One of the most pressing issues of Bitcoin’s network is perhaps its enormous use of energy. Bitcoin maximalists will point to its energy use as being the same feature that makes it secure to begin with, and that the solution to the issue is to in fact “use more energy.” However, I feel that this perspective is misguided. Regulators have started pushing a 30% crypto mining tax, with a heavy emphasis on taxing its energy use.
I believe that governments around the world will become progressively less friendly toward cryptocurrency mining, and in the future coins that utilize the proof-of-stake (PoS) and ASIC-resistant consensus mechanisms will come out on top.
So here are three cryptocurrencies that could dethrone Bitcoin.
Ethereum (ETH-USD)
In my opinion, Ethereum (ETH-USD) has the best chance to dethrone Bitcoin as the world’s leading cryptocurrency. In the crypto word, this has long been speculated as being possible, known as “The Flippening“.
ETH cannot be mined and instead uses PoS to validate market transactions. ETH can also be staked as an incentive for users to hold the cryptocurrency long-term, which can result in attractive annual percentage yield returns relative to other investments such as dividend stocks.
2023 was a foundational year for Ethereum, marked by the Shanghai upgrade and the network’s full transition to PoS. The move to PoS not only made Ethereum more energy-efficient but also introduced deflationary mechanisms through ETH burning.
Ethereum’s total value locked (TVL) witnessed growth from $21 billion in October to $32 billion, signaling rising demand for its blockchain. Institutional adoption and the expansion of Layer-2 networks are pivotal for Ethereum’s 2024 outlook.
As Web3 kicks up, I think that ETH could surge in value, and potentially one day take Bitcoin’s crown, especially if pressure on miners steps up by governments worldwide.
Solana (SOL-USD)
I believe that Solana (SOL-USD) is in the process of making a huge rebound and could one day take Bitcoin’s crown as the number one cryptocurrency.
The FTX saga unfairly tainted SOL. Thankfully the court case is slowly drawing to its conclusion. FTX going bust hit SOL’s valuation hard because it is a speculative asset. Yet Sam Bankman-Fried has continued to support the project, even going as far as suggesting that his prison guards invest in the coin, as reported by CoinTelegraph.
SOL is a PoS token and has 3,300 active developers on Solana, contributing to an average of 40.7 million daily user transactions and 450,000 daily unique fee payers in December 2023. This growth represents a 10x increase in developer activity from 2020 to 2023, making Solana the top non-Ethereum Virtual Machine (EVM) chain for new developers €‹.
Should Solana meet certain short-term technical conditions, some analysts predict it could enter a price range of $300-$400. But looking ahead, as one of the top-rated blockchains for developers to build on, I think that it has the potential to usurp legacy coins like Bitcoin in the number one spot.
Polkadot (DOT-USD)
Polkadot (DOT-USD) enables interoperability among blockchains. I also believe that it’s one of those understated cryptos that could make a move on Bitcoin.
The coin concluded 2023 with significant advancements in scalability, leading to a surge in transactions and setting the stage for further adoption and growth in 2024. The introduction of features like trustless bridges, asynchronous backing and on-demand parachains alongside improvements such as OpenGov and XCM has enhanced the network’s infrastructure.
Coins like DOT will be in a prime position to enter the number one spot as altcoins such as Ethereum and Solana rise in use and adoption. DOT’s robust ecosystem of developers makes primed to challenge Bitcoin.
Moreover, the official release of Polkadot 1.0 and the development of asynchronous backing have been crucial milestones. Asynchronous backing, in particular, is a significant step towards scaling Polkadot’s performance and flexibility for Web3 applications.
DOT has all the makings of a coin that could take Bitcoin’s throne, and is one of those cryptos that investors should watch closely.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.