The future of Bitcoin

Wanted to share my thoughts with you, my fellow experimenters, as we enter the next parabolic wave of crypto adoption by the species.

This is a really long game we are playing here. We are literally replacing government issued currency which is over 3,000 years old. It’s going to take decades to get crypto into a dominate position and centuries to deprecate fiat. It’s the obvious and inevitable next step as we move to a global society and eventually a multi-planetary species.

Did Satoshi nail it with his first shot? No, but he got pretty close, which is why he’s going to be in history books for the rest of human history. He gave us a solid foundation to build upon and then gracefully departed.

So, what are the requirements for a crypto that is going to thrive over the centuries? The organism with the greatest chance of long term survival is the one which is the most adaptable to changes in its environment. What does this mean for the different coins out there?

First off, Bitcoin (BTC). It’s the first chain and currently the biggest, but is destined to lose its dominate position in the long term if it cannot adapt to changes in its environment, specifically large scale adoption. People may collect it and hoard it like gold, but no one is going to be happily paying $100+ or even $1,000+ fees for on chain transactions. So, it will be a collector coin and a fixed memory of Satoshi’s first offering to the world by namesake and ticker symbol.

How did Satoshi propose adapting to large scale usage? When people were spamming the chain with dust transactions and encoding porn and weird crap into the chain he stuck the block size to 1 MB and commented that we can make it bigger as technology allows.

I now have a 4 TB SSD that can read and write at 5 GB/second. Internet to my house can upload and download at 100 MB/second. We should be able to safely 10x the block size every ten years forever. That will at least give some scaling instead of nothing.

I believe the current plan for BTC is to keep the block size at 1 MB forever and use secondary ledgers for scaling. It’s the most conservative move which is the safest play early on but if the secondary ledgers do not succeed BTC will lose its position on top. It’s not going to happen in the next decade but it will probably happen. A lot can change in a decade. Nokia sold 1 billion phones in 2007.

So BTC is the most conservative coin, and now we have Bitcoin Cash (BCH) which is still very conservative but will permit some change. BCH is an experiment in a leaderless path forward. It doesn’t have Satoshi to guide it or the original repo and name, but it does have the love of many of the early Bitcoin adopters and users seeking low fees. Its value proposition is a good one which basically is “we will slowly incorporate good and proven ideas.” Its strength is its weakness: being willing to change. This means there will be inevitable conflict about how to change. I expect more forks over the years, but if the if the community can stay committed to giving users and miners the best experience, BCH is poised to surpass BTC over the next 10-30 years, primarily defeating it based on user fees and transaction volume.

Then we have ETH and the other programmable coins. These are the most innovative but they are going to be the most buggy by their nature. They will very likely continue to find specific niches to fill and be very valuable, although it is hard to tell if they will become the primary coin based on market cap. Their scarcity value proposition isn’t as strong as BTC and BCH.

Lastly we have Monero (XMR) and the privacy coins which are amazing for privacy but also have the same scaling issues. The good ones aren’t fully auditable which means we can’t ever really trust that there are not bad actors on them duping or creating coins. If BTC and BCH can implement equivalent privacy these coins will never become the most valuable.

TLDR: This is a long game. BTC is going to moon over the next few years but lose practical usage as fees become too unfriendly to users. BCH is poised to replace it and may also be able to replace the privacy coin use case if CashFusion and Tor integration work and get integrated into all of the good wallets. ETH will probably have more bug incidents but will create massive value by continuing to explore and open new use cases.