CoinDesk 50: Why Bitcoin Is Still King
Bitcoin is the reason why we're writing these words and you’re reading them now. The first crypto still dominates the industry.
With so many cryptocurrencies and “blockchain solutions” it’s remarkable, yet unavoidably clear, that Bitcoin is still the most exciting project to watch in this space.
In the shadow of the coronavirus crisis, small groups of people use this censorship-resistant money to fundraise for emergency medical equipment, secure their savings and conduct international business. The godfather cryptocurrency still represents 64% of the crypto market.
Although it appears such usage is still an extreme outlier compared to speculative trading volumes, there are people who turn to bitcoin because it’s the only accessible tool that works in their particular circumstances.
Bitcoin is king because it is actually useful to people who want to do more than experiment. This cryptocurrency project isn’t run by a group of youthful researchers publishing their homework in hope of stress-testing models with other people’s money. Bitcoin isn’t a lifestyle brand, even if some zealots congregate around it. It is just money, already today. It is a tool and not a promise. Its value doesn’t rely on any single company. And that’s why, while startup dreams come and go like fashion trends, bitcoin remains resilient.
Lebanese entrepreneur Michel Haber, founder of the remote web services startup cNepho Global, now pays most of his contractors with bitcoin. “They would rather get their payments in bitcoin because they can cash out locally, wherever they are,” Haber said. “I buy bitcoin peer-to-peer, and pay my developers the same way.”
Bitcoin Core contributor Sjors Provoost said perhaps one of the most bullish observations about the Bitcoin network is that development keeps “chugging along” despite the coronavirus crisis. At a time when central banks are opening the money spigot to combat COVID-19, bitcoin’s fixed scarcity becomes more attractive than ever.
“Lightning has been getting easier to use thanks to apps like Phoenix,” Provoost said, referring to the scaling solution that lets people quickly send small amounts. “We know that with Lightning, we can handle far more usage than the last peak.”
Tieron senior software engineer Buck Perley, who made an open-source Lightning tool clients use for time-stamping, agreed Bitcoin’s “consistency and resiliency to external shocks” is the technology’s primary feature. Being reliable is precisely what makes the bitcoin currency exciting to watch in uncertain times.
“As a project, the fact that [Bitcoin] doesn’t rely on funding models … that are tightly correlated to the broader economy is also proving to be an aspect of its resiliency,” Perley said.
Blockstream engineer Lisa Neigut said new privacy tools may eventually have Lightning counterparts as well, offering privacy features for a wider range of transaction types. Her company is collaborating with the French startup ACINQ to enable privacy gateways, called “blinded paths,” on the otherwise public Bitcoin ledger.
“Blinded paths are a huge privacy win for services like Jack Maller’s Zap wallet or the Phoenix mobile app that mediate invoice payment on behalf of users,” she said. “The coronavirus has also opened up conversations about doing more intense tracking of people to see the virus move in real time. As commerce moves online, I think more than ever we’re going to need a permissionless option that Lightning (and bitcoin) help provide.”
Even with on-chain fees, Provoost is optimistic about the balance of supply and demand. While some blockchain enthusiasts may see Bitcoin’s slow-moving development process and narrow focus as “boring,” advocates see this as the cryptocurrency’s most valuable feature.
“With persistently low fees, my impression is that bitcoin is on standby for a lot more people to use it,” Provoost said. “Bitcoin, or the idea of it, is an insurance against tyranny. It’s okay if we don’t need it at the moment. As with insurance, it can be good news if they’re not sending you lots of money. And the [bitcoin] price hasn’t dropped through the floor, so apparently owners are still happy.”
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