Doubting bitcoin
I am starting to have doubts about bitcoin. I doubt it's longevity, it's utility, it's resilience. I even doubt it's value. I probably won't sell, and I probably won't buy anymore. I think if I doubt bitcoin, then for the majority of investors that have been in the industry for a while, and are not maximalists, there is growing doubt around the network. I think my doubt is indicative of the stress bitcoin is under right now, the competition, and perhaps the fact that bitcoin faces it's final major test before it either becomes an accepted network of value, or it enters a period of loss of value and relevance.
I have questions that are unanswered. Questions that are coming up now as bitcoin enters maturity.
What happens when most of the bitcoin are mined?
This is a valid question and I don't think anyone can answer it definitively. After all, I'm asking for a prediction of the future. It's impossible to know as there is, as far as I know, no other case similar to the scenario we have of the bitcoin 21 million cap. The fact is the network that we know and have begun to value will not exist in the near future. There will be a new network with differing incentives. The very fundamentals of bitcoin will enter a new environment, one where the actors responsible for the network, especially miners, will face new conditions.
I think we can hypothesize and make some good theories on what happens when miners only receive transaction fees for their work. This will affect the security of the network and thereby the very existence of bitcoin. If the number of miners drops too low then attacks on bitcoin will become possible, and perhaps long before an attack actually takes place the lack of security will be apparent and users will have already sold their bitcoin and gotten out.
What happens if the majority, or at least a large part, of the total supply of bitcoin are in the hands of major institutions like Michael Saylor's company, or Greyscale, or any other hedge fund?
There is an analogy with gold here, however I think the question deserves to be asked. If bitcoin has any use beyond a store of value, how does institutional dominance in ownership affect this? As simply a store of value, like gold, bitcoin can retain much of it's value and utility for the general population. One bitcoin becomes an ounce of gold, or more, and this is accessible to the everyman. However, beyond that inter generational store of value, as a way of saving and passing on wealth, bitcoin would have little utility as any kind of payment, perhaps even for large purchases like a house except in rare cases.
Bitcoin may become, and I think is becoming, a very limited crypto. Much like gold, bitcoin will become something that is rarely talked about in dynamic financial circles, or in everyday life. Like gold has been for the past 50 years, bitcoin might become the stuff of movies, the target for a heist, the inert mass to be stolen, the shiny treasure at the heart of every rich person's castle.
The one thing that bitcoin has now, and it may be the thing that protects it against any real threat in the short to medium term, is the narrative. Bitcoin has the honor of being the leader. It is the main character in the crypto revolution story. Whether that is true or not. Something needed to take this role, that network on which the myopic ADHD legacy media, and wider public, could focus on and name. Bitcoin is the main guy, and only serious regulatory and governmental attack would render that position a liability. The main character usually doesn't die.
Given the narrative, and bitcoins place in it, my doubts may not be premature, at least for the next ten years or so. However, given the long term doubt around bitcoin, it's strength, utility and security beyond it's 21 million coin issuance, alternatives that address this problem and take a different approach should be looked at. And if they don't exist, there is opportunity here. Perhaps more importantly, I think there is opportunity almost everywhere else in crypto right now, and that is where I want to focus my attention. HODL, for sure, but stacking sats might be over for now.