Doc's Daily Commentary
Mind Of Mav
Recapping The Biggest Bitcoin Event This Year
Earlier this week, the event “The B Word” (The Bitcoin Word) was held, where they talked about Bitcoin and its institutional adoption. Several well-known exponents debated the future of Bitcoin and the opportunities it poses for the next few years.
As part of the conference cycle, one of the most anticipated was precisely the one that had the participation of the CEO of Tesla and SpaceX, Elon Musk; Ark Investment CEO Cathie Wood; and the founder / CEO of Twitter and Square, Jack Dorsey, who talked about the current state of Bitcoin and some topics of interest related to its operational functioning.
The conference moderated by Steven Lee (Square) opened with participants talking about what marked them the most about Bitcoin.
For Wood, the most remarkable aspect of the digital currency had to do with the disruptive innovation that it raised in the face of the economy that we all know. Here she alleged that after the investigations carried out, its role as a payment system was one of the most attractive aspects, a thesis that Musk also supported, which supplemented by talking about decentralization, security, and benefits for other more traditional systems.
In this regard, Elon Musk commented that traditional money moves much slower than people think, since banking systems are not the most optimal based on the needs of users, in addition to raising much more operating costs. For the Tesla executive, there is a clear opportunity here from an information systems point of view, since Bitcoin is clearly faster and less prone to errors.
Dorsey endorsed the aforementioned points and added the importance of the network and its community. In that sense, he stressed that Square has historically tried to solve difficulties present in already known payment systems, especially the issue of bank inclusion in countries and sectors that have been left out of these platforms. Bitcoin offered an effective answer to these problems, and its community continues to learn to optimize the operation of the network.
Hand in hand with the above, Dorsey also mentioned that Bitcoin brought with it a change in current monetary policies, precisely because it provides greater financial empowerment to people and is not under the control of third parties that govern its operation (governments, companies, or figures of power). He also indicated that it is in constant development, which is why his main team of programmers (Bitcoin Core) frequently debates about the future of the project and the next steps that will take place.
Regarding the technical properties of Bitcoin, Wood spoke about the finite and programmed issuance for the digital currency, which implements deflationary principles that help to preserve and organically increase its value.
In this regard, Wood highlighted that Bitcoin would be the first global financial system to implement this idea and that although digital currency applies as an exchange system, unit of account, and store of value, it is this last aspect where it sees its main use today. . In that sense, she also spoke of the goodness of this property vis-à-vis the US economy and those of other nations, since being a finite asset it helps in the fight against inflationary processes such as those that many countries are going through.
The emphasis on decentralization
Returning to the decentralization aspect, Musk assured that any money that is under the control of trusted third parties is susceptible to their wishes. He backed Dorsey by pointing out that governments function as unlimited corporations that establish monopolies based on violence in its various forms.
In this vein, Dorsey stated that any form of value that is beyond the control of third parties is much more secure, so from Square they try to provide support to promote its adoption and education:
“We want to promote what is wonderful about Bitcoin … its decentralization … its open source structure … that it can be used to defend against those with vested interests.”
Energy consumption and the environment
One of the most important points that were opened for debate had to do with the issue of energy consumption of the Bitcoin network, a statement that Musk made at the time, accompanied by the measures announced by Tesla, which led to a significant drop in his listing in the main markets, although he stressed that none of his companies has sold the BTC in their possession and that they will accept the digital currency again once certain issues related to its operation are resolved.
Beyond the speculative topic, all participants agreed that it was important to address the issues of carbon emissions and the use of renewable energy to sustain Bitcoin mining. However, Wood made an important precision by clarifying that this activity is currently much less polluting than gold mining, one of the reserve assets most implemented in the traditional market.
Musk also made the precision on the cessation of mining activities in Chinese territory, which has resulted in a drop in the levels of the HASH present in the network but also spoke about the change that is taking place in the implementation of clean energies within this practice, ensuring that more than half of mining already uses renewable energies, although there is still a way to go.
About this, Dorsey also made some clarifications on the sustainability of Bitcoin mining, inviting critics, analysts, and participants of the sector to think about the amount of renewable energy that is produced and not used, which should be introduced in ongoing conversations about the future of digital currency.
Leaving aside the use of renewable energies a bit, Wood also spoke about the social responsibility that the adoption of Bitcoin entails. Beyond a matter of defending diversities and inclusion, it must also be considered that it addresses social problems mostly linked to the economic order.
In this sense, Wood stressed the importance of the fact that it is a technology available to everyone, without restrictions, which can save lives. For example, he pointed out the relevance of Bitcoin in a remittance system, especially aimed at countries where residents especially depend on capital sent by relatives and acquaintances to cope with economic difficulties.
Wood also highlighted that this and other ideas of social order are very present among the developers of the Bitcoin Core, who assured that they are not people who only understand code. In this regard, he pointed out that many of them know more about economics than even the economists themselves, so they constantly think about how digital currency can help to overcome certain problems of an economic nature.
The role of companies
To close, Lee asked the participants about their respective companies’ role in addressing the negative impact that others generate on Bitcoin.
In this regard, Dorsey assured that everything they try to do from Square and Twitter seeks to support decentralization. Therefore, they constantly try to provide support to the Bitcoin community and are currently working on the creation of a physical wallet where the user is the owner of their private keys and keeps their assets safe.
For her part, Wood pointed to the emphasis on democratization and transparency, for which he highlighted the importance of educating about it with research and discussions, enabling more people and institutions to better understand these properties and how they occur within Bitcoin. She does not rule out that institutional investors will soon increase, which will attract many more to the sector.
For his part, Musk previously spoke about the scalability of the base layer and the difficulties for Bitcoin to be a P2P payment system. In this sense, he highlighted the importance of second-layer solutions to address these problems, since the parameters of the network were set a long time ago. In addition to pointing out that cryptocurrencies will help create a much better future, he stressed that Starlink can help operationally so that users can run their nodes, by providing greater network capacity for all people.
To close, the participants talked about the problems they see for the future of Bitcoin and what they expect for the next few years.
Wood highlighted the importance of price volatility, noting that once this aspect is addressed, Bitcoin could help solve many of the problems present at the economic level, especially due to its deflationary properties. She was also expectant about the convergence between Blockchain and Artificial Intelligence since the combination of these technologies could help generate global changes that we cannot imagine.
For his part, Dorsey assured that the Bitcoin network is very well designed but it can be somewhat complex for those who approach the subject. She highlighted that the Lightning Network appears as a very promising proposal to solve certain cost and speed problems, and positively valued products such as Muun, an easy-to-use wallet that even her mother could handle effectively.
And finally, Musk supported the idea of a better future so that both Bitcoin and cryptocurrencies can help in this goal, precisely because of the empowerment it offers to its users and the freedom they provide to governments and powerful entities.
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