Bitcoin Vs Bitcoin : Disillusionment, Disappointments & Disagreements
Bitcoin was the messiah for those who stood for all-things-anti-establishment: be it broken system of Government, capitalism, flawed monetary policy or even religion. Bitcoin was the messenger of trust. Bitcoin was the answer to bringing transparency in the system and drive away corruption. And for a long time I believed in it. Bitcoin is still like a God with a cult like religious following ; but Bitcoin is more like the Greek God, Zeus — Angry on humans, but in reality suffering from all the negatives of humans. After all Both Zeus and Bitcoin were human constructs.
Bitcoin’s technical brilliance incorporated certain ideological beliefs among the cypherpunk community. Today, neither the original source code exists nor those ideologies for which it stood. Bitcoin has became like a cult religion and maximalism actually became its biggest enemy.
Bitcoin maximalists will try to brainwash you by stating below 6 myths as facts. Don’t ever fall prey to it.
Myth # 1: Bitcoin has potential to be global currency as USD distribution is disproportional.
This blog has explained it with facts and data — so let’s not even argue. Isn’t it scary if Bitcoin becomes currency. The early adopters are the new lords of the crypto kingdom.
I have already explained concepts of money and currency but for anything to be currency — it has to be relatively stable and less volatile. There is no such future in sight for bitcoin. Meanwhile, USD distribution is horrendous but still not as bad as bitcoin.
Myth # 2: Bitcoin is decentralized
Today, everyone agrees that the miner centralization is the biggest threat to Bitcoin. However, there is still hope. Mining rigs are popping up in every part of the world. Hopefully, innovative solutions will bring newer and better ASICs than Bitmain and mining in future may be bit more decentralized than it is today. However what worries me more is the centralization in decision making and the opaque governance of Bitcoin.
As August 2017 approached every blog/forum was shouting about the upcoming fork and its impact. On July 18 2017, Coindesk published this very helpful flowchart of the possible outcomes from the 2 scheduled forks. Nowhere does it mention of Bitcoin Cash. And voila! We have suddenly a new crypto as a result of close door meetings between handful of people. What happened to the philosophy of 1% telling the 99% on what to do? Was it all farce? Oh! but then money was created out of thin air and everyone Bitcoiner partied. It was just another unfortunate event in reality.
Then on Nov 8, after causing a lot of panic regarding Segwit2x, it was suddenly cancelled. An email was sent out on the official distribution list signed by 6 people — Mike Belshe, Wences Casares, Jihan Wu, Jeff Garzik, Peter Smith and Erik Voorhees. Thats it. Even public listed companies have better transparency and governance when it comes to decision making. The markets responded by pouring more billions and overjoyed investors forgot that Bitcoin is sailing away from its core ideologies.
Myth # 3: Bitcoin transactions are cheap & fast
There are possible solutions to lower the transaction fee but many fintech startups are already using Bitcoin as payment. Bitcoin for remittance is sometimes profitable only if there is premium on Bitcoin’s fiat value in the destination country. These startups wont survive much or they would have to move to other crypto to suffice their needs — Bitcoin cash maybe? First the infrastructure needs to be build and then the applications around it. In bitcoin, things are happening the other way around.
Bitcoin’s block confirmation time is 10 mins. So it takes minimum of 10 mins for the funds to be transferred and for use for the receiving party. But because of the tremendous backlog of unconfirmed transactions, it may take upto even 1 day. In the so called “developing world” there is already highly scalable infrastructure and solutions to handle mobile to mobile fund transfer of fiat within a few seconds and costing a few cents in transaction fees. Crypto has a long way to go to achieve this.
Myth # 4: Bitcoin’s code base and economics are its biggest strengths and that can never change
Immutability in the context of Blockchain is regarding the data on the ledger. However many bitcoiners continue to argue that even the economics and the major code base aka “Satoshi’s vision” will never change. Guess what, both have changed as of today.
Myth # 5: Bitcoin main chain can never die or will ever change its PoW
Really? Are you sure of Bitcoin’s main chain is under no threat? Segwit2x was close to it. Really, really close. Ryan Charles had enlightened us with this amazing explanation of all possible outcomes had Segwit2x gone through. Who knows whats in store for 2018 which is already called as the year of the forks :)
Myth # 6: Bitcoin network can be utilized for notarization of land registries and potentially many more use cases
Another famous argument is Bitcoin network is the most powerful supercomputer and it can be used for potentially many usecases other than fund transfer. A few Governments have already started notarizing land registries on the network. But from the network’s point of view this is like spamming it. As of Dec 2017 we do not have the infrastructure (Notary side chains) to handle the use case of notarizing documents on massive scale. Most of these transactions are with zero transaction fees and the miners have no incentive to pick them up. I feel it is too early to implement real live usecases outside of payment on the Bitcoin network.
So what is Bitcoin today?
Bitcoin is an experiment technology. Bitcoin is digital gold and probably the best store of value at this moment. Bitcoin is a very high risk investment and investors should understand basics of keys, forks etc. before investing in it.
Bitcoin’s best use case is high worth cross border fund transfer with certain degree of anonymity and privacy. Bitcoin’s monetary policy is transparent and part of its codebase.
Bitcoin is also in nasty self destructive civil war and investors who do not understand the technology on a high level and the politics of it will be collateral damage.
Conclusion
Bitcoin’s failure to stand by its own ideological principles is a classic example of Bitcoin being so good that humans did not deserve it. I am a strong believer that all religious texts need a version 2.0. Similarly, I also believe that it is really high time that Bitcoin’s whitepaper has an official v2.0. While the former is impossible, the latter will definitely see the light of the day. However, the only question that remains is when we say Bitcoin’s whitepaper — which forked chain of Bitcoin are we referring to?
I hope a few years from now I can laugh out on this article and Bitcoin delivers a few of its promises- but till then it is better to be enlightened by facts than myths.
Update: Received feedback on this post from my crypto-idols:
And of course a lot of disagreement :)
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