Bitcoin (CRYPTO:BTC) has taken up most of the conversation in cryptocurrency for more than a decade, and it's the biggest cryptocurrency by market cap today by a wide margin. But smaller coins like Solana (CRYPTO:SOL) are starting to eat into that lead, and Solana's 10,970% gain in 2021 far exceeded Bitcoin's 57.6% rise.
However, the competition between Bitcoin and Solana isn't exactly for the same space in the crypto economy. Bitcoin is increasingly being thought of as digital gold or an inflation hedge. Solana is a cryptocurrency built for low-cost, high-speed transactions, making it more of a utility coin. And these differences are why I think Solana will outperform Bitcoin again in 2022.
Image source: Getty Images.A shift is already happening
We can get some clues into where crypto traders' money is flowing from Coinbase's (NASDAQ:COIN) trading volume statistics. Bitcoin accounted for 32% of total trading volume in the third quarter of 2020 but that fell to just 19% by Q3 2021. Ethereum (CRYPTO:ETH) gained 4 percentage points of market share, moving from 18% to 22%, but other cryptocurrencies jumped from 50% of trading volume to 59% over the last year -- among them, Solana.
A similar story is forming with developers. It's hard to define developer activity in the fast-moving crypto world, but it's safe to say that Solana's developer community is booming while Bitcoin's is stagnant. In just the last two months, Solana Ventures, the venture capital arm of Solana, has announced $250 million in venture capital funds to build out games. This is on top of NFT marketplaces and finance projects, which are already hitting the market.
Here's another indication of Solana's growth. Phantom, which is a popular wallet on Solana that holds crypto, tokens, and NFTs, recently tweeted that it has grown to 1.8 million monthly active users.1/4 — 2021 has been an incredible year for Phant...