The altcoin mania of 2017
Back in 2017 when I first took a serious look at the cryptocurrency world, Bitcoin had a problem. Transaction fees were high (up to $50), transactions were slow, there was a lot of negative press about its environmental impact. Moreover, Ethereum, the second cryptocurrency of the world was coming close to Bitcoin in terms of market dominance, which people referred to as "the flippening" (ETH becoming the number one cryptocurrency in terms of market capitalization). Things did not look so good for Bitcoin. The sentiment was that it is old, slow, costly and dirty - a big number of alternative cryptocurrency (altcoin) communities were spreading this kind of negativity.
Of course, it was partly true. You could feel the relief, in form of much faster transactions and almost no fees, when moving away from Bitcoin. I myself used Litecoin back then, mainly because it offered much lower fees, especially when moving funds out of exchange (Note: this is also true today, fees for cashing out of an exchange are still very costly in bitcoin - exchanges don't like losing capital).
The promise of altcoins
Some altcoins are direct copies of Bitcoin. Litecoin is a good example - it does pretty much what Bitcoin does, but it is (was?) more eager to introduce changes into its own protocol, hence acting as a testing ground for innovation.
Other altcoins promised to be special in some ways. Ethereum allows you to write sophisticated smart contract code for apps run directly on the blockchain. Many others resemble Ethereum, the so-called "Ethereum killers".
But there is also a group of altcoins which describe themselves as being revolutionary in one form or another. Nano's community was very vocal back then about how much more transactions per second than Bitcoin can their network handle. IOTA promised their coin will be used by Internet of things devices when they communicate with one another. There were more, way too many to remember them all.
There is no silver bullet
In reality, Bitcoin is the closest thing to a perfect blockchain we have - any change made to it would come at a cost. Of course it's still possible to improve Bitcoin, but these changes are incremental steps. Altcoins which claim to have made whole jumps either lie, or have sacrificed some other aspects to achieve it.
This is known as the blockchain trilemma. There are three aspects of the blockchain that need to be balanced - scalability, security and decentralization. It's easy to increase scalability of Bitcoin by making the blocks bigger, but that hurts decentralization. If you wanted to make Bitcoin quantum-secure right now, that would likely hurt scalability.
Modern chess engines, when they play against each other, are able to reach a stalemate because a position can not be improved any more. Any major move would immediately give the opponent an upper hand, which would result in a lost match, so they just make the most insignificant move back and forth. This is pretty much what Bitcoin has achieved at its base - at the moment, there are no further ways to make an improvement.
There's a fourth aspect of Bitcoin that is often overlooked, yet it is absolutely crucial - backward compatibility. You need to be able to spend from your wallet no matter how many years have passed. The value of backward compatibility cannot be overestimated, not just in Bitcoin, but in general. As our technology grows older, this should become a common topic of discussion. Altcoins are bad at keeping backward compatibility. There were multiple instances of altcoins re-launching because they wanted to break it. In blockchain world, breaking backcompat means a hard fork, which is often a death sentence for a project, or at the very least reduces its credibility (unless they had a damn good reason to do it).
Scams, NFTs and Ethereum
Unable to beat Bitcoin at its own game, altcoins have started coming up with random ideas to justify their existence. From get-rich-quick schemes that turned out to be obvious scams (later renamed to "rug pulls") to ugly ape images that were selling for hundreds of thousands of dollars. I got to say I'm a bit ignorant about the whole Web3 thing, but if this is the best they got to offer, they need to do better.
The last token which still seems to more or less keep up with Bitcoin price-wise, Ethereum, has become a vehicle for all this shady business. Most of the altcoins are actually just tokens - only existing as an Ethereum smart contract. The NFT mania got so bad that they even started infecting Bitcoin itself, by abusing Taproot rules and putting their ape images as an ugly blockchain graffiti. Thankfully this now seems to be mostly a thing of the past.
Bitcoin has already won
It is becoming clear as day that Bitcoin has won and altcoins have lost. The blockchain is not the revolutionary technology everyone thought it is, Bitcoin is. The only valid purpose the blockchain ever had was to power the Bitcoin network. Any other blockchain will inevitably fail because they fail to realize that Bitcoin network's success can't be replicated. You can't invent something twice.
Proof of work played a major role in Bitcoin winning. Despite repeated attacks against it, it proved itself to be the most secure and not as bad as everyone thought. It is a known fact that miners seek special places for their operations, places where the energy is either going to waste or where it is available, but no infrastructure exist to put it to any use. So having Bitcoin as their only incentive, they went out of their way to stabilize green energy sources like hydro power plants, capture energy from gas flares or bring electricity to remote locations which the power grid was not reaching.
Moreover, proof of work is the only way to protect the past from the dangers of the present. Since blockchains work based on the "longest chain" rule, you can be sure that the transaction history is secured by all the power that was used to generate the longest chain. Alternatives like proof of stake could allow for rewriting of the past blocks if enough network "weight" was in the hands of malicious actors. In Bitcoin, it is nearly impossible to perform the 51% attack for the new blocks - rewriting the past would require unimaginable resources.
Proof of work altcoins
There are still some altcoins which depend on mining to secure their blockchains. They have two things in common - none of them use the same algorithm as Bitcoin (if they hope to stay relatively secure), and still none of them is as secure as Bitcoin.
Using the same SHA256 algorithm for mining would make the chain immediately vulnerable to be attacked with the small fraction of power of the Bitcoin network. One Bitcoin miner would probably be enough to perform a 51%, since all other miners are busy securing Bitcoin, not the other chains.
Even with chains that use GPU or CPU based mining, their network power is tiny compared to Bitcoin. It makes them a much more realistic target for a 51% attack.
In fact, some altcoins were successfully attacked by a 51% in the past, but never Bitcoin itself.
Will Bitcoin scale?
The Bitcoin scaling problem of 2017 is now mostly fixed. It was fixed by moving a lot of the traffic away from the blockchain, into L2s like the Lightning Network, or in closed systems like ETFs. Fees are low and some blocks are mined half-empty. Taproot is slightly more efficient for small transactions, and much more efficient for complex scripts. Cost of a small taproot transaction seems to be around $0.15 right now.
I think in the future it may be required to increase the block size, but we are far from such need. As for now, the system seems to scale just fine.
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Published on 2025-06-15