The Future of Bitcoin

We as humans are more often than not caught up thinking only in the now or present day, rather than thinking about the full picture and long-term.  Why save money today for your future retirement or emergencies, when you could use that money today to buy the latest item of gadget that you have been wanting.  It is a story as old as time, people aren't concerned about the future until those problems hit them not the side of the head and become current problems. The same can be said about investing and even cryptocurrency.  In crypto, you will often see people flowing into the most hyped coins of the moment, without putting even a minute of research into it.  Meme coins come to mind, Dogecoin, Shiba Inu, Floki and countless others.  Most would agree that the future doesn't bode well for those investments.

In contrast, these same people when asked why they aren't instead investing into bitcoin often reply with one of the following answers.  It's too slow, and too expensive to do transactions. It'd be too expensive to buy a cup of coffee with it. Smart contracts aren't possible on it, it's old tech.  It's way too expensive. Why buy 0.0001 BTC when I can buy 1,000,000 Shiba Inu.  Unit bias is a real thing.  Mining is destroying the world.  

These are all of the most common complaints that you will see about bitcoin.  But the problem is that most of these people are only thinking about current day issues, and not thinking of the full picture.  There are three things that you must always remember when it comes to bitcoin.  The first is that bitcoin and the crypto industry as a whole are still incredibly young and great progress will be made.  A key thing that I often think back to is how easy managing wallets and sending transactions have been recently.  Nowadays, a person with normal tech skills can manage your own wallet and take custody of your bitcoin.  But, back in the beginning days you needed to be much more tech savvy, and if you weren't, there was a real risk that you would lose your coins.  Also, those QR codes that you can now use to quickly and easily send crypto to wallet addresses were not a thing in the beginning.  The industry progresses and will continue to do so.

The second key point to always remember is that while some things might seem like an issue with bitcoin now, or possibly not even possible to do with it yet. Always remember that bitcoin is software, and it can be updated.  While the updates may come slower than an individual would like.  After-all, we have become a civilization that has become addicted to having instant-gratification.  The fact is that bitcoin isn't playing a game of trying to be the best money today, tomorrow or even next year.  It is playing the long game, and is looking hundreds of years into the future.  

Finally, the third key point to remember is that development always flows to where the money is. Like it or not, but right now bitcoin is the original cryptocurrency and the reason why this whole industry exists.  It is king.  As the market continues to grow and even more money floods into the market, if it remains king, much more development will come its way.

When someone tells you to invest into bitcoin or crypto, they will most likely tell you that you should just buy it and forget it.  Come back in ten years or more.  Keep a long-term approach.  Ten years from now, which coin do you have more confidence in? Bitcoin or Shiba Inu? 

As I was explaining above, yesterday's problems will become non-issues today, or in the future.  One of the past issues that I mentioned was that using bitcoin was too slow, expensive and it wouldn't be viable to buy a cup of coffee with it. Or any regular retail purchase for that matter.  Just 2 years ago bitcoin's layer 2 network, Lightning, was considered non-existent or a failure.  But as I'm sure you already know, that has completely changed within the last year.  El Salvador made bitcoin their legal tender and is using lightning to do so.  If Lightning scales to its maximum capacity, it could reach up to 25 millions transactions per second.  Yes, you read that correctly.  More than enough to handle being a world reserve asset, all secured by bitcoin's layer 1.  While admittedly it is not yet to that point, and there is still a lot of work to improve it and make it even easier for regular people to use.  There is no denying that it is on the right path.

As of right now, smart contracts on bitcoin aren't much of a thing.  Especially when you are comparing it to smart contract blockchains like ethereum, Solana, avalanche, luna and the list goes on.  It is also much less capable as well.  There has been work recently to create workarounds to make smart contracts possible on bitcoin through Stacks, Sovereign, RSK and a few others.  But, as of now, it is less than ideal.  I believe that this will change in the future. It will require one of three possible things for this to happen.  The first option is that the side-chains that are attempting to bring smart contracts to bitcoin could have some big breakthroughs or developments that would allow that to happen.  The second option is that the bitcoin protocol itself could be updated to make it more possible.  While I'm sure it would be heavily debated and controversial.  In the past the protocol has been updated to allow the creation, improvement of Lightning.  And also with the recent taproot/schnorr protocol update, it has implement a few minor changes that is a start to making smart contracts easier, but there is a long way to go.  Remember that we are only 12 years into bitcoin's life.  All of the issues don't need to be solved today or tomorrow, and we shouldn't want that.  Bitcoin is too valuable, and we need to exercise extreme caution when attempting to update or upgrade it.

While I believe there is a high chance that bitcoin will be updated someday to allow smart-contracts, I believe that there is an even larger chance that bitcoin will be a much bigger topic with governments around the world.  Last year, El Salvador was the first country to make bitcoin their legal tender, and while we haven't seen another country join them yet, it appears things are picking up recently.  Even here in the United States, some of the most prominent people in government have come out in support for bitcoin.  Rumors are swirling that several other countries will make it their legal tender this year.  But the more interesting thing is how this will play out in the macro world, allowing game theory to kick in.

Recently the world has been watching the Russia-Ukraine situation with intense focus.  The US has threatened that if Russia does invade, that it would invoke heavy sanctions against Russia.  After that news broke, Russia suddenly went public with its support of bitcoin and cryptocurrency.  Rumors also circulated that in the near future they might price their gas sales in bitcoin instead of dollars, which would free them from the USA sanctions. Coincidentally, a few days later news broke that the USA government seized the BTC from one of the largest bitcoin hacks to date.  Perhaps it was just a coincidence. But with governments, I believe that is never the case.  Russia and the USA are playing a game of chicken, and right now the US wanted to show Russia that if they want to go that way, that the USA would be prepared. Who knows how this situation will play or, or if it was actually just a coincidence.  But one thing is for certain and that is that adoption isn't stopping, and its actuation speeding up.

Inflation around the world has gotten out of control, and the world is finally waking up to it.  Particularly companies and corporations.  As this continues to happen, it will become irresponsible for them to not put a portion of their balance sheet into bitcoin.  This will continue to happen, and once some of the larger companies do so, that is will everyone will jump in.

There have been complaints that mining bitcoin requires too much energy, and pollutes to heavily, but I believe that this will be a non issue in the years to come.  The truth is that people who are mining bitcoin, are some of the most innovative people out there.  Miners have actually been incredibly innovative at using renewable energy that isn't being tapped.  Look to volcano thermal power being used in El Salvador.  And also oil companies beginning to use gas flare ups that would normally just be wasted, and instead converting that into power to mine bitcoin.  The fact of the matter is that bitcoin mining is using a large percentage of its energy that would have normally just gone to waste. 

What does this all mean? To put it simply, the bitcoin protocol will continue to improve over time, adoption from retail buyers, corporations, hedge funds and countries will continue to increase at a faster speed. The real use case, and the freedom that it actually provides will become better known by the mainstream, just like what has recently happened with the situation in Canada. And finally, bitcoin will continue to run smoothly.  All the while going through a reward halving every 4 years.  The sky is the limit for its price potential. One thing is for certain, the future for bitcoin will be very exciting to watch.

How about you? What do you think bitcoin's future is?

FOLLOW ME ON TWITTER!

FOLLOW MY SUBSTACK!

As always, thank you for reading!