Does Bitcoin Threaten Crypto Industry?
If you ask anyone what occurs to them when they meet the word “cryptocurrency” they are very likely to say “Bitcoin”. Both of the terms are almost interchangeable for the most of people. But does it serve well for the industry?
Provided current situation all cryptocurrencies are equaled to Bitcoin, distinctions get blurred and the whole industry is easier to go off the course. This is absolutely unacceptable given most of remarkable use cases with cryptocurrency and blockchain do not involve Bitcoin.
If someone wants for enter some sum to Binance account they are likely to do this via BTC or ETH (although Binance allows for depositing with other coins like LTC, NEO and BNB). As a result, we have a curious correlation between Bitcoin and the rest of the sector. The would-be investors need to acquire Bitcoin or Ethereum to convert their funds in altcoins which boosts the price of these loose change.
Now everything gets valued with reference to Bitcoin. Recent growth of the crypto market at the turn of 2017 was partially caused by Bitcoin price rising up and thus making all other projects doing the same. So the question is whether Bitcoin turns in a full-fledged transaction coin and maintain its cost until gets replaced by another coin.
Many Bitcoin enthusiasts hope and expect Bitcoin to reach another astronomical figures. The rest of the market is supposed to take part in it as well. But nobody wonder if this is ok. At the dawn of Internet the situation was the same. Finally it evolved and gave birth to numerous independent entities that used that technology. The only thing left is just waiting for the crypto going the same way.
The industry is configured today in a way that in- and outflow of the Bitcoin environment is easily controlled and traceable. High level of centralization via major players like Coinbase allows for coin flow tracking. Indeed, this helps in deep analysis and segmentation of various groups but stands in the way of the cryptocurrency main feature, i.e. anonymity.
If most of the deals are made in Bitcoin and Ethereum and Bitcoin-addresses can be traced, does this abort Bitcoin’s primary aspect of privacy?
Finally, the last and major point: does focus on Bitcoin establish some kind of centralization? And does it harm the future of Bitcoin that has turned to be unable to provide decent anonymity that was initially expected.
Decentralization has always been regarded to be positive and such power shift was just what Bitcoin promised to its users. But along with decentralization there are many other features Bitcoin has to maintain to stay afloat.
For instance, Bitcoin has to stay autonomous, and as soon as users question the network security, it is all done. In addition, being opposed to censorship has always been a libertarian dream Bitcoin seemed to guarantee. But over-centralized exchanges has compromised this as well.
Today centralized exchanges are needed to convert fiat into cryptocurrency. You may use decentralized exchanges to make crypto-to-crypto transfers, but you need centralized exchange to deposit your funds to the market. This may not a pleasant affair to do, if you try to avoid getting identified or just feel like this is against the major principle of Bitcoin. Decentralized platforms have got lots of advantages like security and reliability centralized ones have big problems with.
To be regarded as “decentralized” a project has to be resistant to both censorship and any authoritarian alternations. From the technical point of view, current use of Bitcoin meets these conditions, but actually we can observe that bias towards centralization makes thing more complex.