The Bitcoin paradox

Bitcoin was created with the goal of being a "peer-to-peer electronic cash system", an alternative currency acting as unit of account, of course, and store of value, but also as a medium of exchange. Bob would do work, or provide a good to Alice, and Alice would pay Bob for the work done, or for the good provided, with Bitcoin instead of fiat, Central Bank money.

But as The Economist observed back in 2011, while technically sophisticated, Bitcoin's economic design was rather rudimentary. Specifically, the strongly deflationary set up, with a fixed cap and slowing issuance rate seriously compromised its suitability as a "medium of exchange" while strongly boosting its "store of value" capability.

Would you spend a currency that has appreciated 30 MILLION times in the past 15 years? No, you wouldn't. That's why Bitcoin payments have been, are and always will remain marginal. But changing Bitcoin would be a very bad idea for so many reasons. Its main strength and value come from it being slow, almost impossible to change, from being predictable. Predictability breeds trust.

For Satoshi's vision to be fulfilled, Bitcoin needs the other cryptocurrencies, its intellectual progeny, that strike a different balance between "medium of exchange" and "store of value". Bitcoin needs the cryptoverse.

Watch the Bitcoin paradox in a nutshell