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By Matteo Pecar
As stated by Satoshi Nakamoto on the Bitcoin whitepaper at the end of 2008, Bitcoin was born as peer to peer electronic cash in a decentralized payment network.
However, Bitcoin so far has shown its limit as pure peer to peer cash. The network can get rapidly congested; and either one has to wait long for a transaction to be validated; or the transaction has to have very high fees in order to be validated “quickly”. (Remember that a Bitcoin transaction will appear within 12 minutes, but for it to become truly irreversible on the blockchain it needs about 1 hour, or 5/6 validated blocks); Despite this, Bitcoin proved to be useful in other ways, and by design has many characteristics more comparable to gold than cash.
- Scarcity – Fewer and fewer new Bitcoin will enter the network until a maximum of about 21 million BTC will be reached.
- Durability – The same transaction ledger is replicated on thousands of Computers around the world.
- Fungibility – all BTC are the same.
And some others far better than Gold:
- Divisibility – Bitcoin is divisible 1 BTC/100 millions Sats.
- Recognizability – it is impossible to counterfeit a Bitcoin, like for instance you can use copper disguised as gold.
- Portability – the concept of borders is obscure to Bitcoin, with the private key in mind, and a 50€ smartphone, one can carry and use any amount of Bitcoin everywhere in the world.
- Permissionless Nature – 24/7 people can access, use, or trade their Bitcoin and do not have to ask permission to nobody.
- Programmability – The ability to embed any type of economic activity with code in a decentralized financial ecosystem.
On the other hand, remember that Gold also has other physical properties that renders it very useful for several industries (health, electronics, jewelry,…); and the objective is not to prove which one is superior, but to understand better about how to position Bitcoin and what are its potential applications.
Bitcoin today is more of a store of value than electronic cash. Even though I realize that ”store of value” may sound strange for an asset still in full price discovery mode; therefore, very volatile; but in times Bitcoin has proven to be a magnificent store of value; and as the traditional financial world tries to understand it, it keeps discovering new applications. If it is true that it started for a game for geeks and hackers, then it became a speculative instrument, and now it’s being used by public companies as reserve instead of $ to preserve the value of their assets.
What is amazing about new technologies, and particularly these constant new waves of decentralized projects, is the ecosystem that takes form around them; like a “living thing it constantly evolves in a Darwinian, Libertarian, Capitalistic dynamic involving founders, developers, miners, nodes, investors; while getting smarter, more efficient”, and more resilient. (Michael Saylor – MicroStrategy). In a world that is more digitalized every day, what was unthinkable just few years ago may well become the reality of tomorrow.
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