As Bitcoin embarks on a new epoch post-Halving, the atmosphere within the community is one of both celebration and contemplation. Juan Galt, a seasoned Bitcoiner and street philosopher, shares a poignant reflection that cuts through the typical jubilation surrounding such milestones. His thoughts offer a sobering look at the realities of Bitcoin’s current state and the complex challenges it faces moving forward.
Galt begins by addressing the elephant in the room…, skyrocketing transaction fees. Currently, fees are soaring above $100 USD to get a transaction on the blockchain, a trend that Galt warns is not just a temporary blip but a glimpse into the future of a successful Bitcoin. This high fee issue is propelled not only by the current JPEG and NFT craze but is also a natural consequence of Bitcoin’s increasing adoption and success.
The implications of these high fees are profound. Most “normal people,” as Galt puts it, are now priced out of using Bitcoin for everyday transactions, making it less accessible as a digital currency. The hope that layer 2 solutions like the Lightning Network (LN) might alleviate this burden is currently unmet, as LN’s security model itself relies on affordable on-chain transaction fees to resolve disputes, a scenario becoming increasingly untenable.
Galt criticizes the common solutions being floated within the community. The “big blockers,” or advocates for increasing block size to handle more transactions, face the reality that even with larger blocks, networks like Ethereum still struggle with high transaction costs and scalability issues. He points out that despite innovations, the fundamental issues of network congestion and high fees persist across various blockchain platforms.
Galt delves into the cultural and speculative aspects that fuel the blockchain and cryptocurrency industry. He suggests that the pervasive gambling and speculative behaviors seen in crypto are not fleeting but part of a long historical continuum of high-risk financial behaviors. According to Galt, even if technological solutions to Bitcoin’s scalability are found, the cultural propensity for high-stakes gambling in crypto will continue to challenge the network’s capacity.
In a more philosophical tone, Galt questions the very future of Bitcoin as it moves increasingly towards a model dominated by Bitcoin banks and regulated financial institutions. This shift could undermine the principles of decentralization and self-custody that are core to Bitcoin’s original ethos. He ponders the implications of losing the ability to conduct cost-effective self-custody and the integrity of verifying Bitcoin’s supply independently.
As Galt reflects on potential technical upgrades and enhancements to Bitcoin’s scripting language to improve efficiency and scalability, he maintains a cautious optimism. He believes in humanity’s ingenuity and ability to overcome these daunting challenges. His closing thoughts are a rallying cry for the community to harness their collective creativity and drive towards finding sustainable solutions that uphold the ideals of liberty and high-quality, accessible money.
Pure Money
Should Bitcoin remain pure as just a currency, devoid of the additional digital assets it currently supports?
Mira Hurley, in response to the thought-provoking write-up from Juan, pondered this exact sentiment. “If you could wave a magic wand and make Bitcoin pure and only money, would you? No JPEGs, no nothing, just value transfer?” she asked. The simplicity of the query cuts through the complex digital ecosystem that Bitcoin has become a part of.
Juan Galt, a voice known for its grounded perspectives responded with a reflective yet candid take. “Sure, why not. There’s no such magic wand though.”
This exchange encapsulates a crucial debate in the crypto community. On one side, purists advocate for Bitcoin’s original intent, creating a decentralized digital currency focused solely on value transfer. On the other, innovators embrace the blockchain’s capacity for expansion, seeing opportunities for Bitcoin to support a diverse range of digital assets, from JPEGs, indicative of NFTs, to smart contracts and more.
Bitcoin was originally conceived as a peer-to-peer electronic cash system, but has evolved into a foundation for a variety of financial instruments. The advent of NFTs and their explosive growth is a testament to the adaptability of blockchain technology, yet it raises questions about the dilution of Bitcoin’s original purpose.
The Scalability Conundrum
In the ever-evolving debate about Bitcoin’s scalability, Olivier Janssens puts forth a bold assertion: Big blocks can scale, and the key is in setting a minimal transaction cost. His argument leans heavily on the economics of mining. By ensuring that miners can continue to profit from their activity, he believes that Bitcoin can achieve an unprecedented level of security and become, in his words, “indestructible.” Janssens harks back to the original Bitcoin whitepaper, suggesting that its genius lies in its simplicity and adherence to its initial vision, facilitate as many transactions as possible to secure the network through mining incentives.
However, Juan Galt counters this argument with practical concerns about the current state of blockchain networks. He points to the technical challenges faced by individuals attempting to sync nodes on Bitcoin, Ethereum, or Solana. The reality of network congestion and high transaction fees, as seen in Ethereum’s case, and significant downtimes, like those experienced by Solana, highlight the growing pains of blockchains as they scale.
Galt emphasizes the importance of the network’s integrity, particularly the ability of individuals to verify the supply of Bitcoin and ensure that consensus rules are upheld. While Janssens views the scaling solution through the lens of transaction volume and mining incentives, Galt argues that the essence of Bitcoin’s value lies in its trustless nature and the capacity for self-custody—”fk you money,” as he bluntly puts it.
Both parties agree, though, on one critical point: tampering with Bitcoin’s capped supply of 21 million coins is a red line that should not be crossed. Such a violation would erode trust in Bitcoin’s scarcity and could compromise the cryptocurrency’s leading position in the market.
The exchange between Janssens and Galt reflects a central tension within the Bitcoin community. It’s a tug-of-war between pursuing aggressive scaling to accommodate a future of mass transactions and preserving the decentralized principles that make Bitcoin unique. As the community fiercely debates these challenges, it’s clear that Bitcoin’s journey is as much about navigating technical and economic hurdles as it is about maintaining the philosophical and ideological underpinnings that have guided it thus far.
Juan Galt’s reflections serve as a critical and insightful commentary on the state of Bitcoin post-Halving. While acknowledging the significant technological and cultural hurdles that lie ahead, Galt remains hopeful about the community’s capacity to navigate these challenges, ensuring Bitcoin’s role as a transformative financial force in the modern era.
Author Profile
- Lucy Walker covers finance, health and beauty since 2014. She has been writing for various online publications.
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