Thoughts On Bitcoin Lately
It’s become about daily now that I get people on the street asking me about bitcoin, or telling me how they just bought in. I’m frankly kind of annoyed with the coin lately, so I wanted to write down some of my thoughts. Before reading, get this through your head: Don’t invest money you can’t afford to lose.
Some background on me. I bought my first bitcoin at $2/coin, back in April of 2010. I think it was 15BTC for $30. There used to be a seller called Coinpal and you could just send PayPal. Services like that are long gone now due to PayPal’s ease of abuse. It was curiosity back then, I bought it to use it not to speculate. Nobody but a few visionaries thought in our community of a few hundred people that things would catch like they have. It’s been almost 8 years now and in the past few weeks I can truly sense the death of the original chain. I have been there for the crashes, argued with mining pool operators and core devs, shot the shit with some of the more notorious scammers, and was even acquainted with the MTGox operators.
Volatility never really fazed me. The world is a volatile place and so long as the bitcoin network functioned predictably we could still negotiate and exchange value without obsessing over numbers from exchanges. There is real utility to being able to transmit value without being subject to holds, chargeback risk, and seizure. I used to get great rates FX'ing in USD to CAD in Canada without needing a bank.
I have been guilty of following old world mindsets of storing bitcoin with third parties. It’s human nature to hoard and it’s been taught for generations that we should keep money in secure banks. Unfortunately the bitcoin ecosystem is just not equipped yet to deal with software threats on a decentralized asset. Individual good security practices utilizing a hardware wallet I still think is going to be the most accessible and secure way to store coin. Look at the long list of exchange failures and the number of complaints about the currently operating ones. Don’t store coin with a third party that you can’t afford to lose.
Anyways, I wrote this because I don’t think the original chain will command majority market share for much longer. It’s actually been bleeding significantly for a couple weeks. You cannot perform transactions within a reasonable timeframe without paying an exorbitant fee to the miners. It’s dumb and it takes away from the appeal Bitcoin provided. Core developers have been working to improve the situation by creating some advanced shit called Segregated Witness (segwit), that took forever to add to the network. Now that it’s there, it hasn’t helped. It often costs around $100 to send a transaction and takes many hours. This is supposed to create some Lightning Network sidechain that should be fun for banks and governments.
So Bitcoin Cash seems to have continued the spirit of the original chain and provided a simpler solution of using bigger blocks to fix the above problems that core has failed to fix. Unfortunately, the holy war between the two chains has opened the market up to competition with novel technology. So we’re in a weird situation where no coin has true dominance and there’s a gigantic hype bubble propping every alt up.
Rest assured: Most coins will lose significant value both before and after they decouple from Bitcoin
Right now we’re in a weird place where one has to question whether large investors will use bitcoin as a long-term asset store (replacing things like gold) or whether it will bleed market capitalization and fall to nothing over time. Maybe both will happen.
Anyways, I’m in the mood to just start publishing writing so I’ll likely write more on this coming soon. This is enough for now.