On Tuesday (December 21), Mark Nesbitt, who is the Engineering Manager (for Blockchain Security) at Coinbase, explained how Bitcoin’s “most common criticisms can actually be strengths, and why its value proposition is unique among cryptocurrencies.”
In an entertaining blog post published on December 22, Nesbitt said not long after someone becomes a Bitcoiner, they enounter the following criticisms of Bitcoin from some members of the crypto community:
The criticism usually includes many of the following arguments:
- “Bitcoin’s proof of work consensus mechanism is inefficient and inferior to proof of stake
- Bitcoin is too slow — other chains reach finality much faster and therefore will support many more compelling use cases
- Bitcoin can’t possibly succeed due to the lack of onchain privacy
- Bitcoin’s lack of an expressive Turing complete programming language makes it less useful than other cryptocurrencies
- Bitcoin is stagnant; there is no meaningful innovation in bitcoin, which means it is sure to be outcompeted
- Bitcoin’s limited onchain transaction throughput will prevent it from being useful“
Nesbitt says that the “Bitcoin is boring” believe that ETH or one of the “ETH-killer” blockchains (such as Solana) will beat depose the king, that Bitcoin is “dead coin walking, carried by nothing more than inertia, name recognition, and the foolishness of the Eternal September of new users flooding into crypto”, and that “sooner or later, the world will realize this, and bitcoin will fade into irrelevance as a pioneering footnote like so many other ‘firsts’ throughout the history of technology.”
He then goes to say that despite such people’s belief that Bitcoin is “in competition with web3 cryptos”, Bitcoin’s main goal is to be “digital gold”, which means that many of the supposed weaknesses of Bitcoin are in fact strengths:
- “Digital gold must be transferable. Proof of work has thus far been highly censorship resistant.
- Digital gold must be decentralized. Ensuring that a global network can consistently reach consensus without trusted parties is crucial.
- Digital gold must be scarce. The transparency of bitcoin’s ledger ensures easy accounting of the total supply.⁵
- Digital gold must be safe. Safety is aided through simplicity, driving a need to eliminate unnecessary complexity.⁶
- Digital gold must be stable. Constantly changing rules are disqualifying.
- Digital gold must be verifiable. Validation of the asset must be cheap and accessible.“
Nesbitt claims that while “the web3 crowd is scratching and clawing at each other”, almost no other crypto project is “trying to play Bitcoin’s game” and that for Bitcoin to achieve its main goal of being digital gold, all it needs to do is to be “stable, predictable, and functional over many years”. He also believes that it will be very difficult for any future challengers to overcome Bitcoin’s 13 year lead.
Next, Nesbitt argues that the other form of the “Bitcoin is boring ” argument is that Bitcoin’s vision of serving as digital gold is far too limited since “blockchains can be far more impactful than mere digital gold”.
He points out that although “there’s nothing wrong with a moonshot”, Bitcoin “has shipped (meaning that “digital gold exists right here, right now”) and “it is ready for investors, financial institutions, and nations.”
In contrast, he says that “none of the web3 projects have shipped anything close to their final product” and “heir current state should be considered as a successful proof of concept for what web3 could become.”
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.