Productivity: For Bitcoin to Thrive, Users Need to Do More than Just Hold Their Money

Productivity: For Bitcoin to Thrive, Users Need to Do More than Just Hold Their Money

Productivity: For Bitcoin to Thrive, Users Need to Do More than Just Hold Their MoneyHere’s how Bitcoin should change gradually to survive in the future.

Bitcoin is a slow-moving target. Transaction rates are insufficient for a global payment system. The community is hesitant to embrace change. In comparison to nearly every other blockchain, the rate of new innovation is tortoise-like. Fortunately for Bitcoin, I believe its slow and steady pace will become its superpower in the end. This year, Ethereum will go through a major upgrade known as the Merge. This mid-September event will shift the underlying “consensus mechanism” that allows blockchains to function from something like the Bitcoin proof-of-work system to a more experimental model known as proof-of-stake. It has been in the works for several years.

Chris Castiglione is the co-founder of Console.xyz, a secure Web3 chat platform. He is also an adjunct professor at Columbia University Business School and a general manager at Trust Machines, where he is working on MultiSafe.XYZ. Vitalik Buterin, the co-founder of Ethereum, announced at a Paris-based Ethereum conference that Ethereum will still be only 55% complete after the Merge. Ethereum will be upgraded over the next two decades, according to a roadmap. Buterin warned the Ethereum community to expect “short-term pain and long-term gains.” This development mindset exposes Ethereum to new potential futures, but also to risk. Herein lies Bitcoin’s opportunity: to embrace its slow rate of change in order to become the world’s most valuable “forever database.”

 

A never-ending database is a gift to humanity.

Blockchains have been described in a variety of ways, including “an immutable ledger,” “a shared system for recording data,” and “a growing list of records secured by cryptography.” Everything is fine. These explanations, however, are perplexing to the average person. A blockchain, in its most basic form, is a never-ending database. Perhaps you’re a complete novice who can’t picture a database. No worries. A database is essentially a sophisticated Excel spreadsheet. And a forever database is one in which data is stored forever when it is written.

Blockchains are immutable due to a series of design decisions. In theory, the data stored becomes a foolproof record of truth for thousands of generations. Since the network went live on January 3, 2009, it has never gone down, been hacked, or stopped storing new data. Bitcoin (BTC) is also a non-inflatable currency, which has become the network’s primary use case. The bookkeeping is always correct.

Imagine knowing that your data and money will still be accessible 1,000 years from now. Not only that, but people living many generations in the future could have confidence that this ledger is correct. That is extremely effective. Forever databases enable novel use cases outside of money-like instruments, which are currently being investigated on networks other than Bitcoin. 0 infinity, Mike Bodge’s crypto-art project, allows you to publish love letters that, according to the site, will last “forever or as long as the Ethereum network is running.” Arweave is a file storage service that claims to “eternally store documents and applications.” And Starling Labs is a project that has uploaded 56,000 Holocaust survivor testimonials, among other things, to preserve evidence of human rights abuses and protect against future disinformation.

In ways that previous databases could not, a forever database ensures the integrity of our collective memories. Nonetheless, consistency is essential. Ethereum, Solana, and other blockchains cannot compete on consistency as long as their codebases are upgraded. The Solana blockchain, known for its “move fast and break things” mentality, experienced two outages in early 2022, each of which took the network offline for several hours. The ability to withstand outages is the key feature that distinguishes a blockchain as a forever database. A never-ending database should never fail; if it does, simply refer to it as a “database.” Users must do more than just keep their money for Bitcoin to thrive. Bitcoin must become more productive. Bitcoins have the opportunity to harness the power of their forever database by using additional layers (e.g., Lightning or Stacks) to build new applications.

 

The race to accept layers

Stack is an example of a layer that enhances Bitcoin’s programmability. With Stack’s Clarity smart contracts, you can build applications (social networks, photo-sharing apps, chat apps) with Bitcoin-secured transactions. Similarly, on Ethereum, Polygon is a popular layer used by developers to scale the Ethereum network. The distinction is that if Ethereum fails, Polygon and all of Ethereum’s additional layers will collapse like a house of cards. We require a new layer that can access Bitcoin’s infinite database. It, and only it, has the potential to be a complete system upon which we can build the future. Satoshi Nakamoto, Bitcoin’s creator, first encouraged the idea of layering on Bitcoin in 2010. “I believe it is possible for [a blockchain] to be a completely separate network and blockchain while sharing CPU power with Bitcoin.” Back then, Nakamoto saw an opportunity for Bitcoin to be more than just money.

If we want to build a database that will last forever, we must acknowledge Bitcoin’s approach to long-term stability. This is what Vitalik Buterin meant when he said Ethereum should “emphasize long-term stability” to become more like Bitcoin. Both Bitcoin and Ethereum will benefit humanity greatly. I’m looking forward to seeing how they each approach building the future. I believe Ethereum will continue to innovate as it evolves quickly. However, until Ethereum stabilizes, it will lose ground in the race to become a perpetual database. It’s taking on too much risk, and the world might not know what Ethereum will look like for decades.

This is the time for Bitcoin. Bitcoin must accept building layers. Bitcoin must learn to be productive rather than just a store of value. Finally, I believe that slow and steady is the key to winning the race because while fast may capture our attention, slow has all the power.