Bitcoin (BTC)

Conclusion

As the OG of crypto, Bitcoin has been number 1 on the charts, and garnered the most interest, of all cryptocurrencies. I don’t see that changing anytime soon. 

There is some hesitation about why miners would continue to mine when no more bitcoins are being created, but they would still receive rewards from trading fees, and if BTC’s popularity continues to increase, I don’t see the fees being low enough to discourage miners. Quite the contrary, if BTC gets accepted as a valid exchange of value by world governments–or becomes used as such despite government regulations–then the fees could be quite substantial.

There are concerns about how decentralized it really is. There are mining farms that use a lot of energy and have way more computing power than a person at home–so much so that a lot of people are discouraged from mining BTC and have moved to other cryptocurrencies that have less “corporate” or “large-scale” infrastructure. While this is a problem now, I speculate that once the total supply is mined, it will become more evenly distributed. However, it is possible that it would become more centralized at that point as the rewards will be less so the more infrastructure a person or company has in place, the more rewards they would receive–and if the infra is already there, then there is limited reason to leave.

The point of bitcoin is to be a store of value – a common currency that isn’t controlled by the government, is deflationary and decentralized, and anyone can access. The major hurdle is getting the technology into people’s hands. For instance, when it was legalized as tender in El Salvador, there wasn’t a mass movement of people suddenly using it, because they didn’t know how to get it, and still had the ease of the currency they already used. A few years later, mass adoption of BTC as a means of payment or exchange of value is still really limited in the country.

On the other hand, many national governments have outright banned cryptocurrency, primarily in Africa and Asia. The reasons for these bans vary, but often include concerns about financial stability, the potential for illegal activities, and challenges to monetary policy. Alternatively, some countries, like the US, UK, and Canada, allow cryptocurrency mining and trading as long as certain conditions are met and people pay taxes on it. It is clear from the variety of stances that the goal of Bitcoin as being something outside the control of governments is not quite so simple and hasn’t been as effective as intended–yet.

Privacy and anonymity are a big concern still. Since all data on the blockchain is visible, if someone can tie your name to an address, they know what you’ve done. Governments have technology that can do this automatically, meaning that unless a person is quite savvy with technology, the ability to stay completely anonymous–and thus outside the control of governments–is limited, if at all possible. There is also the issue of not being able to use cryptocurrency for every purchase you make. We still need to pay rent, buy food, etc., and not all businesses accept crypto (in fact, very few do). So even if someone achieves anonymity and can make transactions outside the government’s eye, there is still no guarantee that they will be able to do all transactions that way so will likely still rely on fiat money to some extent. This is a dis-incentive in my opinion against mass crypto adoption.

Having said all of that, the ethos of bitcoin is clearly appealing for many people, and as more people on-board to crypto, bitcoin tends to be their first stop. While it doesn’t have the fancy smart contract capabilities of Ethereum, and still relies heavily on the energy grid (which is a fault in many people’s eyes), this simplicity actually increases the potential value and use cases to me. Why? Because crypto is already hard to use – if you are new to it, then having something that does only one thing is an easier way to get into it than having to figure out DeFi and dApps, etc.