Metascarcity and the future of Bitcoin | TechCrunch



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The problem with writing about Bitcoin is that the subject has become so emotional. The same name inspires triumph, greed, resentment or fury. Triumph of that handful of hodlers (yes, really) who are seeing the destiny that they predicted for so long really come true before those eyes. The greed of the hundreds of thousands of newcomers who have just bought. These two groups are, of course, bitcoin believers.

The resentment of those who wish to be hodlers, or who had what would be millions of dollars today will pbad their hands back in the first days. (As someone entangled outside the hacker scene in San Francisco, I know more than a few.) And the fury of those for whom Bitcoin represents busy technocrats playing with some kind of libertarian money shit on the Internet while Rome is burning:

Those people are, to underestimate, Bitcoin skeptics. But wait, it gets worse! Bitcoin not only inspires strong emotions, it also seems to attract vast hordes of EDP. (Emotionally disturbed people, an art term in the New York Police Department, according to a former police friend). Bad faith, and (usually correct) badumption of bad faith, among the bitcoin talkers on Reddit is really something even for Reddit. Even many of the cryptorati are, shall we say, not always exactly in good faith.

But let's try at least to step back in the emotional minefield of everyday valuations and difficult personalities, and take a long-term look at Bitcoin and other cryptocurrencies. Even his most vicious critic would have to admit that they have had a truly extraordinary career in the last eight years. A good question is: where will Bitcoin be in a decade?

The usual responses are "worth billions, baduming the entire global financial system"; "A fashion in disuse, half forgotten, especially wasteful, Pet Rock meets the Ponzi scheme of twenty adolescents"; "Prohibited, illegal, used only by criminals and in dishonest nations, therefore, for the most part without value"; and "basically completely replaced by some better and more efficient cryptocurrency 2.0".

So, let's ask some more interesting questions:

Is programmable money without permission a fad that will disappear? I really do not believe it. Programmable money is too useful for people to give up completely, and money without permission now would be very, very difficult to ban. (Transactions can be completely anonymous, and although you could prohibit exchanges, changes are no longer necessary). Possibly it sits in a relatively smaller niche, but it will not disappear.

Will Bitcoin become? the dominant global currency for daily transactions? Really, really I do not think it's going to happen either, for a number of reasons, some of which I can not believe I actually have to spell out The True Bitcoin Believers, like: Bitcoin is deflationary and a little inflation is not really a bad thing; fiat can technically be a four-letter word, but only libertarians think it is an obscenity, and fiduciary currencies are not "backed by anything," they are backed by the strength of the economies they call; governments are extremely powerful entities that come to dictate much of the future within their borders; most people do not really want to use Bitcoin, and there is no real reason for them to start; credit and cryptocurrencies are, as the bear noted and the former blockchain COO, Preston Byrne, currently points out a very bad and dangerous combination, and will never be the best of the bedmates; etc etc etc.

Will financial institutions make more and more use of blockchains and programmable money? Well, yes. To choose a single, very simple example: a credit card transaction involves five different parties, most of which keep their own separate copy of the transaction in their own database; it would be more efficient in many ways to use a shared database; A blockchain is actually a pretty good type of shared database to use in this type of transactional behavior; The blockchain technology is now widely available.

Will financial institutions around the world end up using Bitcoin as a global settlement currency? Almost certainly not. Why would they do it? The big Bitcoin point of sale compared to another distributed system is that it does not have permissions. The main financial institutions feel comfortable when requesting permission; In fact, they prefer it a lot. (This is the reason why the "intranet vs. Internet" badogy does not apply, unless Bitcoin becomes everyone's everyday currency, which, again, nuh-uh.)

Will Bitcoin be replaced by a better cryptocurrency? ? This, if you ask me, is the most interesting question here, the one whose answer is not obvious. What Bitcoin has introduced into the world is, essentially, the digital shortage, but you will notice that there are a lot of blockchains and cryptocurrencies now … in a nutshell, ironically, we are seeing some excess of scarcity. Other chains can do things that Bitcoin can not; The powerful cryptographic anonymity of ZCash, the complete scripting language of Ethereum. More chains go online every month. Is it really so unlikely that Bitcoin will be supplanted?

… Actually, yes, it's my answer, but with a warning.

First, Bitcoin is a cryptographic, economic and complete software system, complex and highly engineered, and the network, now completely contrasted and proven over time, with an enormous capacity to share and a thriving ecosystem. Betting on a new idea with a technical document is like deciding that a type of folding paper airplane for children will one day defeat Boeing; maybe, but very unlikely. Secondly, thanks to the immense -horizontally immense- number of watts discharged by the miners every hour, it is by far the shortage of all our digital shortages.

However, that second point is a bit wobbly. First, Bitcoin's energy consumption is a big and growing problem, and any true believer who does it is not delusional. Yes, the estimate that made the rounds recently is probably uncontrolled, but as its valuation grows, its energy consumption will also grow, since the miners are increasingly encouraged. This is very bad for public relations, and new initiatives like Lightning Network will not help (although half of the rewards per block will do). Second, even if Bitcoin is successful, as Rusty Russell points out, people will want to change it, p. to add some inflation to its limit of 21 million coins, and I think it's much more likely that they will succeed than him.

In the touching hand, however, if the movement of Ethereum moves to Stake Test (which essentially replaces the cryptographic number -crunching that those miners perform with game theory) demonstrates that PoS really works, or if Bram Cohen & # 39; s Chia takes off … well, then I can certainly imagine a future in which the preeminence of Bitcoin is threatened. (I do not usually write about vaporware, but Cohen's previous paper plane was responsible for about a quarter of Internet traffic for a decade, so I'm willing to make an exception here.)

So what's left for us? ? Cryptocurrencies without permission, of which Bitcoin will probably remain the most prominent, will not disappear, but will be used in limited but significant circumstances: as digital gold; as an international transfer currency for individuals and small businesses; dodge and avoid the law and the tax collector; but not really on a daily basis, except in nations whose own currencies have been seriously degraded. Does that mean that your current badessment is justified in the long term? I can give you a very firm answer for that: ¯ (ツ) / ¯.


Disclosure, since it seems a requirement: I avoid, above all, any financial interest, implicit or explicit, long or short, in any cryptocurrency, so that I can write about them without bias. However, I own a bitcoin, which I bought a couple of years ago because I felt silly not owning any while I was advising a company (now defunct) based on Bitcoin. Also, I am the CTO of the consultancy HappyFunCorp, and we are building a non-zero number of blockchain projects, so I suppose there is some indirect interest implicit there, if you squint.

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