Speculation aside, which features are necessary for a digital currency to reach mass adoption in the future digital economy and the Metaverse?
Cypherpunks envisioned a digital currency since the 80s, even before the rapid expansion of the internet and mobile phones, but they constantly faced issues as centralization and double-spending.
In 1998 Wei Dai proposed "b-money" and Nick Szabo "Bit Gold".
Ten years later, Satoshi Nakamoto announced Bitcoin to the cryptographers’ list, combining various elements from these two concepts together with various cryptographic technologies.
Bitcoin, a "P2P electronic cash", was unleashed into the massively expanded internet space in 2009, aiming to become a dominant method of exchange. A currently with features like cryptographic proof of ownership, no intermediaries, no parties in control, produced directly from CPUs running the software.
From the first moment, though, one cryptographer (under the pseudonym James A. Donald) pointed out that Bitcoin will certainly meet scaling issues. Was this a real person or the team behind Satoshi, it doesn't matter.
In 2010, a few months before Satoshi abandoned the Bitcoin project, an important event happened, one that changed the course of Bitcoin history, either for better or for worse. Satoshi changed the code and introduced a temporary limit of 1MB block to counter possible spamming of the network with low-value transactions.
The Importance of the Blocksize Debate
This is when things started getting complicated, since this block size limit introduced by Satoshi was the main reason for the blocksize debate (read more: source1, source2, source3) that lasted years and ended with the Bitcoin community splitting and following two different paths: BTC and Bitcoin Cash.
Both with the same history starting from the 2009 genesis block but following different logic and paths since August 2017.
Bitcoin Cash increased the limit to 8MB (blocksize: 32MB today), while the solution of Blockstream was no changes on-chain but second layer developments like the Lightning Network and Liquid. With LN, users have to open channels, "transfer" BTC to the lightning network, and use these LN-BTC for payments.
A complex methodology and weird decision from just scaling on-chain as Bitcoin Cash successfully managed.
Moreover, the Lightning Network at times of blockchain congestion is equally demanding in cost, since opening and closing channels require BTC fees. These are transactions on-chain, and during May 2021 when fees of the BTC blockchain reached $50 again, multiple LN users voiced their concerns.
Lightning Network is flawed by design, since to combat the BTC blockchain fees, users will have to opt-out from openning/closing channels, but use centralized financial hubs (intermediaries) that demand trust, are in control of the funds, can seize funds upon government's request, can block transactions and sell or pass all private information to other third parties and governments.
Lightning Network centralization fears being described since 2015 were not just theory. The point is to be the owners of our money, not trusting financial hubs that operate under similar regulatory system as the banking sector.
The Lightning Network is only replacing one evil with another one. Meanwhile the solution was simple, increase the blocksize, and scale on chain. However, now it is too late and the BTC Maximalist agenda does not favor any such discussion as we have often observed.
Citigroup believes in the potential of EFFICIENT AND INSTANT BLOCKCHAINS
“We believe in the potential of blockchain and digital assets including the benefits of efficiency, instant processing, fractionalization, programmability, and transparency.”
Source: Bloomberg (November 23).
This phrase belongs to Citigroup executive, Puneet Singhvi while announcing the launch of a digital currency division that plans to hire 100 employees aiming to analyze and research further the cryptocurrency field.
The keywords here are efficiency, instant processing, programmability, transparency.
This looks like describing Bitcoin Cash, since most of the rest of blockchain networks cannot scale efficiently and process transactions instantly without sacrificing other essential elements.
The blockchain is a public ledger, so transparency is an attribute of most networks, and the last part about programmability probably refers to the open-source and permissionless environment blockchain networks provide, although this part would require further details about its meaning. Banks, in their statements, avoid using unnecessary terms, though.
Weak blockchains that can’t handle increased traffic of more than a few thousand users can’t be part of any financial future. The modern digital economy DEMANDS efficient and instant networks. It also demands decentralization since the approach is the user of the digital economy to be in control of the funds and not count on intermediaries (read: A Trustless and Decentralized Metaverse is the Main Objective).
In Conclusion: The Real Question
When calculating speed, comparisons are always important. With cryptocurrencies, comparisons are not just about speed, though. The security of the network with adequate hash-rate and the decentralization of constituencies (mining, development, exchanges, etc.) are equally important as high speeds and low fees.
The BTC development is under the control of Blockstream, a private entity pushing its private layer-2 agenda.
Another example is Solana (and previously IOTA) which offers a network with extremely high speed and low fees, however, it is massively centralized. The developers of Solana simply shut down the network to fix bugs and it remained offline for 17 hours (read more). A similar red flag as with what happened with IOTA a couple of years ago.
Many other networks that offered high speed and decentralization proven they were not secure and were 51% attacked with rented hashpower that cost just a few hundreds of dollars to the attacker. (source)
Bitcoin Cash has a hashrate of 1.5 Exahash today surpassing Litecoin and Ethereum combined (although ETH has currently switched partially to PoS and plans to remove PoW completely).
Bitcoin Cash has the second-best hashrate and often, it is more profitable to mine rather than BTC.
Source: Bitinfocharts
The difficulty of Bitcoin Cash is adjusted under a mechanism called Emergency Difficulty Adjustment (or, EDA) and miners often move between BTC and BCH to maximize profitability.
Bitcoin Cash is a secure, decentralized, and efficient network, offering the perfect network for e-commerce, one that can elevate the modern digital economy to its full potential.
When the time comes and the public has to choose, which cryptocurrency would the world determine better suit its needs?
(With factors like security, decentralization, etc., constant and at a similar level):
What will the public select to use in the near digital future and the Metaverse?
a) a cryptocurrency with $50-$200 fees and transactions that take hours?
or
b) one that offers instant transactions with fees of less a penny?
This is the easiest trillion-dollar question I've ever met, and the main reason I support and keep investing in Bitcoin Cash.
Images:
Lead Image Source: Unsplash, (modified)
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Bitcoin will surely help the youth in future, view to my own perspective.