Feb 10, 2019 19:59 UTC
Feb 10, 2019 at 20:01 UTC
The Chief Investment Officer of BlockTower Capital, a crypto investment firm based out of Stamford, Connecticut, has recently made a very interesting statement on Twitter. Ari Paul, the CEO tweeted out to his followers:
1/ I’m used to talking to traditional finance folks about why “blockchain not bitcoin” makes no sense. (tweestorm link below). I’m increasingly excited about crypto folks understanding that Bitcoin is bigger than the Bitcoin blockchain. https://t.co/jgq10UD0HI
— Ari Paul (@AriDavidPaul) February 8, 2019
He obliterates the bitcoin vs altcoin argument by stating that bitcoin has a clear advantage since it can be used with other protocols/networks (such as the layer 2 solution Lightning Network). Just by offering better increments, altcoins cannot hope to achieve what bitcoin has.
He clearly states that blockchain is in no way the only useful asset that came out of Nakamoto’s genius almost a decade back. Bitcoin blockchain is the more important asset here, that most people fail to notice.
Paul is a former risk specialist and portfolio manager at the University of Chicago’s endowment investment office and a derivatives trader at Susquehanna International Group.
He then launched on a full fledged mission to clarify what he exactly means:
2/ bitcoins (BTC) the asset is tracked on the Bitcoin blockchain and transferred over the Bitcoin network (usually). If this was the end of the story, it would be a problem, since the Bitcoin blockchain is first generation technology with limited throughput and features. But…
3/ BTC can be used on other protocols and networks. The Lightning Network is a layer 2 protocol that allows for numerous fast and cheap BTC transfers that settle to and are secured by the Bitcoin network. People may also use sidechains, drivechains, and other L2 or L3 solutions.
4/ This is wonderful for BTC enthusiasts, since it means that BTC is unlikely to be rendered obsolete by competing protocols that offer incremental improvements. BTC users can access those features or greater bandwidth by using BTC on other protocols like LN.
5/ BTC as an asset is dependent on the Bitcoin blockchain for security, but is not limited to the Bitcoin blockchain’s features or throughput limitations. The Bitcoin network just needs to be a secure foundation.
6/ As an investor in the space, one conclusion this leads to is that competing base protocols and cryptocurrencies can’t credibly compete against BTC and the Bitcoin network by adding features or with incremental transaction throughput. Those don’t differentiate long-term.
So ultimately we conclude that Paul is trying to impress upon us the fact that the bitcoin blockchain is actually an integral part of the bitcoin transaction process and is way more significant compared to the currently competing base protocols.
It still remains to be seen whether Paul’s words actually garner any nods or whether they are disregarded.