What effect does the growing number of altcoins have on BTC?
2 min readBTC is known to be deflationary in nature. The maximum number of BTCs in circulation must never exceed 21 million coins and almost 90% of them have been issued so far.
Unquestionable primacy among altcoins
Not all altcoins are deflationary in nature and that their continued growth means that more and more individual coins are in circulation. The question often arises as to whether this phenomenon could generate some kind of headline cryptocurrency inflation, which would ultimately undermine the deflationary nature of BTC, and during all that time, although there has been an incredible increase in the number of tokens in circulation, BTC never seems to be affected. .
BTC is so far the only cryptocurrency that is considered a hedge against inflation, and no other token or cryptocurrency has ever been able to not only push it out, but even try.
The only cryptocurrency that could come in any way is ETH, especially given the latest update that has started burning fees, but its monetary policy is far from guaranteed because it has changed many times over its history, while BTC has not.
However, this consideration would not be complete without considering the risk that some altcoins could compete with BTC at the technical level. At the technical level, cryptocurrencies have been created that overcome BTC, but this did not affect the dominance of BTC in the slightest.
What is the reason for BTC’s dominance?
First, the main winning feature of BTC is not performance, but its resilience combined with true decentralization. Many of the technically better-performing altcoins are not particularly decentralized or have not yet demonstrated the resilience that BTC has shown in its twelve years on the market.
Second, many altcoins are not to compete with BTC, ie. they are not designed to hedge against inflation, but to technologies that do something different.
All cryptocurrencies produced to attack BTC, from LTC to BCH or BSV, failed. The reason is that the power of BTC over time has become such that it is almost impossible to imagine that any other project could surpass it in this respect. Although Dogecoin has recently been trying to offer an alternative to BTC as a means of payment, thanks to the Lightning Network, it is BTC that puts dococoins at a disadvantage.
To date, there is no altcoin on the horizon that can really compete with BTC, not even ETH, which is a great success, but not as a competitor to BTC.
