Although for many people in the crypto currency world now Bitcoin has no longer secrets, it is a duty to investigate the “King” of cryptocurrencies and see why it is still the backbone of the whole market.
For part 1 go here.
Why is Bitcoin so important?
Why the king of cryptos is so important for the rest of the crypto to influence in an obvious way the trend?
The answers are essentially two:
- In most of the cases, to buy other existing crypto currencies we need to trade them with Bitcoin. Consequently, the volumes and the trend of Bitcoin give us an idea of the general confidence at a given moment on the crypto market.
- To have an immediate feedback on the portfolio value, in the exchange websites crypto currency are considered in Satoshi, although many – especially those who just entered this world – think in terms of conversion to dollars. So, even if the altcoin does not lose percentage points and change its intrinsic value, the fall of Bitcoin quotation causes a decrease in the altcoin value. To understand this concept, let’s say we have a good that is worth $3. After a month our item is always worth $3 but in the meantime the dollar has fallen against other currencies. At first look, the value seems unchanged but, the actual $3 dollars are worth less than the $3 of when we bought the item. In other terms it has less spending power.
For these reasons, Bitcoin still represents a fundamental part for the whole market.