Category Archives: Altcoins

What Happened to Bitcoin?

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For a long time nobody cared about Bitcoin. Then in 2013 it made the news and got your attention. Up and up it went. And then it fell, and fell, and fell. Is that it? Will Bitcoin wander off into the sunset, forgotten?

Disclaimer: This is my opinion, not investment advice.

So what happened? Here’s my take:

Early adopters who bought Bitcoins for less than a penny, they cashed out. It’s Christmas 2013. How many nerds decided it was time to buy some toys? I didn’t take a survey, but if your investment returned 50,000x, wouldn’t you cash out too? Like that old show, The Beverly Hillbillies, they were sitting on a fortune. Who knew? And no doubt some of that new money financed new mining operations and the creation of new cryptocoins.

On paper, Bitcoin shrank after 2013, but the Bitcoin parent gave birth to a hundred hungry children that needed feeding, the so-called altcoins.

Look at the cryptocoin landscape now. More choices. Bitcoin has competition. Most of us missed the first boat. You’re probably not a “Bitcoin millionaire.” But for just $50 you could have been. Today, people are thinking: Should I buy a Bitcoin, that everyone already knows about? Or should I get in early on the next big thing? Maybe buy the coin that consumes less energy, or the coin with faster transactions, or the coin with a better mission statement or better marketing message?

When Bitcoin isn’t the only game in town, it has less mindshare, less perceived potential, and the price falls relative to alternatives. To a degree, the coins are scarce. There’s a fixed number of Bitcoins that can be mined. But that limit does not apply to new, more appealing Bitcoin alternatives.

Bitcoins and altcoins seem to be coexisting, for now. But it’s possible a new leader could rise through the ranks of altcoins to cannibalize Bitcoin, resulting in a Myspace-to-Facebook-like exodus, where the market determines one technology is vastly superior to the other.

Could Bitcoin’s foundation crack? Loads of bad publicity, it’s difficult to mine, transactions are slow, it consumes a lot of electricity, and is arguably vulnerable to attack. Altcoins seem to be working on these problems with varying success. In my opinion, the lack of professional marketing is the greatest weakness of all the cryptocoins and presents the greatest opportunity. Until the altcoins get marketing, Bitcoin remains king.