Every blockchain competes in the monetary space.
Blockchains can only secure and enforce the transfer of their native token, nothing else.
To do this in a censorship resistant and trustless manner, a monetary incentive is required.
Consequently, all blockchain-based tokens are money and thus compete with other monies. All monies compete for liquidity.
All digital monies are ledger based, even tokens. To protect a ledger's history in a trustless fashion, proof-of-work is required.
Consequently, all blockchain-based systems that operate in a trustless fashion compete with each other. Not for liquidity, but for hash rate.
Hash rate equals energy, energy equals security, security equals desirability.
To dethrone the status quo, something like a 10x improvement is required. To dethrone a network, 10x isn't enough.
However, Bitcoin isn't only a network. It is also a store of value. This is important, because while you can send the same message over 2 communication networks, you can't store the same value twice.
Further, both value and security build up over time.
This is why base money is even more competitive than payment networks or communication networks. You can't put a single unit of value into multiple things.
In short: All monies compete for liquidity. All PoW chains compete for energy.
Most people are unaware that Bitcoin has won both these races already. Further, the design space of money is limited. A 10x improvement on the monetary properties of bitcoin is not possible.
Bitcoin is close to perfect money. It is absolutely scarce, has infinite value density, can be teleported at very low cost, can be validated cheaply, is programmable, and so on.
You will not achieve a meaningful improvement by fine-tuning its parameters. Just like you won't meaningfully improve upon the wheel by calculating more digits of pi.
I am trying my best to put these thoughts into a book, feel free to check out what's already there and tag along here: 21-ways.com
Thanks everyone for all the kind words and all the support I've been getting over the years. I appreciate you 🙏🧡
Oh, and before I forget: proof-of-stake is a dead end. Not only does it centralize over time and has no external cost, it also doesn't solve the problem of decentralized time-stamping.
The reason why we are still having this "debate" is that most people do not understand proof-of-work, or the depth of the problem it solves.
- 2020-03-04 Fun With Bitcoin #70
on the Shitcoin Trap and why Bitcoin is superior, hosted by Coinicarus
- German translation by Simon Satoshi
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