For how long can Bitcoins remain number one?
I've been looking at the market dominance chart on coinmarketcap, and noticed something that might not be immediately obvious from simply looking at tables of the top coins. Bitcoins dominance of the crypto market shrank significantly during 2017.
On December 31st, 2016, Bitcoin dominated 87.32% of the total cryptocurrency marketcap. This had collapsed to just 37.81% by June 18th. Bitcoin then rallied over subsequent months and regained dominance of 65.18% on Dec 7th, but this quickly evaporated to just 37.61% at the start of 2018.
This year Bitcoins dominance has remained between 32.46% at its worst and 45.44% at its best. Today it holds 36.66%.
What has caused this decline?
The first really big challenger to Bitcoin came in the form of Ethereum, which in June last year came within 7% of becoming the most dominant cryptocurrency. It collapsed almost as quickly as it arrived, although it has recovered a little somewhat, but not enough to threaten Bitcoin as number one.
No other single challenger has enough market share to claim credit all for itself, so we are forced to accept the only inevitable conclusion. Alt-Coins have come of time. They have risen so fast that some now in the top ten are still only included within the 'Other' label of coinmarketcap's dominance chart. Other now accounts for over 25% of market dominance!
EOS currently commands 3% dominance (accounting for more than 10% of Others total), despite still being an ERC20 token. How fast will it rise after it launches on its own blockchain less than a month from now? How much will its rise affect the dominance of Ethereum and Bitcoin?
Giants will fall
At one time Netscape seemed unassailable as the top web browser, then MicroSoft launched Internet Explorer and many windows users accessed the internet for the first time without ever hearing of Netscape. Within a few years it was no longer number one. After five years it barely registered being used at all.
Then Internet Explorer seemed invincible. My first employer didn't even see the point in testing his clients websites on other browsers. The ruined Netscape sold itself, but not before open sourcing its code base, Gecko. Mozilla built a browser they initially called Firebird (to represent a phoenix rising from Netscapes ashes), but because of trademark issues they had to rename it Firefox. Year on year Firefox clawed back marketshare from MicroSoft.
Then Google launched Chrome, since 2012 the most popular internet browser. Chrome has never reached a market dominance as high as Internet Explorer or Netscape, and the browser market remains healthy and diverse as a result.
The point here is that what seems like an invincible position may prove a lot more vulnerable. Bitcoin already has much less dominance than the Chrome browser has had for the past several years, and it seems unlikely that it will ever regain the head start it once enjoyed.
It may remain number one for another year or two, or it may not. I for one believe that it won't hold that position into the 2020's.