Does blockchain need a second solution?
“There can be only one”©
If the main types of businesses are briefly considered, three types of businesses can be clearly distinguished. The first type is traditional businesses, excepting niche ones. Here, even the largest business has a few percents of the world market. For example, sales of giant Walmart with a turnover of more than $ 500 billion account for a very small share of the global retail market. The second type is Internet companies. Here, the share of world leaders is already significantly higher. Google controls over 60% of the global Internet search market, while Facebook controls over 60% of the global social networking market. Blockchain is the third type. In the blockchain industry, if there is a completely suitable solution, then another solution is simply not needed.
My previous article was about the “Trust Point,” about trust in the place where the blockchain meets the real world. My new article is about justice, about security, and again about trust. About trust in the blockchain itself.
Nowadays, our smartphones are more powerful than supercomputers twenty-five years ago. Does anyone doubt that in a few years our pocket gadgets can easily be full nodes and blockchain miners? What will be installed on all the devices when there are billions of miners and electronic wallets?
All blockchains are based on the monetary system. No matter how this system is called, it is still money. It is widely accepted that there are two basic requirements for any money and in particular, for electronic money: liquidity and security.
I am sure that only one blockchain will be widely used. Indeed, it is a huge waste of resources to spend so much energy to support two competing and interchangeable networks.
I am also sure that this will be an open source public blockchain. Just because the main advantage of cryptocurrency is that we do not need to trust third parties. And if the source code is closed, we have to trust this source code and the one who created and controls this source code.
I also believe that all the existing and still emerging technologies that redistribute property in favor of their founders and developers through their internal money do not have a future. They will quickly become marginalized or become a niche product. Such blockchain networks may have some advantages (for example, an extreme privacy). These advantages may be so valuable for some clients that the constant sponsorship of creators and developers will be justified for this category of customers. However, these customers are and will always be only a very small part of the market.
So, the most liquid, safest, open source, not redistributing its intrinsic value in favor of its developers’ tool will survive. So who is Connor MacLeod? Bitcoin is not controlled by anyone and has never been hacked. Only Bitcoin can and will become the money of the future. Bitcoin blockchain is the only one to which there is absolute trust, and this blockchain has no beneficiaries.
Bitcoin will not replace fiat money, at least because the states issuing them guarantee demand for them by collecting taxes in their own fiat currency. I am talking about successful states, not failed states like Venezuela or Zimbabwe. And it doesn’t matter whether the fiat currency of the state is paper, digital or even with blockchain elements. There is still an issuer — the central bank, and at the same time, everyone who uses this currency is, to one degree or another, under state control. Therefore, the banking system that provides this whole fiat-currency process will exist as long as the states are alive. Most likely, this banking system will somehow transform under the influence of new technologies. However, this is a natural process. After all, today‘s banks are also very different from banks 100 years ago.
For the above reasons, I do not think that in the foreseeable future, Bitcoin will become a world currency or replace fiat money. But I believe in Bitcoin, and I think that Bitcoin is fully consistent with what can be described by the concept of “native currency of the Internet.” Bitcoin will not be the only currency used on the Internet, but Bitcoin will become the only “Internet currency.” Indeed:
● Bitcoin, unlike fiat currencies, is not subject to inflation and, moreover, is not subject to hyperinflation due to corruption and insolvency of the state and government.
● Bitcoin easily avoids any financial control.
● Bitcoin does not require the participation of a traditional banking system.
● Bitcoin, if desired, can provide very high confidentiality of ownership and operations.
All the obstacles that today stand in the way of Bitcoin adoption are imaginary.
Any technological limitations and complexity of use can be easily overcome. Few people understand how the Internet works, but that does not stop billions of people from using it daily. Moreover, not many people even understand the nature of money and money-related economic theories, but everyone constantly uses money in their lives. The same will happen to Bitcoin. The time will come when technology and new gadgets make it just a familiar part of our lives.
Government opposition to Bitcoin is very limited. On the contrary, more and more developed countries recognize Bitcoin as money. Bitcoin already exists, its existence does not violate any laws, and in the civilized world, it cannot be prohibited. Bitcoin even balances the monetary policy of governments, acting as a means to preserve wealth in cases where unprofessionalism or corruption of governments leads to hyperinflation and impoverishment of the population.
Government agencies are obviously opposing and will continue to oppose the emergence of private money, the emergence of large ecosystems private currencies with billions of users, such as Facebook or Telegram. By the way, I think that this opposition is pointless since any state restrictions of this kind can be overcome. The world is already awash with various kinds of tokens, from each of which you can make future money if you wish. Can’t Release Libra? Facebook can buy, for example, Binance and turn Binance coin into its future currency. Or Binance can buy some popular messenger. Or they can unite in some other way, as a result of which the ecosystem with a billion users and a token that has long been on the market will be in the same hands.
Today I expect that someone from the world leaders with a giant ecosystem will give up trying to create their money and will be the first to fully integrate Bitcoin. This can be an extremely strong competitive advantage. Moreover, I would welcome if the US and the EU were able to combine the efforts of their regulators and create conditions to pacify the ambitions of their mega-corporations and make Bitcoin the main large ecosystem currency for high tech companies. Otherwise, very soon such a currency will appear anyway, but China will control it.
Only Bitcoin! As for me, it’s crystal clear, this blockchain can be trusted. In my opinion, it will become the only Internet native currency. We really do not need the second Bitcoin, and the task of the civilized world governments is not to oppose Bitcoin but to accelerate its integration into Internet applications for the benefit of citizens of their countries.
What about Ethereum? From my point of view, Ethereum is also a niche, a niche for smart contracts and digital securities. Money is used by all the inhabitants of our planet. Investments are made by a very small proportion of the population. But this is a huge market. And Ethereum still has a chance to become a leader here. This is a fascinating subject that deserves much more attention. In my next article, we will discuss it and we’ll look at the digital securities market.