Bitcoin is passé. It’s too slow. Too simple.

You’ve probably heard one of these arguments, or even made some of them.

With bitcoin currently trading around $40,000 at the time of this video, many people feel like they have missed the boat. “If I just could have gotten in at $10, $100, or even $1,000,” they think, “then I’d be set for life.”

Of course, the truth is more complicated. In reality, if you had purchased bitcoin at $10, you would have sold it for around $20 and then boasted to your friends about your 100% profit. Or perhaps you’d have ended up like this guy:

It takes a special — perhaps even insane — person to sit on 300,000 percent unrealized gains. You’re probably not that guy. This brings us to an important point. It’s not so much about when you buy as it is about why you buy. Many people who first became interested in bitcoin over a decade ago are still broke, whereas many others who began stacking sats religiously only a few years ago are sitting comfortably. The distinction is entirely philosophical.

If you’re looking for “the next bitcoin,” you’re probably on the wrong path. You most likely have one of the following conditions:

You don’t fully comprehend the purpose of Bitcoin.

You don’t fully comprehend bitcoin’s benefits.

Or you don’t fully comprehend what makes Bitcoin unique.

The third condition will be the focus of this article.

The fact that Bitcoin was the first cryptocurrency isn’t the only thing that distinguishes it. Many people like to bring up the fates of MySpace and Yahoo when discussing Bitcoin’s first-mover advantage. This comparison, however, is a common fallacy that demonstrates a fundamental misunderstanding of what Bitcoin truly is.

Instead of thinking of Bitcoin as an internet company, think of it as akin to the internet itself.

INTERNET AND BITCOIN

Bitcoin is revolutionizing the world of value in the same way that the internet revolutionized the world of information. The internet of today is fundamentally the same as the internet of the early 1990s. However, when it comes to the quantity of applications available, the user interface, and the general social relevance of the internet, the internet of today is virtually indistinguishable from the internet of the 1990s. No new internet infrastructure was required; rather, these new features and applications were subsequently integrated on top of the existing infrastructure, which was a significant cost savings. Many people find it difficult to look beyond the present moment, and as a result, they had no way of predicting how the sluggish, bulky, complicated internet of the early days would evolve into the high-speed, small, intuitive internet that we today carry around in our pockets.

Internet protocol and TCP (transmission control protocol) are two of the foundation layers that support the internet’s operation. Since its inception in the 1970s, TCP/IP has been and continues to be the foundation of internet data transfer.

Is it true that technology has not progressed since then? Is it possible that the world’s greatest computer scientists have failed to come up with something more efficient than TCP/IP?

Yes, technology has advanced significantly since the 1970s, and numerous suggestions to replace TCP/IP have been put up in that time period. So, why are we still utilizing an out-of-date protocol despite the fact that there are “better” versions available?

The answer to this question provides us with an indication of why bitcoin is unlikely to be replaced by any of the more than 16,000 cryptocurrencies currently in circulation.

We’ll come back to this question later on, so keep it in mind as you continue reading.

It’s crucial to keep in mind what Bitcoin is intended to accomplish. One of the goals of Bitcoin is to provide a viable alternative to our flawed fiat financial system, which is currently dominated by governments and central banks. Individual financial sovereignty was achieved with the creation of bitcoin, which took control away from central banks, commercial bankers and governments and placed it in the hands of the people.

Bitcoin’s job is simple. Follow the regulations that have been established by the network and keep going.

That’s all there is to it.

It does this job extremely well. Even the most powerful government on the planet does not have the authority to change the laws of Bitcoin.

This, then, is the most important characteristic of Bitcoin. The one characteristic that distinguishes it from every other altcoin is its immutability.

BITCOIN VS. ETHEREUM: WHICH IS BETTER?

Bitcoin’s monetary policy has remained steadfast since it was established by Satoshi over a decade ago, and it has not changed.

This can be compared to the monetary policy of Ethereum, the second-largest cryptocurrency. As you can see, it fluctuates dramatically and frequently during the day. What is the maximum amount of ETH that can be produced? This is a question for which there is no satisfactory response.

To be fair, Ethereum was not intended to be a Bitcoin substitute when it was developed. It was created as an attempt to fulfill another niche: niche of smart contracts. However, many of the most vocal Ethereum supporters believe that the move to ETH 2.0 will position ETH as a viable monetary alternative to bitcoin in the near future. They have even gone so far as to unironically refer to ETH as “Ultra Sound Money” in response to Bitcoin’s sound-money features.

What these people fail to recognize is that Ethereum’s ability to change its monetary policy in order to be “ultrasound” is the very reason it cannot be.

Bitcoin is sound money not because it has a maximum supply of 21 million coins, or because its inflation rate halved every 210,000 blocks. These are just numbers and could have been different. However, because these figures are set in stone, we are confident in referring to bitcoin as sound money.

Bitcoin and Ethereum have almost nothing in common. They are both doing their own thing, and neither should try to compete with the other. Ethereum is no more a threat to Bitcoin than aluminum foil is to gold.

BITCOIN IN COMPARISON TO “FASTER COINS”

Since Bitcoin’s inception, a lot  of “faster and cheaper” coins have been developed in an attempt to address the cryptocurrency’s perceived shortcomings. From Dogecoin to Litecoin, to Digibyte to Bitcoin Cash, there is no shortage of cryptocurrency competitors vying for the attention of investors.

This is unlikely to happen for the same reason that TCP/IP is still the internet standard 50 years after it was invented.

Upending and rebuilding the entire internet every time a slightly better data-transfer protocol is invented is akin to an artist scraping and repainting their most famous paintings every time a slightly better canvas is invented. The point is that the best paintings are not those with the best canvases, but those with a good enough canvas to allow the artist to create his masterpiece. The canvas only needs to do one thing: get the job done.

TCP/IP gets the job done. It enables the internet to operate and applications to be built on top of it.

Similarly, Bitcoin accomplishes the extremely difficult task of separating money from the state. It is irrelevant that the Bitcoin blockchain appears to be slower and more expensive than many other blockchains.

Altcoin marketers have worked hard to promote their coins as having greater scalability and faster transaction speeds than bitcoin.

The only issue is that no one appears to care. Countries have not made Digibyte legal tender. Dogecoin does not appear on corporate balance sheets. World-class asset managers aren’t investing in Litecoin or Bitcoin Cash.

Why not? Let’s use an analogy to answer this question.

Consider two travelers departing from Cleveland, Ohio, both in search of a flight to Cairo in order to visit Egypt’s pyramids. The flight for Traveler A costs $500 and lasts 10 hours. Traveler B pays only $100 for his ticket, which takes only 2 hours.

Traveler B brags to Traveler A about how much less expensive and time-consuming his trip is.

Both passengers board their flights and land in Cairo. The only difference is that Traveler A arrives in Cairo, Egypt, whereas Traveler B arrives in Cairo, Illinois!

All of Traveler B’s time and money saved turned out to be a waste of time and money because the prerequisite — the correct destination — was overlooked.

When it comes to the soundness of a currency, immutability is a must. If this property is not met, nothing else matters. If a cryptocurrency’s monetary policy can be changed with a few phone calls from the US government, or because powerful insiders say so, then every other feature it provides is completely irrelevant.

IS IT POSSIBLE TO COPY BITCOIN?

Bitcoin’s immutability was achieved not by virtue of its code, but rather by the unique circumstances under which it was created. The code for Bitcoin is completely open source. It can, and has, been copied and forked multiple times.

However, none of these copies are immutable by definition, because immutability had to be broken in order for the fork to exist in the first place. We can see this playing out in real time with Bitcoin Cash.

In 2017, a group led by Roger Ver and Jihan Wu determined that it was worthwhile to forego immutability in order to increase block size. With this precedent established, it was no surprise when, a year later, a faction within the Bitcoin Cash community led by Craig Wright decided to split from Bitcoin Cash, forming BSV. As these forks continue to fork and fade into irrelevance, Bitcoin continues going strong, with its immutability intact.

POTENTIALS  OF BITCOIN

Clifford Stoll, a Newsweek writer, made the following sarcastic remarks about the internet in 1995:

“We’re promised instant catalog shopping — just point and click for great deals. We’ll order airline tickets over the network, make restaurant reservations and negotiate sales contracts. Stores will become obsolete. So how come my local mall does more business in an afternoon than the entire internet handles in a month? Even if there were a trustworthy way to send money over the internet — which there isn’t — the network is missing a most essential ingredient of capitalism: salespeople.”

Stoll was speaking about the internet as he saw it in 1995. He failed to consider the plethora of applications that the same 1995 internet would eventually enable as time passed.

Similarly, many people today regard Bitcoin as slow and expensive. After all, it takes about 10 minutes for a transaction to be confirmed on the blockchain, and fees can range from a few dollars to several hundred dollars, depending on network congestion. Just as it needed insight in the 1990s to identify the internet’s power to scale, it takes delving deeper to comprehend how Bitcoin can scale to millions of transactions per second.

Many organizations, such as Square and PayPal, are integrating bitcoin into their services for individuals who are willing to give up some privacy in exchange for convenience.

For those seeking secrecy and the ability to send bitcoin at the speed of light with minimal fees, the Lightning Network is rapidly gaining traction as the preferred payment method. Already in use in El Salvador and soon to be integrated into Cash App, the Lightning Network is transforming bitcoin into a transactional currency, effectively rendering thousands of altcoins obsolete.

A MORE  TRANSPARENT SYSTEM

The  Federal Reserve is currently debating whether to maintain low interest rates and allow the economy to be destroyed by inflation or to increase interest rates and let the economy be ruined by the enormous amount of debt.

Meanwhile, there is a parallel system in place where no such decisions are required. This system has an algorithmic monetary policy that everyone is aware of before they choose to participate. Over time, rational actors will shift away from the current system, which is characterized by bureaucracy, corruption, and inflation, and toward this other system, which is based on the principles of mathematics, immutability, and scarcity.

This system is known as Bitcoin. And it has no rivals.