I revised my perspective on Bitcoin in 2024.

If you are an avid reader of CryptoSlate, you might have observed that our editorial approach refrains from labeling Bitcoin as ‘crypto.’ This is intentional, and the decision is not merely a matter of semantics. We contend that Bitcoin is distinct from other digital assets typically categorized under the broader term ‘crypto.’

I support this perspective; however, my stance has evolved over time. My profile identifies me as a “blockchain maxi,” a label that I now recognize stemmed from a significant misunderstanding of Bitcoin’s intangible qualities.

One of the initial articles I authored in this domain advocated the idea that a new technology would eventually surpass Bitcoin. I likened Bitcoin to early dot-com companies such as Alta Vista, AOL, and Lycos. In July 2021, I stated,

“The Facebook, Google, Amazon, and eBay of the decentralized ledger space haven’t been born yet! I want to keep an eye out for the next groundbreaking tech projects… because they are on the horizon, and it’s quite likely that they are not the projects most people are currently betting on.”

My primary argument at that time was that we were earlier in the timeline than many believed and that decentralization was the cornerstone of our digital advancement, rather than Bitcoin itself. I even speculated that Bitcoin could potentially vanish entirely.

“My point? We are earlier than you might think in this next phase of our digital evolution. Could Bitcoin disappear completely? Absolutely. Do I anticipate that to signify the end of decentralized ledger-based data solutions? Not a chance. We are at a tipping point.”

While I still maintain that we are at a “tipping point” and that we are still “early” in Bitcoin’s evolution, I do not necessarily believe we are as early in the realm of “crypto.” The adoption of crypto is progressing, and digital assets are becoming integrated into a growing number of FinTech applications. I perceive the pathway to the financialization of the internet through Web3 as relatively straightforward from our current position. However, the journey to Bitcoin’s ultimate form has a significantly longer timeline.

What prompted my change in perspective? I cannot pinpoint a single factor, but several recent guests on SlateCast have profoundly influenced my views. Margot Paez, Ryan Condron, Alex Fazel, Jason Fang, and Lee Bratcher have all contributed to reshaping my understanding of Bitcoin. There is a saying at CryptoSlate that many of us have become “more of a Bitcoin maxi every cycle,” and I certainly resonate with that sentiment as we approach the halving.

Bitcoin vs. Crypto

‘Crypto’ is an abbreviation for cryptocurrency, a term not mentioned in the Bitcoin whitepaper but used in a 2010 forum post by Satoshi, where he referred to Bitcoin as a “P2P cryptocurrency.”

“Announcing version 0.3 of Bitcoin, the P2P cryptocurrency! Bitcoin is a digital currency utilizing cryptography and a distributed network to eliminate the need for a trusted central server. Escape the arbitrary inflation risk of centrally managed currencies!”

Therefore, we should accurately describe Bitcoin as a cryptocurrency; however, the evolution of the sector has led to the emergence of ‘crypto’ as an industry in its own right. Thus, while Bitcoin is a cryptocurrency, it should not be categorized under the umbrella of the ‘crypto’ industry, in my view. Here’s why.

I identify three distinct categories within the digital asset landscape.

1. Bitcoin
2. Ethereum, Polygon, Solana, etc.
3. Memecoins

I generally view assets like Ethereum, Polygon, Solana, and others as comparable to tech investments in the stock market, while memecoins are merely speculative. In contrast, “Bitcoin is a technological marvel.” Non-Bitcoin blockchains and memecoins both fall under the ‘crypto’ label for me. However, projects like Ethereum possess exceptionally strong fundamentals, whereas memecoins are entirely speculative. For this reason, I believe memecoins are detrimental to ‘crypto,’ which is why they should not be included in discussions alongside Bitcoin. This distinction is vital; perceiving Bitcoin merely as another ‘crypto’ undermines its unique value proposition.

Bitcoin is a $1.3 trillion asset that influences the price movements of an additional $1.2 trillion of ‘crypto,’ so its impact on the market is significant. Its fluctuations set the pace for the entire sector, with other cryptocurrencies frequently responding in kind. The occasional delay in this synchronization, typically no more than a week, underscores Bitcoin’s central role in market dynamics. This interdependence reveals my flawed assertion that Bitcoin’s technological foundations might ultimately be its Achilles’ heel. History is filled with instances where superior technology did not ensure market dominance; the network effect and the comprehensive value proposition of Bitcoin far surpass the benefits of newer technologies.

Critics, including myself in the past, often point to the alleged technological shortcomings of Bitcoin in comparison to newer blockchain initiatives. However, this critique fails to recognize the intricate relationship between technology, adoption, and the network effect. Bitcoin’s rise is not solely a result of its technical attributes but a combination of cultural, social, and economic elements that have cemented its status. The notion that newer, technologically advanced cryptocurrencies could dethrone Bitcoin overlooks the unique circumstances and the zeitgeist that facilitated Bitcoin’s ascent.

The miracle of Bitcoin

When asked about selling Bitcoin for profit, MicroStrategy CEO Michael Saylor recently stated, “There’s a word for people who store value in fiat. We call them poor.” By this, he suggests that the prevailing mindset regarding Bitcoin as a store of value is fundamentally flawed. His assertion highlights Bitcoin’s potential as a future cornerstone of global value, a sentiment I share. Selling Bitcoin for profit only makes sense when one’s perspective is rooted in a low-time preference. Thus, while some contend that the era of being “early” to crypto may have passed, I believe the journey for Bitcoin is far from reaching its zenith.

Bitcoin’s societal, technological, philosophical, and genuinely viral foundations distinguish it. Bitcoin functions as a globally distributed event sequencer and an incentivized decentralized timestamp ledger with a reward mechanism intrinsically linked to our planet’s limited resources. Coupled with its independence from any nation, corporation, or individual and its operational viability from any energy-generating location on Earth, these characteristics are essential to our planet’s requirements.

Despite Bitcoin’s considerable advancements, its full potential remains unrealized. The general perception still narrowly confines it as merely a digital store of value or a medium of exchange. However, its strength also lies in its capacity to irrefutably demonstrate that a digital event has transpired, serving as a foundation for innovations that extend well beyond conventional financial applications.

Indeed, as a hard store of value, it is unmatched, and its foundational infrastructure can serve as the basis for global payment networks. Yet, its significance extends beyond finance; it plays a crucial role in securing vital data with accurate timestamping capabilities.

The journey of Bitcoin has been nothing short of extraordinary. Its resilience in the face of numerous challenges and attempts to undermine its value is a testament to its strength and the dedication of its community. Bitcoin transcends technology; it embodies a socio-cultural phenomenon that has established a significant presence in the digital age. Its survival and growth defy expectations, affirming its intrinsic value and essential role in the digital asset ecosystem.

As we explore the intricacies of Bitcoin and its ecosystem, it becomes clear that its journey is unparalleled. The convergence of technology, finance, history, culture, and societal movements has given rise to a phenomenon that defies simple categorization. Bitcoin’s narrative is one of resilience, innovation, and an unwavering belief in the transformative potential of decentralized finance. It stands as a symbol for the future, promising a new paradigm where value, trust, and freedom are redefined for the modern era.

Bitcoin cannot be reproduced.

While technological innovation is vital, the depth of Bitcoin’s integration into society’s financial and cultural fabric provides it with an unparalleled fortress of resilience. The belief that emerging cryptocurrencies could surpass Bitcoin due to superior technology overlooks the complex array of factors contributing to Bitcoin’s lasting significance.

The discussion surrounding Bitcoin and the possibility of newer, technologically advanced cryptocurrencies replacing it opens a broader dialogue about innovation, adoption, and the enduring nature of foundational technologies. Bitcoin’s narrative, intertwined with technological milestones, cultural shifts, and a revolutionary approach to value exchange, offers a profound case study of technological adoption trends and the lasting impact of first-mover advantage combined with deep-rooted network effects.

Bitcoin, at its core, represents an intersection of factors that cannot be duplicated. Its inception, growth, and lasting presence are attributed to a unique combination of technology, societal need, timing, and a touch of luck. This blend has solidified its position in a manner that no subsequent technology or cryptocurrency can replicate.

Bitcoin transcends mere technology or financial innovation; it is interwoven into the cultural and social fabric of our digital era. It embodies a movement, a shift in perception towards value, sovereignty, and decentralization. This cultural resonance reinforces its position, making comparisons with other assets or cryptocurrencies based solely on technology or utility somewhat shortsighted. Bitcoin has sparked a revolution that extends beyond its protocol, influencing global financial systems, governance models, and the concept of money.

Consider, for example, the significant implications of Bitcoin in nations facing hyperinflation and financial instability. In these areas, Bitcoin is not just a speculative asset but a lifeline that provides individuals and businesses with an alternative to failing fiat currencies. By enabling secure, borderless, and decentralized transactions, Bitcoin empowers individuals with financial sovereignty, allowing them to preserve and transfer wealth independently of deteriorating financial systems. This tangible impact illustrates Bitcoin’s utility and reinforces its status as more than just another digital asset; it is a beacon of hope for financial inclusivity and resilience.

While some assert that Bitcoin’s technology may be surpassed, they overlook the adaptability and evolutionary potential within the Bitcoin ecosystem. The network’s foundational principles—decentralization, security, and open participation—alongside a robust community of developers ensure its ongoing evolution. Furthermore, innovations like the Lightning Network demonstrate how Bitcoin can adapt, addressing scalability and usability while maintaining its core values.

The debate surrounding consensus mechanisms, particularly the comparison between Proof of Stake (PoS) and Bitcoin’s Proof of Work (PoW), further emphasizes Bitcoin’s uniqueness. PoS, despite its efficiencies, introduces different trade-offs, particularly concerning security and decentralization. Bitcoin’s PoW consensus is a fundamental aspect of its security model and economic principles, linking the digital to the physical world in a way that PoS systems have yet to replicate. Unlike PoS, possessing all the Bitcoin in existence does not grant control over the network. Bitcoin separates wealth from state.

Nonetheless, there appears to be a resurgence of PoW in newer forms that certainly piques my interest regarding the ‘crypto’ landscape. Decentralized AI like Bittensor, DePin projects such as IoTex, and innovative Web3 initiatives like Core Blockchain are introducing new methods to utilize computing power to secure networks and enhance their blockchains. I do not view these as competitors to Bitcoin either, but I appreciate their ability to diverge from the PoS norm that has dominated Web3.

Speculating on Bitcoin’s future evolution is a complex task. Numerous factors, including technological advancements, regulatory environments, and global economic changes, will likely shape its trajectory. However, the essence of Bitcoin—its principles, community, and the revolutionary ideals it represents—provides a solid foundation for its ongoing relevance and evolution. Evolution may be the most fitting term here—Bitcoin evolves like a living entity; it operates according to models that align with nature and is intrinsically connected to global ecology. No ‘crypto’ possesses this.

Ultimately, Bitcoin is more than just a cryptocurrency; it signifies a paradigm shift in how we perceive and engage with money, value, and each other in a digital age. Its journey reflects a broader narrative of innovation, resilience, and the pursuit of a more inclusive and decentralized financial system. Whether this article stands the test of time or not, the conversation it ignites is a testament to Bitcoin’s lasting impact on the world. As we look ahead, Bitcoin remains a crucial element in understanding the intersection of technology, finance, and society.

The post I was wrong. Why I changed my opinion on Bitcoin in 2024. appeared first on CryptoSlate.