By MichDon | MichDon | 4 Apr 2020

The downside of a good idea that quickly generates value is that there will always be people who want to take advantage of it. There will always be charlatans and other bad guys out there who want to get richer at all costs and everyone.

Unfortunately, that has not been any different with Bitcoin. Bitcoin's code is public and available to everyone so a copy is easily made. All you need to make money over the back of ignorant people are some useless adjustments and a good sales story.

Network effect

Take Litecoin for example. Litecoin's sales pitch is magnificent. Litecoin is the silver among cryptocurrencies, Bitcoin's little brother. That story is beautifully interwoven in the name and logo, but it also stems from the protocol itself.

The blockchain is faster than that of Bitcoin because a new block is chained every 150 seconds instead of every 600 seconds as with Bitcoin. In addition, the blocks have been made larger so that more transactions can be made in a block!

Wow, no one else had thought of this genius solution to make Bitcoin scalable. It is completely understandable that for a layman, Litecoin sounds like the better and faster version of Bitcoin. It is not, but we are leaving that for now.

The only aspect that cannot be copied from bitcoin is the network effect. And let that be a very important aspect.

Bitcoin

Bitcoin is not superior to other cryptocurrencies because it is technically a better protocol. Although I dare to argue for that too. But Bitcoin is mainly superior because of its history and the number of users, the network.

If we knock it flat for a moment, a payment method that is accepted by many people is a better payment method than the savings points that you can only spend at the bakery around the corner.

If you have the choice between getting your wages in a payment method that is accepted by everyone in the Netherlands or a payment method with which you can only buy the bakery Roger & Vitalik croissants, then the choice is made quickly.

The network effect means that everyone will slowly but surely move to the same payment method. Once an imbalance arises in which one payment method is accepted by a majority, everyone will gradually accept that payment method and dump other, less accepted means of payment.

Ultimately, only one form of money will remain. The most accepted form of money will be the best able to retain value, the best means of storing your value.

Head Start

The lead that Bitcoin has over other cryptocurrencies in this regard is immense and has simply arisen because Bitcoin started earlier. It has the longest history and by a street length ahead most users of all cryptocurrencies.

To catch up with Bitcoin as the largest cryptocurrency, a small technological improvement is not enough. It must be a cryptocurrency that is superior to Bitcoin in a similar way, as Bitcoin is superior to fiat money.

Even then, there is no reason not to simply implement that superior technology in Bitcoin. The only reason you would like to start your own cryptocurrency is not to help society progress, but to enrich yourself at the expense of everyone.

Clumsy

That in itself means that an alternative cryptocurrency can never be superior to Bitcoin. In addition, the existence of alternative cryptocurrencies is inconvenient. After all, how valuable is it if you had to pay with a different currency for every application and every store?

You should constantly switch between the different coins and it ultimately adds no extra value at all.

It only makes for viscous transactions. The network effect will cause Bitcoin to gobble up all other cryptocurrencies. The stories of smooth sellers and hefty marketing budgets can only delay this. I think it is going to happen.

At the moment, however, there is no altcoin that is technologically superior to Bitcoin and it is not yet to be seen. Most of the developments are taking place in the sizeable Bitcoin ecosystem itself.

The lead in the network of users that Bitcoin has over all other cryptocurrencies makes bitcoin a better form of money. All other cryptocurrencies are an inferior form of money that will eventually be swallowed by Bitcoin's network effect.

The Bitcoin community is not only a lot bigger than that of all altcoins combined, but is also qualitatively superior.

While people work on Bitcoin with a firm belief in the protocol and its potential to improve the world, altcoins are being worked on to make a lot of money as quickly as possible.

Developers know deep down that their projects will never keep their promises, and yet they keep working on it. This mere difference in motivation makes altcoins stand a chance against Bitcoin.

My articles:

Cryptocurrency Bitcoin (BTC) Crypto BTC Altcoins

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MichDon

Crypto entousiast, father, taekwondo

MichDon

Crypto-enthousiast dad with an aim to try to inform readers of new and interesting projects, upgrades and updates to projects and of course any news of interest on the Crypto spectrum.

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