Nothing is “the next Bitcoin”
Picking the next winners in the cryptocurrency marketplace is difficult – picking “the next Bitcoin” is probably impossible. Those new to the cryptocurrency space often hear this altcoin or the other claiming to be the “next Bitcoin” all the time. The very fact that Bitcoin is used for all comparisons means one should look at what makes it unique.
The first unique aspect is that Bitcoin represents true innovation. Altcoins claim they “improve” or “fix” problems with Bitcoin and make it obsolete with their superior innovation. Unfortunately, these claimants fail to recognize that the innovation has already occurred and they cannot lay claim to it. The true innovation was the development of decentralized digital scarcity and Bitcoin as the software of that innovative creation. In order to even be “similar”, an altcoin has to at least be decentralized and have a limited supply. Clearly, this is the point where many drop off the list.
Decentralization simply means that Bitcoin does not have a single point of failure or control. No founder or company created it, thus no one has a greater influence or the ability to change the rules for Bitcoin in response to market demands so higher profits can be earned. One of the main value propositions for a store of value is the inability to be changed qualitatively – with regard to the quality rather than its quantity.
The original creator of Bitcoin has long since completely disappeared. Bitcoin is actually scarce and will not change qualitatively unless the entire network agrees. Other than Bitcoin, every other cryptocurrency is centralized.
If an altcoin’s claim to fame is that it is faster, more private, less this or that, different from Bitcoin in some other insignificant way – that does not make it “the next Bitcoin” and never will. Since the beginning, there have been many spinoffs and only a few still exist, yet we continue to hear the same hype from those trying to cash-in on the growing crypto awareness.
Those altcoins with a completely different use or purpose have a slightly higher chance of survival than the “wannabes”. If an altcoin or token can create as large a network as Bitcoin, then and only then could it even be in the running as the “next bitcoin” – and the chance of that exists only if Bitcoin ceases to increase the size and gains from its existing network effect. That “network effect” is the second unique aspect of Bitcoin, and rather than diminishing, it is growing stronger as Bitcoin continues to withstand the test of time and become more widely adopted.
Another unique aspect is the ecosystem around Bitcoin continues to improve at a much more rapid pace than any altcoin. Bitcoin has the most users, therefore it grows in utility as developers create better applications for buying, holding, storing or trading it. The ICO (initial coin offering) of the moment is starting from ground-zero and will always be running after Bitcoin, much less catching up to it.
Thousands of ICOs have emerged into the crypto space over the past couple of years, and yet the unique aspects of Bitcoin have not been replicated. The possibility that any ICO will solve the age-old problems to serve a monetary role is slim. To familiarize yourself with the intricacies of what it takes for a technology to perform the functions of money, Saifedean Ammous’ book, The Bitcoin Standard, is a highly recommended read. This is not a book about Bitcoin, but about the history of money with insightful exploration of how Bitcoin works in a functional, intuitive manner.
Ammous puts forth for consideration whether Bitcoin’s true competitive edge might be as a store of value and network for final settlement of large payments across borders in minutes. The first successful form of digital cash and digital hard money, with an automated and predictable monetary policy that is fully extricated from politics.
Innovation, purpose, community, and ecosystem that is not owned by any one entity. Big shoes for any altcoin directly competing with Bitcoin to fill. While some may find their own niche or perform a specific market role, it is doubtful that, even with innovation and purpose, any altcoin will aspire to become “the next Bitcoin” without a way to replicate the entire Bitcoin community and ecosystem. Not impossible, but doubtful.