Bitcoin is arguably the dominant cryptocurrency throughout the digital asset space, but how much of its dominance is real?

How Dominant Is Bitcoin, Exactly?

When placed up against all other crypto assets, bitcoin’s dominance sits at roughly 60 percent. However, many analysts believe that placing it up against all other coins or tokens isn’t entirely fair, and that it should only be placed up against currencies that are trying their best to be legitimate money or that are working to replace fiat. Granted this is the case, bitcoin’s dominance would move up to 80 percent.

Jordan Tuwiner – the investor of the Real Bitcoin Dominance Index – suggests that bitcoin’s market dominance should be determined by placing it up against all other cryptocurrencies that are mined or built from scratch. One of the big things he suggests doing to come up with a correct ratio is to throw out all currencies that came about through initial coin offerings (ICOs) or through token sales. This would automatically disqualify popular stable currencies like Tether given how centralized it is.

He states:

The issue with ICOs is that they are centrally controlled. Let’s say a bitcoin exchange releases stock legally through a token. Other dominance indexes would likely include that in their index. If so, then why not include the whole stock market? ICOs or stocks that are tokens are not trying to be money, and therefore should not be measured in a dominance index with bitcoin… Bitcoin is competing as money and not as a stock or a token. Stable coins, while they are easier to transfer than normal fiat in a bank, are still just tokens backed by fiat. Coins that do not use proof of work can be pre-mined or are not actually scarce since no real work is required to produce them.

By Jordan’s analysis however, wouldn’t Ethereum have to be cut out of all consideration? After all, ETH came about through a token sale, yet today, it’s the second-largest cryptocurrency by market cap and the primary competitor to bitcoin.

Would This Exclude Ethereum?

Tuwiner says that his research paved the way to include Ethereum for several reasons, the main one being just how big it’s gotten. He mentions:

There’s likely hundreds if not thousands of coins on most dominance indexes that are artificially inflated… None of the coins used in the index are pre-mined, besides Ethereum. There was a debate whether to include Ethereum, but we ultimately left it in since it’s the second-biggest coin and is used by people as money. There is an option to turn it on or off because the crypto community is split on whether Ethereum can function as money.

Granted Ethereum was excluded from consideration, bitcoin’s market dominance would have ultimately shot up to more than 90 percent at the time of writing.

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