Is Bitcoin a Cryptocurrency?
The truth about Bitcoin
This is not a scientific journal. Nor is this a class on economics. There is no clear hypothesis here, merely an exploration of the current trajectory of Bitcoin. The parabolic rise of Bitcoin is unfathomable to most people. Who are we kidding, most people can’t take the time to zoom out on trading view to partake in a moment of critical thought about the inevitability of the “four year cycle”. Navigating the mesmerizing interwebs of crypto twitter, youtube influencers, alternative media news sites, reddit forums, telegram and other “educational” forums for Bitcoin posturing leaves little room for wiggling through the rabbit hole of Bitcoin to come out of wonderland without your brain scrambled. And even if you make it out the other side with any semblance of clarity as to Bitcoin’s future in the world economy, to describe Bitcoin’s role in the economy in any sort of finite terms is a fool’s errand.
Hodl they say. Only this we are certain of. Within the logic of a Bitcoin scarcity of 21 million and the programming of the Bitcoin halving's, there is still little certainty of Bitcoins role in the economy. For the first couple cycles many were certain it would be used as an actual currency. Up to this point, few foresaw the rise of the raging bulls of 2017–18 when Bitcoin first reached the towering heights of 20,000 US dollars nor in 2021 when it first got above 60,000 dollars. After the block size debates and the rise of Ethereum, there has been little consensus among the greater Bitcoin community for it to remain simply a currency. Over ten years since the Bitcoin Whitepaper deemed it peer to peer electronic cash, it has yet to seal its fate as such. There has been attempts to scale such as the lightning network and the liquid sidechain, yet the timing is not right. The infrastructure is not yet ready for peer to peer cash. The narrative has changed. It is no longer seen as currency. Now it is known as a store of value, Digital Gold.
At this point, it is not sensible to be used as merely peer to peer cash when only recently it began to make sense for corporate miners to hodl Bitcoin beyond paying their expenses. Not to mention, the decentralization of the network is still at a very early stage and debates still rage on questioning if in the future the average bitcoin user will run their own node or if it be left to corporations. To date, mainstream news outlets convey little understanding and to be a mogul in the bitcoin arena is still seen as risky business. The only sure thing at this point is, “Up Only”. At the present your average coffee shop is not boosting profits accepting Bitcoin, unless they’re hodling sats for the future. The world economic crisis following the pandemic has only accelerated the adoption of Bitcoin and the digital gold narrative. With the exodus of miners out of China, more and more corporations see value in stacking sats: Digital Gold.
So what is the endgame? Well we know the endgame is peer to peer cash as the white paper specifically defines. However, what is not so clear is the road Bitcoin will take to get there. For the average retail investor a deflationary store of value is a saving grace in the current market. In some ways the current pandemic provides a perfect storm for Bitcoin to create a black hole of economic power to allow it to consume as much of the world economy at one time as possible. From the megacorp to the paycheck to paycheck average Joe, slowly everyone is succumbing to its power. Bitcoin is an unconfiscatable, uncensorable peer to peer economic system. This is only the beginning. The battle lines have only just began to be truly forged.
At the moment Bitcoin holds the line of decentralization with the help of Ethereum retail momentum. NFTs, dex’s, much of the meme economy and the majority of innovative protocols run on Ethereum. While Ethereum is also criticized for its lack of progress on the scaling front, when it comes to innovation, it is undeniably a leader. As Ethereum moves from proof of work to proof of stake, much more pressure will likely be on Bitcoin to hold the line as a proof of work protocol while Ethereum’s proof of work chain will likely go through more growing pains as the network adapts to delegated proof of stake. The correlation of trade movement between Ethereum and Bitcoin is undeniable at this point and as many a trader would tell you, the trend is your friend until the end.
So where do we go from here? Will a free market reign? Will Bitcoin maximalists allow Ethereum defi to be our saving grace, a stepping stone if you will into a future we all hope for. Will defi prevail and hold Bitcoin on its pedestal. Will the consumer understand the freedoms Bitcoin is attempting to afford them? Or is Ethereum an easier way to educate them? The only certainty is that we must continue to build a strategy of unity among Bitcoiners and alt-coiners who all want the same thing: Decentralized Finance. If Bitcoin is to remain immutable against government tyranny and provide the freedom that people around the world seek, it is essential that then community holds the line together.
There is a long road ahead of us.
Follow the ledger. This is not financial advice. This is Bitcoin.