Bitcoin has once again risen over $9,000 while its market share has jumped in the past two days by 4% from around 63% to now near 67%, not far off from the high of 70% since ethereum began challenging it.
The currency was lagging behind all others, but now it is leading the market with it rising more than any top coin.
In many ways there has never been a better environment for bitcoin to shine and very brightly this spring.
That’s because western governments are printing at war time levels, which means a significant fall in the value of fiat should be expected within America and Europe.
For some other countries the situation is dire indeed. At the begining of the year one USD bought you 60 Russian Rubbles. That reached 80, a 30% drop, with it now at 74.
Iran is moving some zeros from its paper, a tactic tried before with usually not much success. While in Lebanon, well it’s tragic what has happened to the once Paris of the Middle East:
In Venezuela bitcoin is worth 1.5 billion of their ‘money.’ Even rich Arab lands may suffer as oil has plunged to not just all time low, but the bottom of the barrel in real terms.
Brent Crude Oil (BRO) has not reached this low of $20 since 2001. Back then you could buy a London house for maybe £40,000. Now you need to add a zero to that.
Meaning in real term after adjusting for inflation oil reached about $2, a price you probably won’t find even in the 70s when bread was 10 cent.
That’s before all this has even began economically speaking. Hugely indebted governments will now be far more in debt, with technical bankruptcy not declared except by the printing presses of QE4ever.
Fiat however was arguably never a threat to bitcoin as politburo money can never compete with the people’s money where store of value is concerned.
Nor was gold or any other asset ever a threat to bitcoin. Gold needs to be paper inflated, and by that we include digital spreadsheets, for it to be useful in the ordinary course of events. While bitcoin is just an app on the phone.
Stocks can compete to some extent but they lack the means of exchange element and rely on politburo ‘auditing.’
The only potential challenger therefore has been other cryptos, with the question now being whether all these other current cryptos have failed in challenging bitcoin.
A Third Wave?
If we go back to ancient times, 2011, Litecoin made it clear they were content to be far smaller and very secondary to bitcoin.
There were many others. Namecoin, which tried to do crypto DNS, a bit like the Ethereum Name Service (ENS). There was Dogecoin of course, the favorite of everybody and still king of crypto hearts.
All of them not quite rising anywhere near a real contender even as they tried different things like DASH with Masternodes and all sorts of things which didn’t really add much above what bitcoin could and can still do, with bitcoin maintaining 90%-95% dominance in this first wave.
XRP arguably was the first one trying to compete, but it had no chance and still has no chance because it has some trust elements at the protocol level.
The Rise of the Second Wave
Ethereum is probably when the second wave really started, and is maybe the only coin that bitcoiners feared could rise to be dominant.
The chain-split BCH was also part of this second wave, and that too probably worried some bitcoiners.
There were others but to a lesser extent, with it perhaps statable at this stage that bitcoin withstood this second wave too.
For BCH, it had a real chance but not quite, realistically, and fundamentally the reason is probably because people did not think scalability is an easily solvable issue and/or if other projects could or did solve it, then bitcoin would just incorporate it.
From that then derives perhaps the lack of skilled developers jumping to BCH, and ultimately the lack of adoption, compounding the already huge problem of giving up on, at that point, an eight year old infrastructure set up for and mainly by bitcoin.
One can also state plenty of other reasons, like censorship, but overall those probably had little effect as ultimately after much debate the market decided to wait out bitcoin.
Ethereum had a real chance realistically, and almost succeeded in taking top position, but it didn’t do so even briefly perhaps because the timing just wasn’t right.
Bitcoin was unknown when everyone started talking about the blockchain or ethereum being able to do this or that, with all of this first needing an explanation of just what on earth is bitcoin and what is all this stuff.
That translates to people only heard of bitcoin and/or while they couldn’t buy ‘blockchain’ they could get some bitcoins, with it then mooning in 2017.
The Fall of ETH
That temporary somewhat ‘social’ situation gradually changed but what also changed was the revelation that ethereum was actually just as limited as bitcoin and now after segwit eth has the equivalent of 1MB per ten minutes while bitcoin can go up to around 2MB.
All that was fine, ethereans were told, this would be sorted in two years, so in 2020, with that timeline constantly changing with on-chain scaling for eth now realistically arriving more around 2024, if even then.
There’s a whole roadmap to get there with numerous phases, but conceptually it’s not clear how they can connect these different node networks and/or why bitcoin wouldn’t be able to do the same.
Ethereum has smart contracts which give it more capabilities, so maybe it could scale without bitcoin being able to, but half a decade is a very long time in this space, and during that time in the current situation of mass devaluation bitcoin’s algorithmically fixed supply has distinctive advantages which can’t easily be overlooked as they could have been overlooked had eth managed to increase onchain capacity.
So leaving eth to second position where we have a fairly cool network that can do some open and decentralized finance in defi as well as opens a space for innovation, but isn’t quite ready for prime time in as far as having the ability to overtake bitcoin, if it ever will be ready.
Bringing us thus to a potential third wave, with the question being whether it will be limited to propelling bitcoin upwards as the other two waves have, or whether this time one of these projects will manage to take top position.
Third Time the Charm or Bitcoin 4eva?
There are numerous new projects coming up, all of them interesting, and all mainly focused on addressing the hard problem of decentralized scaling.
We won’t name any of them, but generally they share roughly the same features. They try to break the network into node bundles or locals and then somehow get ‘roads’ to allow ‘traveling’ in these locals in a way that keeps it one network, one ‘country’ or globe, or why not, a whole universe.
In addition they also tend to have other features which generally few care about with different approaches taken to this node bundling or chopping but the aim is the same: to localize data storage.
There are other ways that can potentially address scalability, and that is pruning, something which is also a hard problem but doable.
Much of this involves very cutting edge mainly maths, and also some code, with it pretty much the frontier of tech science that has significant ramifications not just for cryptos, but the entire internet as we know it, and thus the economies of the world.
We show the above because we wanted to wonder if it takes a genius to crack decentralized scalability, and if it does we’re globally overdue for about two of them.
We do not want to go into speculation in the ‘science’ of genius distribution, but presumably they’ve risen in number through the centuries, as clearly can be seen above, because the population has increased also.
Thus currently globally there may be more than two, perhaps about ten, with hopefully at least one of them looking at this hard problem of decentralized scaling.
If a project can crack it then that project would obviously have a real chance of overtaking bitcoin if bitcoin can’t adopt its solution or does so far too late or if devs feel more comfortable in this other project.
As there is a vast amount of money to be made, as well as potentially fame if they don’t want to be anon, then there are huge incentives to experiment and therefore we should expect some of these projects to begin launching as some of them should have been consumed with thinking of it since 2015.
The difficulty is in being able to verify their potential claim and in being able to test their decentralization by forking off the network.
Thus if there is any transition it would be very gradual, with the significant vested interest in bitcoin having perhaps an even existential incentive to adopt any such potential solution, but the risk of complacency is always there.
For now however arguably it is reasonable to say bitcoin has won in a general sense with other networks competing but to a limited extent.
How long that will remains the case is to be seen but as the very first, bitcoin will probably always have a special place and until at least the next halving that place is in first position.