Store of Value Alternatives
Bitcoin is the top store of value currency, but who else is coming for the top spot?
In my prior post on Bitcoin there was an in-depth discussion of why the market has accepted $BTC as a potential store of value. Investors having accumulated positions in $BTC because of its relatively high liquidity and price transparency. Bitcoin also is seeing the beginnings of the payment rails that allow it to be used to purchase for goods and services, another key component for something to be considered a store of value. Today you can get a debit card tied to an account holding $BTC via BitPay, and you can send $BTC to a friend instantly over the Lightning Network. You can also work with a vendor called Strike to have a portion of your paycheck converted into $BTC.
So what other cryptocurrencies have a shot at matching Bitcoin’s scale and usability? In my prior post on the Crypto Alphabet Soup I highlighted a few. The biggest of the competitors today is Dogecoin. $DOGE was created in 2013 as a joke by Billy Markus and Jackson Palmer. They used a popular Meme of a Shibu Inu dog as the inspiration for the coin. Markus has since said “we wanted to make a community that was more fun, lighthearted and inclusive”. $DOGE was made to be faster than $BTC and easier to process transactions.
Unlike Bitcoin with its fixed number of coins, Dogecoin was created with a massive 100 billion token supply. To make things even worse, an additional 5 billion tokens are added to the supply every year. $DOGE initially started trading at the very low price of only $0.00026. The price rose over the years as Reddit forums and other social media groups have latched onto the currency.
The big moves started for $DOGE when Elon Musk started Tweeting about it in December 2020. At that time, the coin traded for around $0.004. Within a month the price had rises 10x to $0.05. Mark Cuban also spoke highly of Dogecoin as a fun currency. In March 2021, the Cuban’s Mavericks team announced they would accept Dogecoin as payment for tickets and merchandise. $DOGE 10x’ed again as Elon’s Saturday Night Live appearance neared in May 2021, topping out at an all time high of $0.64. The euphoria faded quickly, and the price of $DOGE has settled in today closer to $0.17, with a market cap around $23 Billion. Where does $DOGE go from here? Does it die out when the celebrity fuel burns out or does it develop more of the institutional support like $BTC? We’ll have to watch together to see.
Another currency to watch in the store of value race is the fast-growing Shiba Inu $SHIB. This one was created in August 2020 as a potential “Dogecoin killer”. The coin was launched by an anonymous creator called Ryoshi, similar to Bitcoin. It was set up with a massive supply of 1 quadrillion (equal to 1,000 trillion). Half of the supply was put into circulation at launch, and the other half was gifted to the Ethereum creator Vitalik Buterin. Vitalik had nothing to do with the project, this was done to bring publicity and street cred to the coin. In May 2021, Vitalik donated 20% of his gifted coins to a COVID-19 relief fund in India (at the time worth over $1 Billion) and he destroyed the remaining 80%. All of this activity brought a lot of publicity to the $SHIB, and the price rose fast. It currently trades at $0.00003 and sports an impressive $17 Billion market cap.
At this stage, $BTC has a massive lead as the main crypto store of value. Does that guarantee success long term for the currency? Not necessarily, but it will take something at least 10x better to dethrone the current champion. Maybe that could mean better for the environment (possible), more secure (going to be harder), or better aligned with the global financial system (maybe). We’ll wrap this discussion here and look to next dig into the many Ethereum competitors.
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