Blocktower Exec on Rise of Bitcoin’s Challengers: Why BTC is Unlikely to be Ousted by Smaller, Dynamic Rivals
While the late months of 2018, as well as the ongoing months of 2019, are demonstrating that there are updates on the horizon, as well as new challengers coming to the blockchain and cryptocurrency game. So do these challengers pose a significant threat? And is it enough of a threat to depose the long illustrious Bitcoin? Not likely.
That is according to the managing partner of BlockTower, the investment company specializing in cryptocurrency asset investment, Ari Paul took the time out of his schedule to explain that, while these challenges are on the horizon and are evolving, Paul had an interesting theory to add to the mix. On Twitter, he made the following interesting statement – that Bitcoin as a digital asset, is now far larger than the blockchain that it relies upon. And if that sounds farfetched, then some explanation is in order.
Speaking as a seasoned industry insider of a number of years, Ari Paul has been a veteran of the likes of University of Chicago as well as Susquehanna International, and he took some more time in order to explain what he meant by this statement, as well as some of the signs that it represents for the wider ecosystem at large.
Bitcoin Overshoots The Underlying Bitcoin Blockchain
Within one of his more recent thread that made the social rounds on Twitter, Paul went on to claim that there is an apparent, and increasingly growing level of difference between Bitcoin as a digital asset, and the underlying Bitcoin blockchain. Rather than leaving up to the interpretation of the users, Paul goes on to explain why exactly the asset carries far more value than the blockchain.
In order to get to the bottom of this unusual conclusion by Paul, we must start by saying that Bitcoin is no ivory tower, no matter what capacity you use it in. Bitcoin is, instead, the furthest thing from it, with the network appearing to be an independent entity, within his white paper, ‘Satoshi Nakamoto‘ made it clear that this digital asset was, in fact, fully programmable.
This stands as a direct testament to Nakamoto's own self-professed anti-establishment system of understanding, especially for international economics as it will evolve in the digital age. The illustrious ‘godfather' had allowed users to build their own metaphorical church upon the rock of BTC.
1/ I'm used to talking to traditional finance folks about why "blockchain not bitcoin" makes no sense. (tweestorm link below). I'm increasingly excited about crypto folks understanding that Bitcoin is bigger than the Bitcoin blockchain. https://t.co/jgq10UD0HI
— Ari Paul ⛓️ (@AriDavidPaul) February 8, 2019
There are a wholly new paradigm and relationship coming for industry leaders and users internationally, especially those that seek to apply alternative uses for BTC. This includes a wide range of other ecosystems that may benefit from the digital currency, Paul went on to explain.
“If [BTC was just transacted only on its network], that would be a problem, since the Bitcoin blockchain is first generation technology with limited throughput and features. But… BTC can be used on other protocols and networks.”
One of the examples that we see of this is the fact that cryptocurrencies have steadily begun to the introduced transaction, storage and scaling solutions in the shape of aptly named ‘sidechain' protocols as well as additional layers such as ‘second,' ‘third,' and other layers.
One of the examples that the investor cited was the inclusion and subsequent launch of the Bitcoin Lightning protocol on mainnet over the course of 2018. Paul went on to explain that applying a layer two protocol system provides an innovative new approach to Bitcoin, allowing for
“numerous fast and cheap BTC transfers that are settled and secured by the main Bitcoin chain.”
Now, while Lightning's specialty area, as in, one of the major purposes for it was to improve the status for Bitcoin as a feasible candidate as a digital cash solution, and that is of a great deal of importance, both to its developers and users. Paul went on to state that it is a matter of time for Bitcoin, with users moving with ever greater effort and ease to apply drivechains, sidechains, and a number of other applications that will be placed on the Bitcoin blockchain, and powered up by the Lightning Network.
Paul would continue on to state that this ongoing trend is remarkable, to say the lease, stating what kind of impact that this new system may have on the feasibility of rival blockchains and digital assets as viable contenders. Paul argues:
“[Bitcoin’s programmable nature] means that BTC is unlikely to be rendered obsolete by competing protocols that offer incremental improvements. It is not limited to the Bitcoin blockchain’s features or throughput limitations.”
Paul finally concluded his argument by stating that cryptocurrencies, no matter how dynamic, how effective they prove to be in contrast to Bitcoin, they can't so easily suppose that they can usurp, in some way, Bitcoin's long-standing dominance of the market. Paul argues that challengers can't be easy challengers by meagrely “adding features, or with incrementally better transactional throughput.” Instead, these same rivals should seek to utilize different solutions for consensus systems as well as governance features. Among the much-needed solutions include monetary and/or security solutions.
Even then, the veteran financial expert from BlockTower went on to question the kind of thought process that goes behind thinking that BTC will, at some point, fall down to bite the dust in a, particularly significant way. And it's an argument that he is joined in pitching with a number of other influential figures in the space, especially when it comes to this model of thinking. Among them is A.T. Kearney, which operates as a management consulting company with offices across the world.
A.T. Kearney claimed recently that Bitcoin's market dominance has a very good chance of growing as opposed to shrinking; claiming that its market share could rise to 66 percent over the course of 2019/20.
It makes for a unique alternative argument that institutions and experts are arguring in favour of Bitcoin, and institutional interest and investment is following, demonstrating that Bitcoin is not losing its title and throne anytime soon.