Why is Bitcoin unrepeatable?

When we were young, we all knew that money was not falling from the sky. On the other hand, we are believed by the church in subtle ways, which is not only possible, but also a normal, necessary and effective function of our economy. Before Bitcoin, central banks around the world had this privilege. After Bitcoin came out, every Tom, Dick and Harry seemed to think they could also create money.

Fundamentally, this is a kind of arrogance that everyone who tries to copy bitcoin has. Whether by hard-for-sharing (bitcoin cash), cloning bitcoin (Litecoin) or creating a new protocol with "better" functionality (Ethereum), each trying to create a new form of currency . If Bitcoin can do it, why can't we?

In 2019 we witnessed the first monetization of economic commodities (bitcoin) in the free market for thousands of years. Many people have not stopped to think about the importance of this reality, nor do they understand how and why the reality exists, but instead ignore it to focus on a derivative or some improvement that they have not seen before.

Everyone wants to get rich quickly, as long as there is a coin, there will be an alchemist. Those who try to copy bitcoin are our alchemists today.

They said bitcoin was too slow, so they created a "faster" copy. They said Bitcoin couldn't handle the scale of global economic transactions, so they created a replica of "bigger" size. Then they said Bitcoin was too volatile to be a currency, so they created a "more stable" version.

Such replicas have been continuously produced. Next, they said Bitcoin was not very flexible and needed to be more programmable, so they created a "more flexible" version. They even say that they are not creating money, but tools for "payments" or "utilities," or "gas-driven world-class computers." They also tried to convince us to believe in a world with hundreds of currencies. But please don't get me wrong, each of these situations is an attempt by them to issue their own currency.

Bitcoin's value function

If the primary (if not the sole) function of an asset is in exchange for other goods and services, and if there is no requirement for the income stream of a productive asset (such as a stock or bond), then it must compete in monetary form and if it is reliable The currency attribute, it can store the value. For each "feature" modification, those who attempt to copy Bitcoin are unable to understand the attributes that make Bitcoin a monetary value.

When Bitcoin's software code is released, this is not a token. You can make a copy of the code tomorrow, or create your own version with new features, and people who don't use Bitcoin as a currency will have the same attitude towards your version. As time passed, the Bitcoin network developed new features that were not available at first, and these features were almost impossible to copy due to the existence of Bitcoin, and Bitcoin became a currency.

These characteristics spontaneously emerge as people in some countries around the world evaluate Bitcoin and decide to store some of their wealth. As the value of Bitcoin increases, it becomes decentralized.

As it decentralizes, it becomes increasingly difficult to change the consensus rules of the network or invalidate effective transactions (often referred to as anti-censorship). There is still much debate about whether Bitcoin is fully decentralized or fully resistant to censorship, but although it may be true, there are other things that are not considered too much to discuss:

1. Bitcoin is by far the most decentralized and most censored monetary system in the world, compared to traditional currencies, other digital currencies, or commodity currencies such as gold.

2. Bitcoin is able to generate value because it is decentralized and resistant to censorship. It is these features that guarantee and reinforce the reputation of Bitcoin's 21 million fixed supply (ie, why it is an effective way to store value).

3. With the increase in the value of Bitcoin and the expansion of all levels of the network, Bitcoin has become more and more decentralized and increasingly resistant to censorship.

4. Repeat.

The currency system is often the only one

Whether understood or not, all other legal, commodity, or cryptocurrencies compete for the same use case as Bitcoin, and the monetary system is often the only medium because its function is liquidity, not consumption or production.

When evaluating a currency network, if there is a larger, more mobile, and more secure network as a viable option, it is unreasonable to store the value in a smaller, less liquid, and less secure network.

If the person holding Venezuela Bolivar or Argentine peso can join the dollar system, they will do so. Similarly, anyone who chooses to speculative Bitcoin replicas makes unreasonable decisions to voluntarily choose to use a low-monetity, low-security currency network.

Although some currency networks are larger and more liquid than today's bitcoins (such as the US dollar, the euro, and the Japanese yen), individuals who choose to store some of their wealth in Bitcoin do so because they think Bitcoin is more Security (decentralization → uncensored restrictions → fixed supply → value storage). And because it is expected that others will also choose to join, thereby increasing liquidity and trading partners.

Why Bitcoin cannot be copied

Many people who create digital currencies neither accept nor admit that what they create must be money to succeed. Others who speculate on these assets do not understand that the monetary system is often unique or naively believe that their currency can outperform bitcoin.

None of them can explain how the digital currency they choose is more decentralized than Bitcoin, and more resistant to censorship or more liquidity. Further, no other digital currency may achieve the minimum degree of decentralization or anti-censorship required to have a credible monetary policy. The following are quoted from the Bitcoin Standard:

Bitcoin is valuable not because it has a specific function, but because it achieves limited digital scarcity, and through this scarcity it gains value storage characteristics. The credibility of Bitcoin scarcity (and monetary policy) exists only because it is decentralized and resistant to censorship, and this has little to do with software.

Overall, this will drive adoption and more liquidity to strengthen and enhance the value of the Bitcoin network. As part of this process, people choose not to use a low-value currency network.

Fundamentally, this is why the emerging nature of Bitcoin is almost impossible to replicate and why Bitcoin cannot be copied or surpassed: because Bitcoin has existed as an option and its currency characteristics have evolved over time (and scale) Bigger) becomes stronger, while poor quality currency networks are directly ignored.

If you don't first form your own understanding of the following, you may never come to this conclusion: i) Bitcoin is limited (how/why); ii) Bitcoin is valuable because it is scarce; iii) Currency The system is often unique.

You may come to different conclusions, but this is a suitable framework for considering whether you can copy (or exceed) Bitcoin, rather than a framework based on any set of special features. It is also important to recognize that anyone's conclusions, including yours or mines, have little impact. Instead, what matters is what the market consensus believes and its ability to emerge as the most reliable long-term value store.

Empirical evidence (price mechanism and value) shows that despite the large amount of noise, the market continues to clarify why Bitcoin is different. Before speculation, try to understand why Bitcoin is successful and why Bitcoin is unique. When someone tells you something better than Bitcoin or a different function, keep in mind that the market that has faced the same choice over the past decade has rationally considered these trade-offs and chosen Bitcoin.

Minority rule

An article by Nassim Taleb describes how a small group of paranoid people put their preferences on most people and explains why "the most paranoid person" wins.

Bitcoin (and the currency system) is a perfect example of this phenomenon. If a small group of people are unanimously convinced that Bitcoin has superior currency characteristics and will not accept currency in your digital (or traditional) currency, and less convinced market participants accept both Bitcoin and other currencies, Then those paranoid minority will win.

This is exactly what is happening in the global digital currency hegemonic competition. A few market participants have been convinced that only bitcoin is feasible, rejecting the monetary characteristics of all other digital currencies, and most people are willing to accept bitcoin with these people.

Because of their paranoia, this small group of people is gradually forcing their preferences to most people. In the digital currency world, diversifying by choosing these people is equivalent to letting these people (or paranoid minority) decide what your future currency is. Before using your hard-earned money to make speculative investments, evaluate these trade-offs and think about the minority rules. Money is not falling from the sky.


Author: Parker Lewis.

Translator: Chuan, special author of the Blockchain Institute.

Disclaimer: This article is the author's independent point of view, does not represent the position of the Blockchain Institute (Public Number), and does not constitute any investment advice or suggestion, the image source network.

Link: https://www.unchained-capital.com/blog/bitcoin-cant-be-copied/

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