XRP Price Prediction: Will XRP Break $0.35 Resistance? No Silver Lining in the Cloud Is Found
XRP Price Prediction: Will XRP Break $0.35 Resistance? No Silver Lining in the Cloud Is Found

Bitcoin Transactions Down, Does That Mean its Popularity is Also Shrinking?

  • Darryn Pollock
    ⭐ Features

    Bitcoin has seen a steady downturn in transactions and could have something to do with its popularity

Bitcoin Transactions Down, Does That Mean its Popularity is Also Shrinking?
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Since December, Bitcoin has seen a massive change in its value as its price slumped from a high of $20,000 getting as low as $6,800. The coin has recovered somewhat from that, but the number of transactions also came down with the price.

The average number of trades recorded daily has roughly dropped in half from those December highs. So, now in recovery, Bitcoin's Blockchain is less busy, which has its positives but is it endemic of a loss of popularity with the original cryptocurrency.

Price up, not transactions

The Bitcoin price is very volatile and if often subject to external factors like news and popular opinion. However, the trading volume, while linked to the price, usually moves in its own direction.

So, as Bitcoin’s price has recovered some 50 percent, there has not been that same recovery in the transactions. This could mean that the popularity of Bitcoin is down as other cryptocurrencies start to stake a claim in the overall market cap.

Bitcoin’s dominance of the market cap also slumped at the low in early February, getting down towards 30 percent. It now sits at around 40 percent having been at 60 and above as a medium.

Transactions plunged from a seven-day average of almost 400,000 in mid-December to about 200,000 this week, according to research firm Blockchain.info. The last time it was this low, the currency traded below $500.

Other options on the menu

Bitcoin has almost always been every new crypto user's first coin, but, once in the market, many are finding that there are a number of coins in which they can invest and use. There has been a rise in new users to cryptocurrency, mostly entering with Bitcoin, but they are maturing and exploring.

People once in the crypto market will come to realize that there are a number of other coins which are as stable and trustworthy as Bitcoin and can offer different alternatives. This often sees a two-way swing.

Bitcoin is sold for other currencies which not only takes away from Bitcoin transaction and dominance, it adds to the altcoins.

Makes things look good

The flip side to this is of course that the major issue that was dogging Bitcoin at its high was the price of transactions and the time they were taking to complete. Now, however, there is half the volume which means the scaling issue has subsided.

This ties in with the implementation of SegWit growing, helping that upgrade seem like a major success.

It will however all mean nothing if this loss of interest in Bitcoin continues though. There might not be another dominant coin really pushing to take over as the most widely known and accepted coin, but a real threat could break the original.

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Question of the Day: Can Stablecoins Accelerate Cryptocurrency Adoption?

  • Yuri Molchan
    ⭐ Features

    Stablecoins show hardly any volatility compared to Bitcoin and altcoins, many are hoping that they will be able to bridge new crypto economy and regular fiat money

Question of the Day: Can Stablecoins Accelerate Cryptocurrency Adoption?
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Bitcoin, the father cryptocurrency, emerged in hope that it will remove all intermediaries in electronic commerce that cut off their share of payments. BTC was perceived as a P2P way to replace fiat cash in an electronic format, which would enable one party to pay another without any financial institution or payment platform which would demand its share of a transaction as a reward for its services.

What is wrong with Bitcoin

For quite a while Bitcoin was performing the way the crypto community expected. But the situation changed later – BTC rate became weaker, thus bringing down its financial and economic reliability, when it gets to be used as a regular means of payment.

You cannot have a currency that would cost like a British castle today, a gram of gold – tomorrow and a pack of French fries the day after.

At that point practical fintech minds came up with an idea of creating something which would become a breakthrough in the universe of crypto – a so-called stablecoin.

Will stablecoins solve the volatility problem?

Technically, stablecoins are protected from the volatility roller-coaster that Bitcoin and other cryptos love to ride. They are programmed to keep their prices stable and investors now are largely attracted to this new type of digital assets.

Stablecoin does not show any volatility in its monetary value, since it has a fixed connection to an asset it is pegged to. The major goal of using stablecoins is taking the best from decentralized crypto coins and combining it with a constant value. Thanks to it, stablecoins can be used as a reliable means of trade.

Asset-pegged stablecoins

Asset-backed ones get their value from an asset as can be understood from the name. An asset provides the necessary value to a coin, as well as the necessary legitimacy.

A great example of an asset-pegged stablecoin is Tether (USDT). In spite of a series of scandals at the end of last year, it remains the most popular stablecoin in the crypto market.

Recently, it has partnered with the Tron Foundation to launch a Tron-based stablecoin.

Other examples are TrueUSD (TUSD), USD Coin (USDC), the Gemini Dollar (GUSD), and the Paxos Standard (PAX). They are all pegged to the USD.

Crypto-backed stablecoins

Some digital coins work in a similar way to fiat-backed ones, however, they are pegged to collateral crypto. That means that crypto assets that ensure the value of such stablecoins are stored in a wallet similar to escrow.

A good example of a crypto-pegged token is Maker, which is ranked 16 on CMC.

Algorithmic stablecoins

Even though, stablecoin can be interesting at first thought but the way they are built goes against the principle of decentralization that crypto coins have as a foundation. Thus, many crypto fans and evangelists are positive that stablecoins must be linked towards not a centralized asset but a computer algorithm which takes value from a balance between supply and demand.

Basis is now considered the most promising algorithmic stablecoin of all.

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Can stablecoin ensure smooth future for the crypto industry?

The primary goal of all crypto assets was and remains to come up with virtual asset that would be liquid enough and not vulnerable to market volatility. From this point of view, stablecoins are a dream of all crypto fans and evangelists of a decentralized economy.

Apart from the potential to conduct crypto transactions smoothly, experts believe it can bridge the two worlds – fiat and crypto, bringing them a mutually beneficial coexistence. However, that may take time.

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