Editor's Note: This article comes fromBlockchain Camp (ID: blockchain_camp)Editor's Note: This article comes from
Blockchain Camp (ID: blockchain_camp)
, Author: SAIFEDEAN AMMOUS, Translator: Huohuojiang, reprinted by Odaily with authorization.
As Bitcoin's popularity continues to rise and its transaction fees continue to rise, there are complaints about the bleak outlook for the market. Today, the average transaction fee exceeds $2, and pessimists have issued the conclusion that "Bitcoin will eventually perish." After all, no one is willing to pay a $2 fee for a single small consumption. Compared to other payment methods such as credit cards and PayPal, transaction costs are much lower.
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But in fact, the problem is not Bitcoin itself, but some misunderstandings about Bitcoin. First, let's analyze the current skyrocketing price situation: If Bitcoin is destined to die, why are so many people still flocking to it? The reason is that Bitcoin is not designed for small transactions, and its target group is all kinds of large transactions (especially cross-border transactions). There are already many payment methods in the market for small face-to-face transactions: cash, barter, credit cards, bank checks, etc., and the payment methods used in different parts of the world are not the same.
But few currencies are available for international payments: the dollar, the euro, gold and the International Monetary Fund's (IMF) special drawing rights (SDR). The vast majority of international transactions are denominated in these currencies. In this case, thousands of dollars of cross-border transactions often cost tens of dollars in handling fees, and also need to accept the intervention and investigation of financial institutions. The $2.50 Bitcoin transaction fee looks like a lot of money by comparison.
However, such a large amount of international capital flow has far exceeded the actual processing capacity of the Bitcoin blockchain. If more transactions continue to flow in, it will inevitably lead to an increase in fees. However, this does not mean that Bitcoin will eventually die.
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bitcoin advantage
We assume the existence of a global economic system based on Bitcoin settlement. Judging from the current settlement capacity of Bitcoin, the system can verify about 350,000 transactions per day, which can be used by 850 banks around the world to conduct an inter-bank transaction every day.
In such an international network of 850 central banks, daily final settlements can be made via Bitcoin. Compared with the current central bank settlement network, the Bitcoin network has two main advantages: first, the final settlement result does not depend on other counterparties, and does not require physical banks as substantive arbitrators. Breaking the centralized system of global hegemony is a good thing for all countries in the world. Second, in the Bitcoin network, no member of any bank can inflate the supply of its base currency. Therefore, Bitcoin is more valuable and attractive than national currencies (which can increase the supply to raise funds for the government).
Under this scenario, the government cannot create new bitcoins out of thin air, and central banks can freely compete to launch bitcoin-based monetary tools. Without a lender of last resort, fractional reserve banks face an existential crisis, and only sound money banks that offer financial instruments 100% backed by Bitcoin will survive. They can conduct internal customer settlement under the chain, and then conduct daily final inter-bank settlement through the blockchain.
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economic basis
I'm currently writing a book on the main value proposition of Bitcoin as a sound currency, and its historical importance, far beyond the impact of rising transaction costs for small amounts on consumer payments. Throughout history, sound currency is an important cornerstone of the development of human civilization, and its demise is often accompanied by the decline of human civilization. The modern world is built on the foundations of sound money in the 19th century. And in the instant gratification consumerist culture of the twentieth century, the constant devaluation of fiat currencies is not conducive to long-term savings.
