The trouble with the Bitcoin market, indeed any online market, is that rivals can set up a clone or competitor with relative ease. For the cryptocurrency industry, this creates both risks and opportunities.
Negative impact of Bitcoin alternatives
The growing number of smaller players may create alternatives, but they dilute the value of the overall market. Also, since these companies or products have fewer resources, they are more likely to lack the security of an established product or can be open to manipulation or fraud, creating the risk of damaging bad press that can impact the whole market.
Positive impact of Bitcoin alternatives
On the positive side, with growing interest in cryptocurrencies, there is a huge opportunity for investors, especially those making a small early-stage investment that could grow dramatically if the currency becomes popular. That may happen through natural growth, or an investment, partnership or acquisition by a major technology or banking player that would assure the currency’s legitimacy and value for the future.
Is blockchain the secret to mainstream success?
While Bitcoin will remain the poster-child for cryptocurrencies for some time to come, other cryptocurrencies such as Ethereum and Litecoin will play a growing role in helping to shape the future of the market.
The real power driving these and other currencies is the blockchain technology that creates the rules and transactions for each currency. Blockchain will have massive implications for all businesses in just a few years.
Blockchain smart contracts and payments could replace current ways of doing business. It can help create flexible contract practices and bring an end to the 30-day payment wait for old-style invoices. Finance markets will rely on blockchains to speed up multi-party transactions and to create value, even if they use existing currencies or their own cryptocurrencies as the transaction element.
Whatever the changes, blockchain and the attached currencies will increase in value as real-world proofs of concept become hard-and-fast business practices. Monitoring the progress and focusing on the players that win market deals with major players is one way to hedge your bets. However, for such a young market, there is still plenty of opportunities for a new player to steal a march on rivals, particularly one developed by a startup linked to the banking sector that will help garner trust and support. Keep watching the news and be ready to invest if such a player emerges.