What an exciting time to be involved in cryptocurrency. We are in the midst of bulls that will forever change people's lives. Not only that, but we are finally at a stage in the crypto life cycle where projects have actually come together and started to deliver on their initial promises. Whereas during the 2013 bull run, it was based more on speculation and whispers of what might happen. In 2017 came the talk of ICOs and speculation of the technology's potential promises. But now we are finally seeing significant results. It's an exciting time to be in the market. You may feel worried that you are late to investing in cryptocurrency, that you may have missed the boat. This is false. While you may not be too early anymore, you are still early and the ability to change your life financially is still there.
But what does the future hold for cryptocurrency? This is such a big question for someone to ask, and there is no way I can detail everything in one article. But instead, I'll give you a rundown of two options that may or may not happen. Much of this is based on the world outside of cryptocurrency and how the markets are evolving. I guess there's a chance that as a cryptocurrency matures, it could take the same route. But once again, cryptocurrency is unlike anything else, and it can become an outlier and be unlike anything else before it.
The question I will ask today is whether this is a winner take all market. Or more specifically, a few winners take all. There are many Layer 1 blockchain cryptos on the market and we can only assume that this number will continue to grow dramatically in the future. There are often two types of people in the market. People who believe that one chain will win and basically swallow the rest of the market like a black hole. And then there are others who believe that multiple blockchains can co-exist. That all of this helps build the market and the community. Which option will take place? No one knows yet, but it's an important question to ask and definitely something to think about when investing in cryptocurrency.
So let's dig into this more.
Let's start with the first option. In this scenario, the winner takes all the environment. Or at most just a few winners. This is the assumption Bitcoin maximalists often make, and it's something I've seen ETH fans start to say as well. Why would there be only a few winners? What is the reason for this? There are some.
First you need to look at the history of the markets. Especially technology and software. More often than not, there are usually only a few winners. Although there are many smartphone manufacturers, let's take a look at the software they run on. The two most popular smartphone software options are primarily iOS and Android. So overwhelming that off the top of my head it takes a long time to even think of a third option. These two operating systems have absorbed the market and because of this things often run more smoothly. Apps and games have a greater reach because they are accessible to so many people. The same goes for computers and their software. There is MacOS, Windows and Linux. These are the three most popular options. If you want to delve more into the internet technology side of things. Amazon has AWS, and it has a dead end market position with that. Often times in the tech world it wins all kinds of market. Let's also look at the financial world. There are many countries in the world, and with that, many currencies. But if you really dig deep, it's also pretty much a winner that takes over any market. The US dollar is the world's reserve currency and is the world's most dominant currency. Outside of this, there are only a few other currencies that are considered strong and potential reserve assets. Cryptocurrency markets are a combination of all of the above, they are technology, web protocols and also money. It is very possible that it behaves the same way. Bitcoin maxi often think that any development that happens outside of BTC will eventually come to Bitcoin. For example, fast and cheap payments (Lightning), DeFi and NFT (Stacks and Sovereign), Stablecoins (Liquid) and the list goes on. It may or may not happen, but always remember that people and developers follow the money. They will go where they can make the most money.
Now let's talk about the second possible scenario. In this scenario, it would be possible for many chains to co-exist. I could be wrong, but I feel like this is an approach that has become much more popular recently. Especially with the introduction of blockchains, which promise the ability to be interoperable with other chains. The first few that come to mind are Polkadot and Cosmos. In this scenario, it's not a cut-throat market where every coin is pitted against each other trying to win. For example, not Cardano going against Ethereum, but understanding that the world is a big place and there is enough room for many coins to be successful. In fact, many coins directly say that they do not compete with each other. There has been a lot of buzz with Solana lately and some people have praised him, calling him the next ETH killer. While this thought is more like the first scenario. There is an idea that with the speed that Solana offers, it could potentially be a great place to have order books that will one day hold the world's tokenized stock exchanges, and also allow you to participate in DeFi and NFT very cheaply . In that same world, if you wanted more decentralization and security, or went to the place that had the biggest network effect, then you would do the above in Ethereum. There is room for many players. it could potentially be a great place to have order books that will one day hold the world's tokenized stock exchanges and also allow you to participate in DeFi and NFT very cheaply. In that same world, if you wanted more decentralization and security, or went to the place that had the biggest network effect, then you would do the above in Ethereum. There is room for many players. it could potentially be a great place to have order books that will one day hold the world's tokenized stock exchanges and also allow you to participate in DeFi and NFT very cheaply. In that same world, if you wanted more decentralization and security, or went to the place that had the biggest network effect, then you would do the above in Ethereum. There is room for many players.
What about me? Personally, I fall more in the middle of both scenarios. I think both options will happen. I think there are quite a few unwanted projects and in a few years they will be gone. Just look at the top 25 by market capitalization from just five years ago. It looks very different than it does today. I also think that blockchains like Bitcoin, Ethereum, Polkadot and Solana will only continue to get stronger. I'm of the opinion that there won't be more than five layer 1 circuits that will be widely adopted. Although there will be other layer 1 circuits, they will only be moderately successful. This means you have to be careful what you invest in. There are many people who have seen tier 1 chains take off recently and have started looking lower down the market cap list to find coins that will help them make money. There is no guarantee that these chains will ever see any major acceptance or recognition. It's just as likely that Bitcoin or Ethereum will take over. I don't know what will happen. I can only say that I am very excited to find out. We are on the cusp of a new world and brand new technology. We are the pioneers who will benefit greatly. Life-changing wealth is in our hands! I can only say that I am very excited to find out. We are on the cusp of a new world and brand new technology. We are the pioneers who will benefit greatly. Life-changing wealth is within our grasp! I can only say that I am very excited to find out. We are on the cusp of a new world and brand new technology. We are the pioneers who will benefit greatly. Life-changing wealth is within our grasp!