Bitcoin has always been the king of cryptocurrencies, but the day it loses that crown may be coming and some crypto watchers wonder what could happen next.
Bitcoin’s dominant popularity — which it’s enjoyed since the so-called Bitcoin white paper kicked off the cryptocurrency craze in 2008 — has steadily eroded in recent years. Some analysts even think Bitcoin may eventually go the way of Netscape and MySpace, surpassed by imitators who have closed the recognition gap.
That’s because new “altcoins” such as Ether have design advantages that could lead to one of them topping Bitcoin in market value, an event known in these circles as “the flippening.”
As recently as 2017, Bitcoin represented 85% of the total value of cryptocurrencies. Bitcoin’s “dominance ratio” has waned ever since. Today, despite a nearly $1.1 trillion market value, it’s now worth about 44% of the aggregate cryptocurrency values.
Strategists say concerns about Bitcoin’s energy consumption and relatively slow transaction speeds, could accelerate a shift to competitors such as Ether and Cardano. If current trends hold, the flippening could happen in the next five to 10 years.
Even champions of crypto, such as Elon Musk, have pointed to flaws in the original digital currency. These include its dependence on increasingly energy inefficient miners, and intermittent problems with the speed and expense of transactions.
The Bitcoin blockchain, the ever-expanding decentralized ledger that underpins Bitcoin, handles transactions in the same block sizes it has since its early days, which makes it slow by electronic payment standards. There’s an average of about seven Bitcoin transactions processed per second, compared to as many as 24,000 per second on Visa’s digital network.
To receive confirmation of a Bitcoin transaction can take anywhere from a few minutes to a couple of days, depending on network traffic and the size of the transaction, according to Coindesk. The average transaction cost is currently around $4.
Altcoins such as Ripple, or XRP, Cardano and Stellar have streamlined their blockchains for much cheaper and faster transactions, according to rankings from cryptocurrency creator Aleph Zero and others. Even Dogecoin, the “meme” currency started as a joke, is more efficient than Bitcoin as a payment technology.
It’s the remarkable energy inefficiencies that could render Bitcoin obsolete in the current climate-conscious age, however.
Bitcoin is produced using a “proof of work” system, where high-powered computers race to solve complex mathematical problems to verify each transaction. This process, known as Bitcoin mining, already consumes a remarkable 91 terawatt hours of electricity a year.
“The electricity consumption of Bitcoin is about the same as the electricity consumption of the Netherlands,” says Bruno Biais, a professor of finance at HEC in Paris. “It’s crazy…this cannot continue.” Source.