Derivatives, the Lord of Rings in Cryptocurrency

Beginner’s Guide / 24.07.2019

Since Bitcoin came on the cryptocurrency scene over ten years ago, thousands of altcoin rivals have been developed. While some have caught the attention of cryptocurrency users and investors, Bitcoin’s reign as the King remains intact. However, Bitcoin has its disadvantages and has seen its share of ups and downs even recently. This article spotlights the reasons why Bitcoin is still the King of cryptocurrency despite its imperfections.

One of Bitcoin’s main advantages lies in its hash-power’s strength or other words, the number of computations, or how it creates blocks and confirms transactions on the network. Since a low hash power makes a network more susceptible to attack, Bitcoin’s network offers security. Perhaps this explains why Bitcoin is the most widely available cryptocurrency on crypto exchanges, craigslist, eBay, and even has its own Bitcoin ATMs where Bitcoin is traded for local currency.

As the first of its kind, Bitcoin sets the standard for cryptocurrency and enjoys brand recognition. As a result, Bitcoin has become synonymous with cryptocurrency; this is reflected in the fact that all wallets include Bitcoin and that all businesses that accept crypto include Bitcoin. A bit of economics is also at work here as Bitcoin’s supply is capped at $21M, which increases its demand as the population grows.

However, despite its many advantages, analysts questioned Bitcoin’s supremacy as recently as last year. Citing its “inability to scale” as the main problem, critics claimed that Bitcoin was slipping from its throne. Backlogs resulted as transactions filled its networks faster than they could be processed, causing waiting times just like its predecessor – the bank. As a result, Bitcoin suffered a 50% drop in market dominance from November 2017 to January 2018. Adding to its woes, Microsoft reneged on its selection of Bitcoin as a form of electronic payment, then decided to go with it after all. Light is at the end of the tunnel as Bitcoin has introduced the Lightning Network to resolve its logjam problems and help with its scaling issues.

More recently, Bitcoin has proven its resilience. After a cataclysmic drop in price late last year, Bitcoin’s price has rebounded 60% as of May 2019. Viewed increasingly as a safe investment alternative, Bitcoin’s inclusion in traditional investment portfolios has proven its value through high returns.

In fact, testifying to Bitcoin’s supremacy in the trading world, a recent  blog stated that “Bitcoin is the only asset class that maintains consistently low correlation with every other asset, making it a good candidate for a diversified portfolio.” The first-ever Bitcoin ETF is expected to hit the market pending SEC approval on August 19, 2019. BAKKT is offering the first Bitcoin futures exchange where investors can trade Bitcoin futures contracts. Lastly, the CFTC just recently received approval to trade Bitcoin futures. For altcoin derivative trading, the newly launched PLOUTOZ Blockchain Community Derivatives Market offers mainstream altcoin and BTC contract, and highlight itself with altcoin as collateral.


What does all this add up to? In short, looking at good investments, whether cryptocurrency or the market in general, I’d bet my money on BTC and derivatives.
Born in Bucharest, Marius is the founder of Crypto Adventure. Since his first contact with Bitcoin and cryptocurrencies, he never stopped believing that they are one of the most important innovations of our time, which will forever change the way business is done.