On every prolonged Bitcoin bear or bull the same set of questions flood the internet: is BTC dead? is BTC the future? Will BTC replace the banks? Is BTC a bubble?
This already happened on the bitcoin rush of 2017, and will likely keep happening for a while.
I’m in no way a cryptocurrency expert, but I’m a serious enthusiast and I’ve been following bitcoin and another crypto since almost the beginning.
For a couple of years, I’ve seen a persistent trend of people discussing crypto as if BTC was the final stage of it all. From my perspective, this is blatantly wrong and I’ll explain to you why.
The famous white paper “Bitcoin: A Peer-to-Peer Electronic Cash System” by Satoshi Nakamoto in 2008, set in motion an unexpected and unprecedented global phenomenon. It created the first successful digital currency and, the first decentralized and distributed “banking” infrastructure of the world through the blockchain technology also described in the original paper.
In the beginning, Bitcoin was taken as a joke by most people and as a wild cipher-punk dream by others. All the technical and economic concepts were already there working as intended, but as 2009-2010, there was a lack of a real-world application for this new cryptocurrency.
This changed when the black-market “Silk Road” appeared on the mainstream circa 2011-2012. This website introduced two of the hottest trends (The TOR Network and Bitcoin) and mix them to achieve the “perfect” infrastructure for an illicit online marketplace.
After this event, it was proved in vivo that bitcoin worked and it was not a crazy side project of a bored crypto-anarchist. This came with a cost too, the mainstream media immediately associated Bitcoin with Crime and Illegal stuff. This biased view persists in the minds of some journalists, politicians, and businessmen.
When the Silk Road scandal popped this was probably true for the most part. This illegal marketplace was the most prominent use of cryptocurrencies at that time, but only a couple of years after this became only a cliche. In the present day, the vast majority of bitcoin transactions are originated from legitimate sources.
Now Bitcoin is more mainstream than ever, and it’s still the undisputed king of cryptocurrencies with a market cap of $732.18B. So it’s very tempting to get blinded by the stats and believe the whole future of crypto depends on the fate of bitcoin, but from my point of view, this is incorrect. Bitcoin already fulfilled most of its original objectives and technologically is showing signs of being dated.
What Bitcoin achieved:
- Proving that a decentralized network with no third-party authorities for digital currencies is not only viable but profitable and sustainable.
- Breaking the psychological barrier between physical and digital money.
- Implementing a censorship-resistance payment network for countries and regions with authoritarian governments and/or extremely volatile FIAT currencies through decentralization and pseudo-anonymity.
- Introducing the blockchain technology to not only financial system but also very unexpected applications like medicine or supply-chain management.
- Being viable as a store of value, in spite of the claims of extreme volatility and no “real” value in Bitcoin.
What Bitcoin didn’t achieve:
- Replacing traditional digital payment systems.
- The transaction cost is absurdly expensive for little transactions and even mid-sized ones when fees are high.
- The transactions are slow. The standard 3-confirmation can fluctuate in values from 1 or 2 minutes to even 15 or 20 minutes.
- Bitcoin as is, is not scalable to global payment system. Is still even way worse than traditional credit card infrastructure like VISA who has technology in place from the 80’s. Bitcoin is more expensive and slower and not as remotely scalable as credit cards.
- Bitcoin process 4.6 transactions per second, which is a laughable number compared to the more than 1700 than visa handles every second. This is not even a serious competition.
- Being truly anonymous and privacy-friendly. It’s true that no bitcoin wallet is directly associated to any individual, but every transaction of every wallet is public and easily traceable. So with enough time you can establish relationships with transactions to a single person or internet user using things like operations with known wallets of public exchanges and the timestamps of every transaction.
- This was used a lot of times in the past to track individuals and it was famously used to determined that a dirty cop stole bitcoins from Lars Ulbricht in the bust of Silk Road.
- Being a sustainable financial infrastructure.
So? What’s the big deal?
We need to remember we are only in the infancy of crypto. Bitcoin was only the first one and most likely not the last one that will last. It will probably remain relevant for a long time, but we need to start thinking about removing the anxiety that surrounds bitcoin price and market cap. At this point, it doesn’t even matter if bitcoin fails miserably and goes to 0$.
Would it be painless? It surely won’t. We have already seen a lot of people going broke in the latest crash, for holding way too leveraged positions. If bitcoin is indeed a bubble and it drops to an absurd value like 10$ or 20$ the crisis would be very severe and will surely last for at least a couple of years.
But, the changes Bitcoin set in motion ten years ago are not going anywhere. Concepts like the blockchain are the real game-changers here, and these concepts will thrive even if the original bitcoin disappeared.
The innovation is going fast, other cryptos/platforms like Chainlink, Cardano, or Ethereum are tackling one or more of the issues Bitcoin has with incredible success. We are in a much better position now. We don’t have a single chokepoint, like 6 or 7 years ago, where if Bitcoin failed the whole ecosystem went to the garbage.
Anyway, I personally don’t expect bitcoin to fail miserably any time soon, but this scenario should make us realize we should focus on the health of the crypto ecosystem as a whole, instead of panicking when bitcoin goes down 20% or goes up 30%.
This behavior will make the crypto landscape more stable and less stagnant, improving the innovation without the need to carry the baggage of the old man of cryptos.
What do you think? Will BTC still be needed to have a successful crypto market? Or is it just the tree that doesn’t let us see the forest? Let me know in the comments.
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