Community Trust ScoreLikely Real
Bitcoin continues to enjoy the first-mover advantage for the store of value. Ethereum is not the only blockchain with scalability. Several types of blockchains dominate the market and there are different consensus algorithms in use. There is increased competition to establish true decentralization.
Is Bitcoin losing its dominance and power? While it looks like that, there are increasing numbers of institutions and individuals professing the benefits of BTC. Money is of course flowing into several other projects, but BTC continues to hold its space.
The congestion, scalability issues and high gas price is the marketing loophole for Ethereum killers. The kind of sentiment brewing around ETH is that nobody is willing to go there, it is very crowded.
DeFi and NFT competitors on Avalanche, Terra, Polygon, Solana, and BSC are showing rapidly increased TVL in the projects parked in their blockchains.
However, the greatest network effect still stays with the top two projects and the top two continue to be the black scale to compare to. Yet another reality is that the scaling difficulties of BTC and ETH will soon be the reason to make them not the only choice. Several other choices have already propped up. NFTs, stable coins and a lot of other stuff are happening. The progress and innovation are rapid.
This is a point in time when only the scaling projects will thrive. However, Bitcoin officially has become the legal tender in El Salvador, and the lightning network has made it possible to transact Bitcoin cheaply without having to wait for several hours to confirm a transaction.
The growth of decentralized finance (DeFi) and non-fungible tokens (NFTs) has caused congestion on Ethereum and eventually an increase in gas fees. New blockchains are scooping the market share. Despite potential substitutes, ETH is intimately tied to DeFi and NFTs more broadly and it continues to strive.
Bitcoin used to be correlated to macroeconomic assets, but that trend declined when the volatility decreased. The crackdown on China on Miners in Q2 led to decreased hash rate, but that is recovering now as well. Investors are continuing to hold on to their coins.
The EIP 1559 upgrade and the positive attitude of investors towards DeFi and NFTs is a favorable point. Alternative layer 1 solutions are popping up threatening ETH flippening.
Thus, it is not going to be a BTC and ETH space anymore. There are several tiny stars with true value and usability invading the cryptocurrency space.
