Is Bitcoin more than just a store of value?
This is an opinion editorial by Paolo Tasca, a professor, economist and founder of the University College London’s Centre For Blockchain Technologies and the Distributed Ledger Technology Science Foundation.
The debate about whether bitcoin should evolve to become more than just a digital gold store of value has been ongoing for nearly a decade. Can it also be the world’s currency? Could Bitcoin’s blockchain be used to register assets of value? Should it?
Bitcoin Ordinals and BRC-20 tokens have heightened this conversation, driving even more demand to the Bitcoin blockchain. This is welcome news for the store-of-value proponents, as demand for bitcoin should drive up the price. However, more transactions also mean more competition, which leads to more fees and longer confirmation times. This is not ideal for supporters who prefer bitcoin as a currency and the growing competition for block space is already affecting the ability to register assets.
The Economist’s Evolutionary Theory
Bitcoin’s intentional restriction of the block size and transaction capacity has led to debates over adopting colored coins, SegWit, and other Core changes. When other blockchains came into the market, their ability to handle ERC-20 tokens, NFTs and other operations restricted their popularity. Ethereum resolved these limitations with technical upgrades, but this led to severe interoperability issues. The economist’s “evolutionary theory” held true: The market moves in the direction of maximum opportunity.
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Bitcoin’s utility as a store of value is still not widely adopted beyond our sector. During the COVID-19 pandemic, some people bought and held bitcoin, while others preferred to save in their fiat currency and accepted fiat currency support payments. However, bitcoin is entering the treasury reserves of many institutions, banks, and countries. They realize its value and are already using it as a hedge against the next financial or global crisis.
Bitcoin has succeeded in becoming a widespread digital currency that also solves the problem of trust. A truly decentralized, self-sovereign monetary system needs trust. Bitcoin provides that trust — and brilliantly does so with trustlessness. Whatever it evolves into, this is core to its value as a system.
Bitcoin will continue to evolve and adapt to changing market conditions, and that is what makes it, still, the blockchain of choice for many.
It is important to understand that Bitcoin operates within a free market, which means that our individual actions ultimately determine its success. This is not a weakness of Bitcoin, but rather its greatest attribute, ensuring its continued evolution and success.
This article was written by Paolo Tasca and reflects their own opinions, which may not necessarily align with those of BTC Inc or the blockchain industry.
