Topic: On value dilution (Read 528 times)
quite complicated but if recalled in the past the value of bitcoin is very low and the peak value of bitcoin in 2017, it may be right, altcoin takes the value of bitcoin and maybe NO, because of the decline in the value of bitcoin it causes many to sell in large quantities, and if you know the contents of the big whale's wallet might be surprised, so basically I think altcon has no connection with the value of bitcoin.
~ It doesn't matter that while taking from Bitcoin they are also adding to it something as what they take exceeds what they give back
But what if what they take doesn't exceed what they add? Are there stats on the number of people that switched from alts to BTC? I think there are many of such people. Do you think that if there were no other carbonated drinks with sugar and caffeine in them, it would be better for Coca-Cola? I don't think so because, in my opinion, those other drinks get people used to the idea that consuming such drinks is a normal thing, and then some of them start looking for the best one in the field. Also, a healthy competition wouldn't hurt any business
As I said, I didn't intend this topic to turn into a debate of whether altcoins are good or bad
But personally, I think they are a good thing overall (well, at least some of them, for example, Litecoin) but then again, this is not what this topic is about. Regardless, if altcoins give more than they take from Bitcoin (ultimately, Bitcoin's value expressed in its market price), then it would mean that they add to its value (and price) as a net result. But this is exactly what is for debate here
Regarding Coca-Cola, yes, I think we can safely assume that. The inference should be straightforward. As long as people buy drinks specifically because they are carbonated and have caffeine in them, they will start drinking more Coca-Cola if there are no other such drinks around. I think this is a pretty solid assumption
~ It doesn't matter that while taking from Bitcoin they are also adding to it something as what they take exceeds what they give back
But what if what they take doesn't exceed what they add? Are there stats on the number of people that switched from alts to BTC? I think there are many of such people. Do you think that if there were no other carbonated drinks with sugar and caffeine in them, it would be better for Coca-Cola? I don't think so because, in my opinion, those other drinks get people used to the idea that consuming such drinks is a normal thing, and then some of them start looking for the best one in the field. Also, a healthy competition wouldn't hurt any business.
I don't think presence of other cryptocurrencies can impact the price of Bitcoin significantly. Any commodity can significantly effect the price of other commodity only if they are substitute to each other. In the absence of substitution effect, what you saying isn't possible
In fact, that remains to be seen
But your premises themselves are pretty much wrong on their own. All cryptocurrencies are mostly used for the same purpose which is earning profits via speculation. In this manner they are all very good substitutes for each other. And it is not about that only. For example, you can use Bitcoin to hedge against altcoins volatility. In this case, you can't technically say that Bitcoin is a substitute for altcoins, but they are still used together (read, you are incorrect even if your premises had some ground)
I don't think presence of other cryptocurrencies can impact the price of Bitcoin significantly. Any commodity can significantly effect the price of other commodity only if they are substitute to each other. In the absence of substitution effect, what you saying isn't possible.
Now coming to captial market: the substitution effect is not present in capital market. For example: if Gold prices increases, it doesn't mean investors will right away sell their equities and invest in Gold because both markets are independent. Same applies to crypto market too. All coins are generally existing complementary to each other and the fact that altcoins exist doesn't decrease the demand for bitcoin rather increase it since direct market is not available for most of the coins and one has to buy btc in order to invest in other coins.
Now coming to captial market: the substitution effect is not present in capital market. For example: if Gold prices increases, it doesn't mean investors will right away sell their equities and invest in Gold because both markets are independent. Same applies to crypto market too. All coins are generally existing complementary to each other and the fact that altcoins exist doesn't decrease the demand for bitcoin rather increase it since direct market is not available for most of the coins and one has to buy btc in order to invest in other coins.
I think, you are partially right that Bitcoin price could be higher if there were no altcoins. But only partially because with all that buzz new projects generate, it can be true that we are getting more adopters of crypto in general, who then switch to BTC seeing that their projects fail. So, this sword cuts both ways, as they say. We can't state with certainty neither that altcoins are taking value from Bitcoin, nor that Bitcoin is benefiting from them
I'm not sure how I can be partially right here
Really, if Bitcoin price would be higher without altcoins, then I would be just right (read, 100% right) since this is what my point essentially boils down to. In this case it would be legit to say that altcoins are in fact diluting Bitcoin's value as that is the net effect of their existence. It doesn't matter that while taking from Bitcoin they are also adding to it something as what they take exceeds what they give back
~, i.e. without altcoins people would be trading Bitcoin only (note that I don't say whether it would be good or bad)
Or, another option, they would pull out of crypto completely in the case of being disappointed with the gains they could make with trading BTC.
I think, you are partially right that Bitcoin price could be higher if there were no altcoins. But only partially because with all that buzz new projects generate, it can be true that we are getting more adopters of crypto in general, who then switch to BTC seeing that their projects fail. So, this sword cuts both ways, as they say. We can't state with certainty neither that altcoins are taking value from Bitcoin, nor that Bitcoin is benefiting from them.
So what's the bottom line?
Do altcoins add to Bitcoin value or take from it (price-wise, before all)? To make things easier to understand, would Bitcoin be priced higher if there were no altcoins (or just less altcoins)? Further, it seems to be universally accepted that Bitcoin is the primary driver behind the market growth (as well as downfall, for that matter). In other words, where Bitcoin goes, there altcoins go as well (on average)
I think that if there were no altcoins, less people would know about crypto and be interested in it at all. So I'd say that altcoins increase the value of Bitcoin. In the bearish market, bitcoin indeed seems to set the standard of the price dynamics for other coins (just look how similar the weekly charts of the main cryptocurrencies are).Do altcoins add to Bitcoin value or take from it (price-wise, before all)? To make things easier to understand, would Bitcoin be priced higher if there were no altcoins (or just less altcoins)? Further, it seems to be universally accepted that Bitcoin is the primary driver behind the market growth (as well as downfall, for that matter). In other words, where Bitcoin goes, there altcoins go as well (on average)
But when the market is bullish, yeah, the top coins are mainly going up, but their price patterns are not similar to one another, because bitcoin does not have such a strong influence anymore. Take a look at these charts, for instance
I think there's not a lot of difference really
Indeed, if you calculate two different correlation coefficients, i.e. one for the downward movements and the other for the upward ones, they may in fact be somewhat different. But I don't really expect them to be too different to draw a conclusion like the one you arrived at (like "bitcoin does not have such a strong influence anymore")
In other words, if you just evaluated the upward correlation (without first considering or taking a look at the other metric), you would have to conclude that the price action between Bitcoin on the one side and altcoins on the other is still highly correlated. If anyone wants to make direct assessments, you are welcome
I think Bitcoin is the only currency that has structure, that is, you can identify the phases through which it has passed, being accumulation, trend and distribution, the Altcoins have no life of their own, they all depend directly or indirectly on Bitcoin, so much so that its graphs are very similar to bitcoin, especially the ones you talk about, however, the bitcoin when prices drop in some exchanges some coins go up, up to 30%, this is simple, they are the ones that survive thanks to Pump and Dump ... but altcoins bleed when bitcoin goes down, it's law.
So what's the bottom line?
Do altcoins add to Bitcoin value or take from it (price-wise, before all)? To make things easier to understand, would Bitcoin be priced higher if there were no altcoins (or just less altcoins)? Further, it seems to be universally accepted that Bitcoin is the primary driver behind the market growth (as well as downfall, for that matter). In other words, where Bitcoin goes, there altcoins go as well (on average)
I think that if there were no altcoins, less people would know about crypto and be interested in it at all. So I'd say that altcoins increase the value of Bitcoin. In the bearish market, bitcoin indeed seems to set the standard of the price dynamics for other coins (just look how similar the weekly charts of the main cryptocurrencies are).Do altcoins add to Bitcoin value or take from it (price-wise, before all)? To make things easier to understand, would Bitcoin be priced higher if there were no altcoins (or just less altcoins)? Further, it seems to be universally accepted that Bitcoin is the primary driver behind the market growth (as well as downfall, for that matter). In other words, where Bitcoin goes, there altcoins go as well (on average)
But when the market is bullish, yeah, the top coins are mainly going up, but their price patterns are not similar to one another, because bitcoin does not have such a strong influence anymore. Take a look at these charts, for instance:
I think it depends on the BTC value proposition. If altcoins have the same value proposition, i.e., as a P2P cash system, then these altcoins would dilute the BTC value. In other words, altcoins such as LTC, BCH, XMR, etc., would take away some BTC market share. However, it depends on your judgment whether some properties like more privacy, faster tx, etc., are offering different (significant) value proposition or not
All cryptocurrencies have basically the same value proposition
If we cut all the empty verbiage, most of their value comes through speculation. More privacy, faster and cheaper transactions, etc are important only as long as they can be used for heating up the speculation and adding more fuel to the hype. For example, ZCash was created as a Bitcoin copycat with more privacy added, and how many people were actually using it with this purpose in mind? I don't think that many. After it got kicked from regulated exchanges (for being too private), its price crashed. So much for the longed for and dreamed of privacy, huh
For the Dapps platform like EOS, ETH, ADA, etc., they are not playing in the same market as BTC
I'd rather say it is more like some part of them is not playing in the same market as Bitcoin (probably, even the minor part) but they are still traded on exchanges. For example, I see EOS and Ethereum being listed at Bitinex (in fact, I'm shorting the latter right now), so it is not like they don't meddle with Bitcoin on this front as they definitely do
I think it depends on the BTC value proposition. If altcoins have the same value proposition, i.e., as a P2P cash system, then these altcoins would dilute the BTC value. In other words, altcoins such as LTC, BCH, XMR, etc., would take away some BTC market share. However, it depends on your judgment whether some properties like more privacy, faster tx, etc., are offering different (significant) value proposition or not.
For the Dapps platform like EOS, ETH, ADA, etc., they are not playing in the same market as BTC.
For the Dapps platform like EOS, ETH, ADA, etc., they are not playing in the same market as BTC.
Without altcoins in the market I doubt that BTC will even be as popular in the market compared to what we are seeing now. Bitcoin and altcoins have a symbiotic relationship on the sense how Bitcoin's movement can influence the market and how altcoins made the market even more popular to its investors
Technically, I agree with this (to a degree)
Altcoins pick up where Bitcoin leaves off. For example, many people after a while become no longer satisfied with the money they make through Bitcoin's volatility (as they say, one leg of mutton helps down another), while altcoins look promising in this regard (whether they actually live up to these promises is another question)
However, I don't see how it disproves my point as people move from Bitcoin to altcoins looking for more profits, and that's exactly what I'm talking about, i.e. without altcoins people would be trading Bitcoin only (note that I don't say whether it would be good or bad)
On the truest sense the answer is yes because if we are talking about Bitcoin's market share in the crypto market we are seeing that it is on a decline. But if you think that Bitcoin can go to it ATH as the one and only cryptocurrency market than think again. Without altcoins in the market I doubt that BTC will even be as popular in the market compared to what we are seeing now. Bitcoin and altcoins have a symbiotic relationship on the sense how Bitcoin's movement can influence the market and how altcoins made the market even more popular to its investors.
That's also one of the reasons Bitcoin's market cap dominance isn't a helpful metric. In the coming years there will be so many coins and tokens added to Coinmarketcap that Bitcoin's market cap dominance will tank below 25%
That's why we need another metric
Which would be more reliable and accurate. Personally, I go for trading volumes, though they are not without their own shortcomings either because much of the trading volume is outright fake. On the other hand, I don't think that all 5000+ altcoins combined would inaccurately "devalue" Bitcoin in market cap terms anyway, especially if most of them are left for good and dead, i.e. their orderbooks (whenever they might have been listed) are empty at the Bid side (which means they are totally worthless)
I believe if we had like 500 coins at max, that would be fine and help bitcoin, anything over is just pure waste of time and effort and money.
People mostly assume that there are like 2000 altcoins in existence based on what Coinmarketcap indicates, but that's not even half of what exits, and it might not even be a 10th in the grand scheme of things.Binance once stated that they received listing applications of over 5000 projects, so imagine how many of these they had to reject and for that reason don't make it to Coinmarketcap.
That's also one of the reasons Bitcoin's market cap dominance isn't a helpful metric. In the coming years there will be so many coins and tokens added to Coinmarketcap that Bitcoin's market cap dominance will tank below 25%.
I guess there is a sweet spot in between. I mean bitcoin without altcoins wouldn't have gotten this much attention to begin with, so bitcoin definitely needs altcoins to exists, however it is also true that some money that could go to bitcoin is also diluted into altcoins which makes bitcoin not go higher with that money
This point is debatable
It can be said that it is altcoins which get publicity through Bitcoin. After all, if Bitcoin didn't appear, altcoins would not be heard of either (well, there could be some other form of cryptomoney but it is irrelevant). In this way, it is altcoins which are profiting from the Bitcoin popularity and not so much the other way around. So even in this specific case altcoins take more than give back
Now, if there was no altcoins that would mean bitcoin would get that money instead but at the same time if there was no altcoin bitcoin wouldn't get attention from some people who like altcoins more as well
People learn about crypto via Bitcoin, not altcoins, so the net result should be pretty clear
I guess there is a sweet spot in between. I mean bitcoin without altcoins wouldn't have gotten this much attention to begin with, so bitcoin definitely needs altcoins to exists, however it is also true that some money that could go to bitcoin is also diluted into altcoins which makes bitcoin not go higher with that money.
Now, if there was no altcoins that would mean bitcoin would get that money instead but at the same time if there was no altcoin bitcoin wouldn't get attention from some people who like altcoins more as well. That is why I think there is a fine line of "too many altcoins" and also "not enough altcoins", ethereum and litecoin and many coins like that are fine and should exists and helps people out but there are over 2000 coins which we do not use or need, they are useless to begin with and should be gone.
I believe if we had like 500 coins at max, that would be fine and help bitcoin, anything over is just pure waste of time and effort and money.
Now, if there was no altcoins that would mean bitcoin would get that money instead but at the same time if there was no altcoin bitcoin wouldn't get attention from some people who like altcoins more as well. That is why I think there is a fine line of "too many altcoins" and also "not enough altcoins", ethereum and litecoin and many coins like that are fine and should exists and helps people out but there are over 2000 coins which we do not use or need, they are useless to begin with and should be gone.
I believe if we had like 500 coins at max, that would be fine and help bitcoin, anything over is just pure waste of time and effort and money.
I think Altcoins are filling the vacuum left by Bitcoin. More like what Andriod is to Apple. There wouldn't have been need for altcoins if their features are available on Bitcoin. It would be impossible for Bitcoin to solve every single problem plaguing t cryptocurrency. New Idea shouldl always be welcomed
As much as I myself want it to be the case here, it is nowhere near that
The only void that altcoins can fill is lack of volatility in Bitcoin if it can be said so, comparatively speaking. Indeed, Bitcoin is volatile as fuck but altcoins take volatility to the next level of extremity. In simple terms, they are more speculative than Bitcoin, and this is their only real advantage
Okay, I know that there are features that Bitcoin lacks (for example, smart contracts). But how much of Bitcoin price (or lack thereof) can be attributed to them? I don't think that much. In this way, your whole assumption seems to be based on non-existent premises (well, let's call them far fetched) and is therefore invalid overall
I think Altcoins are filling the vacuum left by Bitcoin. More like what Andriod is to Apple. There wouldn't have been need for altcoins if their features are available on Bitcoin. It would be impossible for Bitcoin to solve every single problem plaguing t cryptocurrency. New Idea shouldl always be welcomed
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