Bitcoin
How Bitcoin (BTC) Erased Its Disruptive Potential
Business As Usual
The importance of Bitcoin as a store of value asset should be on par with its role as a widely accepted means of exchange.
Nevertheless, Bitcoin BTC has long forsaken its payment functionality and succumbed to ponzification and an NGU (number-go-up) philosophy.
Ponzification is the easy way out and evidently the one the BTC community selected.
The narratives are contradicting logic, and most seem to be in Bitcoin just for the speculative side (for the price), while just a remote part of the Bitcoin proponents are concerned with fundamentals.
It is all about trading Bitcoin, and trading does help, as it creates transactions on the blockchain and supports the record of an extensive network effect. However, that network effect is still based on exchange transactions, and not on actual usage as digital cash.
If You Can’t Beat Them Buy Them Out
There are different economic views on what constitutes a store of value or if Bitcoin BTC is one, and doubts if it can ever evolve into a means of exchange.
There is also a big difference between how BTC evolved with the Lightning Network (eight years later) and how adoption was rapidly growing until 2014.
LN, a layer-2 network running on top of the BTC blockchain, apparently was never a solution to scalability, and it was rejected in 2015 by the side that supported raising the block size limit (Bitcoin Cash).
The base layer, the blockchain of BTC, is crippled and beyond repair since decisions dictated by a small group of developers, Bitcoin Core, condemned it as such.
A corporate takeover occurred in 2015.
Blocksteam, a for-profit company founded by Adam Back and Core devs assumed control of Bitcoin’s developments and excluded previous developers of the Satoshi era by forcing them to resign or even revoke their Github privileges.
Blockstream had hijacked the Bitcoin brand.
Advancements in merchant adoption backtracked, as the Lightning Network became the only solution proposed to address the scalability issues.
And still, Lightning (with Segwit) was a far more contentious solution than raising the blocksize limit.
Every merchant or business has explored BTC as a payment option in the last seven years but rejected it since it is not a reliable currency.
Fees of BTC can rise astronomically, and the network congestion can delay a transaction in the mempool while waiting for a miner to pick it up after days.
LN simply does not work beyond the aspect of custodial wallets that currently dominate transactions.
Until 2015, Bitcoin as a payments network was fought vigorously by the mainstream media.
If you trace back to pre-2015 records, everyone was against Bitcoin, since it was challenging the stagnating and corrupt legacy financial system. Every newspaper, TV station, reporter, politician, and economist was in fear and shock of what Bitcoin could accomplish.
All abruptly changed in 2015 and started promoting it instead.
Blockstream took control and maintained the blocksize limit of 1MB, canceling Bitcoin’s disruptive potential and obstructing it from achieving its purpose as Peer-to-Peer money for the world.
The narrative had changed, and the “Accepting Bitcoin” and “Be Your Own Bank” messages of mass adoption changed into a narrative of digital gold and a store of value.
The target was not to empower every single person anymore, but the institutional adoption of Bitcoin as a store of value.
With this approach and a vast network of advertisers, fund advisors, and marketing agents on social media, BTC devolved into a Wall Street asset.
This is where it stands today, with absolutely no realistic purpose and no features of either being a store of value or a means of exchange.
What is the purpose or the future of this “asset”?
At the end of the day, it is all about speculation.
There is nothing else in BTC today but buying and selling to profit in dollar terms.
BTC is not used in payments, and the previous fiasco of El Salvador was yet another marketing stunt to attract attention and keep the narrative ongoing and changing.
Bitcoin (BTC), today, only serves the mainstream payment networks (Mastercard, Visa, Paypal, and SWIFT) since it does not disrupt them.
Commerce still relies on payments with third parties in control, and the same old centralized system of trust that barely works anymore.
Bitcoin BTC is not challenging or competing with the established banking-related networks but reinforces them instead.
Lightning Network is flawed by design, indicating centralization tendencies with the inevitable dominance of centralized financial hubs. These are regulated financial institutions (private entities), forcing KYC, AML, and other stationary payment guidelines while controlling funds and the money flows.
Implying:
LN is not a payments revolution and certainly not a competitor to the established financial and payment networks that mired finance in stagnation for centuries.
Instead of disrupting the banks, LN allows them to become dominant hubs if Custodial Lightning ever catches up.
Trusted third parties dominate Lightning within the transactional payment networks controlled by custodial wallets, banks, Central banks, and payment processors.
Why would banks like AXA fund Blockstream if it was competing against their dominant model of POS, e-commerce, and digital banking?
Nobody funds their competitors. They buy them out instead.
There is no conspiracy theory, as some are willing to suggest.
This is (probably) what happened:
And this is nothing else but business as usual.
I’m not sure why for some it is difficult to believe this is how the world works.
This is how the business and banking has operated for centuries.
Perhaps from a philosophical point of view, some may think of the world differently, but it is not.
It is actually way worse than you imagine it, or than what I am describing.
In Conclusion
There is a Bitcoin version that works.
Bitcoin Cash is embraced by honest Bitcoiners who wanted Bitcoin to succeed in its original purpose as P2P Electronic Cash and compete in commerce as a better form of digital money.
The Bitcoin Cash community did not want a distorted version of Bitcoin having lost its initial objective.
The blocksize debate is not important to the millions or the hundred million new cryptocurrency investors. What matters is this:
Bitcoin Cash is the working version of Bitcoin.
Bitcoin Cash scales and can reach global adoption as a currency independent from Central Banks’ manipulation and control.
The other version of Bitcoin, BTC, kept the brand name and logo, but it does not scale and has no intention of becoming a widely accepted method of exchange.
Currently, the version the banks’ support is winning, but without a vision of global adoption, the lost disruptive potential, fees constantly increasing and a community having lost its purpose, it is not really the most compelling “store of value” to watch for.
- Cover on Unsplash
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Originally published at read.cash (rewritten for Medium)
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