Altcoins Take Over the Crypto Market
Editor's Note: A version of today's article originally appeared in the e-letter of Early Investing, a Pillar One Advisor of The Oxford Club. If you haven't already subscribed, click here - it's free.
Bitcoin... For the vast majority of people, this original digital coin has long been synonymous with cryptocurrency.
Indeed, bitcoin was basically the only game in town until recently.
As you can see from the chart above, bitcoin accounted for roughly 85% of the crypto market one year ago.
Today, bitcoin makes up only 34% of the $500 billion-plus market. New competitors such as Ethereum, Ripple, Dash, NEM, Monero and IOTA have emerged to grab big chunks of the market.
And hundreds of even smaller coins combine to make up around 25% of the market.
Collectively, everything that's not bitcoin is referred to as the "altcoin" market.
While bitcoin has lost significant market share to altcoins, its value still skyrocketed from around $1,000 a year ago to around $9,000 today.
Over the same time period, altcoins have soared even higher than bitcoin, rising from only a few billion dollars combined to around $360 billion today.
In my view, these developments don't represent the fall of bitcoin. We still need bitcoin as a reserve cryptocurrency, a secure rock in the crypto world. Instead, what we're seeing is the rise of crypto as a new type of investment.
Why We Need Altcoins
This past year has been a chaotic (and wildly profitable) one for crypto investors. And we're beginning to see the type of market I envision as being necessary for crypto to grow into one of the largest global asset classes.
I've known for years that we need more than just a few big digital coins for crypto to thrive.
We need fierce competition among hundreds of such coins, all of them using the power of open-source software to innovate and create amazing technology... and growing through the power of network effects and viral organic growth.
Today we're seeing exactly that. There are now more than 30 separate digital coins with market capitalizations (total value) of more than $1 billion. Each has its own community of users, developers and supporters.
And the recent correction in the bitcoin market has demonstrated why this kind of currency competition is important. Bitcoin is down a few points for the month... but many other digital coins, including Ethereum, EOS and NEO, are up by double digits.
Hundreds of unique cryptocurrency models are being tested in the wild today. It's an innovation bonanza, much like we saw in the early days of the internet.
Crypto today is a global phenomenon the likes of which the world has rarely seen.
P.S. Crypto markets are currently recovering from a big correction - and that makes this the perfect time to start your crypto portfolio. If you're not sure where to begin, check out my First Stage Investor research service.