Much more than common currency

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2 years ago

Bitcoin has the potential not only to be money, but to be a new kind of money with greater utility than the money we are used to. A fiat currency doesn't allow for very small payments over distance. You don't pay five cents to a content creator halfway around the world, not because it's technically impossible but because it's economically unfeasible or too complicated for most people to consider it worth doing. Cryptocurrencies have the technical potential to enable this kind of payment in a very user-friendly way, and some of them (Bitcoin Cash for example) can do it at very low costs, making it economically viable.

But this means opening the door to a huge amount of transactions of very low amounts, which until now no one was doing because they were not viable, as they were not technically or economically justified. We do not yet know to what extent this market can grow, but perhaps these transactions will come to account for a very significant percentage of the total, allowing a whole set of economic activities to become dependent on this kind of payments.

This means that scaling the system's capacity for the kind of transactions we are used to will be clearly insufficient. The ease of generating transactions and their low cost can be expected to produce a huge increase in demand for the use of the network for very low value transactions (see what is happening with noise.cash and similar services), which should push the ecosystem towards an environment technically capable of meeting that demand efficiently, so that providers can fully satisfy that need for use, along with that coming from the common uses of fiat money.

That means that it does not make much sense to compare with the transactions that companies such as credit card operators do today, except as a medium-term goal. The real goal of use for cryptocurrencies is not only to replace traditional means of payment in a decentralized way, but to enable a remarkable increase in the total number of transactions at a very low cost per transaction, so that this aggregate cost for all users far exceeds the costs generated by a fully decentralized and secure network. At this point, not only can we expect unstoppable organic growth, but also the sophistication that competition between developers and between miners will introduce into the market and the consequent further reduction in costs. Talking about blocks with a size of 32mb, 256mb or 1Gb may be reasonable for the medium term, but the long term will demand much larger capacities.

Personally, I have full confidence in the ability of the development teams committed to the Bitcoin Cash ecosystem and SHA-256 miners to achieve such goals, and that Moore's Law will loosely solve the more specific technical needs, as it has been doing so far. As long as developers continue to keep a low profile, free of confrontation, resolving conflicts through negotiation and remaining fully attuned to the needs of the market, I sincerely believe that Bitcoin (BCH) has a bright future ahead of it.

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Avatar for Moeb
Written by
2 years ago

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