Cryptocurrency: Back to basics

Following the 2008 financial collapse many investors lost their way of life, their retirement, their jobs, their houses and their sense of financial security. The 2008 financial collapse was the biggest sham perpetrated by some of the biggest and most powerful crooks the world could ever imagine. As a response, the pseudonymous programmer Satoshi Nakamoto created one of the most revolutionary electronic accounting systems known to man. Bitcoin, the most pervasive and ubiquitous blockchain technology, was created as a tool that could that could be used to fight these crooks....or, at least that is what we were told.

From the start Bitcoin was lauded for its ability to bring transparency to financial accounting; removal of the "central" bookkeeper in favor of a ledger maintained by those that have everything (and yet, nothing) to gain by an honest accounting on a public ledger. But somewhere along the way Bitcoin lost its way. As Bitcoin's price grew, so did the number of miners. With growth in the value of the Bitcoin network came growth in the size of the mining operation(s) and, hence, the number of institution-like investors. As a result of the growth of the Bitcoin network the mining difficulty became increasingly difficult. Much like taxes, this is both a blessing and a curse. As the mining algorithm became more and more difficult, the hardware required to mine became more and more expensive. The amount of work required to perform this public service became so exorbitant that the average citizen could no longer participate in validation of the public ledger.

Bitcoin had promise. It had the ability to bring financial access to the remainder of un-banked economic participants. This was (and is still) an important piece of the technology. If we are to realize a world in which all producers can fully utilize their assets; hedging them, bringing them to market, or borrowing them when times are tough (food, water, electricity, ideas, information) these very same producers must be able to participate. By making participation extremely expensive (or difficult) Bitcoin ( the original) has effectively removed democracy from its ledger. Now, in order to validate transactions you need cutting-edge mining hardware.

With quality comes cost...and right now BTC is a hard sell. The marks of quality are:
1)Performance
2)Reliability
3)Durability
4)Serviceability
5)Aesthetics
6)Features
7)Percieved quality
8)Conformance to standards

How does BTC meet these marks of quality? Let us have a look:

Performance: What is the mark of performance for BTC? As a financial instrument for the masses, BTC must have the ability to be transacted quickly........ FAIL.
XRP can handle about 10,000 transactions (TX) per second. BTC? About seven. Since XRP is backed by all of the crooks that started this mess in the first place, we should defer to the runner-up: NEM. But NEM is both PERMISSIONED and PRIVATE. So who is next? Steem. Welcome....you are already participating if you are reading this article.

Reliability: BTC has THIS mark of quality down pat. The BTC blockchain has never been hacked. And NO, the hacking of exchanges does not count. That would be akin to saying that cash is unreliable because banks have been successfully robbed.

Durability: Hard to ague with this one... for the same reason as stated above. For a blockchain, reliability and durability go hand-in-hand. Arguably, the security of BTC is second to none; it has the longest running blockchain of ANY competing cryptocurrency. With every block added the chain gets harder and harder to corrupt.

Serviceability: This is two-fold: the code can be serviced by those who can write the software and the ledger is maintained by the nodes that operate within the rules of the code. So the ledger is, for all intents and purposes, maintained by those who write the code. This is a limited community, but the same would apply to ANY other cryptocurrency. So no advantage here.

Aesthetics: this is a not an issue with the bitcoin protocol itself, but rather the various wallets within which the coin is held. So, effectively not an issue that cannot be overcome by free-market choice in one of the many freely available wallets.

Features: On this front, BTC fails. Ethereum, for example, has improved upon blockchain technology by incorporating the ability to execute smart contracts. This ability has given the Ethereum protocol/network an IMMENSE advantage in terms of features. With Ethereum ANY asset is subject to the terms of the smart contract, not just currency. Ethereum was, arguably the first of it's kind to go mainstream but it is certainly not the only protocol to offer this feature.

Perceived quality: BTC receives a good mark here!.. you can't be ranked #1 in market capitalization without every investor in the space BELIEVING that you're #1.

Conformance to standards: Well, we've got some issues here. What ARE the standards? At this point, the standards are what the common users say they are. Some standards that apply to currency are:

a) that the value of the currency matches or exceeds the rate of inflation
b) currency is not easily stolen, or counterfeited
c) the currency is fungible

BTC meets "a" and "b" but fails miserably when it comes to "c". The transaction volume of Bitcoin is ludicrously slow and expensive. At seven...yes SEVEN transactions per second (on average), BTC can hardly be called fungible. There are a multitude of other cryptocurrencies that have much faster transaction times and much lower fees. Monero and Bitcoin Gold, to name TWO that are in the top 20 (by market cap). Not only do these cryptos perform the same function as BTC, but they also have lower fees, higher transaction rates and can be mined by your average desktop computer....at least for now. Limiting or evenly distributing mined coins based on nothing more than simply...well....being one of many miners is a bit too communistic for me, so fixing this issue is a tough nut to crack. I suppose this could be done for BTC right now, but the core developers' answer to fixing this issue go against the core tenet of the original Bitcoin mantra (see lightening network, payment channels.

The free market will always control these forces; the newcomer will have better technology and will able to do it cheaper. The market participants will switch services and the old-guy will fizzle out. Such is life. Only when task of validating transactions happens effortlessly and to the benefit of ALL will the cycle stop. Until then...the not-so-tedious task of accounting will converge at the crossroad between currency and value.