Justin Bons is the founder and CIO of Cyber Capital, Europe’s oldest cryptocurrency fund. He has been a full-time encryption researcher since 2014. He published “Fourteen Reasons Not To Invest In BTC” on June 13, 2023. It listed more and more complete reasons than the before article. In fact, there is no need to comment. My reader, Lu Bo, asked me to comment. For speed, I will comment paragraph by paragraph or sentence by sentence. Bons is represented by B, and Z represents me.
B: Looking at BTC objectively from a fundamentals-first investment perspective; it is abundantly clear that it should not be taken seriously as an investment at all.
Z: What are the fundamentals of gold? Is gold an investment? In Buffett’s eyes, projects that cannot generate profits cannot be regarded as investments, including gold. Buffett does not buy gold.
Bitcoin, like gold, outperforms inflation from a macro-cycle perspective. Is financial management considered investment? In Buffett’s eyes, financial management is also investment. The purpose of financial management is to outperform inflation, so both Bitcoin and gold can outperform inflation. Financial management is investment, but Bitcoin and gold are not investments? It doesn’t make sense. The difference between the two, short-term fluctuations in gold and Bitcoin affect Buffett’s performance, this is the fundamental reason. Now the amount of Bitcoin locked up has increased year by year and has reached 70%. It is obvious that people who lock up Bitcoin view Bitcoin as a long-term investment. The long-term holdings of Bitcoin are no less than any of the top stocks in the United States. Are U.S. stocks not investments?
Fundamentals are the evaluation of a system. Which system does gold represent? Bitcoin does not represent the fundamentals of the Bitcoin system. Gold and Bitcoin are evaluated by the supply and demand relationship like currencies. Gold is a purely natural adjustment of supply and demand, while the brilliance of Bitcoin is that it uses algorithms to adjust the supply and demand relationship. Guaranteed Bitcoin’s long-term upward trend. Bitcoin has investment properties, but using fundamentals to evaluate gold and Bitcoin is like using a sledgehammer to make the meal.
B: BTC is an emperor with no clothes, without a foundation in utility or long-term security. Consequently making it a purely speculative asset, contrary to the original goals of the project.
Z: On January 12, 2009, the third day after Bitcoin was released, Hal Finney published the famous Hal Finney conjecture, believing that Bitcoin would reach $10 million each. It is based on the Bitcoin standard implementation. After 15 years of hard work by cryptocurrency people, we are getting closer to this goal. We don’t need Bitcoin to dominate the entire financial market. If it had the same status as the US dollar now, Bitcoin would reach more than 10 million US dollars. The increase in the price of Bitcoin will lead to a further increase in computing power and further improvement in security.
Bitcoin was initially designed to have three goals: to solve the problem of excessive currency issuance by the central bank, bubble lending by commercial banks, and small payments. It is not practical to use the Bitcoin system to make small payments, and Satoshi Nakamoto did not deny that it can be solved through a second-layer solution. For the first two goals, observing the practice of cryptocurrency, the Bitcoin system design has achieved logical verification to solve the first two problems mentioned above, proving that the logic is feasible. For this, please see the author’s “From Peer-to-Peer Cash System to Bubble-Free Financial System” (chainless.hk). It cannot be said to be contrary to the original goal of Bitcoin.
Bons does not understand that the goal of Bitcoin is to be Bitcoin-standard. The 15 years of practice of Bitcoin have proven the effectiveness and reliability of Bitcoin technology, which will attract the attention of big names in financial application projects. The practicality of Bitcoin depends on financial experts. To play, in addition to technology, you must have a profound financial background to achieve it. Without the first step of Bitcoin, no knowledgeable person would take the second step.
B: Here are fourteen reasons why Cyber Capital has not been invested in BTC since 2017:
Z: The problem he mentioned exists, but it is not unsolvable. My research addresses these issues. The key is that they don’t see a viable path to Bitcoin standards. Bitcoin has reached a threshold, a hurdle that can be overcome.
1. No Capacity (Utility)
B: The block size limit fundamentally limits BTCs throughput to between 7-22 Transaction Per Second, which means it would take more than seventy years for everyone in the world just to do a single transaction.
This means that widespread & significant usage of BTC is impossible from a technical perspective, as usage has literally been capped. Therefore, it cannot & will not ever be the “future of money”.
Congestion also renders transacting over BTC unreliable as it is impossible to predict fees perfectly, leading to failed transactions.
Some have proposed the Lightning Network as a solution to this problem. However, onboarding people onto the Lighting Network in a non-custodial manner actually requires several on-chain transactions, while high fees are also passed on to LN users during times of congestion.
The block size limit, therefore, destroys all potential use cases for BTC, as any significant amount of usage is literally impossible. Whenever a real use case does take off, it only leads to fee spikes and congestion, which eventually drives people away; this is why BTC has no utility.
Z: The great thing about the Bitcoin system is that it has established a credit root that humans have never seen before. It is randomly composed of nearly 10,000 copy nodes. It has not been tampered with for 15 years. When we put the hash value of the ledger file on the chain, the ledger will also become non-tamperable. It is unrealistic for all transactions to be conducted in the Bitcoin system, but credit is transferable. Bitcoin established The credit root forms the basis of financial credibility. As the root, the transaction volume does not need to be large.
Who can replace this credibility? It’s not a matter of price or time. For the sake of credibility, no matter how expensive and time it takes, it’s all a matter of cost. The trusted value of the Bitcoin system is the highest among cryptocurrency projects. The hash value can be stored in the Segregated Witness area, and there is a 4M location. The hash value is only a few bytes in size. Will the human root of credit have no practicality?
2. No Long-Term Security (Without Utility)
B: BTC’s security model is currently in a bootstrapping phase, where the security budget is supported by high inflation. However, we are now approaching the next phase, where fees are supposed to take over from inflation due to the halvening mechanism.
BTC was originally designed to be a high-volume payment network where a large number of TXs, each paying a small fee, would be able to pay for the security of the network based on this utility/service.
However, because BTC fundamentally changed its roadmap, goals & vision by refusing to increase the block size limit as was originally planned, it now faces a different dilemma. A total failure of its security model due to an inability to pay for its own security.
There are now only two ways in which BTC can remain secure while keeping the same inflation schedule; both are exceedingly unrealistic:
BTC has to double in value every four years for the next century or sustain extremely high fees just to maintain the current level of security. Such growth is impossible since it would exceed the current global GDP in 31 years based on the current price.
This price doubling would have to continue for another 80 years after that until the security budget runs out completely. If you understand exponentials & economics, you should know that this is entirely impossible.
Fees will also never reach sustained extremes due to the ratcheting effect of the fee market. Paying hundreds of dollars for a single transaction is not realistic in a competitive market. When fees spike, users leave, all due to the unnecessary addition of the block size limit.
This all means that BTC’s long-term security is unsustainable without extremely high TX fees; the security of BTC will inevitably continue to decrease until it drops so low that the network becomes profitable to attack, rendering BTC insecure. I predict this will happen anywhere between five to nine years from now (two to three halvenings).
BTC’s security & technical foundation are made out of sand; false hope.
Z: Bons is still discussing the dispute between payment and stored value. Since accounts are recorded every 10 minutes, it is impossible to exceed Alipay or Paypal in payment. Choosing safety and stored value is a wise choice. From the perspective of cryptocurrency development, Bitcoin payments are solved across chains to other fast payment platforms. It is wrong to demand that the Bitcoin system be used for payment. The payment system is not the unique value of Bitcoin; the stored value is the unique value of Bitcoin.
Bitcoin is in its 11th cycle in 31 years. I predicted the currency price of Bitcoin under Bitcoin standard conditions in the series “Invite out Satoshi Nakamoto to Welcome the New World” series “13. Bitcoin Natural Growth Curve” (chainless.hk), the price is US$5.8 million, the global base currency M1 is US$132 trillion after deducting the inflation rate, and the market value of Bitcoin is US$121 trillion. The value of GDP is much larger than M1, and the market value of Bitcoin will not exceed GDP in 31 years. It seems that Bons’ financial cultivation still needs to work hard. The trend he demonstrated is not wrong, but his research would not be valid under Bitcoin-standard conditions.
3. No Predictable Supply (Without Security)
B: There is a third, more realistic option to avoid this catastrophe in the absence of increasing the block size limit before it is too late.
Increasing BTC’s inflation rate beyond the 21M limit will be the only option left once BTC’s security drops below a certain threshold. Because once we reach this inevitable state, there will only be two choices left:
Option one is allowing censorship & double spending to occur as the network gets 51% attacked.
Option two is to increase BTC’s supply inflation beyond the 21M limit.
I suspect once this happens in around a decade from now, both will occur simultaneously, splitting the network again and causing even more chaos all as a consequence of rejecting utility and the original vision for Bitcoin during the block-size debates.
Z: If the above is a way, Bitcoin is doomed. Satoshi Nakamoto designed Bitcoin because he wanted Bitcoin to be standard. He wanted everyone to use PCs to mine, making Bitcoin extremely decentralized and forming a wide range of transactions. But the Big Pie Brother Laszlo developed GPU mining, which shattered Satoshi Nakamoto’s dream of extremely decentralized Bitcoin. Not only that, cryptocurrencies also used Bitcoin as a trading pair in the beginning, but due to the high volatility of Bitcoin, it failed again. The core is that the technical elite Satoshi Nakamoto represents does not understand currency enough. They do not know that currency needs a ruler, a key feature, and mistakenly use Satoshi as a ruler. Bitcoin now uses the U.S. dollar as its benchmark, and all strong stablecoins are pegged to the U.S. dollar. The realization of Bitcoin’s Bitcoin standard depends on the face of the United States. There is no chance. U.S. Congressman Mooney proposed a gold bill. It is no better to use gold than Bitcoin. There may be another big financial disaster, and gold or Bitcoin will become the spotlight of history. From the Jiaozi banknotes of the Song Dynasty in China to the big Yuanbao banknotes, the lifespan is about a hundred years. The U.S. dollar has reached the end of its fate and has been considered to have exceeded its service life. Is there any Bitcoin-based solution that doesn’t look at the face of the United States? Have! I designed the decentralized standard currency DW20 based on the Bitcoin dollar standard. It does not need to rely on the government and, together with Bitcoin, constitutes a Bitcoin standard solution. More than 90 preparatory articles have been published on the chainless website (chainless.hk), and it has now entered the “Into the White Paper Series.” Uncover our Bitcoin-based solution step by step. But the solution Bons mentioned is not needed at all.
4. No Value Proposition (Without Security, Utility & A Predictable Supply)
B: An insecure & purely speculative asset cannot serve as a good Store of Value or even a good form of money at all. The best Store of Value is one with a foundation in utility, as that creates a far more stable foundation for speculation. Furthermore, the impending failure of its long-term security model completely destroys all narratives used to justify BTC as an investment in the absence of utility.
The reality is that BTC is unable to provide any value whatsoever beyond mere speculation. That is what turns it into a purely speculative asset, making it highly volatile & ultimately pointless, all very much unlike competing blockchains such as ETH, which provide massive utility & do have mechanisms such as token burning which return part of the value generated by the utility of that blockchain back to token holders.
Making an investment in third & fourth-generation blockchains far more attractive, not only from a utilitarian perspective but also from a Store of Value perspective. As this all translates into a blockchain that is far more secure & scarce, exactly the features at which BTC was supposed to excel at.
The times have changed & the technology has evolved to the point where BTC’s token economics now look incredibly weak compared to the competition.
Z: Satoshi Nakamoto said something about the structure of Bitcoin: “0.1’s structure from beginning to end.” Bitcoin’s script language only uses over 20% of the instruction code space, and over 70% is unused. When many people want Satoshi to add features, to add or not? Too much trouble. In practice, he found that Bitcoin is an excellent stored value tool. Adding too many functions to the Bitcoin system may affect credibility. If Bitcoin had added many functions, it would not be today’s Bitcoin. Today’s Bitcoin is just suitable for realizing the Bitcoin standard. Satoshi Nakamoto believed in natural evolution. He thought that at the right time, different platforms would take over the tasks he left behind.
Regarding the practicality issue, there are particular discussion records in the Bitcoin forum. It discusses scarcity, consensus, and practicality, and I will not go into details here. Bons’s thinking is not at the level of Satoshi Nakamoto. I doubt that the cryptocurrency veteran has read Satoshi Nakamoto’s 80,000-word conversation record.
5. No Turing Completeness (Programmability)
B: Programmability has proven itself to be a critical feature for any new blockchain, as it has enabled a wide range of now-proven new use cases.
It also makes sense that the best-decentralized money needs decentralized finance to support it. Otherwise, everyone would still be reliant on custodial services in order to enable these more complex financial products, defeating the point of using a decentralized cryptocurrency, to begin with. That is why there are orders of more magnitude wrapped BTC on the Ethereum network compared to the Lighting Network right now.
I consider programmability to be a necessity for long-term competitiveness, as it provides a far more compelling stepping stone to attracting new users, compared to the purely speculative SoV narrative & money narrative, which requires some degree of ideological motivation, at least in the developed world.
Z: Originally, the Bitcoin system was not a platform; it was just a tool for issuing Bitcoin. The recent development of the protocol in the Segregated Witness Zone has opened up new ideas. Now, we cannot think that the Bitcoin system has no ecosystem. The biggest benefit of Segregated Witness is that the integrity of the Bitcoin ledger is not compromised. I don’t know how the ecosystem will develop. I don’t know if it will create an ecosystem that surpasses Ethereum. It’s not easy to draw premature conclusions. I admire Bitcoin’s technical experts and discussion mechanism very much, and they have avoided making mistakes many times after Satoshi Nakamoto left.
6. No DeFi (Without Programmability)
B: The lack of programmability explains why BTC cannot support DeFi. Consequently, countless bitcoiners keep losing money on centralized exchanges & fraudulent centralized lending platforms. This will continue indefinitely as BTC is incapable of developing its own DeFi, requiring trust in centralization institutions from its users instead, which is all very much contrary to Bitcoin’s original thesis.
This extreme lack of functionality also further affects BTC’s capability to compete in terms of security & economics, as utility remains the key to sustainable & highly attractive token economics. Something that BTC is just not capable of at any significant scale at all.
Z: The transparent centralized technology of the chainless platform does not require trust in centralized institutions. Following the blockchain ledger and the directed acyclic graph ledger, we proposed the index ledger. Anyone can publicly inspect ledger data. Solving DEFI issues is a piece of cake.
7. No Privacy (Without Capacity & Programmability)
B: The block-size limit also massively reduces the anonymity set, as it is much easier to conduct chain analysis when there are far fewer transactions. Mixers are also rendered far less usable due to this lack of capacity & also far more expensive during periods of congestion.
There is also a complete lack of significant privacy-enhancing technologies, largely due to the lack of programmability over BTC.
Otherwise, solutions such as zero-knowledge proofs could have been implemented, making BTC far more private for users who desire such capabilities. While any native implementation of privacy features still remains far-fetched, at the very least, considering the state of BTC governance, which I will cover later.
Privacy is a critical feature of any financial or payment system. The fact that BTC is unable to implement robust privacy features is what also makes it unsuitable to be adopted as money, even if it had the capacity.
Z: This is a misunderstanding. Coin mixers open the door to money laundering and are prohibited under the current legal environment. The privacy of Bitcoin’s ledger and structure is better than Ethereum’s. Bitcoin does not have the concept of an account. If an Ethereum account transfers money once, the other party will know how much money is in the account. Ordinary users who have no experience will not design several Ethereum accounts for themselves first and will expose how much money they have to the other party. In addition, cryptocurrency uses anonymity to solve privacy issues. Anonymity and privacy are conceptually different. Eric Hughes’ “Cryptopunk Manifesto” makes this very clear. Anonymity is the fundamental reason why cryptocurrencies have always been a niche market. Privacy is graded, just like movies are graded, and anonymity is just the extreme case of privacy. If a cryptocurrency financial system cannot support real-name and anonymity, it will be a dead end. Just imagine anonymous payment is equivalent to cash payment. In modern society, there are fewer and fewer places where only cash is spent. Anonymity is not progress. There is a market, but it’s not big.
8. PoW is inefficient & wasteful compared to PoS
B: Proof of Work carries with it a massive cost in arbitrary computation, almost completely absent when compared to Proof of Stake. This cost has to be reflected in either fees or inflation to pay for its long-term security.
PoW externalizes the cost of validation by requiring a massive amount of hardware and electricity to secure the network, all to solve arbitrary mathematical equations that do not directly benefit the network itself. PoS, on the other hand, leverages the value of the token itself to secure the network, resulting in a far more efficient means to gain high blockchain security.
PoS is economically superior since, without this massive arbitrary computation cost, its token economics can have far lower fees and or inflation in all variations of the design due to this increase in efficiency. In terms of the “cost to attack,” comparing PoS to PoW assuming similar attributes besides the consensus algorithm; PoS is 20x to 50x more expensive to attack compared to PoW.
Due to the cost expenditure already being much lower with PoS, as pointed out above, it means that if all else is equal: PoS is more secure and far more sound based on the economic considerations alone.
Z: The computing power of the Bitcoin system forms the basis of Bitcoin’s price bottom. An increase in computing power means an increase in energy consumption, which means that the value of Bitcoin is derived from energy conversion. The rise in computing power drives up the price of Bitcoin. The competitiveness of Bitcoin’s computing power determines that the strongest controls the computing power. When the price falls below the computing price bottom, these strong players will buy Bitcoin to ensure the upward trend of Bitcoin. The primary purpose of the computing power of the Bitcoin system is not to keep accounts but to protect the value of Bitcoin. From the accounting perspective, using POS is not the lowest cost; it is still too expensive. The cheapest is unilateral accounting, where the ledger hash is uploaded to the chain, and the security depends on the number of backups. When the POS method is adopted, the token represents equity, and Ethereum becomes an equity currency, representing the value of the Ethereum system, which is entirely different from Bitcoin because Bitcoin does not represent the value of the Bitcoin system. For information on why Ethereum is an equity currency, please refer to Cryptocurrency Innovation Road No. 11, “Looking at cryptocurrency from 12 leading projects” (chainless.hk). Bons ultimately failed to understand that the source of value of Bitcoin is entirely different from the source of value of Ethereum. Why did the price of Ethereum not rise after it was transferred to POS, which widened the price gap with Bitcoin? It is because the valuation logic of Ethereum has changed.
9. PoW is less decentralized compared to PoS
B: PoS is far more decentralized compared to PoW, as PoW requires warehouses full of hardware that can be seen from space! Centralized by economies of scale & requiring special deals with governments for electric contracts, PoW is reserved for industrialists.
Whereas PoS block production can be run on Raspberry Pi’s from ordinary people’s homes, and rewards are equally distributed based on stake instead of industrial-scale competition. Lowering the barrier for entry & thereby widening the distribution of power (decentralization).
Most PoS cryptocurrencies operating at the scale of BTC would be far more decentralized by several orders of magnitude. PoW does not stand a chance; PoS is the evolution.
This all makes PoS superior to PoW in every meaningful way, from the standpoint of economics, security, decentralization, and even according to broadly agreed principles of fairness and equality.
Z: Centralization is a very vague concept in blockchain, and it is also a source of systemic risks. Examining whether there is centralization can be carried out from the following ten aspects: management, decision-making, control, development, calculation, accounting, verification, storage, ledger, and system structure. Bons only talked about the multi-party accounting method in the “bookkeeping” aspect, and the comparison with Bitcoin is one-sided. For example, Ethereum is not decentralized in terms of control. In the past, Ethereum had miners to check and balance it, but now, the mortgage mechanism plays almost no role in checking and balancing programmers. Ethereum now relies entirely on moral constraints. Fortunately, Vitalik has not yet had a scandal. It is one-sided to say that POS is more decentralized. Regarding centralization or decentralization, for a detailed comparison, please refer to “Hey! Please get out of the blockchain misunderstanding” (chainless.hk). It is an old article written in 2020. Now, there are many things worth revising.
10. Dysfunctional governance
B: My original 2013 thesis for investing in BTC was destroyed by the very people we trusted to maintain it. There also laid the problem. I believe in the end, what we witnessed was a failure of governance. BTC’s history of power struggles & civil wars is a symptom of this failure.
The truth is that the dominant client implementation, “Bitcoin Core,” has effectively achieved centralized control over BTC development. Turning BTC into a one-party system, with Core as an effective gatekeeper of all change.
Currently, more than 98% of the full nodes are using Bitcoin Core, which is an extreme degree of centralization. There is literally only one lead maintainer who has the final say over all decisions in Core, making it a dictatorship. Like all dictatorships, there are limits to what they can get away with. However, this is still a total perversion of the very idea of decentralization that BTC was supposed to represent.
This is all another cultural consequence of the block-size debates, explaining why truly competing clients are today seen as “enemies of Bitcoin”.
The myth of BTC; is that it is a decentralized meritocracy. This could not be further from the truth; Bitcoin Core has disproportionate power to make any changes to the protocol, including highly controversial ones like RBF, while simply kicking out anyone who disagrees with them, such as Gavin Andresen, Mike Hearn, and Jeff Garzik.
This is why a diversity of competing client implementations is so essential for true decentralization. BTC has lost its client diversity as a consequence of the block-size debates, which means it has effectively been captured, a clear failure of decentralized governance.
Z: In August 2022, Chief Maintenance Officer Wladimir Jasper van der Laan retired without a designated successor. This article was written in June 2023, and 10 months later, it was said that Vanderlaan, the chief maintenance officer, was not rigorous enough. There are currently four maintainers of the Bitcoin system. Bitcoin has not lost the checks and balances between programmers and computing power. Programmers can modify the program, and the computing power party not necessarily be downloaded. The diversity of clients is the user’s choice. If Bitcoin Core cannot provide suitable services, will everyone use it? Even if the Bitcoin system is controlled, there are still checks and balances from the computing power side. Does Ethereum have checks and balances? Bons is not a bowl of water.
11. Toxic culture
B: From bitcoin maximalists to laser eyes, BTC is notorious for its toxic & closed-minded culture. This is important to understand in light of the lack of any formalized governance, which leaves Core as a de-facto dictator of the protocol. That all means that the only hope for reform lies in the culture, or in other words, the social layer.
Unfortunately, this social layer is highly dysfunctional today, again this is partially a consequence of the previous points; as these flaws cause a deep unconscious feeling of insecurity.
As BTC’s culture is a by-product of its history & anthropological evolution. Most notable in this evolution is the time period of the blocksize debates, which was accompanied by mass censorship campaigns. Leading to the exodus of almost all of the dissenting voices.
Creating an echo chamber with a self-reinforcing selection bias for the leading personalities, reinforcing the homogenous demographics of BTC even more. Toxicity, closed-mindedness & hostility are all, their defense mechanism for defending what are fatal flaws in BTCs design. That is the cause of their insecurity, which demands fictitious narratives from its supporters, as falsehoods, fantasy & wishful thinking are the only ways to keep selling BTC to the greater fool, even resorting to tactics taken directly from the Ponzi playbook.
The dominant personality type is now the polar opposite of when I first joined in 2013. The same collective psychological spirit that I fell in love with now thrives in BTC’s competitors instead. While bitcoiners keep selfishly pretending as if BTC still supports its original lofty goals when it clearly does not.
Z: That’s Bons’ point of view. Practice is the standard for testing truth. Bitcoin’s long-term trend is better than Ethereum’s. The chart below is a comparison of Ethereum and Bitcoin. Ethereum is not as good as Bons said. Instead, it will start a downward trend from 2023. The picture below is quoted from Investing Finance (https://cn.investing.com/crypto/ethereum/eth-btc). Facts speak louder than words; pictures speak for themselves. The four hopes for Ethereum are lower each time. The four times refer to the high points in 2017, 2018, 2021, and 2022. As of today, all the ideas have been unveiled, and we have seen that the application faction represented by Ethereum has not brought prosperity to cryptocurrencies. The “stupid” Bitcoin has become the only flower in the cryptocurrencies.
12. Conflicts of interest
B: The majority of prominent BTC developers are financially supported by for-profit companies whose aim is to develop L2 solutions for BTC. This creates a clear conflict of interest against scaling BTC’s L1.
Prominent members of Bitcoin Core received a lot of money & equity from companies building L2 solutions such as the Lightning Network & Liquid. Companies such as Blockstream & Chaincode Labs have been funding Core developers for many years now. The conflict arises from the fact that these companies benefit from not scaling BTC’s L1. At least in the mid-term, these companies were able to raise hundreds of millions of dollars by selling a solution (L2) to a problem they have created and are able to maintain (L1 scaling).
We have to look at a system’s incentive mechanisms as a whole instead of looking at individuals. Since we can predict outcomes of large groups of people based on incentives, unlike the behavior of individuals. That means over a sufficiently large period of time and scale. This particular misalignment of incentives will cause these conflicts of interest to occur again and again. Making this a major systemic flaw in blockchain governance, something I have covered more extensively in my “Theory On Bitcoin Governance; Three-Stage Model”
Z: I don’t understand this issue and can’t comment.
13. Entrenched & complicit leadership
B: Power, on average, always corrupts & we should not expect those in power to go against their own interests and surrender their position. As this only occurs in the rarest of cases throughout history.
The leadership responsible for these failures & departures from the original goals is effectively still in power today. From this perspective, BTC remains effectively captured by parties with direct conflicts of interest.
The need to overthrow the current BTC leadership represents a massive barrier to positive change, one that is unlikely to be overcome any time soon. Especially considering the lack of any formalized governance & cult-like following of the incumbents.
Z: Bitcoin doesn’t even have a foundation similar to Ethereum. The Ethereum Foundation has income. I advocate that Bitcoin should have a foundation similar to Ethereum. How to be corrupt without revenue? Is it corruption to use your own money to fund Bitcoin maintenance? The debate over concepts depends on practice. I think “Bitcoin Core” is worthy of respect and protects the core concept of Bitcoin very well.
14. Inability to solve all of these problems
B: BTC is unable to change in order to solve all of these problems, in large part, due to its dysfunctional governance & toxic culture. BTC’s governance has been ruined by the denial of its existence; “The greatest trick the devil ever played was convincing the world that he did not exist”.
Supporting BTC based on the potential for change cannot be divorced from politics; any sufficiently deep investigation will expose its flaws & highlight its inability to change, even when confronted with the type of major extensional threats to its existence I outlined earlier. BTC is on a train heading directly into the brick wall of its own technical limitations, bitcoiner’s hopes & dreams do not alter that inalienable fact.
Z: The problem with Bitcoin is not a problem with the Bitcoin system. The greatest value of the Bitcoin system is to remain unchanged. Bitcoin is a question of application and how to implement Bitcoin standards. Our upcoming chainless platform will become the infrastructure to make Bitcoin standard. Chainless platforms utilize an indexed ledger, making centralized platforms transparent. It uses the same centralized ledger and public and private key technology as Bitcoin, but it differs from Bitcoin’s multi-party accounting method. It uses single-party accounting to upload the hash value of the running account to the chain and separate smart contract accounts and deposits. The accounts are separated and very flexible. It realizes all the distributed functions of Ethereum except NFT and may surpass it. The technical indicators are not inferior to Web2. We have begun introducing its innovative features on the chainless website (chainless.hk). Before that, we used nearly a hundred articles to systematically introduce the knowledge of cryptocurrency and clarify many confusing concepts.
Conclusion
B: From a fundamental perspective, BTC is one of the worst cryptocurrency assets on the market today. Its only real benefit is its first-mover advantage, still putting it at the number one spot in market capitalization. However, once it inevitably loses this dominant position, there will not be anything left to justify its prominence. Allowing us to see BTC for the failed experiment that it really is. A beautiful experiment that has brought about a Cambrian explosion of innovation, ensuring that Bitcoin’s original vision does succeed.
You can project any beliefs you want onto BTC, but that does not change the technical facts of its inferiority, setting it up for an inevitable downfall. You can speculative on it, you can trade it, you can even set up a quasi-religious belief system around it. However, the one thing you cannot do is build a coherent, fundamentally based long-term investment case around it, without ignoring the competitive landscape of the wider cryptocurrency market.
BTC is on borrowed time, hand waving away its deeply flawed design. Failing to move with the times & ideologically entrenched in outdated technology, BTC is not exempt from free market competition. The Bitcoin dream now thrives in its children instead; while BTC is left behind, relegated in future history books for founding this movement, but not continuing it. A spectacular and necessary failure, I am sure future generations will look back at 2023 and wonder how the majority of people could have been so wrong.
The same is also true when we look into the past, it might seem obvious with hindsight, but for those ingrained in the culture of their time, the opposite can be true. Ultimately all monetary value is based on belief, however, there is a reason why the vast majority of the worlds value is tied up into assets with utility. Because value investors like myself believe that utility is far more valuable than speculation alone can ever be. That is why Cyber Capital has not been invested in BTC since 2017 while never regretting that choice.
Z: We analyzed 13 of the previous 14 reasons, but we couldn’t come to the same conclusion as Bons. In fact, Bons’ biggest problem is that he ignores the existence of Satoshi Nakamoto. Satoshi Nakamoto holds no less than 1.14 million Bitcoins. He has not touched them. If there is a problem, will he not take action? Gavin Andresen, Mike Hearn, and Jeff Garzik have all made important contributions to the development of Bitcoin and are very respectable. It is a pity that they are not cypherpunks because their knowledge does not completely and accurately understand Bitcoin, just like Bons. Cryptocurrencies and Bitcoin haven’t been needed long enough to require 10,000 hours to study them from start to finish, and they have technical foundations that would be sufficient to spend 1k-2k hours on. If you don’t want to spend the time, go to the chainless website and read my analyses, and you won’t come up with such superficial insights.
There is a saying that I strongly agree with:
- Hard work cannot make you rich.
- Speculation cannot make you rich.
- Wealth is directly proportional to your cognition.
Bitcoin once again proves the fact: How many ignorant heroes that self-righteous have missed wealth?
