Bitcoin’s Most Valuable Use-Case

The gold and silver money which circulates in any country, and by means of which, the produce of its land and labour is annually circulated and distributed to the proper consumers, is, in the same manner as the ready money of the dealer, all dead stock. It is a very valuable part of the capital of the country, which produces nothing to the country. The judicious operations of banking, by substituting paper in the room of a great part of this gold and silver, enable the country to convert a great part of this dead stock into active and productive stock; into stock which produces something to the country. The gold and silver money which circulates in any country may very properly be compared to a highway, which, while it circulates and carries to market all the grass and corn of the country, produces itself not a single pile of either.~Adam Smith, The Wealth of Nations

All else being equal, the market would value 148BTC (or UnifiedBTC) more than or equal to LegacyBTC. In other words, if hash power, re-org risks, or related considerations played no part, the market would prefer a bitcoin that has SegWit activated through BIP148 over a bitcoin that does not. Or at least, the market wouldn’t mind it if a bitcoin had SegWit activated through BIP148, and would value it equally to a bitcoin that does not. (This includes a bitcoin that has SegWit activated through a different activation method later on.)

Bitcoin’s 7tx/s Capacity

The Big Blocker Complaint

Bitcoin’s Scaling Trade-off

…greatly sacrificing computational scalability in order to improve social scalability. That is Satoshi’s brilliant tradeoff. It is brilliant because humans are far more expensive than computers and that gap widens further each year. And it is brilliant because it allows one to seamlessly and securely work across human trust boundaries (e.g. national borders), in contrast to “call-the-cop” architectures like PayPal and Visa that continually depend on expensive, error-prone, and sometimes corruptible bureaucracies to function with a reasonable amount of integrity.

Bitcoin As A Settlement System Scales Indefinitely

Bitcoin As Coffee Money Doesn’t Provide A Unique Service

Increasing Low Value Bitcoin Usage Doesn’t Necessarily Increase Its Value As Per Metcalfe’s Law

Metcalfe’s Law states that a value of a network is proportional to the square of the number of its nodes. In an area where good soils, mines, and forests are randomly distributed, the number of nodes valuable to an industrial economy is proportional to the area encompassed. The number of such nodes that can be economically accessed is an inverse square of the cost per mile of transportation. Combine this with Metcalfe’s Law and we reach a dramatic but solid mathematical conclusion: the potential value of a land transportation network is the inverse fourth power of the cost of that transportation.

A reduction in transportation costs in a trade network by a factor of two increases the potential value of that network by a factor of sixteen

While a power of exactly 4.0 will usually be too high, due to redundancies, this does show how the cost of transportation can have a radical nonlinear impact on the value of the trade networks it enables.

Bitcoin As A Coffee Money Doesn’t Scale

Money and Banks as Settlement Mechanisms

Bitcoin As a Settlement Mechanism



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