The World Changing Idea Behind Bitcoin Isn’t What You Think
It’s not the DApp, it’s the DIP
Many people believe that Bitcoin has limited utility and that its high price is based solely on speculation. Others say that the only exciting thing about Bitcoin is how the blockchain will help us track items through the global supply chain or tokenize pieces of art or facilitate financial audits. While these arguments are interesting, they miss the point of what makes Bitcoin so transformative.
Only a small part of the power of Bitcoin is its decentralized application (or DApp) to move value around. The real power of Bitcoin is the decentralized incentive platform (or DIP) that makes it all work. This DIP empowers millions of strangers from around the world to win together by working together.
Bitcoin achieves this by combining three unique properties.
The first is the ability to create a digital asset of guaranteed scarcity. Before Bitcoin, you could have a physical asset with guaranteed scarcity, like gold, but it was a pain to move around. Or you could have a digital asset that was easy to move around, like a currency for a game, but whoever owned that asset could create more of it whenever they wanted. For the first time ever Bitcoin let you have both: it’s easy to move around and it guarantees that there will never be more than 21 million bitcoins.
The second unique property is its ability to algorithmically reward people. The platform relies on people contributing their computing power to run the system that lets everyone else move their bitcoins around. To achieve that, the software guarantees that anyone who contributes computing power in a specific way will be given their own bitcoin.
The third unique property is that the only way to use Bitcoin is to pay with Bitcoin.
When you put these three things together — a cryptocurrency, an incentive, and a use case — you get something incredibly powerful: a decentralized incentive platform. Today, people from all over the world contribute to Bitcoin, and their combined computing power is now a hundred thousand times more powerful than the world’s top five hundred supercomputers combined. To achieve this, the platform has dispensed 17 million bitcoins to contributors. The demand is now so high that the collective value of those bitcoins exceeds $100 billion.
This is the power of a DIP: you can get millions of people working together to solve a problem by offering guaranteed compensation for permissionless contribution. You don’t need permission to contribute, you don’t need to trust that someone will compensate you for that contribution, and you don’t need to hope that the value of that compensation won’t get diluted. All those things are guaranteed. All you need to do is contribute.
But Bitcoin is only the first decentralized incentive platform. There are many other problems we can work together to solve in a similar way, with the benefits being shared fairly among all participants. This is what gets us excited about Kin — using a decentralized incentive platform to create a digital sharing economy of equal opportunity. If this sounds interesting to you we hope you’ll join the discussion.