The future of Bitcoin is not what you think

Foreword: What is the future of Bitcoin? Is it digital gold? Or is it a point-to-point digital cash payment network? The author of this article, Mark Helfman, proposes that Bitcoin will become the basic settlement layer of the payment network in the future. It will integrate local legal currency to form a global payment network. This article was translated by the "HQ" of the "Blue Fox Notes" community.

I am too young to remember the birth of the Internet. When the Internet was booming, I was in high school and I was a bit confused about what happened. At a family gathering, when my cousin boasted about how much money he made to buy and sell domain names, I thought it was stupid.

To this day, I still think it is silly to make money by buying and selling domain names. I know that sometimes it happens, it's like a high-risk, low-return investment.

As a result, the Internet has done it. Now, 20 years later, domain names have become very cheap, and search engines have made them only relevant to brands. (Blue Fox Note: The author's meaning is that the convenience of the search engine makes the domain name lower and cheaper, and the domain name is more related to the brand.)

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What does this have to do with the value of Bitcoin?

This is an example of how people's perceptions of value change as technology evolves.

At this point, most people regard bitcoin as currency. The US SEC chairman said, yes, the drug trafficking group used it like this. Everyone I know thinks this way. Its name is "bit-COIN" for a reason.

Bitcoin's maximists call it hard currency, critics call it fake money, and old players call it online money.

What is the common theme? money.

However, Bitcoin is not a legal currency anywhere, but if no one is willing to take it, what is the use of money?

Like a 10-year-old child, Bitcoin has a lot of potential but no direction.

When Bitcoin grows, what will it become? Value storage? But its price often collapses.

The hedging means of inflation? It has nothing to do with any other asset class or government currency system.

Another financial system? You can't use it to save money.

After 20 years, Bitcoin will not be any of these things, it will be a global payment network.

You will mainly use the local currency, but you will also have an App, or a card, or other payment method, convert the local currency to Bitcoin in real time, use the Bitcoin network to settle the transaction, and convert the Bitcoin back to your local currency. . You will not even notice that you are using Bitcoin through the App or other services.

With lightning networks and smart contracts, Bitcoin will have all the features of modern electronic payments that are faster, cheaper and safer.

Why can people use Bitcoin without perception? Because unlike local currency, you can use Bitcoin to start a business, build apps and services, and pay for a system, but you can't create more bitcoins. Its code is open source, covers the whole world, its network does not stop, its rules are constant and predictable.

However, no organization can control its production or distribution.

Just like the cryptocurrency described in my book Consensus: Public Payments Network, Bitcoin simply confirms that everyone's transactions are as they expected.

In the next wave of technological innovation, developers will hide the features of the technology level so that users can get a seamless experience, just as Web browsers simplify the Internet, bank apps simplify financial services, you will never touch the actual bits. The currency, if you don't want to, the app and service program will help you with all the technical issues.

Blockchain engineers will create sidechains and payment layers for a variety of new and interesting application scenarios. The store will use a bitcoin-based payment system instead of a credit card that requires a 3-5% fee. The mobile payment application will use Bitcoin's network to settle transactions with almost no cost.

How do I know that this will be the case?

Because this is already happening.

People are building the future. Opennode has begun to offer similar services, and Square plans to enter the field. Falcon Bank's blockchain team is exploring ways to offer similar services to merchants. Starbucks will work with Bakkt to provide its customers with bitcoin to buy coffee. It is not Starbucks that wants Bitcoin, but it wants to pass people through Bakkt. Bitcoin is converted to cash as needed during payment.

Will these be successful?

Ask Metal Pay, IBM, Ripple, and JP Morgan. They all use non-bitcoin cryptocurrencies to do what I just mentioned.

Bitcoin has an advantage over the above: its network is huge and decentralized. Anyone can design or develop improvements without permission, and anyone can access the Bitcoin network.

When bitcoin technology becomes more mature, the public will not have to consider these issues. Some people will have bitcoin as an investment or financial reserve to hedge against currency crises. Merchants and payment network providers hold some bitcoin for everyone to use. However, you still use the cryptocurrency issued in your local currency or a company as your salary.

(This means that Bitcoin may evolve like Linux, which is software that powers most computer systems. In fact, your company may run on a system built on Linux, and you are not even aware of it! )

If Bitcoin can't fill this role, it will die. In terms of currency, it is really bad.

Why is Bitcoin a bad currency? Bitcoin failed as a currency, but it has nothing to do with technology. The problem is bitcoin itself: no one controls it, its value tends to rise.

This is very bad for the currency:

1. Because no one can control Bitcoin, its price is unstable. And people prefer to use a relatively stable currency. This is not only psychological comfort, but also practical – if you don't know how much your money will be worth in the future, how can you rely on it to make future plans? The existence of modern central banks is to prevent government currency from fluctuating too much at any time. Bitcoin does not have this mechanism.

2. Because many people think Bitcoin is valuable, they are more inclined to sell coins. If no one uses it, can this still be a good currency? Is it used (as a trading medium) not the full meaning of money?

This is not a problem that technology developers can solve.

Where is the value of Bitcoin?

The value of Bitcoin lies in its network.

With Bitcoin, people can create their own Visa or PayPal. People can buy bitcoin worth $100,000 and create an app that trades through the Lightning Network Wallet, which is almost zero cost for a $100,000 transaction settlement.

We can connect to the global payment network in real time. A large or small amount of funds can be sent to anyone, any place, any time, for any purpose, while determining that the payment can be made without acquiring or sharing any person's private information.

We will use Bitcoin as an open source payment processor and charge our customers a small fee or use our app through a layered subscription service. We will use a stable currency to maintain the value of the funds. When bitcoin prices fall, we will buy more bitcoins to expand our ability to pay. When the price of Bitcoin rises, we will sell some to make a profit.

Our cash flow will come from our services and we are committed to making them as useful as possible. Our profits will come from our business, not from the bitcoins we hold.

This is more practical, in line with Bitcoin's original vision of a peer-to-peer electronic cash system – a bank alternative, not a currency.

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