The following is a guest post from Shane Neagle, Editor In Chief from The Tokenist.
With US presidential elections concluded, Bitcoin has been hitting new all-time highs nearly on a weekly basis during November. Having reached almost $100,000 threshold on November 22nd, Bitcoin reinvigorated the altcoin market, now holding a $1.49 trillion market cap.
The common wisdom would suggest that altcoins will follow Bitcoin’s lead, as prior trends have shown. But what types of altcoins should see significant performance? More importantly, are there new fundamentals in play to consider this time?
First, let’s revisit the relationship between Bitcoin and altcoins. It is more important than one would think.
Why Does Bitcoin Lead the Crypto Market?
From the launch of Bitcoin mainnet in January 2009, to Bitcoin price breaching $10k threshold in November 2017, it took nearly 9 years. Although Bitcoin gradually became a household name, it still retained the status of a novel, highly speculative asset. This is understandable in a central banking system, where money is synonymous with government edicts – fiat (by decree) money.
Therefore, belief in government edicts, and government’s application of force, is what gives money its value. This has been the habituated common wisdom for generations. Moreover, there is the question of medium. If Bitcoin is not a physical paper token issued by a central bank, but digital, how can it be trusted?
Blockchain enthusiasts already know the answer. The central bank, the Federal Reserve, also relies on an electronic ledger, which could manifest its accounting as physical tokens (paper money) but not necessarily. In contrast, the entire point of Bitcoin’s ledger is that its accounting is fortified against arbitrary dilution.
That makes Bitcoin pseudo-digital. Its accounting is enforced by computing power via its proof-of-work algorithm, which erects a bridge between the digital and physical. The physical being the energy and hardware assets needed for computing power. Consequently, Bitcoin sets the altcoin market:
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Author: Shane Neagle
