What are the chances that BTC will actually be replaced by another cryptocurrency?

When the famous Satoshi Nakamoto (Satoshi Nakamoto) first designed his masterpiece, few people could think of Peak nearly $63,500 This drives investors into madness. Even in the last few days, it is sometimes difficult to believe the price of the first ever cryptocurrency, and investors may pinch themselves from time to time. With Bitcoin (Bitcoin) On a roller coaster, like Litecoin (LTC),ether(ETH) And Bitcoin Cash (Biosafety Information Clearing House) (Including the recent DeFi giants Polkadot and Cardano) joined this journey.

But in the long run, looking at the crystal ball, it is difficult to see the future of the coin that is enveloped by uncertainty.Ray Dario Put forward a fair point in his criticism Bitcoin’s point of view is that there is uncertainty about how the government will react to digital assets that replace fiat currencies in use, which may raise potential concerns. He further argued that the Bitcoin blockchain will quickly become obsolete, and if there is no central governance to adapt it to emerging blockchain technology, high-quality tokens may replace it.

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This illustrates this point: Bitcoin’s underlying blockchain protocol is very limited in terms of supporting a wider range of financial applications. Given Bitcoin’s proof-of-work transaction consensus algorithm, it is incredible to run a huge DeFi ecosystem on the Bitcoin blockchain.

Despite the limitations, it is difficult to predict whether the innovation progress in the blockchain of competing coins will be sufficient to surpass the success of Bitcoin. It all depends on the utility factor: will encryption retain storage space for value, or will it become a viable option for exchanging value?

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Emerging blockchain technology and the success of DeFi

Since the advent of Bitcoin more than ten years ago, the blockchain industry has produced hundreds of different projects, each aimed at turning a new coin into a star. In the long run, many successes. Ether is the second most valuable coin of Bitcoin. Continue to hit a record high throughout AprilIt not only verified the potential of coins as a storage of value assets, but also verified the potential of Ethereum as a blockchain network.

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Similar to Ethereum, many projects aim to imitate Ethereum, Vitalik Buterin He and his colleagues established Cardano, EOS, and the recently popular popular Polkadot. Each project attempts to eliminate the limitations of another project with varying degrees of success. Hype has always been the main content delivered to users, because only time will prove the true effectiveness of these projects.

Regardless of the blockchain project and its creative name, they all promote a collaborative development ecosystem. Together, they created a decentralized application or DApp, which can free the unbanked from the trough of poverty, obtain opportunities for financial exclusion, and provide new investment avenues for the already savvy people.

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The prosperous development of tokens and DApps has provided great optimism for many outsiders who hope to have real potential to cultivate a thriving decentralized financial ecosystem, or at least combine it with a centralized market. But this is all due to the belief in the value of Bitcoin, which is a fixed point for many investors.

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Bitcoin’s store of value is the real idea

What motivates the curiosity of investors, developers and cryptocurrency enthusiasts is the attractiveness of Bitcoin as a store of value. For fiat currencies, Bitcoin is deflationary. As a result, during the COVID-19 pandemic, Bitcoin’s appeal has become intense.

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Although discussions about Ethereum, Polkadot, and other blockchain platforms have caught the attention of the DeFi world, many outsiders are still insensitive to them and focus on coin prices. This is why the attractiveness of Bitcoin is still a store of value in most cases.

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Many ordinary retail investors and institutional investors are not sure about the inner workings of cryptocurrencies. According to Cardify Polls, Only 16.9% of cryptocurrency investors “fully understand” it, while more than 33% of cryptocurrency investors have limited or “zero knowledge”. More than 40% of cryptocurrency investors are newbies who are hype. It can be said that the entry barrier to enter the DeFi world is very high, and the literacy rate is also difficult to achieve, but this is another matter.

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In addition, institutional investors remain vigilant about the volatility issues faced by Bitcoin and other cryptocurrencies and continue to predict the upcoming bubble-another signal that the underlying blockchain technology is not important. This is why other coins will not surpass Bitcoin. As long as mainstream fixed assets are fixed on the value of coins rather than the value of the underlying blockchain, Bitcoin will stand on the cryptocurrency podium. Whether investors can become more literate in the internal operations of the DeFi world will determine how much value investors will get in the underlying technology of emerging coins.

For now, Bitcoin is the king of the hill. As prices continue to rise and mainstream investors join in, Bitcoin may remain in this state for a long time.

This article does not contain investment advice or recommendations. Every investment and trading action involves risks, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed in this article are only the personal views of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.