Elon Musk. Source: video screenshot, Youtube, Bloomberg.
Part of what many observers expected to see during the Bitcoin (BTC) discussion on Wednesday with General Director of Ark Invest , Katie Wood, CEO Are you here Yes Spacex , Elon Musk and Square CEO Yes Twitter , Jack Dorsey, there was a discussion about the merits of Bitcoin’s layered approach to scaling. compared to the alternative of increasing transaction capacity at the base level of the blockchain.
While this direct confrontation between panellists did not actually take place, Wood and Musk’s contrasting comments illustrated the main point of disagreement in this technical debate and why Musk’s Dogecoin experiment (DOGE) does not have much of an impact on the odds of success.
Wood Explains Bitcoin’s Value Proposition
At the start of a live performance on Wednesday, Steve Lee of Square Crypto He asked Wood to explain what initially sparked his interest in bitcoin. In his response, Wood recalled that his former mentor and economist Arthur Laffer (famous for the Laffer curve) called Bitcoin the “rules-based monetary system” he has been waiting for his entire career.
Wood added later in an interview: “The role he plays [Bitcoin]since the rule is the quantity rule [de] 21 million pieces is really a reserve of paper value. “
In other words, the main purpose of the Bitcoin blockchain in the context of the usefulness of a Bitcoin asset as a store of value is to make monetary policy “carved in stone” (as Bitcoin creator Satoshi Nakamoto said many years ago) and cannot be bribed by a trusted third by a party such as a central bank.
Wood also mentioned that various applications involving the use of bitcoin as a medium of exchange can be built on the underlying bitcoin chain, although high value transactions are already taking place on the underlying chain.
Musk wants to test large blocks in Dogecoin
Shortly after Wood explained the basic utility of the Bitcoin blockchain as a foundational layer of the new money network, Musk was asked what he thought of Bitcoin’s ability to evolve as a means of payment. While Musk has been heavily criticized by some Bitcoin enthusiasts for the statements he has made regarding Bitcoin’s scalability, his position has been more subtle regarding live streaming.
“Bitcoin by itself simply cannot evolve into a global monetary system at the base level. But with the second level it is possible, depending on how this second level is implemented. “
Musk added that he has a lot more BTC than Ethereum (ETH) or DOGE, and that he would like Bitcoin to be successful. However, he also sees value in pushing the boundaries of chain scaling with Dogecoin.
That Musk is wrong
A key point that Musk did not try to challenge in Wednesday’s discussion was that changing the baseline of Bitcoin, especially in such a way as to increase the cost of operating a full node, weakens confidence in the rules of the network. Returning to Wood’s ideas on the value proposition of the Bitcoin blockchain, large changes in the underlying level could undermine the credibility of Bitcoin’s monetary policy and the usefulness of cryptoassets as a store of value. In the past, the market has been unwilling to risk Bitcoin’s usefulness as a store of value for the perceived benefits associated with lower-value transactions, as was the case with the SegWit2x failure.
As Lee rightly points out, there has been a lot of controversy over this topic throughout the history of Bitcoin, and it doesn’t seem like Musk is coming up with anything new here. Bitcoin Cash (BCH) even tried to take advantage of the Bitcoin currency network to implement a much higher block size limit, and failed miserably. For many, a more practical way to take advantage of Bitcoin’s existing network effects is to use secondary layer networks such as the Lightning Network and sidechains, which do not require the creation of a new separate cryptocurrency. And, to Musk’s credit, he is also open to the potential of this ambitious philosophy.
@NeerajKA Dogecoin Cash is the real Dogecoin. Or is it Dogecoin EV (Elon’s vision)?
-Daniel McNally (@sangaman)
It seems that the meme “I’m new to Bitcoin and I’m here to fix it” is quite applicable here. Of course, this applies to just about everyone when they first enter space, and in this situation it is certainly amplified by Musk’s celebrity profile. However, it is understandable that Bitcoin users were annoyed by the recent repetition of old discussions and ideas from Musk and others.
While Musk remains obsessed with things such as long-discredited concerns about possible regulation of the Lightning Network nodes and the overwhelming desire to just buy coffee with a chain transaction, chances are, like everyone else, the effects of the Bitcoin monetary network are ultimately inevitable.
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