What makes Bitcoin a unique cryptocurrency
Overview:
As of mid-2019, over 2200 crypto-currencies have succeeded in obtaining a listing on a notable platform such as coinmarketcap. Of these coins, very few—approximately 10—can be described as world-class coins. Bitcoin is at the top of that list.
That is incredible when you consider that Bitcoin has been here for a decade. Part of the reason the coin has done so well is the fact that it was the first cryptocurrency to penetrate the market, and as such, it has consumer loyalty.
However, the bigger reason why the coin has managed to stave off equally strong coins consistently is its uniqueness. So, what makes Bitcoin so unique?
1. Unparalleled Security
Most will argue that recent hacking incidents such as the Binance hack that saw hackers steal $40 million worth of Bitcoin from Binance—a cryptocurrency exchange—prove that Bitcoin is no longer 100% secure.
That conclusion is false. The Blockchain—a ledger technology upon which Bitcoin is based—remains as secure and as unhackable as it has always been. It is an unchangeable record of who has transferred Bitcoins to who.
However, other aspects of the cryptocurrency or Bitcoin ecosystem, most notably, the exchanges, suffer from weaknesses. A Bitcoin exchange is a digital marketplace that allows users to sell and buy bitcoins. For this to happen, some users, especially those who are not tech savvy, surrender their keys to either the exchange or the wallet.
Once the exchange has a user’s keys, then it is up to them to keep the currency safe. If they do not have adequate cybersecurity practices and systems to keep your keys safe, then hacking is a possibility.
Bear in mind that as long as you don’t surrender your keys to anyone—those that correspond to your Bitcoin—then your currency remains safe. That kind of security is not always a guarantee when it comes to other newer cryptocurrencies. A good example of a previously unsecured cryptocurrency is Zcash.
2. Efficiency
It is critical to note that because Bitcoin was the first ever cryptocurrency to attract significant traction, all subsequent cryptocurrencies are either clones of Bitcoin or forks—new cryptocurrencies that split off from existing ones.
As a result, Bitcoin is still one of the most efficient coins. The technology uses peer-to-peer transactions which eliminate the need for a central authority or third-party intermediary. Users of Bitcoin transact with each other directly, and the Blockchain verifies the transaction.
It is interesting to realize that although most of the newer coins claim faster transaction speeds as the distinguishing factor that gives them an advantage over Bitcoin; the speed is simply a psychological boon and it does not affect usability or value of the currency.
Take a very practical example of Litecoin. Transaction confirmation time for Litecoin is 2.5 minutes while that of Bitcoin is 10 minutes according to their Investopedia. However, a merchant receiving a Bitcoin payment can always decide to accept the payment without waiting for confirmation which renders Litecoin’s faster confirmation time of non-effect.
3. The coin’s value as an asset
Bitcoin has a supply limit of 21 million coins, and as soon as that limit is achieved, no other Bitcoin will ever be added. Consequently, the existing coins are quite valuable as an asset.
As time goes by, the demand will grow, but the supply will remain the same. As a result, the value will increase. That is a huge benefit to those who own the coin because they never have to worry about a reduction in the value of their asset.
Bear in mind that some cryptocurrencies don’t have a limit, and that is why this low limit is such a unique and distinguishing Bitcoin characteristic. A good example is Ethereum, which has no upper limit on the coin supply.
As of 2018, Ethereum hit the 100 million mark which translates to a hundred million Ethers in circulation. The lack of supply limit is very worrying to a majority of the Ethereum community, including the founder. So much so that in 2018, Vitalik Buterin—Ethereum co founder—proposed an improvement (originally as a joke) that would set a hard limit of 120 million Ethers. The proposal is yet to be approved.
4. Bitcoin’s mysterious founder
While the fact that Bitcoin has a mysterious founder does not affect the coin in any way, it is still fascinating that Bitcoin is the only cryptocurrency with no known founder. It sets the coin apart and adds to its uniqueness.
In 2009, a whitepaper authored by someone known as Satoshi Nakamoto appeared online outlining the project. No one has ever seen him/her, and chances are high, no one ever will. In honor of him/her though, the smallest transferrable Bitcoin, which is one hundredth million of a Bitcoin—0.00000001—is known as a Satoshi.
Final word
New cryptocurrencies are always showing up, and existing average or purposeless coins are constantly disappearing. It is a testament to Bitcoin’s uniqueness that ten years down the line, the coin is as strong as ever. It is the most stable coin, and it has the highest market cap.
