What is the difference between Bitcoin and other virtual currencies (often called "altcoins")? The answer is that they differ in many ways, including their "decentralization," "centralization," the transaction authentication methods they use, and "market dominance."
First, about "decentralization." Bitcoin is the first virtual currency with a "fully decentralized network" in which transaction records are stored by a large number of computers, and there is no central organization that manages the Bitcoin network.
On the other hand, it is said that many other virtual currencies are not as decentralized as Bitcoin. This is because a few developers and organizations have centralized control over the operation of the network. There are also virtual currencies that claim to be "decentralized," but in reality, a few developers and organizations often have a large influence over them, and it is difficult to have true decentralization like Bitcoin.
Next, let's talk about how transactions are authenticated. Bitcoin uses a method called "Proof of Work (PoW)," in which miners generate new blocks by solving problems that require an enormous amount of calculations. In contrast, many new virtual currencies use a method called "Proof of Stake (PoS)." This is a method in which you obtain the right to generate new blocks based on the amount of virtual currency you hold and the length of time you have held it. However, PoS can encourage the concentration of wealth, so in that sense it can be said that PoW is a fairer system. (For more information, see " What are PoW and PoS? ")
Finally, let's talk about "market dominance." Bitcoin is the virtual currency with the largest market capitalization, and its market value is said to account for nearly half of all virtual currencies (as of July 2023). This is proof that Bitcoin is recognized and trusted by people all over the world, and it is difficult for any other virtual currency to catch up with Bitcoin's dominance.
The fact that Bitcoin has a high dominance is itself a reason for more people to choose Bitcoin, because generally speaking, the more widely circulated and accepted a currency is, the more secure it is to hold and the more liquid it is. This is the same for the US dollar, the euro, or the Japanese yen, as widely circulated currencies are perceived as more stable and reliable.
In this way, the widespread circulation of Bitcoin and its acceptance by many people creates an incentive for even more people to use Bitcoin, resulting in a trend toward increasing Bitcoin dominance.