It has been over 11 years since the Bitcoin network launched, it is now the most popular Blockchain network in the world. According to the Lindy effect theory (popularised by Nassim Taleb) – the future life expectancy of some non-perishable things like a technology or an idea is proportional to their current age, so that every additional period of survival implies a longer remaining life expectancy.
This is proving out to be true especially for technological breakthroughs like Bitcoin, which is not just a thriving ecosystem of miners, node operators, exchanges, users but also a philosophical push towards creating non-sovereign sound money.
Bitcoin is Durable and Robust
The reason why Bitcoin is so robust is simply because of its game theory and incentive structure.
There have been other decentralized networks before Bitcoin like the torrent, but Bitcoin is much more reliable and secure because of its incentive structure. The miners have to spend money on electricity and equipment in order to mine Bitcoins, this makes sure that the cost of entry is non-zero, unlike torrent where anyone can upload or seed a file for no cost.
The more people use and value Bitcoin, the more costly and difficult it becomes to mine Bitcoins. The reason behind it is a beautiful thing called the free market, the demand for Bitcoin determines the difficulty to mine as competition becomes fierce once it is more profitable to mine Bitcoin. If there is too much competition for mining, it becomes much more difficult to find profitability where only the most efficient miners end up making a bulk of profits. Thus this entire economy works flawlessly and finds an equilibrium as long as the actors in it are rational.
As long as there are rational actors who wish to make money and don’t mind spinning up some machines to churn out magical internet money (which actually has value) Bitcoin will exist and thrive.
Bitcoin is decentralized and philosophically consistent
Bitcoin isn’t the first gold like digital currency to have graced the world, there have been other implementations like e-gold which were launched before Bitcoin and failed.
Why you ask?
Simply because they were centralized, Bitcoin would have probably failed too if it was centralized. If there is a chance that a state actor you are competing against can shut down your network, the chances are that they will. Anyone can become a miner, node operator or a user in the Bitcoin network, the network is sufficiently big enough now that it is fair to call it decentralized (the SEC agrees!).
Another reason why the Bitcoin network is more reliable is that it doesn’t change much. This goes against the Silicon Valley narrative of “move fast and break things” which seems to work well in consumer applications. But when it comes to Blockchain networks especially like Bitcoin which is trying to be sound money that is not the case.
Think of it more like hardware rather than software, once the network is live making changes becomes really hard. Instead of making radical changes in the protocol, the bitcoin developers have decided to keep it simple. Bitcoin works reasonably well for transactions, but it has been a subject of criticism for quite a while due to scalability issues. The core philosophy is to not change the core protocol but to experiment with layer 2 and layer 3 solutions like the lightning network to scale the network. (Check out our lightning network wallet!)
Bitcoin trades 24/7 worldwide
Unlike traditional markets where the downtime is more than uptime, the bitcoin market is 24/7 and worldwide. Stock markets are open only for a certain time in the day and take multiple days to actually settle the transactions but the Crypto markets are open 24/7 and the settlement time of Bitcoin can be just a few hours and even minutes at best.
As pomp best puts it:
You can’t change Bitcoin’s monetary policy, supply schedule, interest rate, or transaction history.
There is no CEO or employees. No one will answer customer service complaints.
But you can always count on Bitcoin.
It never goes down.
— Pomp 🌪 (@APompliano) July 12, 2019
The mainstream media has declared Bitcoin dead several times when the price has crashed, but it is not just the price that is the sole factor deciding whether the network is thriving. It is also the number of nodes, miners, users, exchanges and the brand value which seems to go only in one direction over a longer period of time.
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