OK. It is time for a Saturday long post. All you OGs can skip over this. Because it is stuff you already know. In fact I am not sure there is ANYONE here that NEEDS to read it. Oh wait, I do. Sometimes it is good to go over the basics.
First of all... we have some sacred math we hold to like religious totems... this cAPSLOCK guy, for example has held a belief that Bitcoin has never gone lower than it's previous top in the next cycle, and yet, is that really true?
And Bitcoin, while also down is showing fairly strong support and not doing the sort of draw down we have seen in past bears. Many are still calling for Bitcoin to do something it never has and pull back to below the last cycle's highs.
This belief seems widespread, however it is false.
Top of April 2013 was $266.
Top of December 2013 was $1170.
Bottom of August 2015 was $160.
And I remember at the time, during the downtrend post December 2013 peak, many people could not envision the price going below 266$ because "the price never went below the last cycle high" (and despite this pattern being true at that time - unlike today, the pattern got broken).
We like to say "No one who has held bitcoin for more than 4 years has lost money." That's sort of the same thing, right Is that one true? Does it really matter? The basic gist of the idea has held. Bitcoin is super volatile and goes up and down wildly.
Some status quo economists have declared that bitcoin cannot be used as a currency because of this volatility. And to be honest, I think the jury is still firmly out on that one. To be fair I imagine there are a lot of Salvadorians, who would rather be holding their wealth in the USD version of their currency rather than BTC. And Jack Mallers, perhaps because of his boyish charm, rarely gets called out by even the most hardened maxis for basically using BTC as a USD stablecoin, and perverting the purity that the maxis have been preaching for years.
I think part of the reason for this is he sees what Bitcoin is better than ... well just about anyone. Saylor sees this too, but it makes maxis mad that they cannot fight the idea because it goes against the doctrine we have all preached for so long.
Mallers sees bitcoin as a payment network, but one built entirely on an open, trust minimized, global system that is ruled by the immutable laws of mathematics. And what he has done is hack the original idea to use Bitcoin as a way to move value from anywhere to anywhere. Users of strike don't even have to know it's Bitcoin underneath. And Strike IS introducing trust in this transaction. If I send you $20 from my studio in Dallas TX, to you on vacation in the Swiss alps to buy you a magnum of Belgian beer what happens is Strike takes the money from my account, turns it into Bitcoin, sends it to Switserland, turns it into Francs and deposits it into the your account. Basically this is Venmo, or Cash App, but interestingly the trusted third party in this case is Strike. What is different is the network Strike is using can be used by literally ANYONE on Earth with a cellphone and some data. Users trust Strike in return for the convenience of the service, and not having to think about LND, CL, or BITCOIND. But not only can I send a lightning payment from my node to your strike wallet, but I can do the opposite, AND if I want to take ALL the trust out of the equation you and I can both just use Muun.
Very few people call out Mallers for basically introducing trust and banks into the Bitcoin network. And I think I know why.
Because their arguments are stupid.
Sorry, let me say that a better way. It is often said that Bitcoin is for enemies. It is also often said that Silk Road was an early battle test in production for Bitcoin. Because if criminals can use it then it works, and works without interference. I have often said that the revolution with Bitcoin is not that you
HAVE use it in a trust minimized way, but that you
CAN. Mallers is using the Bitcoin network in a trust minimized way to offer a business that includes some trust that users might want to use. He gets all the benefits of the open, inclusive monetary network, and passes some of that on to you as a customer.
But no one said you have to use Strike. I don't For a host of reasons. But the point is it is impossible to build an open source ungoverned monetary network, and then tell people "you can't use it that way". See what I mean? It does not ruin Bitcoin that Mallers has figured out a way to sell something useful to people with it. As long as you can make a transaction on the base layer. As long as you can spin up a lightning node, or run a neutrino light wallet on your phone, or even a Liquid server then it is still working as intended.
But Mallers sees a value in the network that has... deep breath here... NOTHING TO DO WITH THE PRICE OF BITCOIN. His service will work 1BTC = 20 houses or 1BTC = stick of gum. As long as we can put enough digits after the decimal point we will be able to denominate the value of anything. Instead of printing more money to supply the need for commerce (the current system of the world) we just divide up this perfectly scarce asset further.
I remember when that light bulb went on for me: One hidden beauty of Bitcoin is that even though we cant change how much of it there is, we CAN keep dividing it up into more and more pieces. Some idiots have even pointed and called that inflation. Yes. Cut my pizza into 35 pieces please, because I want more! So in a way we CAN make "more Bitcoin". to satisfy the needs of a growing population, and more and more use of the asset.
Humans change how they value things. And we are evidently f*%king while we do that because there are just a hair under 8 BILLION of us now. The way the current system works is it keeps making more money so more people can have money and we will all have enough to use it. And an advantage to this system is what I mentioned up above. The planners can control the rate of creation to keep the price of milk fairly stable. Oh, and take their entirely reasonable cut for themselves and their friends.
Well... yeah. Problems there.
And that has been the argument against hard money for longer than bitcoin has been around. Without those valves the price will go up and down wildly. Velocity will decrease because people are incentivized to hold it. And so on... Therefore, Bitcoin cannot be money.
That argument has merit. Bitcoin DOES go up and down wildly. Hello? 19k? But the conclusion that it cannot be used as money because of this? Or that people won't spend it for ... reasons? That has yet to be seen. When the Federal Reserve bank took us off the gold standard we entered an imperfect, but good enough experiment of Keynesian economics. When Satoshi spun up Bitcoin he launched a completely perfect Austrian system. The fact that it exists is enough to see if the experiment will work. Never more than 21mm. But 2,100,000,000,000,000,000 (2.1E＋18) millisatoshis. Enough for every human alive to have more than 250,000,000 mSats.
The cost of the security of that unchanging number is price volatility. Period. No way around it. We are giving up that feature of the Keynesian fiat system with this experiment. This is particularly true in the bootstrapping phase. But it will ALWAYS be somewhat true. Because we will keep making more people, and other things will keep changing.
So, back to Mallers. He saw a way that Bitcoin could work and no one have to worry about that volatility. We have always known that the various advantages of alt coins would eventually be absorbed by King Daddy. And Mallers basically rendered Ripple useless in one fell swoop. And with the introduction of protocols like Taro and OmniBOLT we will see the ability for stablecoins to be issued on and transacted across the lightning network.
We purists are frightened by this. I get it... I am not sure I want to issue token on any part of the Bitcoin network. Though, it has been done before (Omni and Counterparty) and there are reasons we want this, as humans. It IS going to happen whether we like it or not. And it might not work, but it sure looks like it will.
Thing is you will not be FORCED to use it, but there are reasons many would WANT to.
Now back to the price.
What happens as Strike grows, and Cash App starts to do some of the same things by using the legacy system less and less, and doing value movement of lightning network more and more. What happens when other countries start using the lightning network whether or not it is legal tender. Africans can see why this is better than mPesa. Well as more people are using it more people will need it.
And we will need more of it.
But wait, cAPS. We can't HAVE more of it, right? Right. Not in the physical sense. But 10 satoshis weighs exactly the same as1000 satoshis, or 1 mSat. The math does the work for us. We don't need a federal reserve printing more because people NEED more and because we want to keep prices stable. We will just keep cutting the pieces smaller and smaller.
And instead of leeching value out of the pockets of the poor into the pockets of the people behind the charade, Everyone gets more value for what they hold as the system grows.
Eventually all the folks using the 2nd and 3rd layers systems will realize that it is good for them to hold some of the underlying asset themselves.
So here is the point of all those letters up there:
If Bitcoin continues to work, it MUST become more valuable. Period.Hang in there OGs.
We are gonna be just fine.
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