Post
Topic
Board Bitcoin Discussion
Re: Vitalik Buterin's thoughts about Blocksize increase
by
ebliever
on 09/09/2015, 18:04:01 UTC
The current price of bitcoin is based largely on expectations of future growth. Choke off that growth and I suspect a large portion of its current valuation will evaporate.

Doesn't that imply that the priority is maintaining bitcoin as a payment system? Or rather, that the only way towards "future growth" is with low fees/fast confirms? It seems that the digital gold crowd doesn't necessarily see things that way. I, for one, don't see the payment protocol as the primary value; it is wholly secondary to that of decentralized store of value.

Good question. I think cryptocurrency can serve both functions (store of value vs. payment system). In fact I've always been of the opinion that in the long run there will be a handful of dominant cryptocurrencies (not one), each optimized for a particular financial function. These would include, for example (1) a highly secure store of value (AKA digital gold), (2) fully anonymous transactions (3) high speed transactions (such as stock market day traders might want to utilize), (4) a simple, convenient payment system (perhaps at the cost of high security), (5) maximally public transactions (for example, so the public could hold government spending accountable), (6) optimization for micro-payments and no-fee transactions, and so on.

I am skeptical that any one cryptocurrency can really be a "jack of all trades" and be the best choice for all these disparate functions, though there could be linkages between the major cryptocurrencies such as via sidechains. I also believe that there will be dozens of moderately successful "second-tier" cryptocurrencies filling minor financial/technical niches, or appealing to particular demographics and interest groups. The latter doesn't make pure financial sense, but we are dealing with human interests and human foibles. So I guess I'm saying, dogecoin is here to stay. ;-)

If I'm right, then _something_ will ultimately take on the role of "digital gold." But for bitcoin to take on this role, something else has to take on a co-flagship role as a mainstream payments processor or the whole cryptocurrency industry will suffer a setback. So far everything has been too much in flux for the cryptocurrency scene to gravitate towards my vision of the future, though I have faith that my underlying logic is sound and that it will eventually be born out.