Please below to listen to the 35th episode of my weekly crypto podcast ‘Two Minute Crypto.’ These are intended to be short, single-topic ramblings on some aspect of the cryptosphere. Comments and critiques welcome.
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Two Minute Crypto – (The King – Are You Rebel Part 2 of 3)
It is useless to attempt to reason a man out of a thing he was never reasoned into.
Welcome to Two Minute Crypto – last week’s episode posed the question whether or not you were invested in Bitcoin and argued that, if not, the assumptions underlying that decision should at the very least be re-examined.
This episode discusses two of the most common reasons given for choosing not to include BTC in a crypto investment portfolio. The key word here is portfolio, if you only have one small investment in crypto then you may indeed lean towards an outlier in the hope of beating the odds. However, if you have any significant exposure to crypto yet don’t hold BTC then the assumptions underlying that decision become relevant.
In discussing these points I’ve drawn heavily from a recent article I posted on Bitcoin which may be found on the Trybe platform.
Bitcoin is Too Expensive
Remember late 2017, I certainly do. The absurd spike in BTC transaction fees was reputationally damaging and led many, myself included, to reassess the dominance of BTC. Despite SegWit wallets becoming the norm, fees do indeed remain high for utilizing the BTC network. Taken in isolation, this does seem to be a key competitive weakness. However, once again, on reflection- if BTC is a base layer store of value -it’s not meant to be cheap – it doesn’t have to be. Critically, as the Lightning Network continues to expand and mature, the fee premium of BTC will become less and less relevant. If indeed, BTC becomes the go-to chain for high monetary value wealth transfers – its current fee structure becomes trivial. BTC already moved over 2 trillion dollars in 2018, in the teeth of the bear market.
Bitcoin is Old
Yes, it was the first. It is over ten years old – a methuselah by crypto standards. Herein lies the rub, BTCs very longevity is a key component of its value proposition. It’s a proven network – through time and adversity. No other project lives in the same category of ‘self-evident’ reliability. It’s all claim and supposition – perhaps to be later proven true but only BTC can factually point to a decade of network service and security.
Bitcoin is often compared to centralized iterations of software such as browsers and email platforms which were superseded by newer more feature rich programs. This is understandable but the access to decentralized sovereign hard money that BTC created is not easily replicated or improved upon. Claims that this is the newer, bigger, better Bitcoin have so far been mostly hot air. Each day that passes entrenches Bitcoin’s place within this new sovereign money financial system rather than weakens it. Again, don’t take my word for it but sit back and reflect – Is Bitcoin really just a piece of centralized software passively awaiting a newer, leaner model or is there perhaps more to it?
Next week BTC’s supposed inability to scale, it’s lack of speed and the negative impact of Bitcoin maximalism will be examined.
Thanks for listening.