Why Is Bitcoin Superior to Other Crypto: the 10 Reasons

Published: 22nd June, 2024 | Last Updated: 18th June, 2024

Markos Koemtzopoulos

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

Bitcoin maxis consider anything other than Bitcoin worthless or a shitcoin. In this post, I will explain why they think Bitcoin is superior to other crypto.

After reading this post, you will have a solid footing on why Bitcoin is considered the ultimate cryptocurrency and why it accounts for 50% of the total crypto market cap.

infographic why bitcoin is superior

10 Reasons Why Bitcoin Is Superior

Why Bitcoin Is Superior

1. Limited Supply

Bitcoin is set up in such a way that there can only ever be 21 million Bitcoins.

With 94% of that supply already circulating in the market, Bitcoin takes time to come by.

All forms of money that retain value are limited in supply. The closest thing to Bitcoin in the physical world is gold.

Yet gold’s supply increases by about 2% per year.

Some of the largest cryptocurrencies, such as Ethereum, Solana and Dogecoin, do not have a mixed supply.

However, many such as XRP, BNB, and ADA do, so what else sets Bitcoin apart?

2. Security and Immutability

Miners use a proof of work consensus mechanism to verify transactions on the Bitcoin blockchain network.

The miner who is the first to solve a complex mathematical problem can add a new block of transactions to the blockchain.

The incentive for doing this is that they receive a reward in the form of new bitcoin. 

To cheat and change an entry in a blockchain (e.g., giving oneself 1000 Bitcoin), an attacker would need to:

  1. Change the desired block’s data and re-mine it.
  2. Re-mine all subsequent blocks to create a longer chain than the current one.
  3. Achieve this while competing against the rest of the network’s combined hash power, which requires controlling more than 50% of the total computational power (hash rate).

The significant computational power and associated costs make such an attack highly impractical for well-established blockchains like Bitcoin.

The economic incentives are designed to discourage such behaviour, as the resources required to perform the attack usually exceed the potential gains. 

Bitcoiners argue that proof of work offers more robust security than other consensus mechanisms, such as proof of stake, which other cryptocurrencies use.

However, many coins use proof-of-work algorithms such as Dogecoin, Bitcoin Cash and Litecoin. 

So, what else is special about Bitcoin? 

3. Bitcoin Didn’t Do a Premine

When the person or group known as Satoshi Nakamoto launched the Bitcoin Network, they did not hoard a percentage of coins for themselves.

This is a common practice with most crypto projects. The team behind a protocol will disclose how many tokens they plan to mint and the allocation.

For example, they might allocate 5% to early investors, 10% to the team, 20% to Ecosystem development, 10% to rewards and liquidity pools, etc.

Very often, they leave very little on the table for the public to own.

Bitcoin Maxis claims that this is highly unfair.

When Bitcoin launched, the only way to get newly minted Bitcoin was if you mined it. And this still holds today.

Bitcoin is the coin of the people. 

4. Market Capitalization

Market Capitalization

At the time of writing, Bitcoin is worth $1.3 trillion, while the total crypto market cap is $2.57 trillion.

As the largest coin that accounts for more than 50% of the crypto market, Bitcoin is clearly the leader in this space.

It is doubtful that another coin will unseat digital currency from its throne.

The closest contender is the Ethereum network, which has a market cap of $400Bn.

After that, market caps fizzle out quite dramatically.

For example, BNB has a market cap of $90 billion, and SOL has a market cap of $70 billion.

5. First Mover Advantage

By being the first cryptocurrency, Bitcoin had a head start, giving it enough time to cement itself as the leader in people’s minds.

Other contenders with better products, such as Litecoin (faster) and Monero (privacy-preserving), have yet to catch up.

And most likely, they won’t.

Bitcoin’s brand is too strong. Everyone has heard about Bitcoin, even if they have never heard about any other digital assets.

In this sense, Bitcoin has the largest network effects.

If you start a new social media platform (think Google +), you will have a hard time tackling the incumbent, which is Facebook.

With money, the network effect is even stronger.

Gold has a stronger network effect than Bitcoin since it has been around for thousands of years.

However, Bitcoin has the most substantial network effects out of all cryptocurrencies.

If there is one currency you will invest in over the long run, it will be Bitcoin. 

Note that anyone can copy the code for Bitcoin and call it something else.

I could copy it and start a new coin called Awesome Coin. However, there will be no reason for anyone to switch from the largest coin to my new coin, which is identical.

6. Decentralization

Bitcoin is the most decentralized blockchain when you compare blockchains by the number of participating nodes. 

A cryptocurrency node is a computer part of a blockchain network. 

  • Bitcoin nodes: 55,000 
  • Ethereum nodes: 13900. 
  • Dogecoin: 1090
  • Solana: 5693

7. Institutional Adoption

Financial institutions are increasingly adopting Bitcoin as part of their offering. The biggest move we saw this year was with the launch of the spot Bitcoin ETF. 

An Exchange-Traded Fund (ETF) is a type of investment fund traded on stock exchanges, much like individual stocks.

ETFs typically hold a diversified portfolio of assets, such as stocks, bonds, or commodities, and aim to replicate the performance of a specific index, sector, or commodity. They offer investors an easy way to gain exposure to a broad range of investments with the liquidity and flexibility of stock trading.

The Bitcoin ETF tracks Bitcoin’s performance. 

This means that pension funds, insurance funds and others can now invest in Bitcoin as part of their portfolios.

Similarly, anyone with a brokerage account considering investing in Bitcoin can do so easily without figuring out how to open an account on a crypto exchange or use a wallet. 

8. Hard Money You Can’t F*ck With. 

This is actually the title of a book. The main premise here is that Bitcoin is a superior form of money. It has many of the qualities of money you could want:

  • Fixed supply: there can only ever be 21 million BTC
  • Divisible: 1 BTC=100 million satoshis. 
  • Portable: you can easily send it from one person to another within minutes.
  • Fungible and uniform: All Bitcoins are the same, meaning each Bitcoin is interchangeable. However, keep in mind that if Bitcoin has been used in money laundering, some exchanges may not accept it. But this holds true for bank notes as well since you can identify them by their serial numbers. 
  • It’s durable: the Bitcoin network is not going away. There is no way to stop it. Unlike a physical bank note, it’s digital, so nothing can cause it to decay.
  • Decentralized: Unlike fiat currencies, Bitcoin is not controlled by central banks or governments.
  • You can’t cheat: creating and sending someone a fake Bitcoin is impossible. 
  • Stability: This is a missing key attribute, as Bitcoin is highly volatile. Imagine pricing the goods on a grocery shelf in Bitcoin. It would not work. Yet.
  • Acceptability: While Bitcoin is not a medium of exchange in everyday life, it has become increasingly acceptable. Acceptability is likely to increase over time. Also, acceptability is much higher in countries like Venezuela and Argentina, which are experiencing very high inflation in their own currencies. 

9. Censorship-Resistant

Because Bitcoin is decentralized, it can’t be confined to a specific geography. No nation-state can regulate the open-source code of the Bitcoin blockchain. Anyone can participate in the network without asking for permission, and efforts to stop mining like China did are futile as Bitcoin miners will move to a more crypto-friendly environment. 

10. Widespread Adoption and Acceptance

Bitcoin is the most adopted and acceptable cryptocurrency with the largest user base. Any platform that forays into crypto starts with Bitcoin. Robinhood, Venmo, Cash App, and PayPal are all such examples. 

Arguments Against Bitcoin

While Bitcoin maxis think they are superior, some camps think otherwise. Here are their arguments:

Bitcoin in the Street

1. Guzzles Energy

Most blockchains use an alternate consensus mechanism called proof of stake. The amount of energy consumed by this type of blockchain is insignificant. The most notable example is the Ethereum blockchain, which transitioned from a proof of work to a proof of stake consensus mechanism in 2022.

Bitcoin Maxis argues that half of the energy Bitcoin consumes comes from renewable energy sources.

There are also many case studies of Bitcoin mining helping to manage the efficiency of the grid when there is overcapacity.

Another example is conducting bitcoin mining using energy from excess gas in oil fields that would otherwise be released into the atmosphere.

Bitcoin maxis will often say that Bitcoin is energy in a bottle. 

2. Lack of Smart Contracts

Most of the other blockchains allow developers to build apps on top of them using smart contracts.

Bitcoin did not have this in place when it launched, making it hard for the Bitcoin blockchain to serve any purpose other than being a distributed ledger for Bitcoin transactions.

Bitcoin maxis argue that this does not detract from the fact that Bitcoin is a superior form of money. 

That said, the Bitcoin community is experimenting with ways to be able to inscribe NFTs and build apps on top of the Bitcoin network through BRC-20 tokens (ordinals) and Rune inscriptions.

It’s still in the early days, but a fantastic example is BAMK Finance and the Nakamoto Dollar stablecoin.

See https://www.bamk.fi/

3. It’s Not a Medium of Exchange

The first reaction people have to Bitcoin is that you can’t use it to buy groceries.

Since it’s not a means of payment, it can’t be money.

While it is true that you wouldn’t use Bitcoin to buy everyday stuff, this parable might change over time.

Already, countries such as El Salvador invest in and encourage the use of Bitcoin alongside fiat money amongst their citizens.

More importantly, though, Bitcoin does not need to be a medium of exchange to be a form of money, just like how you don’t go shopping with a bag of gold nuggets. 

4. Bitcoin Hasn’t Been Around Long Enough

This is an acceptable argument when you compare Bitcoin to gold, which has been used as an effective store of value for thousands of years.

However, Bitcoin is the oldest of all the other crypto asset and continues to gain acceptability.

5. Scalability Issues

The Bitcoin network can only process seven transactions per second.

Compare this to Visa and MasterCard, which can process 24,000 transactions per second, and you see how that could be a problem.

However, Bitcoin has developed layer two solutions, such as the lightning network, which bundles transactions together before sending them to be validated on the more secure Bitcoin network.

The Bitcoin Lightning Network can process about 1 million transactions per second. 

6. Bitcoin Is Volatile

This is true. Bitcoin’s price is very dependent on market sentiment.

However, this is true of all digital currencies, and Bitcoin is the least volatile.

Bitcoin’s volatility will continue to drop as it becomes more dominant. 

FAQs

Why do people prefer Bitcoin?

Bitcoin has sealed itself as the digital gold of the modern era. Its fixed supply and robust money properties (divisibility, uniformity, portability, durability) make it the most acceptable cryptocurrency. 

Does Bitcoin have a future?

Bitcoin launched in 2009 and has proved itself for the last 15 years. It’s been delivering an average yearly return of over 150%. If Bitcoin were to replace gold as a store of value, its price would reach $700,000. Most Bitcoin users believe that Bitcoin is here to stay and will continue to grow. 

Why is Bitcoin so unique?

Bitcoin was the first cryptocurrency to launch and has a fixed supply of 21 million BTC. There is no central authority that can change the rules on Bitcoin. 

Why does all crypto depend on Bitcoin?

All cryptocurrency price movements are highly correlated to Bitcoin’s price. This is nonsensical, but it is commonly accepted. Traders who see the price of Bitcoin dropping will often pull out of other assets. However, this relationship does not hold true during altcoin season when the market takes a risk on appetite and starts investing more aggressively in altcoins. 

Do altcoins pump after Bitcoin?

In the past three bull runs, altcoin season kicks in after Bitcoin has reached an all-time high. This is likely because people who have earned profits are rotating into riskier bets, and many in the market want to see outsized returns. They take their chances on smaller coins, hoping for a more considerable upside. 

Can Bitcoin go to zero?

In theory, Bitcoin may go to zero if a vulnerability is discovered or if the node participants vote to increase its supply indefinitely. However, Bitcoin has proved itself over 15 years, and it is doubtful it will be replaced by another cryptocurrency and go to zero. 

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

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