Bitcoin vs. Cryptocurrency

What is Cryptocurrency?

A cryptocurrency is a digital asset designed to function as a medium of exchange. “Crypto” refers to cryptography which are methods of creating protocols used to prevent third parties from reading private messages. With modern technology, these methods can be used for data confidentiality, data integrity, and authentication. More specifically, for cryptocurrencies, this allows for a decentralized, secure form of digital assets.

Photo by Bermix Studio on Unsplash

Methodology

The purpose of this study is to explore bitcoin’s dominance as the largest market cap cryptocurrency. In order to do this, bitcoins trading activity was compared against altcoin trading activity. The sample was taken from Kraken’s published historical data. They have published data on every trade from 2018 to October, 2020. The data initially comes like this:

Data Exploration

First, I broke the data down by months and then years to get an idea of what happened over time:

Note: Unlike the other graphs, trades are in 10'000s

Hypothesis Testing

Hypothesis testing the sample over time may include influence from variables specific to Kraken’s trading platform. Since the sample doesn’t include all tradeable coins on the market, testing the trade totals of the sample seemed like an ineffective study. Knowing this, the best data that can be extracted from the sample would be a relationship between order size and coin traded.

Conclusion

Though bitcoin has the highest market cap(more than double the next largest altcoin), and is the most well-known cryptocurrency around the world, it does not have the dominance I expected. There are times when altcoins seem to have more popularity and trade at higher volumes. Over time, all cryptocurrency trading seems to be growing rapidly.

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