To Succeed Bitcoin Needs Something New, Not More of the Same

Too much of this space, and things being built around it, is centered around essentially mimicking the legacy financial system. There is not much being built trying to blaze new grounds. Micropayments, while admittedly something I’ve been very critical of due to the user experience of having to think about tiny transactions all day, has seen almost no real experimentation or development in trying to solve that UX problem at scale.

I struggle to think of any application that is truly innovative. Yes, things like crowdfunding or micropayments in games remove a central point of control that can be used to censor use cases of these applications, but they are still reinventing the wheel. Numerous projects are focused on collateralizing fiat or stablecoin loans with Bitcoin, dollar payment rails on Bitcoin, etc. These are important applications to build if Bitcoin is to be used in commerce, that is beyond a doubt, but they are not things that are only possible on Bitcoin.

In some cases this has implications for the overall network and protocol if followed through to its extreme. In the case of Bitcoin collateralized dollar loans, for example, it is inescapable that these things interface with the legacy system. This gives those systems some degree of control over those applications, and (proportional to how much activity on Bitcoin they make up) Bitcoin itself.

Consensus on Bitcoin is not governed by voting, it is governed by participation. That is,. those actors that actually receive bitcoin in economic activity, and those who transact and generate revenue for miners. If you aren’t doing one of these two things, your node has no influence on network consensus, especially during the instance of a chainsplit or contentious fork. That’s just the cold reality. Bitcoiners focusing on building applications that leverage or interface with the legacy system are just giving the system we are trying to escape a bar wedged into Bitcoin the legacy system can use to leverage against it.

It is foolish, short sighted, and a major tactical error.

The path forward is to focus on sustainable applications that do not require that interface, that can function totally independently of the legacy system, while still generating revenue for miners and application users and operators. This is the only way forward in terms of encouraging Bitcoin adoption without slowly ceding more and more influence over the network and protocol to the exact types of players we set out to escape in the first place.

To truly thrive outside of the existing system, we need markets for digital goods, for services, for real products, for new types of applications that legacy players won’t or can’t clone and monopolize for Bitcoin.