Saifeadean Ammous, the best-selling author of The Bitcoin Standard , provided an excellent explanation of scarcity in relation to money: “A money that is easy to produce is no money at all, and easy money does not make a society richer; on the contrary, it makes it poorer by placing hard-earned wealth for sale in exchange for something easy to produce.”
Completely Decentralized
Bitcoin is the only truly decentralized cryptocurrency. No single entity or person runs or operates the Bitcoin protocol.
Therefore, the entire Bitcoin ecosystem is completely resistant to any counterparty risk. Politically and socially, this is extremely important to the overall value proposition of Bitcoin’s network because, with no single points of failure, governments and other powerful entities cannot target, coerce, or manipulate any individual or group into regulating or altering key components of the base protocol. Ethereum, for example, has the influence and leadership of Vitalik Buterin and the Ethereum Foundation, so as Ethereum 2.0 and other cryptocurrencies continue to adapt and grow, it will be interesting to see how he and the protocol responds to political pressure and government regulation.
Proven Network Effects
Bitcoin’s network effects cannot be ignored. It has established itself as a legitimate store of value (SoV), growing to over $1 trillion market capitalization in 12 years. No other cryptocurrency has come even close to Bitcoin’s mass adoption and overall market cap. To further emphasize the power of Bitcoin’s network effects, Metcalfe’s Law holds that a network’s value is proportional to the square of the number of users. That is to say, as a network’s number of users grows linearly, its value grows exponentially.
Jeff Booth, a visionary leader in the Bitcoin space and author of The Price of Tomorrow , explained that for any new emerging technology to disrupt an existing network of similar significance, it needs to be 10 times better. For the new network to gain mass adoption, it can’t just be twice as good—it needs to be orders of magnitude better to create a mass network effect.
Bitcoin Wins
When looking at the overall crypto ecosystem, it can be easy for beginning investors to get overwhelmed by the thousands of different cryptocurrencies . One might question whether they should go all in on Bitcoin, or incorporate other cryptocurrencies into their portfolio. There are different opinions on other cryptocurrencies, as some believe them to have various possible future use cases. However, from the standpoint of which cryptocurrencies have the characteristics of a SoV asset, there is no comparison to Bitcoin’s economic and technical principles.
Bitcoin is and will continue to reign supreme as the top global cryptocurrency as its adoption grows, wealth management firms continue to provide exposure to their high-net-worth individual clients, and more institutions adopt it on their balance sheets. In the race to become the world’s largest monetary asset and paradigm-shifting economic network, Bitcoin will win.
This is a guest post by Austin Zeizel. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
