Well, well, well—if it isn’t Jack Mallers dropping truth bombs like they’re going out of fashion! His latest video on Bitcoin scarcity has me more thrilled than a Brit who’s just found out the pub’s open early.

You see, we Brits have a knack for understatement, but when it comes to Bitcoin, subtlety takes a backseat. We often babble on about Bitcoin being an inflation hedge—as if it’s some sort of financial umbrella protecting us from the monetary drizzle. But let’s cut the crumpets; the real magic lies in its finite supply.

In his recent episode of The Money Matters Podcast, streamed live on 11 November 2024, Mallers didn’t just hit the nail on the head; he used a sledgehammer. “Bitcoin is a solution, it is not a hedge,” he proclaimed, with the kind of conviction you’d expect from someone who’s just discovered tea and biscuits.

He pointed out the glaringly obvious—yet often overlooked—fact that Bitcoin is the only asset where increased demand doesn’t lead to increased supply. If everyone suddenly wants an iPhone, Apple will churn them out faster than you can say “planned obsolescence.” But if everyone wants Bitcoin? Well, tough biscuits. There’s a fixed supply, and that’s that.

Mallers eloquently stated, “Bitcoin is the most performant asset in the world because it’s the scarcest asset in the world. It’s the only asset that demands a higher price for more supply.” It’s like trying to get tickets to a sold-out Oasis concert; the more you want them, the more you have to cough up.

He also took a delightful jab at those who think Bitcoin is just another cog in the financial machine, correlated to stocks or precious metals. It’s as if he’s telling us that while the world fiddles with monetary policies like a cat with a ball of yarn, Bitcoin stands unflinchingly firm.

Now, I don’t know about you, but the idea that Bitcoin is immune to the whims of central banks and governments makes me sleep better at night. Well, that and a good cup of Earl Grey. The finite nature of Bitcoin means it can’t be diluted, devalued, or tampered with—unlike my neighbor’s opinion on my lawn gnomes.

Mallers sums it up brilliantly: “Bitcoin can change the world because the world cannot change Bitcoin.” It’s the financial equivalent of an unstoppable force meeting an immovable object—except, in this case, the object is a decentralized ledger, and the force is our collective realization that scarcity is valuable.

So, what’s the takeaway here? If you’re still treating Bitcoin like an optional side dish rather than the main course, it’s time to rethink your financial menu. The scarcity of Bitcoin isn’t a bug; it’s a feature—a rather splendid one at that.

In the grand tapestry of assets, Bitcoin is that elusive thread of gold that doesn’t tarnish, doesn’t fray, and certainly doesn’t multiply just because we fancy a bit more bling. It’s high time we recognized Bitcoin not just as a hedge against inflation but as a standalone solution to the age-old problem of value preservation.

As for me, I’ve decided to value two things above all: my time and my Bitcoins. Everything else is just window dressing—or, as we say across the pond, mere fluff.

So here’s to Jack Mallers for reminding us that sometimes, less truly is more. And if you haven’t watched his latest video, do yourself a favor and give it a gander. Just be prepared—you might find yourself nodding along more vigorously than a bobblehead on a bumpy road.

Cheers!

Watch the video:

#Bitcoin can change the world because the world can’t change #Bitcoin pic.twitter.com/3WnamG8nL7

— Jack Mallers (@jackmallers) November 14, 2024

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

A lot of consensus-change proposals for bitcoin are on the table at the moment. All of them have good motivations, whether it’s scaling UTXO ownership or making self-custody more tractable. I won’t rehash them here, you’re probably already familiar. Some have been actively developed for years.

The past two such changes that have been made to bitcoin successfully, Segwit and Taproot, were massive engine-lift-style deployments fraught with drama. There have been smaller changes in bitcoin’s past, like the introduction of locktimes, but for some reason the last two have been kitchen sink affairs.

The reality not often talked about by many bitcoin engineers is that up until Taproot, bitcoin’s consensus development was more or less operating under a benevolent dictatorship model. Project leadership went from Satoshi to Gavin to… well, I’ll stop naming names.

Core developers will likely quibble with this characterization, but we all know deep down that to a first order approximation that it’s basically true. The “final say” and big ideas were implicitly signed off on by one guy, or maybe a small oligarchy of wizened autists.

In many ways there’s really nothing wrong with this – most (all?) major open source projects operate similarly with pretty clear leadership structures. Oftentimes they have benevolent dictators who just “make the call” in times of high-dimensional ambiguity. Everyone knows Guido and Linus and the based Christian sqlite guy.

Bitcoin is aesthetically loath to this but the reality, whether we like it or not, is that this is how it worked up until about 2021.

Given that, there are three factors that create the CONSENSUS CONUNDRUM facing bitcoin right now:

(1) The old benevolent dictators (or high-caste oligarchy) have abdicated their power, leaving a vacuum that shifts the project from “conventional mode of operation” to “novel, never-before-tried” mode: an attempt at some kind of supposedly meritocratic leaderlessness.

This change is coupled with the fact that

(2) the possible design space for improvements and things to care about in bitcoin is wide open at this point. Do you want vaults? Or more L2s? What about rollups? Or how about a generic computational tool like CAT? Or should we bundle the generic things with applications (CTV + VAULT) to make sure they really work?

The problem is that all of these are valid opinions. They all have merit, both in terms of what to focus on and how to get to the end goal. There really isn’t a clear “correct” design pattern.

(3) A final factor that makes this situation poisonous is that faithfully pursuing, fleshing out, building, “doing the work” of presenting a proposal IS REALLY REALLY TIME CONSUMPTIVE AND MIND MELTING.

Getting the demos, specs, implementation, and “marketing” material together is a long grind that takes years of experience with Core to even approach.

I was well paid to do this fulltime for years, and the process left me disgusted with the dysfunction and having very little desire to continue contributing. I think this is a common feeling.

A related myth is that businesses will do something analogous to aid the process. The idea that businesses will build on prospective forks is pretty laughable. Most bitcoin companies have a ton on their backlog, are fighting for survival, and have basically no one dedicated to R&D. The have a hard enough time integrating features that actually make it in.

Many of the ones who do have the budget for R&D are shitcoin factories that don’t care about bitcoin-specific upgrades.

I’ve worked for some of the rare companies that care about bitcoin and do have the money for this kind of R&D, and even then the resources are not sufficient to build a serious product demo on top of 1 of N speculative softforks that may never happen.

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This kind of situation is why human systems evolve leadership hierarchies. In general, to progress in a situation like this someone needs to be in a position to say “alright, after due consideration we’re doing X.”

Of course what makes this seem intractable is that the Bitcoin mythology dictates (rightly) that clear leadership hierarchies are how you wind up, in the limit, with the Fed.

Sure, bitcoin can just never change again in any meaningful way (“ossify”). But at this point that almost certainly resigns it to yet another financial product that can only be accessed with the benefit of a large institution.

If you grant that bitcoin should probably keep tightening its rules for more and better functionality, but that we should go “slow and steady,” I think there are issues with that too.

Because another factor that isn’t talked about is that as bitcoin rises in price, and as nation-states start buying in size, the rules will be harder to change. So inaction — not deciding — is actually a very consequential decision.

I do not know how this resolves.

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There’s another uncomfortable subject I want to touch on: where the power actually lies.

The current mechanism for changing bitcoin hinges on what Core developers will merge. This of course isn’t official policy, but it’s the unintended reality.

Other less technically savvy actors (like miners and exchanges) have to pick some indicator to pay attention to that tells them what changes are safe and when they are coming. They have little ability or interest to size these things up for themselves, or do the development necessary to figure them out.

My Core colleagues will bristle at this characterization. They’ll say “we’re just janitors! we just merge what has consensus!” And they’re not being disingenuous in saying that. But they’re also not acknowledging that historically, that is how consensus changes have operated.

This is something that everyone knows semi-consciously but doesn’t really want to own.

Core devs saying “yes” and clicking merge has been a necessary precursor every time. And right now none of the Core devs are paying attention to the soft fork conversations – sort of understandable, there’s a bunch to do in bitcoin.

But let’s be honest here, a lot of the work happening in Core has been sort of secondary to bitcoin’s realization.

Mempool work is interesting, but the whole model is more or less upside down anyway because it’s based on altruism. For-profit darkpools and accelerators seem inevitable to me, although that could be argued. Much of the mempool work is rooted in support for Lightning, which is pretty obviously not going to solve the scaling problem.

Sure, encrypted P2P connections are great, but what’s even the point if we can’t get on-chain ownership to a level beyond essentially requiring the use of an exchange, ecash mint, sidechain, or some other trusted third party?

My main complaint is that Core has developed an ivory tower mindset that more or less sneers at people piatching long-run consensus stuff instead of trying to actually engage with the hard problems.

And that could have bitcoin fall short of its potential.

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I don’t know what the solution to any of this is. I do know that self-custody is totally nervewracking and basically out of the question for casual users, and I do know that bitcoin in its current form will not scale to twice-monthly volume for even 10% of the US, let alone most of the world.

The people who don’t acknowledge this, and who want to spend critical time and energy wallowing in the mire of proposing the perfect remix of CTV, are making a fateful choice.

Most of the longstanding, fully specified fork proposals active today are totally fine, and conceptually they’d be great additions to bitcoin.

Hell, probably a higher block size is safe given features like compactblocks and assumeutxo and eventually utreexo. But that’s another post for another day.

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I’ve gone back and forth about writing a post like this, because I don’t have any concrete prescriptions or recommendations. I guess I can only hope that bringing up these uncomfortable observations is some distant precursor to making progress on scaling self-custody.

All of these opinions have probably been expressed by @JeremyRubin years ago in his blog. I’m just tired of biting my tongue.

Thanks to @rot13maxi and @MsHodl for feedback on drafts of this.

This is a guest post by James O’Beirne. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Look, I am not an expert in public markets, but raising money to buy more Bitcoin seems to be the obvious new alpha for public companies.

MicroStrategy pioneered this strategy, and now, 4 years later, it’s the most compelling and successful story in corporate finance. Microstrategy has been the best-performing stock in the last 4 years, beating every US company, including NVIDIA. That’s crazy, right? All thanks to Bitcoin.

I am sure the CFOs of most public companies are now looking at MicroStrategy and analysing how they turned a $1 billion company into a $70 billion empire in just 4 years, and they are thinking about how they can do the same.

Here’s the playbook:

Use Profits, Equity and Debt to buy more Bitcoin. And tell the world about it loudly.

But let’s be real — MicroStrategy’s Bitcoin playbook won’t pump stock prices forever, at least not for other public companies. The arbitrage opportunity is closing rapidly as more firms adopt similar strategies.

MicroStrategy enjoys first mover advantage and guru status with Michael Saylor. New corporate BTC buyers lack that credibility and cult following with Bitcoiners. The impact diminishes with each new adopter.

Bitcoin’s growth is slowing, too. Doing a 5x annually gets harder as the marginalized rising competition for a somewhat fixed BTC supply spells diminishing relative returns.

Let’s also remember — today’s investors can get Bitcoin exposure easier than when MicroStrategy started. ETFs and funds reduce the impact of new companies holding BTC directly.

All this means the MicroStrategy playbook is closing fast for public companies. Firms considering it must act quickly to maximize gains before the strategy gets overplayed.

To be clear, I’m incredibly bullish on corporations adopting BTC treasury reserves. It’s just that early movers will benefit the most. The impact will wane over time for new adopters.

And of course, regardless of time, companies will continue to benefit from adopting this strategy as the Bitcoin price continues to increase forever.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.