Topic: The crypto market becomes efficient (Read 123 times)

About all coins below bitcoin on coinmarketcap are better in terms of security and efficiency.  Don't forget that bitcoin's security comes at the expense of the entire electricity bill of a small European country, and that its security is only induced by its high price.  That's how PoW coins are secured: by inflation.  Yes, bitcoin's block chain has a high level of security, but it needs to secure a high value, and needs to spend the amount of electricity of a small European country for that.  Any PoS coin can reach higher levels of cryptographic security with just a digital signature which spends only a few Joules.


Bitcoin doesn't have a scaling solution.  It doesn't have a mechanism to adapt block size to demand. The only solution proposed, namely LN, is a banking layer, which won't even be secure, because of the limited block chain space to settle, which means that no matter what, in 100 blocks, there are only so many settlements that can be placed.  Any settlement that will not be ranged within those 100 blocks can be screwed.  100 blocks, that's what ?  500 000 transactions ?  So any lightning hub that has more than 500 000 open channels, can screw its customers, because they cannot settle within the "punishment time" even if all room on the chain is used for that.

Bitcoin will only increase in value and adoption! Bitcoin is not going any where yet because I am yet to see better coin in terms of security  and efficiency. If people think because bitcoin fee are on the high side then it has problem, i would say that is not a problem at all! When bitcoin scale that issue will be solved, the high fee is part of growing pain.

The point I was trying to make was that in crypto, coins have value because they are scarce.  The original bitcoin dream was that there would be 21 million coins, and that's it.  And most probably, there will never be more than 21 million bitcoins.  But there will be many, many, many more crypto coins, so the market of crypto can be infinitely diluted.  As to what is a valuable coin, almost ANY alt coin out there is technically a more valuable coin than bitcoin.  Bitcoin's only real use case is the transmission of tokens, on a limited block size, one every 10 minutes, that consumes more electricity than a small European country, with a clunky piece of software, and with your transactions visible to any Joe out there in the world for ever.  That's something that about any alt coin does better than bitcoin.  Most of the "currency" alt coins improved upon the problems of bitcoin.  It is amazing that one of the best improvements, namely stopping the waste of electricity, was experimented by Peercoin, which is now "out of sight".  DASH and monero, and later zcash, and many others, attacked the problem of privacy and the potential problem of non-fungibility that goes with it (although the non-fungibility problem hasn't manifested itself in bitcoin, only in ethereum).
Then there are the "useful" tokens, that buy you a ticket for a service nobody has been waiting for: all the ICO app tokens.  All these tokens can act like a currency coin (can be transmitted) but on top of that, they do something on an application that is, most of the time, pretty useless, but sound as if they are going to change the world, from blogging (steam and co) to prediction markets (augur and co).

Yes, at the moment, it still takes some dev. effort to make a plausible coin, even though just copying bitcoin's code, and changing some parameters is something a reasonable dev can do in one week's time (like Doge coin).  The essence is simply to have a token that can be transmitted.  Making a block chain with a token that can be transmitted isn't that hard.  You can take the open source code of many stuff out there, change a detail, and then hype it as the next revolution (that last part is probably the most delicate one).   You can do that an unlimited number of times, which makes the supply of crypto unlimited.  You can also fork existing chains an unlimited number of times.

So even if there's scarcity on a *given chain branch*, there's no scarcity in the crypto market.  You simply need to make believe people that only a very limited number of chain branches is "real", or the whole market will be infinitely diluted.  But there's nothing that distinguishes the "real" branches from others, apart from some brand name.  All essential functionality (and the only real functionality is transactions) is present on all coins, on all branches of all forks of coins.

It still takes some dev effort, like it took some knowledge of HTML in the 90-ies to set up a web page.  But I don't see why there won't be soon "tools to make a coin", or even better, tools to make a fork (say, of bitcoin), so that you don't even need to be a dev.  Say, the "dreamweaver of crypto".

I do agree with the first part of your analysis and that Bitcoin will eventually lose dominance (and perhaps number 1 spot). However I don't agree with your assessment that any Joe can start a valuable coin. I do think that many projects have inherent value and that offer / demand for tokens will be based in utility of them. I also think that Bitcoin itself will continue evolving (albeit at slower pace).

When  we look at 2017, I think the most important happening is that bitcoin lost its monopoly.  Exactly 1 year ago, bitcoin's market share was 85%, and apart from some glitches, had never been below 80%.  Then it crashed down to 40% or so, to have a dead cat's bounce back to 65% and now we're at an all time low < 40%.  Remember, on top of this, that about 20-25% of bitcoin's coins are dead, so the real market cap is 20/25% less than that, so bitcoin's real market share is less than 30%.   This never happened before.

Nevertheless, bitcoin is still market leader.  It has been close with ethereum on June 15th, when bitcoin was only 30% higher than ethereum (if you discount the dead coins, they were really close !).  But Ethereum's market share also fell.

What is interesting to see is that "other coins" is now the second most important market share.  Bitcoin is not really losing from "number 2" all by itself (be it ETH, XRP, ...).

In all this, however, people talk about the amazing run by bitcoin.  Yes, bitcoin went up about x15 in 2017.  And alt coins went up x 150 !  The market cap of alt coins was somewhat more than 2 billion one year ago, now it is more than 300 billion.  However, even though within the alt coin market there are a few heavy weights, there's not one clearly dominating like bitcoin did.  The first place has been bitcoin since its inception, but the second place has not been so evident.  And the third place even less.

What does this mean ?  It means that the market becomes less and less evidently predictable.  7 years ago, if you wanted to invest in crypto, you bought bitcoin, period.  Now, it is not clear and it will become more and more opaque. 

My take is that bitcoin's dominance is gone for good.  This is not a glitch that will recover, and we won't see bitcoin at 80% market share any more ever.  Bitcoin is still a very big name, and it is not clear if bitcoin will lose its 1st position in 2018 or not.  But all the rest becomes much more opaque.  Nobody will be able to say who will be number 2 in 5 years from now (I wouldn't even bet on bitcoin being number 1).  The market will become efficient, and gains will not be easy any more.  What seems to be a grower today, can be a loser tomorrow.  Like in the normal stock market.

The question will be of course, what will happen psychologically to alt coins, at bitcoin's loss of position 1, if it happens.  Because then, it will be clear for everyone that crypto doesn't last for ever, which is the belief that kept it going until now.  If the original coin is not number 1 any more, and there are thousands of other coins, and just any Joe can start a coin, what's the value of such a thing in the long term ?