Bitcoin is an extremely unique invention in the entire history of mankind. The decentralized payment network created by Satoshi Nakamoto is unique. I repeat this constantly, as do all other Bitcoiners. However, many non-Believers or continue to doubt the true uniqueness of Bitcoin.
These people believe that Bitcoin will be technologically outdated in the future. Many take the example of MySpace. It had the first-mover advantage in the field of social networks, but was quickly dethroned by Facebook. Today, MySpace represents practically nothing, while Facebook is the undisputed leader in the world of social networks.
Bitcoin should be seen as a protocol before anything else. The first thing I want to say is that the comparison above is strikingly wrong when comparing Bitcoin to Altcoins. It does not take into account that Bitcoin is a protocol. It actually operates at a lower level than MySpace. When you think Bitcoin, you have to think TCP/IP layer of the internet. Bitcoin is the money protocol for the Internet that comes in addition to the other protocols that support the Internet.
Since its creation, the Internet has never been replaced. Similarly, the TCP/IP protocol is still at the heart of the Internet. The Internet is constantly evolving, but it is and never will be replaced. For the Bitcoin protocol, it will be the same. Bitcoin will continue to evolve, but it will not be replaced.
Once you understand this fundamental reality, you will understand that searching for the next Bitcoin is as useless as searching for the next Internet or the next TCP/IP protocol.
The domination Bitcoin has over the cryptocurrency world is not technological, but monetary. Bitcoin has unique monetary attributes that are made credible by its technology. At the heart of the Bitcoin system are three properties that no other human invention has possessed simultaneously until now. Bitcoin is scarce, decentralized, and digital at the same time. The combination of these three properties makes Bitcoin so unique.
1. Bitcoin is Scarce
In designing the Bitcoin network, Satoshi Nakamoto defined very precise rules that have never changed since the network was launched on January 3, 2009. Thus, the maximum supply for Bitcoin is set at 21 million units. Besides, Bitcoin’s monetary policy is programmatic. No human can change it according to their liking. The issuance of new BTC is reduced by half every 210,000 mined blocks, until the day when all BTC are put into circulation. By then it will be 2140. The miners will be incentivized to secure the network only through transaction fees.
I can tell you that all Bitcoins will be produced around 2140 because the issuance of it is predictable. This is another incredible strength of the Bitcoin system. For example, you can’t know how many U.S. Dollars or Euros will be in circulation in 1 year, 5 years, or even 50 years. The only thing you can imagine is that the quantity will be much larger than today. The monetary inflation of fiat currency is endless.
2. Bitcoin is Decentralized
The title of the Bitcoin whitepaper published by Satoshi Nakamoto on October 31, 2008, explains what Bitcoin is, “Bitcoin: A Peer-to-Peer Electronic Cash System”.
Bitcoin is a P2P payment network. It is based on a permissionless and trustless blockchain that allows anyone to become a node of the Bitcoin network. Everyone can therefore participate in the network. No user has more rights than another. Again, something that is revolutionary.
Transactions on the Bitcoin network do not require intermediaries to be validated. It is the network that validates whether the transactions included in blocks are valid or not. The greater the computing power made available to the Bitcoin network by the miners, the more secure the Bitcoin network is.
The Hash Rate is the amount of computing power made available to the Bitcoin network by the miners. Since the launch of the Bitcoin network, this Hash Rate has been constantly increasing, which only increases the de facto difficulty to mine new blocks on the Bitcoin Blockchain. As a result, Bitcoin is the most secure decentralized network in the world at the time of writing.
3. Bitcoin is Digital
Bitcoin runs thanks to software that everyone is free to install on their computer to become a node of the network. Bitcoin is therefore digital. Bitcoin is even the first successful implementation of a P2P digital currency.
Satoshi Nakamoto has explained in the past why Bitcoin has succeeded where all other attempts have failed since the 90s:
“A lot of people automatically dismiss e-currency as a lost cause because of all the companies that failed since the 1990’s. I hope it’s obvious it was only the centrally controlled nature of those systems that doomed them. I think this is the first time we’re trying a decentralized, non-trust-based system.”
It is thanks to the decentralization of its network that Bitcoin has been able to achieve phenomenal success. The fact that Satoshi Nakamoto offered their unique invention to the rest of the world as a magnificent gift also made a major difference. Thanks to this gesture, Bitcoin has no leader and thus belongs to all its users.
No other human invention possesses these three properties simultaneously. A great store of value for centuries, gold is scarce and decentralized. However, unlike Bitcoin, gold is not digital. BitTorrent clients are digital and decentralized software. However, there is nothing scarce bout them, since anyone can own an infinite number of copies.
Finally, the shares of a listed company are digital. They can be traded via the Internet. Moreover, they are scarce. Although the quantity may increase when the founders decide to make capital increases, the shares exist in finite quantity at a given time. Nevertheless, they are not decentralized. You have to go through closed systems to acquire them. You can continue to look for other human inventions that would combine the properties that make Bitcoin unique. However, that would be a waste of time. Indeed, there are none.
Before the invention of Bitcoin, all the digital things were considered to be non-scarce. The case of corporate actions is limited since the quantity can increase at any time. This digital scarcity discovered with Bitcoin can only exist once. Anything after that will be a vulgar attempt to copy the unique invention that is Bitcoin. No Altcoin can hope to seriously compete with Bitcoin.
Bitcoin is not perfect, of course. Neither is the Internet. On the other hand, Bitcoin has an extremely talented community of developers who will continue to improve the Bitcoin source code in the years to come. Just as the Internet has never been replaced, Bitcoin will not be. It will continue to evolve to better meet the needs of its users. As for now, it seems like the future belongs to Bitcoin.
Do you think the future of digital finance belongs to Bitcoin?
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