Bitcoin’s limited capacities may be hindering journey towards bankless economy
A bankless world seems exciting. There’s no central authority keeping track of transactions, there’s no identity leak, and everything is under individual control. However, as many still see Bitcoin as being in its experimental phase, a completely bankless world feels like a distant dream.
Ryan Sean Adams, the host of the Bankless podcast, recently spoke about a few things that need to be taken care of to realize a complete bankless economy. Listing Bitcoin’s limited capabilities as the main reason, he said,
“You can only do two things with Bitcoin. Hold it and watch the price go up or down, and transact by sending it from one place to another. Everything else on Bitcoin requires something else[an external upgrade].”
The main vision of a decentralized bankless economy is this – Cryptocurrencies should be able to be borrowed, lent, used in paying bills, and almost every other thing fiat currency facilitates. When virtual currencies can do this, only then can there be an efficient bankless system in place. But Bitcoin, at the moment, is dependent on centralized sidechains and traditional banks to be able to function properly. Along the same lines, Adams opined,
“When I say bankless, it doesn’t mean we’re going to eliminate all banks. That’s not the goal; we’ll need fewer of them to accomplish core things in a public way. Financial tools like borrowing and lending against collateral you already have, that can be a public good too. And that’s a pretty powerful concept.”
On the other hand, Ethereum was highlighted by Adams as a much more advanced and efficient crypto coin by design, in comparison to Bitcoin. In fact, it has been established by now that in many ways, ETH is indeed money. But the question is – Is ETH a good form of money?
Ethereum’s monetary policy is fluid and focused on maximizing chain security; thus it neither has a fixed hard cap nor a clear inflation curve for the future. How will Bitcoiners be convinced as many of them believe that the fixed hard cap economic model is the only valid economic model for economics and crypto? This is a question that needs to be addressed.
Interestingly, Bitcoin maximalist Anthony Pompliano, while discussing the “ETH is money” narrative in one of his blog posts, had claimed that the idea behind the concept of ‘ETH is money’ was fundamentally flawed and that Ethereum was no different from fiat currency.