How Can Smaller Cryptocurrencies Compete With the Likes of Bitcoin?
With Bitcoin reaching a higher value than ever before, the cryptocurrency industry as a whole is back on the front page. Now, investors will once again be looking towards the coins with the best potential to rise over the course of 2021. The main questions are to do with whether new players have any chance of competing with Satoshi Nakamoto’s leading e-currency? Do they need to rival Bitcoin, or can they find success simply existing in its shadow?
Bitcoin Value is Skyrocketing
It’s no secret that the value of Bitcoin has gone through the roof in recent times, and there are questions as to how high the leading cryptocurrency can go. In November 2020, it reached an all-time high of $19,850. This was the top valuation of the e-currency since it hit $19,783 at the end of 2017. This new bull run was a long time coming, and it has cast fresh hope on the cryptocurrency scene.
While it is thrilling to think about bitcoin’s potential, it is also worth looking at what happened to the industry as a whole in the last big bull market. When the leading crypto is going well, it tends to open up opportunities for the lesser coins. In 2017, a vast number of brand new options cropped up, but few have managed to break into the mainstream in the same way Bitcoin has. 2021 represents a great opportunity for these rivals to gain recognition.
Offering Something Different Can Help
Going up against the Bitcoin juggernaut as direct competition is unlikely to bring success. Litecoin has a lot of similarities with Bitcoin and it has always lived in its shadow. Ethereum enjoyed greater success than Litecoin because it operated on a different set of principles and its blockchain was considered more robust. Ethereum itself is more than just a currency, and can be used as a ledger technology to help businesses build new programs.
Success for a smaller cryptocurrency could be achieved in imitating the things that make Bitcoin so popular, while, at the same time, bringing something new to the table. This has been a successful model across a number of industries over the years. The key is small innovations that don’t aim to reinvent the wheel.
Similarly, the ever-expanding smartphone industry has long been dominated by Apple and Samsung. But other brands have been able to muscle in by offering slight alternatives to the tried and tested model. Google Pixel managed to find success by offering a much more advanced camera than most of its competition, along with it being easier to hold. This isn’t saying that Google is a small company that finds it hard to compete with heavyweights. But, it didn’t have much of a foothold in the smartphone market until recently. It realized that it needed to copy the giants but still add something new in order to gain traction.
As another example, in the ever-changing and ever-expanding online casino industry, when developers bring new slot games to the bustling market, a lot of elements remain the same because that’s what people are used to. The Jurassic Park slot is a good example of this. The Microgaming offering seems like any other slot, but the company introduced a new element with its parallax scrolling effects. In turn, the developer earned an award for this feature, and it subsequently inspired other slots to follow suit. This minor innovation enabled it to stand out from the crowd, and even introduce a new feature to the industry at large.
Which Coins Are The Ones to Watch in 2021?
Developers of the minor cryptocurrencies that have managed to find success up to now have taken a few things into account. They have capitalized on bull markets in the industry, taken inspiration from Bitcoin, and added their own twist on the concept.
One of the biggest success stories in the crypto boom of 2017 was Ripple. While most of the other main contenders were seeking to replicate Bitcoin’s decentralized blockchain, Ripple operated on a common shared ledger that was managed by a network of validating servers. It had the backing of some of the world’s largest banks, which helped to boost its credibility.
Ripple could certainly be one to watch out for in 2021. Another currency that is projected to do well this year is the Basic Attention Token. This was developed by the co-founder of Mozilla Firefox and has been endorsed by a number of IT professionals.
Is There Actually a Need to Compete?
It seems fair to say that smaller cryptocurrencies will find it hard to compete against the well-established powerhouse of Bitcoin. However, is there actually any need for them to rival the virtual gold? In the early days of rival cryptocurrencies, there was speculation over which one would win the race and become the chosen currency of the internet. But now it is becoming clearer that there is unlikely to be just one. The internet era has brought about a rise in choice when it comes to payment systems, and it will almost certainly be the case that consumers want options when it comes to cryptocurrencies.
It seems clear that smaller cryptocurrencies need to focus not on beating Bitcoin, but successfully living alongside it. Indeed, by collaborating with the main e-currency, they could massively increase their own chance of success. In order to get recognized in the mainstream, smaller cryptocurrencies should replicate the best elements of Bitcoin while also looking to innovate.