My Take on the Bitcoin vs AltCoin Debate
Some are Bitcoin Maxies while others are not. Here is my take
Bitcoin vs ShitCoins has been the argument ever since Blockchain first came into the picture. While money into AltCoins have gone up significantly, Bitcoin Maximalists or Maxies have been very vocal on AltCoin investors. To be frank crypto Twitter has become toxic due to many Maxies taunting AltCoin investors. Here is my take:
My take is that in terms of “Digital Gold” the only Blockchain that comes close to a store of value is Bitcoin. There are a limited number of Bitcoins, it’s unhackable, the most decentralized crypto blockchain, the government cannot seize your Bitcoin, or your Bitcoin cannot be nationalized. This is why so many investors see Bitcoin as their first choice of crypto.
But Crypto is not just a store of value. Crypto is being used for so many other purposes. Crypto is used for so many projects. Cryptos are used to create NFTs, decentralized finance (DeFi), and decentralized applications (dApps).
Let’s take for example someone who is a commodity and natural resources analyst. Clearly, these analysts will recommend gold as a safe haven asset. But there are roughly 30 tradable commodities. Lithium is used to power electric cars. Uranium is used to power nuclear power and create green energy (as I’ve highlighted here, here, and here). Would this natural resources analyst be a gold “maximalist”. This analyst would call gold a safe haven but would recommend other metals and companies that mine and explore these metals and viable investments. Same can be said about crypto.
So many blockchains are currently being used for major decentralized finance and application projects. 90% of NFT digital assets are created using the Ethereum blockchain. Solana is able to conduct 65,000 transactions per second for $0.00025 per transaction. Bitcoin on the other hand can only conduct 13 - 15 transactions per second. Here are 10 of the fastest growing blockchain networks:
Source: Electric Capital and ETF Trends
As shown above, some of the fastest blockchain networks are outside Bitcoin and Ethereum. Some of the biggest DeFI and DApp projects are happening on diverse blockchain networks. As more networks with improved transaction speed and decreased costs appear expect developers to migrate to these networks.
In terms of investment, if you were to listen to the Maxies you would have missed out on so much investment return. Just take the Bitcoin vs Midcap Altcoin chart below:
As you can see if you were to miss out on Midcap cryptos you were to miss out on 5770% of gains (since 2017). Now let’s look at Bitcoin vs Ethereum since 2017.
Over the five years, Ethereum has given investors a higher return than Bitcoin. If you were not invested in Ethereum in 2017 you would have missed out on some massive gains and returns. Now let’s look at YTD returns for cryptos (from Jan 2021 to Jan 2022).
As you can see above Solana, Ethereum, and Cordano all outperformed Bitcoin in 2021. If you did not hold any of the cryptos you would have missed out on some monstrous returns.
Of course investing in crypto is very risky. You are going to find so many real “Shitcoins” and pump and dumps. One needs to be very careful when investing in this space. Also, many have an agenda. Be very careful when listening to “experts” on the internet. Whether they are introducing a new ICO or promoting only Bitcoin many have their own agenda. You should always do your own research and be diligent.
Many Bitcoin Maximalists don’t like other cryptos mainly because when investors diversify their crypto portfolio away from Bitcoin, Bitcoin’s market value declines. This is the same reason why gold salesmen like Peter Schiff hate Bitcoin. When more people buy Bitcoin there is less demand for Gold.
In conclusion, I see the overall cryptos as an ecosystem. The future of the internet is crypto. Cryptos are going to create the next generation finance, investing, and entertainment apps (which will all be decentralized). As for a store of value and sound money, Bitcoin is the only viable options. But other Blockchain networks should be considered as emerging technology investments.
What I write here is not investment advice. Please do your own research before investing. I write these mostly for educational purposes. Investing in crypto is very very very risky!
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