Table of Content
- The tipping point of traditional finance & the rise of the bitcoin network.
- The future of bitcoin is bright for bitcoin users.
- Every banker’s worst nightmare: Bitcoin network
- Satoshi’s master move is to remain anonymous.
- Like how the Internet changed information, Bitcoin & other digital currencies are changing finance.
- Bitcoin’s best bet for mass adoption in the long & short term
Bitcoin is a cryptocurrency introduced to the world in 2009. Bitcoin has evolved from an experiment to a global movement against big tech and traditional financial systems, which have been in existence for almost 400 years. Bitcoin leveraged existing technologies like encryption & the Internet to become a global decentralized payment solution changing the fundamental nature of traditional finance, which was closed, centralized, and benefitted only a few people who owned it. So what is the future of bitcoin? I believe that bitcoin can be the global bank for the entire planet and maybe beyond because any government or organization just can’t shut it down due to its decentralized nature.
Today’s oldest bank is the “Banca Monte Dei Paschi di Siena” from Italy, which was founded in 1472 & has been in its current state since 1624. It has been a very long time since traditional banks and financial systems had an upgrade. With the rise of computers and the Internet, banks became even more cash hungry and made numerous more ways to exploit their users.
The tipping point of traditional finance & the rise of the bitcoin network.
The 2008 financial crisis was the tipping point of traditional finance. On 15th September, Lehman Brothers filed for Chapter 11 bankruptcy. The fall of the Lehman brothers’ bank in 2007-2008 cost the US economy around 5 Trillion $ in taxpayers’ money. For comparison, the Indian economy is around 2 Trillion $ today, and the US lost 5 Trillion $ just in a crisis! So the timing of the introduction of bitcoin by Satoshi couldn’t be more perfect just after 33 days of bankruptcy declaration from the Lehman brothers.
The introduction of bitcoin on 13th October 2008 to the world was no big announcement or grand launch. Still, it was just Satoshi Nakamoto posting the bitcoin whitepaper on a Subreddit among some brainy nerds. However, this moment was the start of the global revolution of bitcoin, which has evolved to a 2.5 Trillion $ crypto Industry where bitcoin alone holds 1 Trillion in market cap with almost 50% Market dominance. Bitcoin’s rise from 0 to a 1 trillion $ asset has merely taken 12 Years, and still, we are into very early stages to experience the full potential of bitcoin and its underlying technology.
The future of bitcoin is bright for bitcoin users.
All this brings us again to the burning question of the future of bitcoin & how it will affect everyone? Further in the article, I will try to break down the most critical evolutions in bitcoin that have happened in its 12-year history and its implication for everyone.
Read here about what is bitcoin and who is Satoshi Nakamoto & know more about the early days of bitcoin.
Every banker’s worst nightmare: Bitcoin network
As described in our previous article linked above, incidents like bitcoin’s use in the illegal drug marketplace on Silkroad & Wikileaks accepting bitcoin as a donation was both good and bad for bitcoin. Of course, bitcoin used in the illicit online drug trade was terrible and not good. However, its use in that setting sparked the idea in thousands of people that bitcoin can be the perfect candidate for storing and transferring value on the Internet for regular people without third parties like banks and clearinghouses.
2014-2018 were the most challenging years for the crypto market, especially bitcoin, as it has been the leading & the first crypto since its inception. As a result, all central banks, financial institutions, and almost all world governments closely researched Bitcoin’s evolution. Furthermore, as bitcoin’s adoption increased, bankers got more and more anxious about the rise of bitcoin & its potential to take over the financial system.
Ironically the biggest bank in the world today, JPMorgan Chase & Co, with a market cap of $ 470 B, tried to patent a bitcoin-like clone numerous times. Still, the patent was never granted as bitcoin exists as open-source software under the MIT OpenSource license that no one owned, not even Satoshi, so Poor JPMorgan could not own it.
Satoshi’s master move is to remain anonymous.
Satoshi knew very well the implication of bitcoin’s success on the current financial system. The transition would not be easy but, in fact, very brutal, so bitcoin had to be OpenSource, and the true identity of the creator of bitcoin had to be anonymous for the sake of bitcoin’s success. But, unfortunately, all governments & central banks are desperate to identify the creator of bitcoin for Bizzare unknown reasons.
It is good that Satoshi remains anonymous for everyone until we have our much-awaited fantasy of the bitcoin standard in the world. Today it is a fantasy, but tomorrow it will be the reality of everyone. No one in the 80s & 90s Could have imagined how integral the Internet would be in every human being’s life today. Imagine the Internet vanishing suddenly from the entire earth. It could potentially trigger a war that ends the world and humans eventually.
Like how the Internet changed information, Bitcoin & other digital currencies are changing finance.
On 30th April 1993, CERN made the World Wide Web software free to use in the public domain. They later released it with an open license which maximized its dissemination and usage by users worldwide!
The Internet in itself started as an open-source technology. Still, today we have many layers built over the Internet by many private companies like google who’s search engine dominates the internet searches, and google heavily monetizes its platform used by more than half of the world. Bitcoin is similar to how web standards were created, open-sourced & shared among developers, providing infinite opportunities. However, Bitcoin is not only money. It can also be:
- A means for remitting money cheaper across countries without third parties (Banks, Western Union, Paypal, Venmo, Paytm, etc.)
- An alternative way for storing value. Before bitcoin, only gold was considered the ultimate store of value for almost 5000 years.
- Bitcoin is a better settlement layer open for everyone than traditional banks and traditional financial systems that only focus on serving the wealthy.
- Bitcoin has no boundaries. It only needs the Internet, which will be soon available on mars too!
- Bitcoin will make taxes obsolete, this is hard to digest, but this is a possible future.
- Bitcoin gives people sovereignty over themselves which many don’t understand yet.
- When used in its native form, Bitcoin provides complete anonymity by self custody of private keys and running your node.
Bitcoin’s best bet for mass adoption in the long & short term
The future of bitcoin is contingent on whether or not it can be highly scalable and utilized in practical transactions. Today bitcoin’s first layer, the native blockchain, can handle 7-10 Transactions per second. It doesn’t sound very reassuring, but it is going to be exciting at the end. Keep reading!
Get Struck by Lightning! Evolution of bitcoin, the digital currency.
Be ready to get struck by lightning! The lightning network has been previously discussed, but the hype over lightning died as the market’s focus temporarily shifted to other things. However, after Elon Musk, CEO of SpaceX, Tesla & Jack Dorothy, CEO of Twitter, praised bitcoin’s lightning network approx a month ago, the buzz started to build again over the lightning network. Twitter has introduced a tipping feature where anyone can donate bitcoins to their favorite influencer via the Lightning Network! Twitter’s bitcoin tipping feature came in the same day china banned crypto altogether. Luckily the china ban did not affect the market at all. The price of bitcoin is up by 12% after china banned bitcoin.
Lightning Network: Free bitcoin transactions for the masses.
The future of bitcoin is highly dependent on the Lightning network’s adoption by the developer community, crypto startups & businesses worldwide. Unfortunately, despite a lot of progress in the lightning network since its update on the bitcoin blockchain in February 2018, it has yet to receive much attention due to the shitcoins, hype factories, and all the fancy buzzwords divert everyone’s attention from the important stuff.
The Lightning Network is a layer above Bitcoin’s blockchain that allows for microtransactions. So if Bitcoin is layer one, then the Lightning Network can be considered another layer two solution - this time explicitly designed to facilitate small transactions between users for free!
The concept was initially proposed by Thaddeus Dryja & Joseph Poon back in 2015 when they significantly advanced Satoshi Nakamoto’s original design proposal with proposals about decentralized network architecture while remaining fast enough. The lightning network element in bitcoin will allow users to connect to this “fast and feeless” system via a routed sequence of transactions. In other words, we may enjoy all of Bitcoin’s advantages while avoiding its drawbacks like absurdly high transaction fees and higher confirmation times with this approach!
Discreet log contracts: Smart Contracts on the bitcoin blockchain.
DLC or Discreet log contracts were introduced by Mr. Tadge Dryja, a Research Scientist at the Massachusetts Institute of Technology (MIT). Read his white paper on DLC here.
The rise of the ethereum blockchain mainly popularized smart contracts. Ethereum allowed anyone to build their token on the ethereum blockchain, create dApps, or mint your NFT coin, and much more. However, as we know, because of the exponential adoption of the ethereum blockchain, the Ethereum blockchain gets congested many times, and fees rise to 50-100$ Per transacTherefore, then. The Ethereum community is transitioning to the Proof of Stake Consensus mechanism from Proof of work to counter this.
DLC in the bitcoin blockchain coupled with lightning is like the missing puzzle in the bitcoin blockchain. DLC implemented in BTC can give bitcoin’s blockchain features like executing smart contracts, conditional payments, time-locked transactions, all on the lightning network at minuscule or zero fees.
There is still a very long way for wide-scale adoption of the lightning network in the real world upgrades BIPs (Bitcoin Improvement Proposal) on the bitcoin blockchain is a slow process and for startups and companies to adopt it is a different challenge. There are still technical barriers for a regular person to use lightning in a way that benefits them. Not enough people have payment channels open in the lightning network or even use lightning frequently as not many use cases are present. This is debatable as lightning is being improved by the community every day. With time, use cases will emerge just like people, institutions, and even governments saw potential in bitcoin and stand by it today. Lightning is a layer two solution built over bitcoin, which will enable microtransactions of the future.