- Bitcoin is the largest cryptocurrency by market cap, controlling a large chunk of the crypto market share.
- Several events and upgrades around Bitcoin will ensure that the cryptocurrency continues its dominant run at the top.
- The Bitcoin Taproot upgrade and the expansion of the Lightning Network will ensure that the distance between Bitcoin and Ethereum is maintained.
- Bitcoin controls almost half of the market share and has a market capitalization of $678 billion.
Once the word “cryptocurrency” is mentioned, Bitcoin is the first to come to mind. Bitcoin does not only have a first-mover advantage but is also the largest cryptocurrency in terms of market capitalization. With a market cap of $678 billion, Bitcoin dominates with 46.06% of the market share, while its closest competition, Ethereum, holds a market share of 17.59%.
By all indications, Bitcoin looks set to maintain its dominance with the highly anticipated Taproot upgrade, the growth of the Lightning Network, and the influx of institutional funds.
Network Upgrades
2021 has been a particularly bullish year for Bitcoin as waves of institutional and retail investors scrambled for a piece of the action. Aside from the money flowing into the network, major technological developments have also enabled the asset to maintain its status as the premier cryptocurrency.
The Taproot Upgrade is the most significant piece of innovation to come to the bitcoin network in recent years. The upgrade will usher Bitcoin into the era of smart contracts, arming it with the necessary capabilities to compete with other blockchains such as Ethereum.
In addition to smart contract functionality, the upgrade will improve privacy through the use of Schnorr signatures.
The combination of these features will make the network more appealing to investors as they wait for the implementation of the upgrade which is scheduled for November.
Other positive developments are the milestones achieved by the Lightning Network. The Network’s capacity grew to exceed 1,500 BTC, and similarly, the number of nodes has soared beyond 21,000.
Big Money Is Coming
For Bitcoin, 2021 was defined by the influx of institutional money. The year started with a bang and reached a climax when Tesla (NASDAQ:TSLA) purchased $1.5 billion worth of bitcoin in February.
Other firms followed suit as MicroStrategy, Morgan Stanley (NYSE:MS), and J.P. Morgan, among others, invested in bitcoin. With current prices hovering around $35,000, at the time of writing, Bitcoin whales are taking advantage of the dip to beef up their holdings.
MicroStrategy recently purchased $489 million worth of bitcoin, bringing the total number of bitcoins held by the software firm to over 100,000 BTC.
Presently, miners are making frantic efforts to reduce the energy consumption of mining bitcoin, and progress on this issue will see even more institutional investors flock to the asset.
On the Flipside
- Bitcoin’s hashrate has slumped to new lows following China’s crackdown on cryptocurrencies.
- As a result of the dwindling hashrate, bitcoin mining difficulty levels could be reduced by 25%.
A Comparison of Bitcoin and Ethereum
Bitcoin’s fiercest competitor is Ethereum, and if any cryptocurrency can flip Bitcoin to altcoin status, it is Ethereum. Bitcoin controls 46.06% of the total cryptocurrency market share, while Ethereum controls 17.59%.
Ethereum began the year trading at $737 and is trading at $2,220, at the time of writing, which represents an increase of over 220% from the start of the year. Bitcoin, on the other hand, started 2021 with prices of around $28,000, which rose to see highs of $64,000 in an epic price run.
It is hoped that with smart contract capabilities, and the increased levels of privacy that the Taproot Upgrade will bring, Bitcoin will maintain its dominance over all other cryptocurrencies.
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