Celebrating Bitcoin Independence Day!
The “Small Blockers” win over the “Big Blockers” in the infamous Blocksize War of 2015-2017 marked the true power of community consensus in Bitcoin. Small Blockers united to outvote corporate executives over the size of Bitcoin blocks. A hard fork launch was slated for August 1, 2017, and genuine decentralized finance took a victory lap.
Since then, August 1 has become a meme, but it is nonetheless an important milestone in the evolution of DeFi.
Bitcoin Independence Day
Bitcoin offers ordinary people an offramp from the centralized control of fiat currencies. This has become much more desirable in the aftermath of the economic response to COVID. Specifically, the U.S. Federal Reserve’s decision to print 40% of all dollars in circulation – in 2020 alone.
Fast forward to 2022 and, unsurprisingly, there is rampant inflation. And now the U.S. is in a recession, redefinitions notwithstanding. To address the problem, the Fed has decided to raise interest rates in an effort to destroy demand.
Many look upon the economic mayhem and are naturally drawn to Bitcoin, a scarce, decentralized, incorruptible, secure and private digital currency that offers true ownership of funds. In Bitcoin, investors are seeing independence from limitless, centralized, corruptible fiat currency.
Bitcoin’s true value
Crucial to the value of Bitcoin is its blocksize which is limited to 1 megabyte. This controls the number of transactions added to each block, thus preventing bad actors from overwhelming the network.
Overall, Bitcoin is valuable because of its protocol, solidity and transparency. It is completely inverting the financial system as we know it today:
Cryptography. Bitcoin’s incredibly complex hash rate system can only be solved by multiple high-powered computers.
International payments. Bitcoin can be taken from one country to another without the traveler even having to hold anything physical. A person who memorizes their passphrase is holding their money in their mind and can access it in any country 24/7.
Inflation hedge. Though this aspect is still debated, Bitcoin is a hedge against the manipulation of the value of the U.S. dollar. It cannot be valued or devalued by any third party.
Trustless. Unlike traditional banks that can take days to transfer fiat dollars, Bitcoin has no trusted third party that mediates between a buyer and seller. A transaction is sent and is recorded on the public ledger.
Transparent. With Bitcoin it is not possible to launder money, lose unaccounted money, or any other financial chicanery because Bitcoin’s transaction records are consolidated into one big, global, distributed ledger.
The future benefits of Bitcoin
While Bitcoin still suffers from slow transaction speeds and scaling issues, it is still far and away the best alternative to fiat currency. Sidechains such as the Lightning Network and Liquid Network are solutions currently being built to address these issues.
Debates continue over Bitcoin blocksize, mining, scaling, the protocol and more. However, what is not debated amongst Bitcoin enthusiasts is the direct application and utility of a peer-to-peer network that is distinct from centralized fiat.
Bitcoin may never overtake fiat currency or override a CBDC. Nevertheless, it is still highly regarded for the simple fact that it is a viable second option in a system where there are no other alternatives.
For that alone, we can celebrate independence.
