What separates Bitcoin from other Digital Assets?
THE NETWORK, THE STORE OF VALUE, THE COMMODITY
THE NETWORK
The analogy with the Internet since the bitcoin network is, like TCP/IT protocol, developed in layer: base layer, L2, L3
To the best form of money and monetary good (Fidelity), I would humbly add another angle. Not only bitcoin is the best form of money and monetary good, but it is also important to evaluate Bitcoin in terms of the underlying technology, its infrastructure, and the base layer.
Bitcoin is not yet a superior payment technology, like Amazon was not the superior form of e-commerce in the marketplace, while the logistic infrastructure was under construction. Amazon’s logistic infrastructure is like Bitcoin’s base layer (the one inefficient with only 7 TPS, transactions per second that is so stable, secure, and resilient, that you could build the worldwide payment infrastructure on top of it!) How many years did it take for Amazon to build its infrastructure? 25sh?
Lightning payment network, and the other layer 2 and layer 3 solutions, are like the digital services built on top Amazon’s logistic network, with servers worldwide, applications, and merchants.
Bitcoin base layer is growing decentralized, worldwide, like the internet in 1998, while other blockchains are trying to reach global adoption through a patchwork of heterogeneous technologies, with incompatible foundations-based governances, where the level of decentralization is not algorithmic but established by human beings, with unfeasible interoperability between them.
Bitcoin base layer is 14 years old, Layer 2 payment protocols are only 7 years old, and some of them are even way much younger. The not-yet-superior payment network already transfers value globally, connecting part of the globe never connected with the international financial system before, at a fraction of the cost, allowing almost real-time micro and macro payment. Yes, replacing the inefficient financial infrastructures run by central banks and governments across the globe, with only one worldwide, purely peer-to-peer, decentralized, publicly accessible, superior payment network, might take 10/20 years, still.
THE STORE OF VALUE
What is the difference between bitcoin and other cryptocurrencies, stablecoins, digital dollar, CDBS, and digital euro?
Why invest in bitcoin vs other digital assets?
If it isn’t still not clear why bitcoin should be considered separate from other digital assets, then keep reading my articles, Bitcoin Internet of Value and Bitcoin Value proposition and use cases, or follow what highlighted Fidelity Asset services, which manages $4.5 Trillion from a total of 43 million investors, in their very recent analysis:
Traditional investors typically apply a technology investing framework to bitcoin, leading to the conclusion bitcoin as a first-mover technology will easily be supplanted by a superior one or have lower returns. However, as we have argued here, bitcoin’s first technological breakthrough was not as a superior payment technology but as a superior form of money. As a monetary good, bitcoin is unique. Therefore, not only do we believe investors should consider bitcoin first to understand digital assets, but that bitcoin should be considered first and separate from all other digital assets that have come after it.
Following what Fidelity said, bitcoin is a monetary good, a store of value because is scarce (only 21 million), in an increasingly digital world. Bitcoin, like no other digital asset, is the most secure, decentralized, sound digital money any “improvement” will necessarily face tradeoffs.
THE COMMODITY
There are plenty of reasons to invest in bitcoin and bitcoin mining, and why now (2024) is the best moment to do it, but if you have only four minutes rather than reading this article, I would suggest watching the teaser of Dirty Coin, a short film by Alana Mediavilla-Diaz, that sum up gracefully why bitcoin mining is the rare example of sustainability across the three dimensions of a circular economy, which are economic, social, and environmental. It provides an insightful look into why bitcoin mining is a sustainable practice that aligns with the principles of a circular economy and 3Ps (People, Planet, Profit) framework to build a sustainable Future. This is one of the significant factors that sets bitcoin apart from other investment options.
CONCLUSION
There are many investors although driven by interest in bitcoin and bitcoin mining struggle to understand the difference between bitcoin and other digital assets and to see the value of bitcoin beyond store of value. Investors should be aware of the difference in order to evaluate properly the investment in the long term and avoid making risky decisions if a proper time horizon is not set up since the beginning.
If you are evaluating investing into bitcoin mining data centres, either a site development, or hosting turn-key, or have specific requirements and questions, feel free to send me an email, or connect, or schedule a call
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