- Bitcoin is the oldest and slowest blockchain on the market, being over 100,000 times slower than the fastest
- It is no longer viable to use Bitcoin for everyday purchases, which many see as a major weakness
- However, Bitcoin’s technological frailties have led to it carving out a niche as a major store of value
Bitcoin should by rights be considered an outdated relic of the blockchain space, but it still remains the top cryptocurrency by market cap by some distance. This is no accident, and in fact it could well be that the developers’ consistent refusal to upgrade Bitcoin to compete with newer cryptocurrencies has helped it retain its place at the top.
An Atari ST in a World of PlayStations
Bitcoin is often criticized for its ancient technology, ancient that is in cryptocurrency terms, where boundaries are being pushed all the time. Blockchains are now being made that can complete 500,000 transactions per second, whereas Bitcoin is stuck on a measly 4-5.
There is a reason why Bitcoin has forked into coins like Bitcoin Cash and Bitcoin SV which take what Bitcoin started but ramp up the speed and efficiency, allowing them a much better opportunity to function as a coin for everyday use – what their developers say Bitcoin was always supposed to be.
The fact is that, much though Bitcoin maximalists argue the opposite, Bitcoin cannot effectively be used for everyday purchases. It is an Atari ST in a world of PlayStations – seen quite rightly as a technological breakthrough when it launched, but a system that has been superseded in speed and efficiency by even the shittiest of shitcoins.
Bitcoin Has Carved a New Niche
All of this suggests then that Bitcoin should be on the scrapheap and consigned to blockchain history, but instead the past few years have seen the opposite happen – Bitcoin is now much more respected and sought after than at any time in its history. It is being bought up by companies and financial institutions by the boatload, and is being eulogized by well-respected individuals from traditional financial backgrounds.
The reason for this change is in part to do with Bitcoin’s inability to function as the ubiquitous ‘coffee shop coin’. By being too slow to adequately fight its corner in the payment coin battle, it has instead fallen back on its founding principles as a decentralized asset where it has no competitor.
In a world where hyperinflation is suddenly a real threat, alternative stores of value are being sought across the world. We have seen this in the recent re-emergence of silver and gold from multi-year bear markets, and we can add Bitcoin’s own resurgence to that list.
In 2017 when Bitcoin hit $20,000 very few people were considering it as a hedge to fiat currency, but three years on this is very much it’s raison d’être – it is being seen more and more as a store of value in case the value of fiat currency continues to fall.
Tortoise Versus Hare
As precious metals have shown, stores of value don’t need to be fast moving – the idea is to accumulate them bit by bit and let them sit there for years or decades until called upon. For this reason, Bitcoin no longer needs to worry about the fact that it is slower and clunkier than other more nimble blockchains. It may have had an inferiority complex post-2017, but 2020 has seen Bitcoin carve out a niche for itself that no other coin on the market possibly could.
Let all the other coins fight it out to be used in Starbucks. Bitcoin has found its place at a different table.