Bitcoin dominance denotes the percentage market share Bitcoin has among all cryptocurrencies.
The metric made sense at its inception, though there was little need for other cryptocurrencies in 2013. It was assumed that Bitcoin would scale to handle all possible transactions.
Now, Bitcoin dominance is used to compare Bitcoin (BTC) to every other cryptocurrency – without regard to the fact that BTC is no longer a currency, nor does it aim to be one.
After Bitcoin was co-opted by globalists and the Bitcoin community split into two, the BTC branch started promoting Bitcoin as ‘digital gold,’ while the other side of the community became Bitcoin Cash (BCH) and promotes Bitcoin as cash.
Apples-to-oranges comparisons
Because BTC is no longer a currency, it seems ill-fitting to compare it with actual cryptocurrencies like Bitcoin Cash, Dash, and Monero.
In the Investor Series articles, we’ve modeled cryptocurrencies’ potential value according to their Total Addressable Market (TAM).
Apples-to-apples comparisons would use TAMs to compare cryptoassets with the same niches.
Actual BTC dominance
By this standard, BTC’s dominance is nearly 100%; no other cryptocurrency is as slow and expensive to use as BTC.
Through a host of cognitive biases, BTC maximalists have actually convinced themselves these are desirable properties for Bitcoin, since they are also features of gold.
We’re speaking somewhat tongue-in-cheek, but BTC is actually the only cryptoasset pursuing “store of value” uses for a Total Addressable Market.
Other TAMs
As we mentioned above, cryptocurrencies have a separate niche from ‘digital gold’. Cryptocurrencies like Bitcoin Cash, Dash, and Monero address the ‘medium of exchange’ market.
There are also many niches for blockchain applications to disintermediate. Many ICOs issued tokens designated specifically for this second niche.
Platform tokens
Through the 2017 ICO wave, speculators learned that separate currencies are unnecessary for specific niches. Most use cases of a blockchain can use the blockchain’s native asset, or a stablecoin built on it.
The blockchains underlying applications are generally called platforms; we call their native assets platform tokens.
Ethereum and ETH are one such example.
Platforms fit a large niche with several sub-niches, each with a corresponding TAM. In making comparisons, it would make sense to compare the supply of these platform tokens to each other, rather than to BTC, or to cryptocurrencies like BCH.
Conclusion
BTC used to be fast, cheap, and reliable – it used to work like Bitcoin Cash.
Now when BTC fees increase, people use other cryptocurrencies. The only context in which it makes sense to compare BTC to Bitcoin Cash (BCH) or Ethereum (ETH) is in the amount of money flowing into the ecosystem through each asset.
A new metric or series of metrics is required to measure dominance between cryptoassets.
For now, we’re specifying the TAM of each currency in our Investor Series articles and models. If there’s demand for it, we’ll create charts to classify cryptocurrencies according to target markets.
Let us know in the comments what you’d like to see in future articles, or in follow up to this one.