By surviving the current bear phase, the cryptocurrency sector has shown investors worldwide that it can withstand time and overcome challenges because most projects have varied utilities. Even if digital coins’ prices dropped in 2022, people continued to trust the market and purchased cryptocurrency to join the financial revolution.
Crypto investors have always kept an eye on alternative coins to increase their profits by trading in and out of them. But they have been aware that the market heavily relies on the evolution of the first cryptocurrency – Bitcoin. When it was first launched on the market, it raised eyebrows because it triggered confused curiosity. At the time, the blockchain and digital currency had just started doing rounds of the internet and attracting buzz. As the years passed, people started to look at them as assets providing investment opportunities. The phenomenal success of Bitcoin and Ethereum paved the way for many other projects. Because Ethereum was designed to offer an alternative to Bitcoin’s functionalities, it was named the first altcoin. And as other projects were launched on the market, they were assigned to the altcoins group because they all marketed themselves as offering features Bitcoin lacked.
Since Bitcoin is the first-ever cryptocurrency created, it greatly impacts the overall crypto market and influences all digital coins’ evolution.
What is Bitcoin?
The mysterious developer or group of developers, Satoshi Nakamoto launched Bitcoin in 2009 to provide a modern solution to traditional finance. Nakamoto created Bitcoin to offer people a universal digital currency they can use to exchange value without dealing with third parties or intermediaries. They thought the traditional financial system would fail in the near future because of its dependency on central banks and governments, and they introduced Bitcoin as a peer-to-peer digital currency to work as a hedge against inflation. The cryptocurrency created a sense of urgency because it has a limited supply and opens the internet economy to all Internet users, regardless of their location.
The developer’s unique vision has transformed a niche project into a trillion-dollar financial system that put the basis of a flourishing sector. Check Bitcoin price evolution on a reliable exchange platform like Binance if you’re curious to see how its value has increased over the years. No one can deny that it revolutionised the financial sector because it offers an alternative to governmental finances.
Reasons why Bitcoin influences the entire crypto sector
Suppose you’ve been following the crypto sector for a period; you most likely noticed that when Bitcoin’s price registers fluctuations, altcoins’ prices immediately follow. You cannot help but wonder why this happens. Why is Bitcoin so powerful to impact the entire industry and make all alternative cryptocurrencies follow it closely? If you parallel the crypto sector with the stock one, it’s ludicrous to think that Nasdaq will crash if Microsoft stocks’ price goes down.
Bitcoin is the crypto pioneer
Being the first digital currency ever launched put great weight on its shoulders and earned it the reputation of a sure store of value, boosting its popularity to astronomical levels. Regardless of what people say, Bitcoin is the digital token that brought the market into the mainstream. The idea behind the cryptocurrency caught the public’s attention and drove its price to its present value.
Crypto specialists agree that Bitcoin paved the way for the sector, and most investors trading cryptocurrencies have at least some Bitcoin in their portfolios. It’s important to add that Bitcoin is the only digital token whose creator remained utterly anonymous.
Some alternative currencies are Bitcoin clones
When developers noticed that Bitcoin quickly grew in value and popularity, they didn’t hesitate to introduce on the market close projects that brought nothing new. These tokens have identical features to Bitcoin but promote themselves as alternatives that will revolutionise the market. For example, one of the altcoins that registered a worldwide adoption, Litecoin, even uses a copy of Bitcoin code but promises to be faster and lighter that the first currency. Several other cloned projects exist in the sector, like Bitcoin Gold, Bitcoin Cash, Bitcoin Diamond and many others.
Even if most altcoins aim to become better than Bitcoin, they usually follow its lead.
Bitcoin has a secure network
Bitcoin uses the proof-of-work mechanism ensured by over 18 million miners participating in its decentralised network. The high volume of participants guarantees increased decentralisation of the blockchain and ensure all Bitcoin payments are completely safe.
Crypto enthusiasts consider it a reserve currency for digital currencies
No one can deny that Bitcoin is the pioneer of the market, so investors often consider it the service currency of the entire market and compare it to the USD in the global stock markets. Let’s not forget that most cryptocurrency trading platforms don’t allow trading alternative crypto for fiat money because of the complex regulatory and compliance measures in some countries. Therefore, investors must first buy Bitcoin to trade altcoins and make a profit.
Also, some crypto investors don’t compare altcoins’ prices to traditional currencies but use BTC to create pairs. As such, it’s no wonder that all cryptocurrencies’ prices drop when Bitcoin fluctuates.
Are altcoins different from Bitcoin?
Alternative coins were built on the success of Bitcoin, with slight changes to the features to bring something different and attract new prospects. Ethereum for example, introduced the concept of smart contracts that run when predetermined conditions are met. They complete agreements between two users with the help of blockchain technologies, enabling users to explore new crypto applications.
Altcoins are supposed to bring improved transaction speeds, functionality, and scaling, to match the users’ demands. As the sector evolves, some wonder if the original digital currency will continue to lead the market now that altcoins offer many functionalities. Bitcoin is the first digital coin, and all other tokens are altcoins. At present, it’s clear that Bitcoin has the final word when establishing the market’s trajectory. Experienced investors and traders always check Bitcoin before making a decision.