Bitcoin’s dominance of the cryptocurrency market is not growing. It is increasingly having to share the limelight with other digital assets we often label as ‘altcoins’ or ‘meme coins’.
Altcoins (i.e. a cryptocurrency alternative to Bitcoin) are proving their resilience – September is often a subdued month for Bitcoin, but Ether (ETH) 2.0 saw an 8% increase to its staking activity, and other Layer-1 blockchains such as Solana saw significant increases to activity too. Everyone’s favourite dog-themed investment Dogecoin (DOGE) struggled, finishing at USD$0.20 from an August USD$0.35 high and a far cry from the fabled USD$1.00 DOGE target.
Clearly, Bitcoin can take a punch in one month and bounce back the next (if you haven’t learned that lesson by now I don’t know what will convince you), but amidst all this data, there’s an important story being missed. It shows there’s a growing gap between what is actually happening in the wider cryptocurrency industry and the narratives that we see appear in the media.
We need to do away with altcoins and meme coins
The language we use to describe cryptocurrencies that aren’t Bitcoin needs to change. The industry is now far more complex than the ‘Bitcoin plus others’ view that the altcoin and meme coin names espouse.
As a point of comparison, it would be as if we chose Apple (NYSE: AAPL) as the leading technology stock, and all others (Alphabet, Microsoft etc.) were alt-stocks.
Intuitively we know these are vastly different companies that deal with different market sectors and have different strengths.
Ethereum’s smart contract network and Solana’s decentralised payment network are completely different value propositions to Bitcoin’s role as an emerging store of value. The fact that there is still widespread confusion about these basic facts presents an amazing opportunity, akin to investor misunderstanding of the potential value of technology stocks back in the late 2000s.
What then of the popular DOGE? Since inception it has been viewed as a ‘meme coin’. Now, for whatever their motivation, groups of people get together through social media and decide it has a value. It is incredibly similar in its utility then to Bitcoin – it truly is a Bitcoin alternative.
Remember, gold, silver and precious metals are valuable in part because they are limited in supply and hard to mine, but also because people believe they are valuable. What is happening with meme coins is a similar process.
In summary, what are often referred to as ‘alt-coins’ are completely different to Bitcoin, but our talismanic ‘meme coin’ is a great example of a Bitcoin alt-coin.
Perhaps it’s time we did away with these terms entirely.
This article was developed in collaboration with Kraken, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.