After a lot of deliberation, I just converted all my BTC to ETH. I have owned BTC on and off since 2015 and they're clearly worth a lot more now than they were then. It has been the first cryptoasset to be adopted as a national currency. BTC has been and will likely continue to be one of the few blue-chip cryptoassets for the foreseeable future. However, I see dark clouds on the horizon. Bitcoin fulfills almost none of what I can identify as present and future use-cases for cryptoassets.
- A community that dislikes change. The problems that Bitcoin faces today will likely remain forever. If there is anything that the modern Bitcoin community has proved, it is that change is the devil itself. All of the problems facing Bitcoin today (listed below) are technical challenges. Yet, the community continues to pretend that it is perfect. Even if the community were to agree to some changes, they would have to be backward compatible with previous versions of Bitcoin. This severely limits upgradability. The mantra seems to be "do not change, build on top" (yet, while not being very suitable for building on top of).
- Smart contracts. Bitcoin saw an improvement in its smart contract capability with the Taproot upgrade. This is an improvement, but the smart contracts are yet not Turing complete meaning that there are limits to their expressiveness. This is usually touted by many supporters as a feature, though any form of justification seems to be glossed over. I think that fully expressive smart contracts are important if you hold the view that the blockchain is not just for settling monetary transactions.
- Storing data on the blockchain. One of the common examples of the application of blockchains is the "one truth"-idea where one can prove certain things happened as a consequence of the indelible entries on the blockchain. A modern day example would be storing vaccine passports on the blockchain. Bitcoin has fairly slow transaction speeds, which is a major limitation in the use of it to store, record, and share data. The Lightning network and Segwit are great improvements for speed, but they do not solve the problem of storing data on the blockchain since senders cannot include messages with their transactions.
- One of the primary ways of using BTC is to not use BTC. I am here referring to the practice of "wrapping" currencies and trading them on different networks. This is one of the most common ways to trade BTC. This is the modern-day equivalent of banks using mainframes from the 70s to make payments and transactions. At some point, I think we will start wondering why we bother trading Bitcoin when we would never bother using the Bitcoin network itself.
- "Store of value". Arguments for why Bitcoin would be the best store of value are typically weak. Yes - there will only ever be 21 million Bitcoins. Yes - Bitcoin is scarce. Yes, Bitcoin is deflationary. Can this be replicated in other projects? Uh, yeah.
- Energy efficiency. Bitcoin uses Proof of Work/Proof of Wasted Energy on Dumb Computations. Sure, switching to renewable energy would help reduce the negative impacts of Bitcoin, but it does not change the fact that the system is based on dumb computations. It could theoretically be migrated to proof of stake and use much less energy, but it would never be allowed by the community who love calculating hash functions for no good reason.
My now only blue-chip cryptoasset ETH, of course, has its own issues and the coming upgrades feel like they are taking forever. However, unlike BTC, ETH is exploring and embracing change. It is a platform for people to build on, and they are freer in how they can choose to do so. The world changes, and what does not change with it gets left behind. Except the wheel.
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