Introducing the Bitcoin+ Mentality

November 29, 2022

Introducing the Bitcoin+ Mentality

Bitcoin’s spectacular growth has turned it into a global phenomenon. Its decentralized model, predictable monetary policy and self-sovereign principles have made it an effective store of value. Today, Bitcoin is probably the best savings account in the world. When kept in self-custody in a user’s own wallet, it is not subject to adverse government actions, hacks or bankruptcies that plague other banks and financial institutions. Bitcoin is on the way to becoming a global reserve currency that can safeguard value despite central bank policies and inflationary money printing.

However, the rise of Bitcoin created philosophical conflict. The term “Bitcoin maxi” (short for maximalist) has emerged, denoting individuals who believe that Bitcoin is the one and only sound technology that has ever been developed in web3. Bitcoin maxis wish to build a decentralized financial system, but they believe that Ethereum and all other blockchains are by nature untrustworthy and flawed to the point of being unusable. In short, they wish for a “Bitcoin-only” future.

Web3 or Bitcoin Only?

The Bitcoin-only thought process presents several challenges. First, Bitcoin does not have a smart contract interface, and it is practically impossible to build robust financial applications with Bitcoin script. The tight security and hack-resistance of Bitcoin severely limit its programmability. Developer tooling is sparse and 10-minute block times on Bitcoin lead to slow development and testing. Bitcoin maxis point to emerging technologies on Lightning (a “Layer 2” technology on Bitcoin), but its promise has yet to materialize. As a result, Bitcoin-native applications offer difficult user experiences that have hampered their adoption by non-technical users.

Meanwhile, Ethereum and other chains have rapidly moved to fill this gap. Ethereum features a robust smart contract platform that can be used to create sophisticated financial applications. Its rise in popularity, driven by a central founding team and fueled by venture capital funding, has led to both tremendous growth and rampant speculation. In the eyes of Bitcoiners, Decentralized Finance (DeFi) is essentially a high-risk casino. Similar to the allure of crowdfunding, individuals have the ability to speculate and gamble on over 20,000 available tokens. This trading activity often fills Bitcoiners with dread, especially when smart contract hacks and custodian failures lead to greater volatility and hurts public perception.

An interesting example of this can be seen with digital payments. Despite spirited attempts, the use of Bitcoin as a “medium of exchange” has not caught on. More than a decade after Bitcoin's creation, vendors ranging from small businesses to Amazon do not accept it. Instead, stablecoins such as USDC and USDT were adopted quickly and forcefully, even without the decentralized guarantee of Bitcoin. From a user perspective, the US dollar is still the reserve currency of the world -- which stablecoins extend into a fully-digital domain.

Instead of attempting to rebuild financial applications and currencies on top of Bitcoin, it makes more logical sense to use Bitcoin as a stable reserve layer within future decentralized financial systems that are being built on other platforms. It's become clear that entrusting centralized entities to safeguard massive reserve assets is overly risky, so it makes sense to utilize Bitcoin as a store of value that secures the sophisticated applications running on various blockchains on top.

Introducing Bitcoin+

Since there isn't a clear word for this, we propose a new term: Bitcoin+. A Bitcoin+ person sees Bitcoin as a superior savings account and believes that its decentralized infrastructure, secured by a global network of Proof of Work miners, presents a safer store of reserves than any other digital currency.

However, Bitcoin+ individuals believe that the widespread financial utility of Bitcoin will ultimately be realized from financial applications built on Ethereum and other chains. Purpose-built blockchains can be designed to serve specific use cases and can be tailored to customer needs. Drawing from the NoSQL revolution which began a decade ago, chains can be designed to take advantage of trade-offs in terms of security, scaling, volume, velocity and usability. In other words, Bitcoin+ people believe in the inevitability of both Bitcoin and smart contract interconnectivity. Instead of fighting it, they seek to realize this future in safe and mutually beneficial ways. 

Bitcoin+ individuals are also proponents of risk management and intelligent regulation of digital financial markets. As web3 matures, risk management protocols such as “proof of reserve” need to be in place on all levels. Bitcoin itself can and should preserve its privacy and anonymity benefits, but as soon as Bitcoin is used in a financial transaction involving third-party applications, consumers must be protected against massive institutional risk-taking. After all, web3 custodians are not FDIC-insured and users are subject to losing 100% of their capital that is not held in their custody. 

The Future of Financial Systems

Extending the self-sovereign, self-custody aspect of Bitcoin into a responsible financial environment built on Ethereum and secured by regular proof-of-reserve audits will enable a new generation of financial technology. The fusion will create new financial systems with superior capabilities to traditional finance anda preferred user experience that will engender adoption. We've now seen over a hundred Billion dollars of casualties as evidenced by the recent failure of FTX, Celsius, Voyager and those of the past. By working together, we can build a better future.

Join us as we enable a Trillion dollars of Bitcoin capital to be used in smart contracts. Contact us:

Twitter | Discord | Website | DocsGitHub | Email

arrow_back Back to Homepage

Related Articles