At BQT, we our curated list of asset pairs is and will perpetually remain a work in progress. That said, we’ve listed BNB, Binance’s internal token. If it were a true cryptocurrency, it would be the seventh-largest by market cap. That’ suggest we need to examine the top six: EOS, LTC, BCH, XRP, ETH and — to start at the top — BTC.
Market cap
As of this writing, the market cap for bitcoin classic, or BTC, is $210.8 billion, according to CoinMarketCap. (Many take issue with CMC’s volume reports, but I’m still prepared to take their word for cumulative value.) That’s roughly half of all crypto assets’ combined, Coindesk reports. From 2009 to 2015, BTC was 100% of total crypto market cap, being the only player in the game. It really wasn’t until mid-2017, when digital assets’ surreal boom began to take hold, that BTC’s share was anything less than monolithic.
It was at that point, two years ago, that enthusiasts dared speculate that the granddaddy of all cryptocurrencies could fall from dominance. The alt-coins, let by ETH, were developing their own networks — of investors as well as nodes. New ICOs were launched daily and some of them weren’t even scams. With all that money pouring into the crypto space, it was inevitable that BTC’s lead would experience a little chipping away.
Some new currencies were based on technology that added inherent value to the coins themselves. Others could provide additional privacy and fungibility. Many experimented with consensus algorithms that were less energy-intensive and environmentally unfriendly as proof-of-work hashing. Still others were focused on such security threats as the advent of quantum computing and added layers of protection. And, of course, many had no reason for being other than separating suckers from their money, and they were all fabulously successful.
Until February 2018 when the law of supply and demand bowed before the law of gravity. The bear market had the effect of clearing the field, and BTC’s market leadership grew back by default.
But now “crypto winter” appears to be over, the markets have stabilized, and valuations are back to where they were in October 2017, when the bull market still had some binding in reality. It’s a testament to the endurance of cryptocurrency as an asset class that BTC is hovering at around 50% of total market cap. While still the market leader — and a suitable benchmark and bellwether for the class as a whole — it still provides air for a wide array of alternatives.
History
On August 18, 2018, somebody registered the domain name bitcoin.com. Two-and-a-half months later, on October 31, a pseudonymous paper, Bitcoin: A Peer-to-Peer Electronic Cash System attributed to “Satoshi Nakamoto,” appeared on a cypherpunk mailing list. Then, on January 3, 2009, the bitcoin network’s genesis block debuted.
Um, maybe “cypherpunk” is where we ought to begin. A cypherpunk is an advocate for strong cryptography and other privacy-enhancing technologies to bring about social and political change. And by “change,” I don’t mean anarchy — necessarily. Within this community, there is a strong distrust of central government and putting cryptography in the hands of regular people is seen as a bulwark against intrusions on personal liberty. Julian Assange of Wikileaks infamy considers himself a cypherpunk.
While we’re on the subject, the term “cypherpunk” is a play on the term “cyberpunk,” coined by science fiction novelist William Gibson to describe his 1984 debut novel Neuromancer. The cyberpunk subgenre focuses on the near future, when high tech coexists with societal breakdown. If you haven’t read Neuromancer, you’re not really a crypto enthusiast. Personally, I prefer the work of Gibson’s occasional collaborator Bruce Sterling if you’re looking for something to read. If you’re more into visuals, then re-watch The Matrix. The current touchstone of cyberpunk artistic sensibilities is Alita: Battle Angel, a collaboration between James Cameron and Robert Rodriguez which pretty much bombed at the box office earlier this year. I missed it when it was in theaters, but it should find its way to streaming services soon.
The above is a bit of a detour, but consider it a You Are Here sign in the cultural shopping mall.
At its inception (Inception is another awesome movie but totally off-topic), there was no BTC, only bitcoin. There were no alt-coins against which to trade, but it was worth a barely significant number of pennies. Everyone already knows the pizza story.
Since September 2012, the network has been governed (more or less) by the Washington-based Bitcoin Foundation. This institution was established to salvage bitcoin’s reputation which, barely three years into its history, was already fraying. As early as 2011, the notoriously tech-unsavvy deliberative body known as the United States Senate was already calling for investigations into bitcoin’s role in money laundering and tax evasion. And a year later, hackers stole $250,000 in digital currency from Bitfloor. The amount sounds ridiculously low now, but it put the exchange out of business in short order, precipitating a steep bitcoin selloff. Traders saw the asset drop all the way to $2 from the outrageous peak of $31. This is what led to the Foundation’s establishment.
Did the Foundation work? No, not really. The people who thought that bitcoin was sketchy seven years ago still think it’s sketchy. Let’s be honest: Crypto is still being used for nefarious purposes — you know, kind of like fiat currency — with the October 2013 raid on Silk Road being the most well-known bust. And the Bitfloor attack was just one early instance of bad actors swiping coins out of centralized crypto exchanges, with the Mt. Gox meltdown coming just six months after the Silk Road raid. (One of many reasons why you ought to considered a decentralized exchange such as BQT if you’re serious about participating in this market.) And of course, the market saw a bear run in 2018 that looked a lot like the 2012 selloff — if you added three zeroes to both the peak and the bottom.
And of course I need to mention the hard forks. Without getting into the technobabble, it’s like a divorce between one set of network participants and another, and anyone invested in the network has to pick a side. Bitcoin has faced three of these in its fairly recent history.
The first came on August 1, 2017, when a disagreement about the optimal block size caused a rift with most of the chain participants sticking with the retronym Bitcoin Classic — what we abbreviate BTC — and Bitcoin Cash, or BCH. Although BTC seems to have won the battle, BCH is still a thing and, in fact, we’ll discuss it soon in this space. Despite being dwarfed by BTC’s market cap, it is still the fourth-most valued cryptocurrency in the world. That’s despite its own hard fork in November 2018 which established Bitcoin Satoshi’s Vision, or BSV. Again, this new asset’s market cap is a fraction of that of the asset it split from, but BSV is still roughly a billion-dollar concern and is, as of this writing, the 14th-largest player in this class.
But getting back to 2017, the BCH fork was only the first of two mutinies aboard the SS Bitcoin. On October 24, 2017, Bitcoin Gold, or BTG, split off from BTC without any clear justification not rooted in geekspeak — and was almost immediately DDOSed. This attack was followed by a 51% attack — I discussed them here — and it never really recovered. Even so, it’s still in the Top 30. While I never say never, I doubt that BQT is going to get behind BSV or BTG in the near future.
Use case
When ether hit the market in 2015, followed quickly by a parade of other alt-coins, some believed that BTC would be crowded out but that just hasn’t happened.
It has become the cryptocurrency that organizations accept if they accept only one cryptocurrency. And that’s pretty much how it keeps grinding along despite more technologically sophisticated and more inherently useful assets being developed all the time. Its miners keep grinding along to validate blocks one inefficient and costly guess after another, but there are so many of these nodes that the chain just continues to gain value due to sheer network effect, and today there are at least 2.9 million BTC holders. BTC has a notoriously limited amount of bandwidth, meaning that transactions take a long time to clear when compared to stock trades or credit card runs. Meantime, an ever-increasing number of merchants are accepting bitcoin often through the BitPay processing service, an ever-increasing number of techno-centric organizations such as the Electronic Frontier Foundation and WordPress welcome it and an ever-increasing number of governments and their financial regulators are actively encouraging its growth while others are finally getting used to the idea.
So BTC is here to stay. It’s not the most elegant cryptocurrency, but it is the most liquid and most widely accepted. It’s not the most private, but it’s still a lot more private than PayPal. It’s not the most stable medium for storing value, but it sure as hell beats whatever Venezuela pumps out, and has come to the rescue during recent financial crises in Cyprus, Turkey and other countries that faced near-meltdowns of their central banks. It’s not the most efficient way to transfer value, but it beats Western Union and has proven that it’s not going to lose all its value on its way from San Francisco to Manila.
And that last item was, after all, bitcoin’s initial use case. My friend William Freedman argues convincingly that Satoshi Nakamoto never intended bitcoin to become BTC, a true currency traded on exchanges with a price determined largely by speculators. Freedman makes a compelling case that it was never intended to be anything more than a way to facilitate value transfers and reward those who managed the distributed ledger and assured widespread consensus.
Whether he’s right or wrong about that, I don’t think the first successful cryptocurrency’s founder or founders mind in the least that this is what it has become.
Current state
BTC is subject to market volatility. And water is wet. You want a stablecoin, buy a stablecoin. You want a medium of exchange that’s accepted by hundreds of thousands of merchants, consider BTC.
Its legal status is still developing and the asset is treated differently in different countries. In my opinion, Malta treats it just about right. This is in contrast to China, which won’t sanction any currency it can’t control, or the United States, where the Rube Goldberg machine that passes for a financial regulatory framework can’t agree on how to categorize it.
Because of its status as the most prominent cryptocurrency, it’s the one in which respectable Old Money has the most interest. If someone in London, New York or Hong Kong is looking to create an exchange-traded fund or futures contract or some other synthetic instrument intended to make crypto appeal to established investors, you can expect that it’s really BTC they’re toying with.
Despite every regulatory misstep, every hard fork, every bear market, every exchange gone belly-up, BTC has proved its critics wrong. I don’t generally do this, but let me just quote Wikipedia verbatim:
The “death” of bitcoin has been proclaimed numerous times. One journalist has recorded 29 such “obituaries” as of early 2015.
Forbes magazine declared bitcoin “dead” in June 2011, followed by Gizmodo Australia in August 2011. Wired magazine wrote it had “expired” in December 2012. Ouishare Magazine declared, “game over, bitcoin” in May 2013, and New York Magazine stated bitcoin was “on its path to grave” in June 2013. Reuters published an “obituary” for bitcoin in January 2014. Street Insider declared bitcoin “dead” in February 2014, followed by The Weekly Standard in March 2014, Salon in March 2014, Vice News in March 2014, and Financial Times in September 2014. In January 2015, USA Today stated bitcoin was “headed to the ash heap”, and The Telegraph declared “the end of bitcoin experiment”. In January 2016, former bitcoin developer Mike Hearn called bitcoin a “failed project”.
Keeping perspective
Market cap, however, isn’t the only determinant of whether BQT will list a given coin. While it serves as a solid proxy for liquidity — which is of immense importance to market participants — it isn’t the only way of measuring utility. Other digital assets struggle to maintain a three-comma market cap, and others are a long way from even that milestone.
But we can’t and won’t ignore such possible selections as USDT, USDC, TUSD or GUSD which are riding the current trend toward stablecoins. Nor can we overlook the privacy advantages offered by XMR or ZEC. XLM, ADA and TRX have compelling use cases, as do such fit-for-purpose tokens as BAT or STEEM. The unique technologies offered by MIOTA or ZRX require a closer look and, if we’re going to list BNB, we can’t dismiss out-of-hand such other centralized exchange-related tokens as AT.
So we’re looking at all of these and more. But ultimately, it’s up to you: the sophisticated trader who chooses to transact on BQT. Let us know what you want to see more of — or less of.
Edward is an Ernst and Young Entrepreneur of the Year Finalist, Blockchain Enthusiast and visionary behind many successful organizations. An avid entrepreneur, Edward has a knack for designing distinctive business models complemented with superior technology to deliver unparalleled service and profitability. Edward also has been advising and consulting for various successful Blockchain technology and ICO projects and recently launched his own BQT.IO P2P exchange helping traders connect with each other to leverage their crypto assets.
BQT.IO has been in development since March 2017 and its ICO launched September 18. The information can be found online at BQT.IO, on Telegram @BQTCommunity and on Twitter as @bqt_ico.