This blog is the seventh extract from our eBook, “A Short History of Bitcoin Myths”. You can download your copy here or read other extracts over here:
Part 1: A Short History of Bitcoin Myths
Part 2: The Genesis of Bitcoin
Part 3: Myth I - Crypto Anarchy
Part 7: Myth V - Bitcoin is a Speculative Asset
Part 9: The Rebirth of Bitcoin
For the early part of blockchain technology’s history, Bitcoin was the one and only public distributed ledger. Once Ethereum launched in 2015, it wasn’t long before a flood of projects made their claim to fame… simply by associating themselves to the concept of Bitcoin and blockchain technology.
In the previous episode of this Bitcoin Myths Series, we considered the Ethereum project’s claim of being a new and superior version of Bitcoin - a ‘supercomputer network’ and ‘decentralised world computer’ (the claim turned out to be little more than hype). But the buck didn’t stop there.
As the developers who had gained control of the Bitcoin (BTC) project at the time continued to suppress the implementation of tokenisation (the capability to host tokens on top of its blockchain), Ethereum zero-ed in on this functionality and made it available to the broader developer community. It didn’t take long for the feature to be appropriated by opportunists.
As it turned out, Ethereum’s tokenisation facility perfectly lent itself to imitate the stocks and shares model of the traditional financial industry, but without the red-tape and exclusivity of Wall Street investment schemes. Entrepreneurs and business founders started using the Ethereum network as fundraising platform for their proposed ventures issuing tokens to represent a stake in their business and a share in the profits. And so, the ICO and the ‘cryptocurrency industry’ was born.
Although the first ‘alt-coins’ began to emerge in 2011 (Litecoin, Namecoin and Swiftcoin all made their debut), Ethereum’s 2015 launch can be considered the spark and fuel of this new hype for two reasons:
ICO’s made it easy for any organisation to raise funds while piggy-backing on the Bitcoin name. Essentially, ICO’s became the cryptocurrency equivalent of an initial public offering (IPO), except with a far lower barrier to entry.
The public leapt at the chance of investing in business ventures without having to meet the burdensome requirements of becoming an accredited investor, which in many countries, is restricted to high-net-worth individuals, banks, financial institutions and other large corporations etc. In the cryptocurrency industry any individual - child, blue-collar worker, dreamer, or hobbyist - could buy into ICO’s that promised exponential returns on investment.
By the time the 2017 cryptocurrency price boom had started taking effect, a new, entirely unregulated market had entered the awareness of the mainstream media. The ICO narrative was driven by promises of getting rich quickly and a “redistribution of wealth”. One could reason that it was the lure of the ICO market paired with the capital inflows by technically ‘uneducated’ investors that triggered the speculative bubble. The outcome - a dramatic burst of the price bubble and a prolonged bear market - was inevitable.
“I intend to see Bitcoin scale into a global economic system and become the plumbing for the information world.” Dr Craig S Wright, Founder of Bitcoin and author of the Bitcoin Whitepaper
In a previous chapter of our Bitcoin Myths series, we spoke about the fraudulent nature of the largest majority of cryptocurrency tokens and ICO’s. For the most part, ‘investing’ in a cryptocurrency project is little more than speculation - trying your hand at roulette or a spin of the wheel of fortune.
The myth holds that Bitcoin’s ‘groundbreaking property’ is to make venture capital, stocks and shares schemes available to the masses.
It’s not difficult to see the allure, especially for people who feel like the traditional financial system has relegated them to a position at the bottom end of the totem pole - where they’ll be stuck forever. In some cases, the narrative of cryptocurrency as a means to redistribute wealth has led people to mortgage their properties or max out their credit cards to stake it all on crypto tokens. As a result, many who gambled their fortunes on cryptocurrency were left in dire straits when the market collapsed:
“I got too caught up in the fear of missing out and trying to make a quick buck. The losses have pretty much left me financially ruined.”
Though you’ll be forgiven for fantasising of winning the lottery, instant riches could bring greater misfortune than you might imagine:
“Lottery winners are more likely to declare bankruptcy within three to five years than the average American. What’s more, studies have shown that winning the lottery does not necessarily make you happier or healthier.”
If we trace back to the underlying philosophy of the Original Bitcoin project, however, we’ll see that quick riches were never part of the plan. Instead, proof-of-work lies at the very core of Bitcoin’s incentive scheme and translates into an economic model that’s much more sustainable and dignified than playing a game of dice:
The Bitcoin economy incentivises participants to secure, build and develop the network. In effect, the financial reward on offer is equal to the amount of energy expended and work accomplished.
The peer-to-peer economic model embedded in the Original Bitcoin protocol holds far greater promise for society, and for you and me. Let me explain.
At the Expo-Bitcoin International 2019 conference held in Bogota, Colombia in June, Bitcoin creator, Dr Craig Wright, spoke of his vision to create a decentralised marketplace where individuals can create something of value and be rewarded fairly, without the mediation of go-betweeners who scoop away the bulk of profits.
“Blockchain can drive profound change across a range of industries and sectors, reimagining the way we do so many things.”
If we dig beneath the financial implementations of Bitcoin that we’re all familiar with, we’ll discover the technological foundation that will serve as a cornerstone for a new economic system: the Bitcoin protocol.
Like the Internet Protocol (IP) that enabled entrepreneurs to invent millions of different Internet-based business models, the Bitcoin protocol opens up an entirely new world of opportunity.
And this is where the true value of Bitcoin’s blockchain technology lies: in the value it offers to society through the real-world applications that can be built on top of it.
Let’s take a look at some of the business applications that are improving and reinventing their operations with the help of the Bitcoin protocol.
Since the Bitcoin blockchain allows for data storage on-chain and the Bitcoin SV project has made scaling of this capability one of their primary focus areas, it is now possible to upload large files to the blockchain - uncensored, immutable and available globally. See for yourself! This 25 minutes of video, an Alex Jones (America’s most censored man) interview with blockchain scientist and developer Derek Moore is stored and streaming straight from Bitcoin (BSV)!
But more than its ability to store data, a project by one of the most prolific Bitcoin developers of our time, Unwriter, is building a new and much improved version of the Internet on top of Bitcoin: Metanet.
At its most basic, the Metanet protocol utilises the data storage capacity of BSV as an immutable ‘data server’. This data, when paired with a Bitcoin browser like Bottle, can be searched by keyword and rendered as websites and applications can draw from specified data sets. Because transaction structures can be specified with read and write permissions, access can be granted to just the relevant data without compromising the privacy of sensitive data where necessary.
The Metanet, or “the world’s first 4 dimensional computer” boasts unique properties like:
“The use cases for this are already powerful. Institutions can use this structure to encrypt and safeguard data while still allowing transparency for information that needs to be shared openly.
Social media can use the BSV blockchain to build platforms on, where users can share content and interact with each other, with identities supported by referencing those previously mentioned institutions. As a result, it’s incredibly simple for a social media platform to safeguard itself against bad actors, fake news, and guarantee the interactions their users have online are with legitimate, verified users.”
It’s not just blockchain aficionados who are working day and night to tap into the potential of Bitcoin. In May 2019, American cloud-based software company, Salesforce announced the launch of their own blockchain, a software application for creating trusted partner networks between organisations. Partners can access, verify and update data according to specific permissions. Even partners who are not clients of Salesforce can access data via block explorer to verify the authenticity and accuracy of the bits of data that pertains to them.
And, don’t you fear, it’s not all work and no play! David Case, Chief Architect & Engineer of Kronoverse studio (online game developer), recently sat down with Bitstocks' to discuss how the unique properties of the Bitcoin SV blockchain is enabling them to build CryptoFights, a game where players will be able to own (and trade) their in-game collectables and avatars.
While some are obsessing over Bitcoin’s short-term price moves a new world is taking shape, built on the infrastructure of the Bitcoin protocol. Every day, whether prices rise or fall, entrepreneurs who have an inkling of the vast untapped potential of the Bitcoin protocol, are inventing, building and developing. It is this new Bitcoin world that keeps us up at night with excitement, but we know that it’s a long journey ahead and the road to success will be paved with grit and sweat.