Despite the gains made by Bitcoin over the years, market analysts have been debating whether Bitcoin will survive the rapid advancements taking place in the crypto sector. Some believe that Bitcoin’s dominance in the crypto market will hold, while some argue that if Bitcoin’s blockchain remains rigid, it could be surpassed.
Bitcoin Could Become Obsolete
There are several factors that, if considered, show that Bitcoin has a bleak future. Firstly, Bitcoin is doing very little to keep up with the fast-changing crypto sector. Blockchain platforms such as Ethereum have been making strides to remain competitive as new, faster, cheaper, and more scalable blockchains are being developed.
Bitcoin has, however, remained rigid, and this has made the coinless competitive. Very few improvements have been done to the Bitcoin blockchain to make it more scalable. Despite the effort made by Jack Dorsey, Twitter’s CEO, to boost the efficiency of Bitcoin, a lot more needs to be done.
Ethereum is expected to launch ETH 2.0 in 2022, which could propel Ethereum’s prices, and its value could finally surpass Bitcoin, as many analysts have predicted. Besides, Bitcoin has failed to diversify its utility in decentralized finance (DeFi). The DeFi sector has rapidly grown in 2021, and blockchains that stand a fighting chance in the future are those that embrace the sector.
Another factor that could make Bitcoin obsolete is the development of Central Bank Digital Currencies (CBDCs). One of the main areas where Bitcoin has found dominance is being endorsed as a means of payment. This attribute has even led to countries as such El Salvador approving Bitcoin as legal tender.
However, when CBDCs join the market, they could offer safer and more stable ways of payment. The fact that the government controls CBDCs will also make them gain adoption from people who feared investing in Bitcoin because of misconceptions.
The US Federal Reserve Chairman, Jerome Powell, gave a speech in July before the US Financial Services Committee. In the speech, he said that once the digital dollar is launched, it would make cryptocurrencies such as Bitcoin and Tether unnecessary. Despite the US lagging behind in CBDC development, plans for the digital dollar have been in discussion, and its existence could make Bitcoin obsolete.
Bitcoin Could Also Survive
Despite the argument that Bitcoin could become obsolete, there is also a chance that the cryptocurrency could survive. Firstly, when Bitcoin was launched, it faced heavy opposition from major financial institutions and governments. However, its growth has inspired investor confidence in the coin, which has translated to high prices.
On the other hand, Bitcoin is the top cryptocurrency selected by top global financial institutions such as Goldman Sachs and JPMorgan. These firms have launched Bitcoin-backed investments that have attracted many investors. This adoption has been attributed to people’s trust in Bitcoin for being the oldest cryptocurrency.
Moreover, there is no saying that Bitcoin’s blockchain will remain the same and will not be improved over time. The Bitcoin community has an agile team that includes Jack Dorsey, who has launched several initiatives for the blockchain, including a Bitcoin digital wallet. Besides, Bitcoin’s creator, Satoshi Nakamoto, could also develop new mechanisms to make the Bitcoin blockchain more efficient.
Considering these factors, the main area where Bitcoin lags behind is the lack of improvements in its blockchain and its failure to embrace DeFi. However, if the blockchain can change its mechanisms to embrace a proof-of-stake platform and become endorsed by the DeFi sector, we could see massive gains.