Bitcoin accounts for about 60% of the total digital currency market share, edging out even some cryptocurrencies that came before it. It has single-handedly influenced an entire industry, creating a platform for developing many other digital currencies. Bitcoin’s entry into the Bull Run has signaled investors worldwide that it can stand the test of time.
Investors are constantly seeking ways of making extra profits by trading alternative cryptocurrencies. Even leading crypto exchanges such as Bitcoin Era advise traders to trade in alternate coins to make considerable profits. However, it is clear that the entire crypto market heavily relies on Bitcoin. So, why does Bitcoin has so much influence over the other digital currencies in the market? Here are the main reasons.
Bitcoin is the Crypto Industry’s Pioneer
Although some virtual currencies existed before Bitcoin, their adoption was never as successful as the latter. Bitcoin is the crypto industry’s pioneer and, many digital currencies copy its protocols. That has allowed Bitcoin to cement its position in the market as a store of value and payment method, rapidly driving its popularity.
Bitcoin has proven the potential of digital money to the rest of the world, laying the foundation for developing more cryptocurrencies and the entire crypto market. It is the only crypto whose creator remains completely anonymous. Bitcoin’s adoption is still in the infant stages but, several mainstream industries, including finance, healthcare, and real estate, have already integrated it as an investment instrument and payment method.
As the pioneer of the crypto industry, almost every business and individual that owns virtual money has at least some Bitcoin holdings. Many new investors often use Bitcoin as a test project to understand how cryptocurrencies work.
Most Altcoins Are Bitcoin Clones
Bitcoin’s increasing popularity has inspired the development of several cryptocurrencies over the years. Most of the altcoins present in the market today have borrowed a lot from Bitcoin. For example, Litecoin runs on a copy of the Bitcoin code, seeking to become a lighter and quicker version of the original.
There are several other Bitcoin clones, including Bitcoin Gold, Bitcoin Cash, and Bitcoin Diamond. Although those altcoins strive to become a better version of Bitcoin, they are just following its lead.
Bitcoin Has Better Network Security
Bitcoin’s decentralized network has more than 18 million miners worldwide, using the proof-of-work mechanism to mint new tokens and secure transactions. The larger volume of participants impacts a high level of the network’s decentralization, contributing to the better security of Bitcoin transactions. Besides, its underlying blockchain technology eliminates third parties from the transactions, which also prevents security risks.
Many Investors View Bitcoin as the Reserve Currency for Crypto
Bitcoin’s status as the crypto industry pioneer gives investors the impression that it is the crypto market’s reserve currency, as the USD is to the global stock markets. Besides, many crypto exchange platforms do not recommend trading cryptocurrencies with fiat money because of the unique compliance and regulatory issues.
Thus, most investors initially invest in Bitcoin to make profits from trading it for altcoins. A majority of them do not even compare the prices of altcoins to fiat money. Instead, they compare their prices with the value of Bitcoin since it is the most dominant market pair. That is why the entire market prices usually drop whenever Bitcoin’s price falls.
Bitcoin is undoubtedly still new to most people but, it is the original crypto that ignited the entire cryptocurrency revolution. That status has enabled it to quickly garner a multi-billion user base, significantly increasing its price and value over other altcoins. It has successfully strengthened its position as the industry leader that investors and traders always look up to before buying or selling their altcoins positions.