It has been almost a decade since Bitcoin was invented.
Within this span of time, there have been many efforts to improve on the original cryptocurrency protocol. Different groups of developers and companies have been trying to create their own versions of a distributed currency system, but none have managed to inspire the public quite like Bitcoin has. Some projects, such as Litecoin, are optimized for speedy transactions, others incorporate different consensus algorithms such as NEO, while still others introduce additional features like privacy – Monero and Zcash. With such a plethora of new and improved altcoins, why do people want to buy Bitcoin instead?
So far, no virtual currency has managed to replace Bitcoin as the number one digital asset in terms of market capitalization. The reason why is simple – security.
Properties of Bitcoin
Bitcoin possesses several properties that make it a sound and hard form of money. Although other currencies have tried to replicate these qualities and introduce more, there are some that are unique to Bitcoin. Let’s look at what makes Bitcoin special.
Truly Limited Supply
Bitcoin has a truly limited supply. No matter how much people want to multiply it, there will only ever be 21 million BTC. For nodes to take part in maintaining the network, they must agree to its consensus rules. Attempting to change these rules will cause a hard fork since the other nodes will reject any blocks added to the chain that do not conform to the rules. The rule is 21 million total units. To be a part of the network, you must also agree that there will only be 21 million units.
Most Secure Cryptocurrency
The hashing power of other cryptocurrency chains is far less than Bitcoin’s. This means that their network rules are considerably easier to change, particularly if the founders want to exert pressure on the community to do so.
The consensus rules of Bitcoin are enforced by the world’s largest and most powerful network of computers. This makes it by far the most resistant to various attacks that can occur from those trying to game crypto networks in their favour somehow. At the time of writing, the Bitcoin hash rate (power of the network) is just over 52,000,000 TH/s. To put this another way, it would cost millions of dollars to attack Bitcoin for a day than it would any of the other cryptocurrencies. Of course, this level of security makes the Bitcoin network most suited for handling the kind of value investors want to expose to the asset.
The Sound Form of Money
Since it is the most secure blockchain-based cryptocurrency by far, Bitcoin represents a sound form of money. Historically, poor forms of money have been replaced by harder forms. We see this time and again.
Across the globe, sea shells were used as a primitive form of money. Although they served the purpose well for many thousands of years, the value would fluctuate wildly between areas where the specific shells were found and those living further inland. Eventually, people learned that gold served the purpose of money even better than sea shells as it was much rarer and difficult to forge. Those economies that switched to gold first found that they were at an advantage to those that were still using sea shells.
Following sea shells, gold has become a largely universal representation of value. However, it is not perfect. It is difficult to store, transport, secure, and divide. It doesn’t have a truly fixed supply either. In fact, it is thought to be many thousands of tones of the stuff out of reach of current mining capabilities. Truth be told, gold is a dated monetary technology.
Bitcoin outperforms gold in just about all the qualities needed for a sound money. Its supply is absolutely limited to 21 million. No more can possibly be created. It can be divided down to the 1/100,000th (one Satoshi). It can be transferred around the globe in just minutes for a matter of cents. In fact, recently a whopping $194 million was moved between two wallets. The grand total cost of this transfer was just 10p. If you compare this with the price of moving the same value of fiat currency, you’re looking at many thousands of dollars. If you further compare it to transporting $194 million dollars’ worth of gold, you’re probably looking at more like tens of thousands!
Infrastructure and Development
Finally, another great reason why investors seem to prefer Bitcoin to the other couple of thousand cryptos is that the developers working on the Bitcoin protocol are committed to preserving the qualities that make Bitcoin special. By creating additional layers of scaling, the currency is evolving in terms of its usability without compromising its robust security model.
Although many altcoins might flirt with decentralization and experiment with more environmentally sound consensus-finding techniques, none have come close to Bitcoin’s popularity. This fact makes Bitcoin uniquely positioned to challenge the existing fiat currency system and bring the community to a new era of economic development.