Adoption is an important part of the value of a cryptocurrency. Even if a coin isn’t technically the best, if it has widespread adoption, it will be more valuable than a technically better, but less widely used coin.
Put another way, there is a large network effect with money.
The network effect is powerful, but that does not mean that Bitcoin and Ethereum are bound to win.
The Language Analogy
Language has a similarly powerful network effect. The more people in a location that speak a language the more valuable it is to know the language, so there is a convergence on a common language over time.
If you create a technically “better” language and introduce it to the world, you will almost certainly get nowhere because there is no value to speaking a language unless others understand it. And with a language, it is very difficult to learn enough to speak and understand. There is a high switching cost.
Money has a similar network effect to language, but cryptocurrency does and will continue to have a drastically lower switching cost, making it easier for competitors to overcome the network effect.
A good way to understand this is to think about areas where multiple languages are widely understood, like areas of Canada with fusions of French and English or in the U.S. where people mix Spanish and English expressions to communicate with more specific meaning.
If you go to Harlem today, you will hear English being spoken all around you, but many people their know how to speak Spanish. If English changes so that it becomes slow and imprecise, you will find very quickly that Spanish would become the dominant language.
The thing that is unique about crypto is that a new “language” can appear out of nowhere that is better in many ways and people can learn to “speak” it very quickly at low cost.
Being a cryptocurrency user is like living in a neighborhood where everyone speaks and understands 50 languages and can learn a new language in a day. People will tend to use the same language and use specific phrases when they did a better job than the common language, but if any language becomes drastically better, it will quickly overtake the common language.
People will see the benefits and the low costs and not think twice about using the new language. They may not even notice for a long time that the former common language is no longer the most used language. So the most used cryptocurrency is likely to remain on top, but it holds a uniquely precarious position compared to language and other protocols that we are used to dealing with.
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