The Bitcoin whitepaper was released in 2008 by an anonymous person by the name of Satoshi Nakamoto. He named the paper “Bitcoin: A Peer-to-Peer Electronic Cash System” indicating his intent for Bitcoin’s future. Of course, Bitcoin has turned out to be anything but P2P cash. Nakamoto succeeded in creating a trustless payment system, but if his intentions were to truly create an electronic cash system in the Bitcoin protocol, he failed miserably. That is not to diminish his accomplishment — Bitcoin is perhaps the most important and innovative idea of the 21st century — but Bitcoin is horrible P2P cash.
Rather than a P2P cash system, Bitcoin has evolved into a “store-of-value” (SoV), like gold. Since Bitcoin reduces issuance by half every four years, it turns out Bitcoin stores value better than almost any other system in existence to date. Bitcoiners nearly unanimously agree on the SoV narrative since anyone who wanted to use Bitcoin as P2P cash left during the Bitcoin Cash fork in 2018. Thus, true Bitcoiners champion the original Bitcoin blockchain and its subsequent protocol, code, and monetary policy despite what Nakamoto originally intended for Bitcoin, as indicated in the whitepaper.
A key feature of Bitcoin maximialism is that the original code remains undisturbed and is therefore unadulterated and perfectly immutable. To Bitcoiners this is critical to the protocol’s reputation and the single most important factor in its success since 2008. In other words, Bitcoiners do not want change or adaptation; they forbid it.
Bitcoiners forbid change with a ferocity that is born of cognitive bias inherent to human nature and game theory. As a result of the significant intellectual work required to finally understand such an abstract concept such as Bitcoin in part or in whole, the brain seems to bask in the new-found knowledge — because it’s easier — rather than seek to further understand the crypto space. Instantaneously, Bitcoin twitter, YouTuber influencers, Bloomberg articles, and CNBC interviews of Michael Saylor all reinforce the eureka moment the brain has achieved. The word “shitcoin” arrives in the lexicon as an easy way to disregard the significantly more complex and perilous world outside of Bitcoin. Soon after, the memes arrive and deeply entrench themselves in the brain: “There will only ever be 21 million Bitcoins.”
What if, however, a cryptocurrency existed with 25% of the market capitalization of Bitcoin, 1000x the efficiency, and a multitude of use cases decided to adopt a monetary policy that rivals Bitcoin’s main selling point: scarcity?
Ethereum enters stage right holding EIP-1559.
One can imagine a few likely scenarios playing out when Ether emerges as “ultra-sound money” compared to Bitcoin.
In the first scenario, Bitcoiners, firmly in denial, entrenched in their belief that code is law, with no desire to change and no experienced developers or community processes set up to effect any change, stand idly by as Ethereum quickly makes Bitcoin completely and utterly irrelevant.
In the second, possibly more likely scenario, Bitcoiners completely disregard everything they once stood for, realize the existential crisis they now face, and fork the chain in order to reduce issuance to something more aggressive than Ethereum’s 1559 improvement. Ceteris paribus, I find this to be the most likely outcome since so much money will be on the line and money drives narratives not vice versa.
Let’s not be so dense as to assume that if Bitcoin were ever to be legitimately threatened by a competitor that the virtue signaled, bias-driven narratives that espouse to protect the antiquated, inefficient Bitcoin protocol — being used for a reason other than its original intention — would withstand a microsecond of consideration in the face of monetary loss.
See you at the Bitcoin fork of 2023 (if not earlier).