Its Time to Start Moving on From Bitcoin

We're just shy from being a decade away from the publishing of the Bitcoin whitepaper back in 2009. Since then, we've seen the price of Bitcoin explode from almost nothing to almost $20,000 at its peak in Q4 2017. But as the new year rolls around, I think its high time to air my opinion about the role of Bitcoin today:

Its a dinosaur and it needs to go extinct.

Now, I predict that you, the reader, fall into roughly one of three categories:

1. you agree,

2. you disagree,

3. or you're unsure.

In any case, here's why I think Bitcoin is a dinosaur.

Bitcoin wastes precious energy. In other words, proof-of-work sucks.

I'm sure that you've heard this argument many times before, but I think its important that we recognize the significance of the energy that Bitcoin uses calculating useless hashes.

According to the World Bank, over a billion people still live without electricity. That's approximately how many people live in both North and South America combined. Of course, without electricity, these people have no access to assets like cryptocurrency, and they will never profit from the rise of cryptocurrency.

I shouldn't need to remind anyone about the direction were pushing our climate in. Nevertheless, we still receive about 40% of our power from coal, worldwide, and while nuclear seems to be the best current option for clean energy, it seems to have fallen out of favor over the past two decades. With other renewable energy sources still out on the horizon, wasting energy on calculating useless hashes just seems a bit unethical and irresponsible.

Bitcoin still deserves credit for implementing the Hashcash based proof-of-work (PoW) mechanism as a means to achieve Byzantine fault tolerance (BFT). When it was first introduced, Bitcoin was in fact a novel approach to solving consensus issues with distributed ledger technology. But it is worth pointing out that there are other consensus algorithms by which we can achieve BFT Among these are:

• Proof-of-stake (PoS)

• delegated proof-of-stake (DPoS)

• the multiple variations on practical byzantine fault tolerance (PBFT)

Between power consumption, transaction speed, and scalability, PoW is quickly becoming outdated. We need to move onto different ways of achieving consensus.

Bitcoin has to failed revolutionize the way we make electronic payments

In the original Bitcoin whitepaper titled "Bitcoin: A Peer-to-Peer Electronic Cash System", the authors specified a protocol by which a distributed ledger could eliminate the double spending problem and remove the necessity for trusted financial intermediaries. The implementation of the protocol that we know today has achieved those aims, but thanks to fees and transaction times, it has fallen short of becoming the end all electronic cash system that was hoped to revolutionize payments over the internet.

While projects like the Lightning Network (LN) hold promise for Bitcoin realizing the vision as a vehicle for easy electronic payments, we have yet to see their promise realized. Only time will tell if solutions like LN will remedy the issue. Regardless, should we really have to continually bolt on fixes for Bitcoin instead of just baking them in in the first place?

The Bitcoin community is fragmented - and power is centralized.

As the continuing drama of Segregated Witness upgrades on the Bitcoin network has demonstrated, the Bitcoin community is unstable to say the least. Between Bitcoin Cash, the failed New York Agreement, and extreme market volatility, the political conditions surrounding Bitcoin are unnerving. Here's some fun drama that further illustrates this point.

The fact is that there is too much money involved for different actors to not act in ways that benefit themselves. With little faith in many of the most influential developers, Bitcoin keeps finding its way into peril.

Perhaps even more disturbingly, trusted intermediaries like exchanges have centralized massive amounts of power. I need only point to Coinbase for evidence of this. As this Quora post points out, Bitcoin is subject to the whims of very powerful groups such as:

• Miners,

• developers,

• exchanges,

• and other large stakeholders.

Needless to say, power being vested in such parties defeats much of the original intention of Bitcoin to remove the need for trusted intermediaries. These parties often own large enough sums of Bitcoin to disturb the market artificially at their own whims. Unfortunately however, this type of behavior seems to be fairly easy to get away with.

Other cryptocurrency projects are already leaving Bitcoin in the dust.

Because of the indecisiveness of the Bitcoin community, a number of new distributed ledger projects are already threatening to relegate Bitcoin to dinosaur status. While improvements to the Bitcoin protocol have been mired in controversy and delayed again and again, other cryptocurrencies have been moving ahead and making innovations with smart contracts, consensus algorithms, and tokenization. Examples of projects which threaten to leave Bitcoin behind in terms of innovation include Ethereum, Cardano, and Ripple. Regardless of your opinion of these projects, they have the potential to displace Bitcoin as leading cryptocurrency technologies.

Ethereum is paving the way as a functioning distributed ledger system with Byzantine fault tolerance and a nearly Turing complete virtual machine. While developers are capable of creating smart contracts on top of Bitcoin, the fact is that Ethereum has already become the de facto standard for smart contracts. Coupled with easy tokenization, its obvious why most contract development takes place on Ethereum rather than Bitcoin.

Ethereum doesn't come without its own host of issues, however. As of the writing of this article, Ethereum still operates on PoW, although Casper, Ethereum's PoS implementation (coming soon) hopes to change that.

Another promising project that threatens to eventually dethrone Bitcoin is Cardano. Cardano is a distributed ledger technology that is being built with the failures of current cryptocurrencies in mind. The Cardano Foundation and their contacted development team IOHK are hoping to create a distributed ledger system with peer reviewed, high assurance, mathematically proven code. The project aims to create a "3rd generation" blockchain technology that achieves goals of:

• scalability through Ouroboros PoS, partitioning, and sidechains

• interoperability through advanced metadata attribution,

• and sustainability through a DASH like treasury system.

These are only a couple examples of projects which are baking-in improvements to distributed ledger technology rather than bolting them on like Bitcoin.

Conclusions

In short, I've made four arguments:

1. Bitcoin is wasting world energy supplies,

2. Bitcoin hasn't lived up to its hype as a revolutionary payment system,

3. the Bitcoin community's indecisiveness is preventing much needed improvement while major holders laugh themselves all the way to the bank,

4. and Bitcoin is quickly moving towards deprecation.

I am by no means an expert on this technology, but I think that as a whole, the Blockchain space moves rapidly and will leave behind those projects that cant keep up. We should not cling to projects like Bitcoin simply due to their historical significance. There is too much work to be done improving the technology to waste time on dinosaurs that belong only in the fossil record.

References

Bitcoin Transaction Fees

Access to electricity (% of population) | Data

Proof-of-stake - Wikipedia

Delegated Proof-of-Stake Consensus

Byzantine fault tolerance - Wikipedia

Bitcoin Cash - Wikipedia

New York Agreement - Bitcoin Wiki
(https://en.bitcoin.it/wiki/New_York_Agreement)
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