Having been sitting and staring at this blockchain thing for as long a time as I have, you start to pick up on a few things that newcomers to the game tend to miss out on. Almost all the talk and headlines are about Bitcoin the asset; Bitcoin the asset refers to the token made up of UTX’s, and it’s the thing so many of us want to own more of and try to convert our fiat into to try and protect it.
Bitcoin, the asset, has migrated from speculation to a store of value and, as the value measured in fiat is what’s getting so many frothing at the mouth. Yet, no one thinks about the network, the thing actually being used to move this store of value around.
Sure it’s the same as people would rather care about the Lambo than the roads that are required to use it, even though the roads are far more valuable than the Lambo. As is the case with Bitcoin, the network is far more valuable than the asset.
The asset is but a reflection of the value of the network; if someone is willing to spend millions on making a car, he’s pretty confident that the infrastructure is working. So if people are willing to bid up Bitcoin to 600 billion, they are confident in the ability of the network to accept more.
The Bitcoin Network
The Bitcoin network gets a lot of stick for being slow, expensive and consuming tonnes of energy, but if we look at the network of the internet, it’s consuming far more than Bitcoin is doing right now, and no one complains. Yes, the main chain is slow in terms of the number of transactions that can be synced, but this is the price you pay for security.
The main chain focuses on security, immutability, and maintaining the hard cap; asking it to do anything more is unnecessary. Yes, the chain needs to scale, coming in second layer solutions like the liquid and lightning network.
Each year new dapps are coming online, new wallets, new exchanges, new ways to invest using Bitcoin, new miners supporting the network. The open nature of Bitcoin allows anyone to participate in the network in the way they feel comfortable with and requires no KYC, no specific beliefs, no location, regulation.
Governments can legislate the use of the asset, but there is very little they can do about the network.
The asset funds the network
As the price of Bitcoin increases, the chain contains more and more money. The more money locked in the system, the more investment is required in the network to secure that capital and ensure improvements in the efficiency of the network.
When you invest in Bitcoin, you not only secure your purchasing power, you’re also an angel investor in the network that aims to become the payment rail of the future internet.
