Like traditional companies, competitive advantages exist within variations of cryptocurrencies as well. The many factors that make a company like Apple successful also apply to what makes Bitcoin more popular over other stores of value coins such as Litecoin. Some key vectors where they are able to create a competitive advantage:

Brand Equity

Branding affects cryptocurrencies just like they do traditional companies. It can be argued it is even more important in valuing the edge a cryptocurrency has against the other cryptocurrencies since so much of its value is speculative. The branding of a cryptocurrency includes the reputation of the creators and the teams behind its construction, expansion, and governance.

• How well thought through are the upgrades and forks?
• How long have the founders and developer team been in the space?
• How well known is this coin?
• How marketable is its name?

Branding creates the emotion or image individuals conjures up in their mind when they think of the currency.

Case studies

• Bitcoin — perceived as digital gold, carries the reputation as the first cryptocurrency and founder of the crypto space. Its anonymous founder Satoshi Nakamoto who has unclaimed his one million bitcoins further boosts Bitcoins branding of legitimacy.
• Ethereum — perceived as the silver to bitcoins gold for many investors and to those more involved in the space, the first to use a smart contract system. It also has a charismatic (in its own way) and benevolent founder in Vitalik Buterin.
• Cardano — First proof of stake coin, charismatic leader in Charles Hoskinson emphasis on extensive research before development.
• Dogecoin — a currency created as a joke, however, marketed to the extremity.

Network effect

The most important competitive advantage that would guarantee the long-term success of a cryptocurrency would be its active user's network. Cryptocurrencies are useful only when they have many users on the platform, as only then are decentralised applications such as marketplaces and games feasible (To value this, Metcalfe’s law is used). Network effects take a long time to establish properly and favour the first mover disproportionately.

An example of a cryptocurrency benefiting greatly from this competitive advantage is Ethereum. Ethereum isn’t the most widely used cryptocurrency for decentralised applications because it has the fastest transaction speeds, lowest transaction costs, or even the most decentralised (there are many cryptocurrencies who would best it in the first two factors and be equal Ethereum in decentralisation given enough users), it’s popular for developers due to the widespread adoption it already has with users.

However, networks are not forever and the advantage continues to exist only if the user finds the benefit of staying on the current platform such as establish applications and the lower learning curve is greater than the benefit provided by a newer platform.

Lindyness

Lindy, Lindyness, and the Lindy Effect have been trending words throughout the crypto twitter space, and for good reason. The idea of an asset’s Lindyness (Lindyness only applies to nonperishable things) can be summarised as “the longer something has been around, the longer it is expected to stay around.”

The longer a cryptocurrency (that is past a threshold of users) has survived in this competitive space is correlated to its security. A huge amount of financial value is at risk with cryptocurrency exploits so security is crucial to cryptocurrencies competitive edge. Bitcoin’s survival so far attests to this. The Lindyness of the asset also directly contributes to its brand equity. The survival time of a cryptocurrency also helps distinguish it from the hundreds of nascent cryptocurrencies emerging daily; drawing more users and developers from the crypto community.

Open Source Technology

Cryptocurrencies however have some fundamental differences to traditional companies and even specifically technology companies, one of which is the open-source nature of its technology leading to a very low barrier to entry. Open source welcomes anyone to contribute and drives the growth of the cryptocurrency directly instead of just the application layer whilst maintaining the transparency of the technology which validates it as a store of value since the properties of the coin are absolutely certain (no hidden code that introduces inflation, etc.).

However open source also renders no technological edge for the cryptocurrency over competitors. This leads to a trade-off where the successful cryptocurrencies will need to find a balance between protecting the product through closed source thereby giving teams a chance to drive adoption and establish network effects, and opening up the core code to everyone maintaining the ethos of cryptocurrency being trustless.

Dedicated Developers

Relying on just the community to develop the core protocol and the applications is insufficient. An edge in core developer quality exists where developers who are persistent and able to filter out the noise (scams), fast at adapting to new technology, and deliver consistently are as important as the wider community of developers. For example, developers who don’t know what the community wants and build nonuser-friendly applications can hinder network effects from forming.