It seems strange to me that some people do not think that Bitcoin needs to compete with other cryptocurrencies. That Bitcoin somehow exists in a vacuum and does not need to compete in the free market, that somehow Bitcoins success is guaranteed even if we all just sit on our holdings while having no regard to its utility. This in my opinion is not correct, people do care about the cost of the transaction and the present holders of Bitcoin is not all that matters. For Bitcoin to grow and survive it needs to attract more users, when better and cheaper alternatives exists people will choose those instead of Bitcoin. Bitcoin should be able to compete with other cryptocurrencies and I believe that it can as long as we do not allow the Bitcoin network to become overloaded which would lead to transactions becoming unreliable and over the long term prohibitively expensive.
One that you propose here is that without large transaction throughput and high velocity Bitcoin has no utility.
I never said this.
Well "this in my opinion is not correct".
I guess then I agree with this.
While regular retail consumers may care about the cost of transactions, Bitcoin offers little to no advantage in that regard compared to traditional payment and monetary systems.
I disagree, I even personally have ideological reasons for why I prefer using cryptocurrency over traditional payment and monetary systems. If I can no longer do this on the Bitcoin blockchain I will simply move to another blockchain that does allow me to do this. Which relates to my point about competition as well.
Aside from certain niche use cases (remittances or conventional international money transfer) most people are perfectly fine using credit cards and fiat for their daily purchases. These systems provide consumer protection and security that is hardly possible using Bitcoin.
I disagree, I prefer Bitcoin. If I could use it for everything I would.
While these might be costly and put enormous weight on the financial system as well as shift enormous responsibility & trust toward the institutions running these networks most people could not care less.
I do care.
So essentially what you are doing is pushing for dangerous changes to Bitcoin so that it attempts to compete with systems that are inherently more efficient and scalable given their centralized arrangements. This, to me, is asinine and totally misses the point of what Bitcoin's true value proposition is.
I am not advocating for pushing dangerous changes to Bitcoin, I actually think that we should not increase the blocksize beyond conservative projected estimates of the technical limitations for running a full node, mainly bandwidth actually. A guideline could be that most people should be able to run a full node from their homes if they live in the developed world. So please do not mischaracterize my views as dangerous unless you do think that what I have just described is actually dangerous.
Bitcoin has grown from nothing to a 3.5B$ market cap largely without notable "transactional" utility except for some special uses cases. The reasons for this are obvious to anyone who has been paying attention: its sound monetary theory & its decentralized, censorship-resistant property.
It is not a case of either or, Bitcoin can have notable transactional utility and have a sound monetary theory while remaining decentralized and censorship resistant. These properties are not mutually exclusive, they are actually synergistic. It is a false dichotomy to think that we must choose. Increasing the utility of Bitcoin allows it to be a better store of value. Being a better store of value in turn also allows Bitcoin to function more effectively as payment system. Bitcoin can be many things simultaneously and be different things to different people at the same time, we should not try and restrict Bitcoin.
Since then, a trove of entrepreneurs and venture capitalist have tried to shape Bitcoin into the second coming of Paypal, riding the coattails of its novelty features and permissionless aspects. Remember when 2014 was supposed to be the "year of the merchant"? Expedia, Microsoft, Dell, Overstock, Newegg, etc. Somehow you would think all this "utility" would lead to more adoption right? After all people cant wait to spend their bitcoins and use them to shop online....right..right? Well it turns out that no, they don't. It simply doesn't make sense, other than maybe temporarily as a novelty, to purchase bitcoins to make purchases. It is not convenient or economically desirable. Imagine the amount of money that was wasted trying to sell this "utility" to mainstream customers. Just thinking of the giant fail that was the "Bitpay Bitcoin Bowl" says all that needs to be said. The "customer" is simply not buying it. Bitcoin is still looked at as a freak show by most of the general public, they simply don't care for it.
It will take more time for Bitcoin to be more commonly be accepted as a means of exchange, for some people there are certain psychological barriers to overcome considering some of the anarchistic aspects of Bitcoin, currency without centralized authority. For me Bitcoin is much more then currency, it is trust without centralized authority which can be applied to many applications, including currency. For me the political benefits of using Bitcoin as a currency, as well as a store of value, would have profound effects on global economics and political power. Money is power, Bitcoin changes the fundamental nature of power. The benifits of this are not as easily measured because the true cost of the current financial system is borne through externalities like quantitative easing, regulatory capture, inefficiencies, corruption ect.
As we consider the different avenues we could take it is seemingly clear to me that we always end up at the same point: monetary freedom.
Monetary freedom implies the protection of one's wealth from government inflation, taxes, confiscation or general destructive economic policies. Trace speaks of economic interests in Venezuela and Switzerland using Bitcoin to the tune of millions of dollars to circumvent some of their countries restrictive economic policies. By all account this is what Bitcoin excels at: being a safe haven for one's wealth, an accessible and comparatively cheap way to escape capital controls
It seems like you are implying that a conservative blocksize increase would compromise monetary freedom when that is not the case. Again you are setting up a false dichotomy, a false choice. Increasing the block size does not compromise monetary freedom.
The generalization that you make of what a user is, as if it only relates to transactional interest, is misguided and to some extent downright disingenuous. On the other hand the users I refer to are not some imaginary "mass adoption" fantasy. They are real and are using Bitcoin as we speak. They are not deterred by high transaction fees because they literally have no other options or if they have, they involve costs that are on a whole different level than what you would refer to as "prohibitive" (bankers, lawyers, accountants, government officials).
I am not making the generalization of what a user is, I think that we should account for many different users of Bitcoin not just the "bankers, lawyers, accountants, government officials" whom you however are saying who the users should be which is a much worse generalization to make, furthermore I would consider that "prohibitive" for most people, myself included. If the fee market determines that this the price for transacting on the Bitcoin network based on the technical limitations of the time then it would be justified and I would use an altcoin instead. However that would not be the case if we left the limit at one megabyte since that does not presently represent the median of our current technical limitations, since it is just an arbitrary limit after all. That is why the blocksize should be increased within the extend that it does not compromise decentralization as a whole. Since leaving this restriction in place would lead to more centralization as whole in the form of an increased reliance on off chain transactions and other types of third parties in comparison to the alternative in the case of increased adoption.
No one's disregarding Bitcoin's competition. If someone is it is you as you conveniently ignore readily available and very dominant fiat alternatives for the purpose of "transactional utility".
Again you are saying we should use fiat instead, I am sure that many more people will want to use Bitcoin instead of fiat even if just because of "ideological" reasons. If the majority do not choose financial freedom then that is alright since at least we do still have the choice.
As far as cryptocurrency is concerned there are a multitude of reasons why Bitcoin has little to no competition. If you wish to understand why I suggest this excellent article from Mencius Moldbug about monetary history. While it may not be factually accurate on all points, it certainly is in regard to inherent network effects and how powerful they are in the context of money:
Once Nitropia is on rhodium, anyone who buys palladium is no different from anyone who is trying to manipulate any commodities market. In a free market, if you want to buy up a bunch of palladium - or wheat or oil or FCOJ - and by so doing raise the price, you may do so. But if you want to actually realize your profits, you have to sell at some point, and there is no reason to think you'll have any luck getting out at a higher price than you got in at. This is called the "burying the corpse" problem, and a thing of beauty it is.
In other words, money is the bubble that doesn't pop. Once rhodium feels the Quickening, any other potential monetary standard is at an incurable disadvantage, because its adherents are mere manipulators. Sooner or later they will get tired and let their guard down, and rhodium will take their heads. But rhodium itself cannot pop - there can be only one, but there has to be at least one. And that's money.
When you research the history of currency, they most certainly can pop. There have been many currencies in history that seemed to have had this "network effect" however they have still failed time and time again. To suggest that Bitcoin has no competition is not accurate, I agree that the network effect in cryptocurrency is strong but it is not invincible. Especially now that true volunteerism and choice exists for currency which previously did not exist. Currency and aspects of macro economic policy can be truly separated from the state in a similiar way that the seperation of church and state has. These are compelling reasons to use Bitcoin as a store of value and as a currency, while maintaining financial freedom and decentralization. Since that would better then using the fiat it seems you think we should use instead, the definition being.
https://en.wikipedia.org/wiki/Fiat_money"Fiat money is currency which derives its value from government regulation or law. The term derives from the Latin fiat ("let it be done", "it shall be").[1] It differs from commodity money and representative money. Commodity money is created from a good, often a precious metal such as gold or silver, which has uses other than as a medium of exchange (such a good is called a commodity), while representative money simply represents a claim on such a good."
Gold was used as a currency for millennia and it has been a good store of value for most of its history simultaneously, these concepts are not incompatible and historically has been how human society has operated for the vast majority of recorded history.
