Bitcoin is booming, but other crypto currencies claiming more of the market
As Bitcoin hovers around the $79,000 (US$57,000) mark, the cryptocurrency's share of the market's value has dropped below 50% for the first time as rival currencies gain traction.
Bitcoin accounts for 46% of the entire cryptocurrency market's value, which last month was put at more than US$2 trillion thanks largely to the surging price of Bitcoin, which has more than doubled this year alone.
But its distant second rival Ether, part of the Ethereum blockchain platform, has also seen its value surge this year from US$730 to US$3,294. It now accounts for around 15% of the total market, worth around US$370 billion.
The top five cryptocurrencies by market cap, according to crypto tracer CoinGecko are now Bitcoin (US$1.06 trillion), Ethereum (US$381 billion), Binance Coin (US$103 billion), XRP (US$71 billion) and Dogecoin (US$56.2 billion).
Ether's growth has been put down to the digital token's popularity for use in financial services. Ether is also the choice of token in the market for non-fungible tokens (NFTs) which have fueled a wave of buying in the collectables market, including for artworks and baseball trading cards.
Across the board, cryptocurrencies have gained in value this year as institutional investors embrace crypto and take significant holdings in Bitcoin and various other coins. Dogecoin, started as a joke by two engineers in 2013, now has a market capitalisation of US$50 billion, its value surging 15,000% this year thanks to some enthusiastic social media endorsement from Tesla founder Elon Musk.
Ethereum's big run
Whether any of these "altcoins" have market staying power beyond Bitcoin and Ether is anyone's guess, though the gradual mainstreaming of Bitcoin, which has been embraced by payment platforms PayPal and Square, is rubbing off on cryptocurrencies across the board.
Less discussed is the real-world impact of producing cryptocurrency, which relies on miners undertaking complex mathematical equations using high-powered computers to process transactions and unlock new blocks on the blockchain, for which they are rewarded with some coins.
Governments are increasingly alarmed at the carbon footprint of the computer farms devoted to mining cryptocurrency, Bitcoin in particular, and the escalating value is only increasing competition in the mining industry.
This week, a new cryptocurrency called Chia started trading that dispenses with the usual 'proof of work' crypto mining model. Chia was created by BitTorrent founder Bram Cohen. Instead, it relies on 'proofs of space and time'. So-called "farmers" put the Chia software on storage drives, which generates cryptographic numbers in plots. Creating these plots is rewarded with blocks on the blockchain, which is based on the total space a farmer has compared to the entire Chia network.
The mining is eliminated, but the system is already seeing a surge in demand for high-capacity hard drives and solid-state drives as early adopters look to create plots. Chia faces an uphill battle against its more established rivals but has benefitted from high-level support from investment firms and mining companies nervous about regulatory intervention to halt Bitcoin mining operations and seeking greener alternatives.
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