BTC breaks $20b market cap as fiat trust is lost

Earlier today, the world's first and most popular crypto-currency Bitcoin, broke another milestone barrier. Its market cap has surpassed $20 billion US dollars. That's no small feat, given that it has almost quadrippled in value in a year.

The Bitcoin community is in the middle of an ever growing civil war concerning its future development direction, and yet the price keeps rising. The bitcoin network is congested with transactions beyond its artificially limited 1MB limit blocksize, causing delays and failed transactions, yet the price keeps rising. Numerous countries around the world have tried to either set tough laws around the crypto-currency, or even outright ban it, and yet, the price keeps rising.

Bitcoin is the libertarian's dream come true. No government, no country, and certainly no entity can bring it down. It is the currency that just won't die, despite countless headlines around the world spelling doom and gloom for it.

Bitcoin is currently experiencing what appears to be a recurring hype cycle, a similar fractal pattern that has repeated itself at least 3 times before, growing in significant magnitude each time, with peak estimates ranging from $4000 to $10,000 USD for this cycle, should the pattern continue to follow suit. Alas, as always with the markets, correlation does not equal causation, and anything can and does happen.

So if Bitcoin's utility is pushed down given its choking pipeline, what is keeping Bitcoin soaring to new heights?

The much talked about Winklevoss Bitcoin ETF may be a small part of it. An EFT would make it easier for US investors to invest in and trade with the currency, which if approved by March 11, would bring a whole slew of investment power to Bitcoin, surely having a positive effect on price. But even then, it begs the question why investors would invest in something that is at present gridlocked when it comes to micro-transactions.

Bitcoin's purpose it appears is slowly but surely changing. It is used less and less so for micro-transactions, and it is being increasingly seen as a safe store of value. While perhaps other alt-coins such as litecoin, or monero might be better suited to smaller transactions. This isn't to say that Bitcoin is broken, - far from it. But its original purpose is shifting drastically, and its reduced utility is clearly being reflected in the changing market share bitcoin holds over its competition.

Bitcoin's crypto market share over time. - coinmarketcap.com

As of at the time of writing, the total Cryptocurrency market cap is over 24 billion USD with bitcoin holding 84% of that sum. There are many factors to consider the slowly degrading trend, but this doesn't mean that bitcoin is going down at all. To the contrary its price and market cap is stronger than its ever been. But investors also now have a much bigger choice of cryptos to invest in than ever before, and cryptos themselves offer more bells and whistles than ever before. While Bitcoin is the safest longterm bet for store of value, Monero is safest for private, untraceable transactions. Ethereum is also making a huge revival this year and is hands down the platform of choice for building blockchain apps (more on that in the next article).

The incredible surge and rise in crypto value across the board is incredibly telling of a shift in trust people have regarding fiat currencies. Populations prefer to place their trust in mathematically unbreakable transaction and supply systems, than reserve banks that can print money on command.

Author: Eli Afram, Developer & Analyst.