Key Insights
Bitcoin is the most secure digital asset by a wide margin. However, it is limited in terms of scalability and innovation.
Altcoins, on the other hand, are the biggest drivers of blockchain progress through smart contracts, DeFi, NFTs and interoperability.
The future of blockchain depends on the crypto industry being diverse, instead of maximalism.
Bitcoin was the first cryptocurrency. This advantage makes it the most recognized (and most decentralized) digital asset.
Many investors see it as a secure store of value, on par with digital gold. This reputation has created a belief system called Bitcoin maximalism. According to Maximalists, Bitcoin is the only cryptocurrency that truly matters.
However, this outlook might be wrong, and here are a few reasons why.
Bitcoin was designed to be a censorship-resistant, peer-to-peer electronic cash system.
To achieve this, its creator, Satoshi Nakamoto, sacrificed scalability for decentralization and security. Because of this choice, Bitcoin has become highly secure over the last few years. However, it is still highly rigid.
The asset’s limited block size prevents it from processing large volumes of transactions quickly. This is why fees tend to skyrocket during periods of congestion.
Layer 2 solutions like the Lightning Network have improved scalability. However, they are still extensions of the main Bitcoin network and are limited by proxy. Bitcoin’s protocol was intentionally made to be difficult to change.
This is a great way to protect its integrity, but it also limits its innovation. Because of this, the altcoins have improved in ways that Bitcoin simply cannot.
Altcoins are not just copies of Bitcoin. They are entirely new projects that test new ideas in consensus, scalability, interoperability and real-world applications. This kind of diversity is exactly what drives progress.
One of the most important contributions from altcoins is the development of alternative consensus mechanisms.
Bitcoin’s Proof-of-Work is secure, but consumes a lot of energy. In contrast, the Proof-of-Stake (PoS) mechanism has become a viable alternative.
The Ethereum network’s transition to PoS in 2022 proved that a large network can run securely without having to spend so much energy. Other projects like Cardano, Solana, and Polkadot have adopted variations of this PoS mechanism and have added features like on-chain governance and liquid staking.
Ethereum’s introduction of smart contracts changed the direction of blockchain technology forever. The network was the first to enable code-based agreements, which have given rise to wonders like programmable money and applications beyond simple transactions.
Smart contracts now power entire sectors like Decentralized Finance (DeFi), which hosts platforms for lending, borrowing, and trading without intermediaries.
Non-Fungible Tokens (NFTs) have also been made possible via smart contracts. Ownership of art, collectables and even real-world items can now be tokenized and traded.
These innovations have attracted developers over the years and have expanded the initial use case of blockchain technology, laid out by Nakamoto.
Adoption continues to grow over the years. Because of this, blockchains must process more transactions without losing speed or security.
Bitcoin’s throughput is too low to handle the average use cases in gaming or defi lending.
However, projects like Solana can handle thousands of transactions per second. This makes applications like gaming and real-time trading possible. Polkadot and Cosmos work on interoperability and have built connections between different blockchains.
This allows data and value to move more easily across networks, which is something that Bitcoin cannot achieve alone.
Bitcoin maximalism assumes that one blockchain is enough for the entire industry.
However, this view is flawed because it ignores reality. Bitcoin is important as a store of value and a secure base asset.
However, it cannot solve every problem. The altcoins, on the other hand, are leading in terms of scalability and use case.
The future of crypto is not about one chain alone. It is about the entire industry, with each chain specializing in a specific purpose.
Bitcoin will always be the foundation. However, altcoins will continue to expand what is possible.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.