Why I stick with Bitcoin

I suspect most of us know the time will eventually come when we have to move on and start disrupting Bitcoin, just like we are disrupting the inefficient traditional systems now.

Some of us sticks with Bitcoin, because they gave up on micro transactions, caffè with Bitcoin, land recording, autonomous organizations and other exotic ideas with Bitcoin. I did not gave up on them. They are obviously not going to happen on The Blockchain, well, because of math, but they can definitely happen with the unit of value, called Bitcoin.

Some of us think the time has already came and they moved on to work on altcoins or blockchains, whatever the latter means. Here I will argue we are not quite there.

Altcoins are so 2013

Back then I was there. “Bitcoin is the biggest, Bitcoin is the first, but that doesn’t make it the best, so why should I stick with Bitcoin?” The network effect was and still is a great argument: Bitcoin has the most developers and in my opinion also the best, too. However this still wasn’t convincing enough for me. An Apollo team is not a guarantee to success. You can try to grow super genetically modified horses with the smartest scientists, but average scientists will half-ass together a shitty car and it will still perform better. There is a difference in the underlying technology.
So as every very smart people did, I started trading and researching altcoins. And by trading, I mean gambling of course.

Sidechains to tackle exotic blockchain use-cases

When I first heard about sidechains, that was my “holy shit altcoins are all doomed” moment. I mean what’s the point of launching a technology as an altcoin if anyone can just copy paste the code and launch it as a sidechain, with a stable unit of value, called btc. While speculating is a fair enough use case in itself, not fair enough to build an economy upon it.

  • Note, in the context of cryptocurrencies, btc is a stable unit of value.
  • Note, I’m talking about two-way pegged sidechains.

Lightning to tackle scaling and speed of transactions

Later the house was on fire. Bitcoin was about to fail, and make no mistake, every cryptocurrency with it. No altcoin figured out how to not store and not do operations with every transaction on everyone’s computer.
While there were many small optimization ideas, like pruning, payment channels or elevating the block size, none of them solves the real problem. How can we use Bitcoin for every transaction? A blockchain with 1GB blocks can barely handle a bigger city’s metro system.
Even if we could distribute similar transactions happening on their own sidechains, they still would suffer from the inherent scaling problems of a blockchain.

And here came the idea of lightning network, that not only solves the scaling problems, but also one of the weakest point of Bitcoin, the speed of transactions.

  • Note, I’m not talking about Lightning without SegWit. I suspect that would still pretty much suck.

Properties of good money

By examining Bitcoin from purely as money perspective, it all comes down to the attributes of good money.

Durability, portability, divisibility, scarcity, acceptability and fungibility.

Acceptability, portability and fungibility are the ones where Bitcoin should improve if it wants to stay in business.
Acceptability is slowly taking care of itself. This is our main advantage over altcoins.
I hope lightning network will bring us the awaited portability, meaning: instant and close-to free transactions and with that get another advantage over altcoins.
However we are lacking behind some alts in fungibility. If Bitcoin solves every problem it has, but its fungibility stays the same, I will move on. I won’t work on another surveillance tool, we already have enough of them. I belive TumbleBit will prevent my capitulation eventually.

What if Lightning and Sidechains don’t happen within 5–10 years?

That would be sad and probably a strong sign to move on, because they will happen elsewhere.
Or it still won’t be the time to move on, because developers keep surprising us and come out with some great new concept from seemingly nowhere. HD wallets, Ethereum, Sidechains, SegWit, TumbleBit, Confidential Transactions, Lightning Network, Mimblewimble, even Bloom filtering SPV wallets were great idea at the time.
But there is one problem: we are experiencing these surprises, because we have an army of developers working on Bitcoin and not on some altcoins. If we throw out their hard work, we risk them to move on.

My rule of thumb advice

Until you don’t see lightning network or sidechains deployed on any altcoin don’t move on. Gamble if you want, but don’t lie to yourself, because you made some money, your altcoin won’t outcompete Bitcoin anytime soon.

An exception to this when you recognize a fundamental world-changing technology being implemented in an altcoin that cannot be in Bitcoin. You say, you already recognized it? Chances are you didn’t. So how to recognize it, if it’ll ever exist? That’s the zillion dollar question.

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