2 months ago I posted the diagram below as a long term speculation about the future of blockchain. It might seem that I am speculating about Bitcoin and Altcoins but my core sentiment has more to do with the overall technology and adaptation rather than individual coins.
I am not a trader or a financial advisor. If you have followed my posts over the last several months, you would realize how much I despise technical analysis and charting. Nonetheless, over very long periods of time, I believe charting might offer some benefits since it reduces the noise we get from the daily or even monthly movements. The crypto world is still too irrational to speculate short-term.
The conventional wisdom for bitcoin so far went like this: If you want to make more Bitcoin, find or issue an altcoin, pump it and then park the gains in BTC. As whales start accumulating BTC from the altcoin gains, everything else crashes. The masses sell at a discount their alts in order to FOMO in the new BTC rally. Rinse and repeat.
I have seen this cycle play out at least 5 times. Nonetheless, I believe this time things will be different. This time the speculator needs to ask themselves a single question. "Are they all shitcoins or do I see the world changing through some of these technologies?" If you believe that they are all shitcoins then the cycle of alts pumping BTC will work for you. If not, then BTC owes to die out and allow for the new technologies to be something more than vague speculation.
Bitcoin has offered the seed for all the other coins to become what they are today. This is the undeniable truth. Nonetheless, after almost a decade since the original vision was put into practise, the space has moved forward. If we are to experience the true Satoshi vision Bitcoin will have little to do with the blockchain sphere in the future. There are amazing projects out there that can do so much more. Steemit itself offers instantaneous transactions with absolutely no fees while people are allowed to engage proactively through a social platform. BTC having such a difference in valuation demonstrates how immature the space still is when clearly Steemit is superior in every single way. In the real world it would be like Betamax videos still dominating the market because they have a superior network effect to Blu-Ray discs. Utility trumps network effect in the long run.
The network effect, which has become the only argument might not last as much as we like to think it will last. As the masses join the crypto scene, the network effect of those coins grows exponentially while the BTC network struggles to send a single transaction from A to B. Ironically, this is the only thing it was designed to do and it fails even for that.
I am not advocating against Bitcoin. I am a holder myself and there is a portion I will never sell. Bitcoin has offered me unparallel freedom and insights about how this world works and I will always keep some as a reminder of that lesson. Much like my first computer though I do acknowledge that it has become obsolete. I make silly upgrades like installing shady linux distros in order to say that "it still works" but deep down I know that it's utility is obsolete. The question is not if Bitcoin will become obsolete but when.
The first coin to make it out from under the cryptocurrencies fanclub dome as a viable way of payment with a few of the big on-line players will be huge. I doubt this will be Bitcoin, as it just can't handle such use in practice.
Steem could, but its marketing is totally misguided. "Grow the application landscape and get more users, all the rest will follow." Bollocks to that, Steem needs marketing as a practical currency out there where the transactions are that buy stuff. The VP of M at Steemit Inc. should consider this or leave.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I agree that which crypto the large online retailers choose will have a huge effect. I like a crypto like litecoin for this but I think a coin like ripple might have a chance to win this since banks and governments will like this due to the identity link. Hopefully the payment interface will allow for many different cryptos by using some service like shapeshift.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
word
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
You're spot on everybody is too focused on the Steemit platform, but the truth is that it's way better as a currency than all of the current top 10 currency coins, yet still languishing in about 35th place. I think people just don't realise how good it is.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
What makes it better as a currency?
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
But it's still blockchain right? If Steem got to be as popular as Bitcoin wouldn't we see the same transaction time issues?
Definitely true about the addresses though...
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Potentially but that's a hell of a long way off, the STEEM blockchain is currently doing more than double the transactions of BTC but only using 0.3% of its capacity
http://blocktivity.info
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
no because it is so much more efficient. Steem could easily handle all the BTC traffic without any drop in speed.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Hold on. I have heard steem is designed to double supply every year. Every 3.32 year, there is a 10:1 reverse split. This can not be a currency.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I think the inflation rate started at 10% per year and will drop by half a percent every year until it settles at either .5% or 1%. That's what I've heard anyway
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Also for this to happen Steem will need a mobile wallet app or something like that ... as far as I know it is coming now, they talked about it at SteemFest 2. When the app is online then, I imagine, they will start promoting Steem. But before, without a wallet app, how will be a practical currency? ;)
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
How about a payment plug-in for the websites of on-line retailers? Seems like a good place to spend some development time.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Also a good idea to do for sure @ocrdu :) Everything that facilitate payments and movility is always welcome for a monetary system
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I find the whole Bitcoin vs Bitcoin Cash debate interesting but the truth is that neither of them offers the best coin in terms of utility. I would like to see Bitcoin go through some kind of drastic technological change but that's looking unlikely, and the lightning network is just too complicated to ever see mass adoption.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Is it? I think what the world needs is better wallets. What we have today is too primitive for everyday use.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
You have to open and close channels with the lightning network, the average person can barely understand bitcoin as it is. The coin that wins will have to be fast, free and as easy or easier to use than a credit card. I hope bitcoin becomes all of those things but right now it looks unlikely
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I certainly hope details of opening a channel can be hidden under the hood so that the end user can deal with just the right level of abstraction. What the world needs is a sophisticated AI-powered multi-currency wallet with budgeting and analysis tools.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Yeh I hope you're right about that too and I know there are many smart people working on solutions, however, the fact that we're now at the stage of high fees and long confirmation times doesn't indicate that they have been doing a great job so far of scaling Bitcoin to be the fast, cheap, global currency we hope it can be
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Bitcoin as it is will never be any of that. At best in might become a recognized store of value, which is no small feat.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Thinking on bitcoin is a hard one. There are times when I think it should be dead. And there are times when I think that it is growing to fill a need that other coins can't compete with.
Such as, by a house or a priceless painting.
Bitcoin has the name recognition needed for people trading at this level. Also, the fees are tiny... comparatively.
Bitcoin also has some of the securist blockchain simply by the number of miners. Adding to its name for big ticket purchases.
However, I have always been enamoured with the usability of crytos. And thus, I want to own some bitcoin... for, ummm, buying a house.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
If you had the choice of buying a painting with a currency that charged you a $20 fee or one that was free to use which would you pick?
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
When buying anything expensive you use an escrow service. Sure, it would be cheaper to simply do the exchange, but the numbers are so large you want to be sure of every detail.
Sure, Iota is really cheap to use, but if you didn't have much experience in the crypto market, would you take $1,000,000 of the no name coin, or $999,980 of the name brand coin? When dealing with numbers that large, trust is the most important.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Yeh sure, absolutely Bitcoin has the biggest brand name right now and it's probably the most trusted coin there is, but others will build their reputation over time and if they become as trusted, yet faster and cheaper than Bitcoin they will overtake it. Also the people using BTC to buy houses and paintings are not the largest potential market, those that would benefit the most from the crypto are those that do not even have a bank account, who could never afford a $20 transaction fee anyway
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Oh yes, for them, and for me, bitcoin is almost dead. Bitcoin is next to unusable accept for large transactions. And, you don't have to tell me that other coins are far better for use as a currency.
Does it sadden you that you may never become a bitcoin millionaire? Oh sure, you are a Litecoin, Dash, Steemit millionaire, but is that the same?
:-p
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Thing is you can still do this with other crypto assets.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Very sound thinking! I think only a few altcoins are a lasting success. In fact, it is estimated that 90 percent of altcoins will not make it and will disappear from the market fairly quickly. View the possibilities of the currency and assess the interest of the market (is someone waiting for this?). Find out which team is behind the developments, who the sponsors are, which applications they make possible. Very imporant, believe in yourself and try to ignore most of the opinions. They will make you crazy. And one last thing: do not let it control your life! Don’t fall In love with your coins, they won’t love you back.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I'm just happy to be alive to see all of this right now. I think #Bitcoin will be like gold in the future and we will use some new coin to make transactions. Hope im hodling one of them right now!
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Utility trumps network effect in the long run.
Word.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Sound thinking.
There are plenty of decent alt-coins out in amongst the shitcoins that have far greater utility than BTC.
As the market matures I expect to BTCs dominance continue to decline, although I cant rule out the possibility it will still be around in some form or another in 10 years time.
As you mention, the wise play is to hold onto a portion of BTC, probably somewhere in relation to its given market dominance. i.e. BTC 50% market dominance, portfolio 50% BTC. If this falls to 30%, then adjust holdings accordingly.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Thank you good Post
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
nice post and I really like to read your article
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Very good analysis.
We need to remeber that, while hodling coins can be prefectly legitimate, if we can't imagine doing anything other than hodling a specific Altcoin, it's probably not going to be around in the long run.
If it's got no actual use, the only real uses left are storing, laundering, and otherwise moving money around.
I, for one, wouldn't bet on EVILcoin to hang around (if it isn't already dead... last time I saw it was several months ago) ;)
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
"The conventional wisdom for bitcoin so far went like this: If you want to make more Bitcoin, find or issue an altcoin, pump it and then park the gains in BTC. As whales start accumulating BTC from the altcoin gains, everything else crashes. The masses sell at a discount their alts in order to FOMO in the new BTC rally. Rinse and repeat." ----- This is called wash trading. It is illegal in traditional market, however, because ICO market is not regulated, this will go on. Thanks for the great post!
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
It's not because of segwit2x it's because the advancements of other cryptos. Cardano is way ahead Ethereum and Bitcoin. Meet the team behind Cardano: https://iohk.io/team/
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit