Dangerous news is spinning in the Bitcoin community today, some 60,000 bitcoins have been moved in two transactions from a whale-sized account. What does this mean? The community is abuzz with fear that this could result in a massive sell off by a majorly vested account shorting the market. And while that could cause our already bearish market to get worse, that's not the only serious threat to Bitcoin's dominance.
Why is Bitcoin still the raining king of the cryptocurrencies? It's easy for early adopters in the Bitcoin community to claim that Bitcoin would be better off without all the altcoins, but that is likely inaccurate. What is Bitcoin? A store of value, sure, but right now it is something more important than that, it's the decentralized US dollar. The US dollar is the means of exchange for all forms of value internationally, no other currency comes close to its importance on a global scale. Bitcoin is becoming its one competitor in a small space, the cryptocurrency exchanges.
Legally, for most exchanges its much easier and safer to use BTC than the US dollar or any other fiat to base their online exchanges on and Bitcoin has benefited from this fact. However, as more and more exchanges come out and regulation grows Bitcoin's role will likely diminish.
The greatest challenge to Bitcoin will very possibly be the growth of the newcomers. Cryptocurrency is a word spreading like wildfire, but the new arrivals are not like the original adopters and many of them do not have the same priorities. Although no one likes their finances being under the thumb of public officials most people are not freedom fighters and will easily cooperate with centralized exchanges such as the widely known Coinbase and the up-and-coming Gemini.
These private businesses are fully regulated and make the US dollar and many other fiat currencies the means of exchange instead of Bitcoin. Sure, Bitcoin will see growth as its brand is more well known than the others, however there is a very good chance that it will gradually lose overall market share as fresh investment money seek the shiniest new thing with promise of a moon.
One young millionaire having recently acquired his wealth in the stock market pointed out that his investments were not in Bitcoin at all, but in Ethereum and other specialized coins, because he couldn't see what special advantage Bitcoin actually had. We may be a fan of Bitcoin, but remaining objective, we should reflect on the full state of the technology. The lightning network might be an effective solution to the problem of expensive transactions, but even if it is will it be too little too late?
Other coins can move fast and cheap right now, such as Bitcoin Cash. If you were one of those people getting into cryptocurrency for the first time and all you know is that one can be used for daily expenses and a "store of value" while the other can be used for that "store of value" bit, well, which one would you choose? It leaves room for other cryptocurrencies to cut out a larger portion of the future market.
It seems some people might not fully understand my intention from this post and I thought this comment clears up my point a bit more:
"BTC might be serving as "gold" in the eyes of investors, but in the market it is serving as the "USD" of the cryptocurrency market. USD is the #1 currency for basing all international value trades, BTC is the #1 cryptocurrency for basing all international value trades in the cryptocurrency space.
I argue that BTC's current worth and persisting dominance is completely founded by this role in the market. I invest in BTC, I have no desire to see it lose market share, but I believe over time it will. Exchanges like Binance use their own cryptocurrency as the main trading currency, which is effective, Binance coin has been performing much better than BTC. Atomic swaps or DEX advances will also lead to BTC's diminished necessity, and this will likely erode much of BTC's market share.
I have no doubt that BTC still has plenty of room to grow and profit its hodlers, but overall, I suspect its lead to shrink over time." - Hobo Joe
(Not financial advice yo!)