Why is bitcoin number 1 by market cap? It's technology is arguably worse than other crypto coins.

Here's the definition of innovation

make changes in something established, especially by introducing new methods, ideas, or products. "the company's failure to diversify and innovate competitively" introduce (something new, especially a product). "we continue to innovate new products"

By definition, if something is popular, it has to be innovative, people don't just en masse jump on the bandwagon of stuff that's been done for years.

Innovation != useful

If your innovation isn't useful in the real world, it's not even really an innovation.

Popular innovation = useful innovation.

You build a combustion engine, it is impossible to mass produce, and only 3 people have them.

I take your engine and make one that is simpler and easier to mass manufacture and cheaper to produce. Yours might be better, more innovative, but mine is the only one that's actually useful to society.