Is it possible that altcoins could potentially disappear forever?
Altcoins Don’t Have the Same Appeal They Once Did
While they may not vanish into thin air, Adam Back – the CEO of Block Stream and the co-author of a bitcoin sidechains whitepaper – claims that the presence and stamina of presence bitcoin sidechains could lower interest in altcoins altogether, thereby making their appeal virtually non-existent.
As it stands, currencies like Ethereum (ETH), Ripple’s XRP, EOS (EOS), and Litecoin (LTC) have made hefty names for themselves in the crypto space. Ethereum, for example, is the world’s second-largest cryptocurrency by market cap and has easily become the most popular blockchain for building new cryptocurrency applications and tokens due in part to its smart contracts.
Ethereum has become a primary competitor to bitcoin. Unfortunately, despite being newer and arguably bearing more advanced technology and transaction speeds, it doesn’t compare in overall strength and size to bitcoin, which despite its age, remains the largest and most popular cryptocurrency to date. With a current trading price of just over $8,200, BTC has suffered over the past two years in terms of value, but it still plays a solid game.
At a recent Transylvania crypto conference, Back commented:
In the history of altcoins, it seemed like there was a period where there were a huge number of them that had no features, and that played out. And then people started to need a new way to market them, so they added features. Some of them were real features, and some of them were stories to market [their altcoins].
He further stated that one of the main reasons so many altcoins have been created is because several developers are inspired primarily by the thought of making money, so while it would benefit the space to make bitcoin “more modular” which could allow new features to be added, several developers have simply decided to put their efforts into creating new coins from scratch.
This financial incentive will remain, but it will have less credibility because if you have a very easy to use extension mechanism for bitcoin and examples of extensions that do something simple that you can build on, there’s not really a good story about why you’re doing it somewhere else.
What Would Need to Happen?
However, he acknowledges that while sidechains have a lot of power, they are not entirely trustless, and lie predominantly in the hands of exchanges and financial institutions. In order to place them in the hands of miners, a “soft fork” on the BTC blockchain would be required. He explains:
Your risk with bitcoin is that the coins are escrowed in some way – in a somewhat decentralized way. If it’s merged mined, the miners could take them against the protocol, or if it’s in an HSM-assured multi-sig, somebody could go hack two-thirds of the HSMs.