Bitcoin seems indestructible but another cryptocurrency might be about to take its place

On the tenth anniversary of its white paper publication, can the digital currency hold off rivals like ethereum and bitcoin cash?

Anthony Cuthbertson
Monday 29 October 2018 10:04
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Bitcoin was born out of the global financial crisis of 2008, but on the eve of its 10th anniversary the world's first cryptocurrency may be facing a crisis of its own. Uncertain regulation, technological failings and infighting within its developer community mean another cryptocurrency could be on the verge of taking its place as the world's leading digital currency.

With a market cap of over $100 billion, bitcoin has established itself over the last decade as the world's leading cryptocurrency, yet since its inception more than 3,000 other cryptocurrencies have since come into existence – each attempting to offer something that bitcoin can't. After a decade of dominance, experts tell The Independent that one of them may soon succeed.

"A number of clouds now hang over bitcoin's original vision – chiefly the speculation around whether it can make it as a general service for payments," said Shiv Malik, head of strategy and communications at the blockchain firm Streamr. "But bitcoin now has many children — cryptocurrencies and digital tokens of all sorts – and they will eventually serve as the basis not just for money, and money transfer but for accessing all sorts of vital digital services in the future."

One of the fundamental features of bitcoin is that it's decentralised, meaning there is no government or financial institution that can interfere as an intermediary.

But while this allows fee-free international transactions and protects against manipulative monetary policies like quantitative easing, a lack of centralisation and governance also means it is difficult to implement new technologies that are necessary to keep up with its growth.

"Some argue that the bitcoin community's lack of governance will prevent the community from adopting innovations at a fast enough pace, quickly resulting in an antiquated network that fades in prominence," said Will Warren, CEO of decentralised exchange platform 0x.

This could see another cryptocurrency overtake bitcoin and dominate the space, much in the same way as some early internet companies like MySpace were eventually usurped by superior alternatives like Facebook.

One potential rival that could overthrow bitcoin is one that spawned from its own blockchain – the online ledger that documents every transaction – in an effort to make transactions cheaper and more efficient: Bitcoin cash.

The new cryptocurrency, which launched last year, is currently only worth around 15 per cent of the original bitcoin, yet its improved functionality means some of the original proponents of bitcoin believe it is “the one true bitcoin” and will soon replace it.

"Perhaps the push of bitcoin cash with its narrative of being the true bitcoin and ownership of key bitcoin domains and handles of social media will make bitcoin cash overtake bitcoin, or maybe some centralised cryptocurrencies will become the new standard," said Angel Versetti, CEO of blockchain firm Ambrosus.

"I hope the latter does not happen though, as hopefully people will become more educated about what blockchain is and how it should work, and make the choice for freedom from censorship and control."

Regardless of whether this happens or not, Cristian Gil, Co-founder of trading firm GSR​ believes bitcoin has served its fundamental role of kickstarting a financial revolution, even if it is another cryptocurrency – or cryptocurrencies – that eventually achieve the full potential.

"The space is evolving at such a rapid pace that it is difficult to make predictions even two years out," he said.

"Whether bitcoin itself is used in the pipes for these systems or not, when history books are written about this period of time, bitcoin will have earned the first page mention."

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