Bitcoin has soared this week, rocketing above $ 11,000 for the first time since August last year and adding about 20% in just a few days.
Some smaller cryptocurrencies have made huge gains in recent months as bitcoin is treading water, eating into the dominance of bitcoin – a measure of bitcoin’s value relative to the broader cryptocurrency market.
However, some have suggested that bitcoin’s dominance should be measured against other cryptocurrencies that “try to be money,” putting bitcoin’s “real” dominance at almost 80%, up from just over 60% by measures others.
According to the new measure of bitcoin supremacy, bitcoin currently makes up 79% of the cryptocurrency market – up from the 62% bitcoin market share calculated by the specifically quoted crypto data website CoinMarketCap , which considers hundreds of cryptocurrencies that are all created. and publish it in different ways.
The Real Bitcoin Dominance Index, created by Buy Bitcoin Worldwide founder Jordan Tuwiner, calculates bitcoin’s market share among cryptocurrencies that are created, or “mined,” in a similar way to bitcoin.
The new bitcoin supremacy index also excludes all cryptocurrencies issued as a form of fundraising, known as initial coin offerings (ICOs), cryptocurrencies tied to traditional currencies, such as tether, and other central projects, by make a “better measure” of the cryptocurrency market, according to Tuwiner.
“The problem with ICOs is that they are centrally managed. Let’s say a bitcoin exchange legally releases stock by ticket. Other dominance indexes would likely include that in their index. If so, then why not include the whole stock market? ICOs or stocks tokens don’t try to be money, and therefore should not be measured in a dominance index with bitcoin, “Tuwiner said via email.
“Bitcoin competes as cash and not as a stock or token. Although they are easier to transfer than a normal bank fiat, Stacocoins is still just fiat-backed tokens. Non-mining can be pre-mined use proof of work., or not really rare because they don’t need any real work to produce. “
The Bitcoin Real Dominance Index is made up of 12 bitcoin competitors, including litecoin, sometimes referred to as “the currency to bitcoin gold,” bitcoin offshoots bitcoin cash and bitcoin SV, monero cryptocurrency focused on privacy, and token a “joke” based on feme. dogecoin.
“Most artificially inflated dominance indices are probably hundreds if not thousands of coins,” Tuwiner said, pointing to “central ICOs” that can “pre-mine coins and create high artificial market caps. “
“None of the coins used in the index are pre-mined, apart from ethereum,” Tuwiner said.
“There was a debate about whether or not to include ethereum, but we left it eventually as it is the second largest coin and is used by people as a currency. There is an option to turn on or off because the crypto community is divided on whether ethereum can function as a currency. “
If ethereum, which currently has a total value of $ 37 billion compared to $ 204 billion bitcoin, is excluded from the index bitcoin’s dominance increases to 92%.
Tuwiner feels that the dominance measures involving all types of cryptocurrencies can create confusion about how other cryptocurrencies are related to bitcoin, saying: “I think it would be good for other websites to offer both metrics. One without ICOs or fixedcoins – and one with the whole ‘crypto’ market capitalization. “
Others have expressed concerns that any measure of bitcoin supremacy using cryptocurrency valuations may have problems.
“Generally there are many problems with using market capitalization to determine dominance,” Jameson Lopp, cofounder and chief technology officer of Casa’s bitcoin storage service, said by email, though he added, “the arguments made by the Dominance Real Bitcoin Index makes sense to me. “
“Superstition generally appears as a vanity metric and different websites use different algorithms to calculate it. Trying to argue about which assets should qualify as money tends to devolve into subjectivity.
“I think that if you are going to measure ‘dominance’ then it should be in the context of all types of competing currencies, not just crypto projects.”