“Bitcoin: Electronic Peer-to-Peer Cash.”
It’s right there in the title of Satoshi Nakamoto’s Bitcoin white paper from 2008.
So, it makes sense a rather vocal contingent of the Bitcoin Community waves the banner that Bitcoin should be cash.
One of the main critiques of bitcoin is that in times of high transaction volume transaction fees go out of control and transactions take longer. There have been hotly contested and divisive debates over how to make Bitcoin the electronic peer-to-peer cash and not the digital gold it has become since it was unleashed onto the world in January 2009.
The Bitcoin Block Size debate raged in 2016 as one group called to actually change the Bitcoin protocol and expand the block size, arguing that Satoshi intended to potentially do so at a later date anyway. The other side of that debate vehemently opposed changing Bitcoin at the protocol level. There has even been an annual conference, Scaling Bitcoin, dedicated to scaling Bitcoin. Eventually, layer twos–of which Lightning Network is the best known–began to appear with the promise of scaling Bitcoin without changing the protocol.
Going to bat for Bitcoin as a digital currency has been a tremendous waste of time. When you explain Bitcoin as a cryptocurrency, all sorts of imagery comes to mind–Silk Road, Russian hackers, money laundering, and so on. When Bitcoin is explained as property–as a digital asset–the resistance dissipates.
A battle for Bitcoin as a currency entails going up against governments with unlimited money and armies. If Bitcoin is understood to be property, and not currency, then it won’t be banned in countries with property rights. Countries turning Communist is but an existential risk we all face, not necessarily tied to Bitcoin.
Regardless, most of the $900 trillion dollars worth of wealth in the world is not held in checking accounts as currency. Most of the money in the world is held in assets, such as property, Picasso paintings, and sports teams. The Middle Class today uses the Vanguard 500 or the S&P index and holds wealth in a diversified portfolio of stocks—that’s been the way for thirty or forty years.
Capital is not sitting in currency. Wealthy individuals do not view the US dollar as a store of value. Clearly, Bitcoin as a store value–that is, as property–is the meaningful use case here.
Bitcoin As Property
Whether or not Bitcoin is a security or commodity is a fundamental question. If Bitcoin is a commodity, it’s an asset without an issuer. Therefore, no person, company, government or group can exercise undue influence over the protocol’s future. Luckily, this question has already been answered. The Securities and Exchange Commission (SEC) has already declared Bitcoin a commodity.
Bitcoin in fact behaves like property. For example, Bitcoin transactions function in some ways as digital deeds while replicating many aspects of real estate transactions; most importantly, recording and title assurance. In some ways, Bitcoin is even better. For instance, real property deeds are recorded in a centralized public records office. The Bitcoin protocol effectively serves as a decentralized public records office.
Deeds are maintained at the Bitcoin mining layer, which makes a public record of validated transactions. Whereas in deeds, in Bitcoin if one grantor makes more than one transaction and tries to double-spend a single bitcoin, bitcoin miners determine which transaction is valid by making one of them, not the other, public record.
All of the makings of a real estate transaction made possible without the need for a central authority. Miners essentially time-stamp transactions and add them to bitcoin’s transaction history, a decentralized public ledger known as the blockchain. Bitcoin conducts property and maintains property law in a decentralized fashion and outside of existing law.
Institutional Adoption
Institutions have already begun to adopt Bitcoin as a digital asset, not a currency. Their adoption of Bitcoin began in earnest January 2024 with the Bitcoin ETF approvals. It is the beginning of a fervent digital gold rush.
By November 2034, 99% of all bitcoins will have been mined. And then the last one percent comes out over the following 100 years. Presently, 94% of all bitcoins ever have been mined thus far. Miners still sell their bitcoins in order to cover operating costs. Once the last Bitcoin is mined, miners will only receive transaction fees.
A relatively small number of corporations control vast amounts of wealth. They will spend the coming years researching Bitcoin and considering allocating part of their treasury to Bitcoin. They will ultimately have to look at their cash holdings, which are losing value over time, and conclude that they don’t have much choice other than to do what MicroStrategy has done.
Bitcoin Will Soon Be One Of The World’s Most In Demand Assets
Bitcoin is the highest quality capital and will become the most credit worthy asset. It’s a transparent 24/7 365 days per year market with no down time ever. There will only ever be 21 million bitcoins in existence. No other asset has such clarity in future supply. While real estate can be subject to rent control, expropriation, eminent domain, and cumbersome taxes, Bitcoin is not tied to any particular jurisdiction.
Man discovered with Bitcoin a mathematically sound economic protocol. Bitcoin has been copied thousands of times and none of the attempts proven superior and the world’s first digital asset has yet to be hacked despite a lofty bounty. Bitcoin will outlast Satoshi Nakamoto and us all.
Post by Kadan Stadelmann: CTO of Komodo Platform
Kadan Stadelmann is a blockchain developer, operations security expert and Komodo Platform’s chief technology officer. His experience ranges from working in operations security in the government sector and launching technology startups to application development and cryptography. Kadan started his journey into blockchain technology in 2011 and joined the Komodo team in 2016.
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