In the past decade, the cryptocurrency industry has been attracting more and more of the brightest minds from the tech world. The technology itself is interesting, to say the least. One can easily spend months learning about cryptographic hash functions, decentralized consensus mechanisms, Byzantine fault tolerance, and all of the other technical components that make cryptocurrencies possible.
However, something that happens to a lot of people when they first learn about cryptocurrencies is that they get consumed by the tech side of things and lose sight of the bigger picture. Speedy confirmation times and high transaction throughput make for compelling marketing material, while the nuances of monetary policy go unnoticed in the background.
As a result, Bitcoin looks like an ancient dinosaur on the brink of extinction, while many of the innovative altcoins appear to be superior alternatives just waiting to dethrone King BTC.
This is the place where Brandom Quittem, cryptocurrency researcher and writer, found himself in late 2017, having spent months researching various projects and looking into the greater possibilities for blockchain technology.
But, as Quittem describes in the latest episode of the Contrarian Island podcast, he eventually came to have a massive shift in perspective. The basis for that shift was a realization that Bitcoin is best understood not just as a technological innovation, but as a new kind of money.
You see, the factors that contribute to a technology being successful are not all that similar to the factors that make money successful. Technology needs to evolve and innovate rapidly in order to keep up with the competition and continue providing more and more value to society. Money, on the other hand, is all about trust.
As such, it’s far more important that money is secure, resilient to change, robust, and reliable. Those are the factors that make Bitcoin valuable.
With that in mind, Quittem and Contrarian Island’s host, Matt, dive into the weeds and explore both technical and non-technical features of Bitcoin that give it advantages over previous forms of money, including gold and fiat.
Many of the topics discussed touched on Quittem’s writing, including his article from January Bitcoin Culture Wars: What Doesn’t Kill You Only Makes You Stronger. Here, Quittem explains how disagreements that occur in the Bitcoin community and the hard forks that sometimes come from those disagreements can actually help Bitcoin grow while making it more secure over time.
The conversation gets even more interesting when the two Bitcoiners discuss the contentious topic of how Bitcoin will remain secure and affordable to use in the future, after its block rewards have significantly diminished.
That’s where ongoing developments like Schnorr signatures and the Lightning Network come into play. Quittem explains how these innovations make it possible to consolidate a substantial amount of economic activity into a single on-chain transaction, making it reasonable to pay higher fees because the size of the fees would still be small compared to the value of the transactions they are associated with.
For example, nobody reasonably wants to pay a $10 fee to move $50 from one wallet to another on-chain. However, it is reasonable to pay that same fee for one on-chain transaction that encompasses tens, hundreds, or even thousands of transactions within it. This is why the Lightning Network and especially Schnorr are such important parts of Bitcoin’s future.