Part of what many observers expected to see during Wednesday’s Bitcoin (BTC) discussion featuring Ark Invest CEO Cathie Wood, Tesla and SpaceX CEO Elon Musk, and Square and Twitter CEO Jack Dorsey was a debate regarding the merits of Bitcoin’s multi-layer approach to scaling versus the alternative of increasing transaction capacity at the base blockchain layer.
While this direct confrontation between the panelists did not really happen, contrasting comments made by Wood and Musk illustrated the key area of disagreement in this technical debate and why Musk’s Dogecoin (DOGE) experiment is unlikely to succeed.
Wood explains Bitcoin’s value proposition
At the beginning of Wednesday’s livestream, Wood was asked by Square Crypto‘s Steve Lee to explain what originally sparked her interest in Bitcoin. In her response, Wood recalled that her former mentor and economist Arthur Laffer (of Laffer curve fame) referred to Bitcoin as the sort of “rules based monetary system” that he had been waiting for his entire career.
Later in the talk, Wood added, “The role that [Bitcoin] is playing, given that the rule is a quantity rule [of] 21 million units, is really a store of value role.”
Put differently, the main purpose of the Bitcoin blockchain in the context of the bitcoin asset’s utility as a store of value is to enable a monetary policy that is “set in stone” (as Bitcoin creator Satoshi Nakamoto put it many years ago) and cannot be corrupted by a trusted third party such as a central bank.
Wood also mentioned the fact that various apps around the use of bitcoin as medium of exchange can be built on top of the base Bitcoin blockchain, although high-value transactions do already take place on the base chain as well.
Musk wants to test bigger blocks on Dogecoin
Shortly after Wood’s explanation regarding the main utility of the Bitcoin blockchain as the foundational layer of a new monetary network, Musk was asked for his thoughts regarding bitcoin’s ability to scale as a means of payment. While Musk has received heavy criticism from some Bitcoin enthusiasts over statements he’s made regarding Bitcoin’s scalability, his position came off as more nuanced in the livestream.
“Bitcoin, by itself, simply cannot scale to be the monetary system of the world at the base layer. But with a second layer, this is possible, depending on how that second layer is implemented.”
Musk added that he holds much more BTC than ethereum (ETH) or DOGE, and that he would like to see Bitcoin succeed. However, he also sees value in pushing the limits of on-chain scaling with Dogecoin.
What Musk gets wrong
The key point that Musk did not attempt to dispute in Wednesday’s discussion was that changing Bitcoin’s base layer at all, especially in a way that increases the cost of operating a full node, weakens the credibility of the rules of the network. Going back to Wood’s points on the value proposition of the Bitcoin blockchain, large changes made at the base layer potentially harm the credibility of bitcoin’s monetary policy and the crypto asset’s utility as a store of value. In the past, the market has been unwilling to risk bitcoin’s utility as a store of value in favor of perceived advantages associated with smaller-value transactions, as was the case with the failure of SegWit2x.
As Lee rightly pointed out, there has already been plenty of debate on this topic throughout Bitcoin’s history, and it’s not like Musk is proposing anything new here. Bitcoin Cash (BCH) even tried to piggyback on top of Bitcoin’s monetary network effects to implement a much higher block size limit and failed miserably. For many, a more practical way to build on Bitcoin’s existing network effects is through the use of secondary-layer networks like the Lightning Network and sidechains, which don’t necessitate the creation of a new, separate cryptocurrency. And to Musk’s credit, he’s also open to the potential of this scaling philosophy.
Dogecoin Cash is the real Dogecoin. Or is it Dogecoin EV (Elon's Vision)?
— Daniel McNally (@sangaman) May 16, 2021
It appears that the “I’m new to Bitcoin and I’m here to fix it” meme applies quite well here. Of course, that tends to apply to nearly everyone when they get involved in the space for the first time, and it’s definitely magnified in this situation due to Musk’s celebrity profile. That said, it’s understandable that Bitcoin users have become annoyed by Musk’s and others’ recent rehashing of old discussions and ideas.
While Musk is still hung up on things like long-debunked concerns over the potential regulation of Lightning Network nodes and a bewildering desire to only buy a coffee with an on-chain transaction, it’s likely that, just like everyone else, he’ll eventually give in to the inevitability of bitcoin’s monetary network effects.
Billionaire Mark Cuban Identifies Altcoin With ‘Most Upside’ As Bitcoin Blasts Above $60,000
As Bitcoin shoots above $60,000, business magnate Mark Cuban says one altcoin stands above the rest in terms of investment potential.
In a new interview with CNBC Make It, the billionaire says that Ethereum (ETH) is the best crypto prospect on the market.
“As an investment, I think Ethereum has the most upside.”
Cuban, who previously stated that smart contracts on Ethereum’s blockchain have revolutionized the cryptocurrency market, believes that the second-largest crypto by market cap is the digital asset which most resembles legal tender.
“I wish I had bought [Ethereum] sooner. I think it’s the closest thing we have to a true currency.”
Cuban went on to reiterate his position that Bitcoin (BTC) is superior to gold because not only is its supply scarce, but it’s easier to transfer, store, trade, and fractionalize. That sentiment is shared by fellow billionaire CEO Chamath Palihapitiya of Social Capital and Virgin Galactic.
Cuban’s comments come on the heels of him saying that customers prefer making payments in Dogecoin (DOGE) rather than BTC at his venues because Bitcoin tends to be a highly appreciable asset.
Ethereum is exchanging hands at $3,839 at time of writing, an 11% increase from its seven-day low of $3,431, according to CoinGecko.
ProShares Set for Bitcoin Futures ETF Launch on Monday After Apparent SEC Approval
The US Securities and Exchange Commission has reportedly greenlit the country’s first Bitcoin futures exchange-traded fund (ETF).
ProShares, an ETF provider, filed a post-effective amendment prospectus on Friday that states the company plans to launch the BTC Futures ETF on Monday, a sign that the SEC has approved the product.
The fund doesn’t invest directly in Bitcoin, but it provides price exposure to Bitcoin futures contracts, a first in the US.
Both Bloomberg and CNBC, citing people “familiar with the matter,” reported earlier in the week that the SEC planned to approve BTC futures ETFs from ProShares and the independent investment firm Invesco Ltd.
Invesco’s ETF is also set to provide exposure to a collection of exchange-traded products (ETPs) and private investment trusts that hold Bitcoin, rather than direct investments in BTC itself.
Last month, SEC Chairman Gary Gensler said he was open to ETFs for Bitcoin futures, noting that they are filed under mutual fund guidelines which provide “significant investor protections.”
Bitcoin is trading at $61,549.38 at time of writing and is up 6.6% in the past day and more than 40% in the past two weeks, according to CoinGecko.
BTC hit its all-time high of $64,804.72 in mid-April.
Bitcoin May See Real Peak If ETF Is Approved and I May Cash Out Half My ETH: CNBC’s Jim Cramer
Jim Cramer shares a common view that Bitcoin has the opportunity to reach a short-term peak or even a real peak if Bitcoin ETFs are approved next week.
Host of CNBC’s Mad Money, Jim Cramer, has talked to Andrew Sorkin from CNBC’s Squawk Box show about the prospects of the Bitcoin price if or when four Bitcoin futures ETFs get the SEC’s approval next week.
Cramer also stated that he may cash out half of his Ethereum stash.
SEC approval for ETF may push Bitcoin up, Cramer says
Answering Sorkin’s question, Cramer stated that a lot of people believe there is a high chance that the senior cryptocurrency, Bitcoin, may hit a short-term or even a real price peak if four BTC-based ETFs are approved by the SEC next week.
He corrected the host and said that the regulatory agency may approve not just one but four Bitcoin futures ETFs next week.
However, he stated that people are running ahead of a possible ETF approval.
"There's a possibility a lot of people feel that you can get a short-term peak, or maybe a real peak as people just run ahead of the ETFs," says @jimcramer on a #Bitcoin ETF approval. "I might cash out half my $ETH." pic.twitter.com/48MJP047yK— Squawk Box (@SquawkCNBC) October 15, 2021
Bitcoin spikes to $59,500 as chance for ETF approval emerges
Earlier today, the flagship digital currency, Bitcoin, soared to a multi-month high of $59,500 on the Bitstamp exchange. It happened after Bloomberg released a report, saying that so far the Securities and Exchange Commission has not objected to approving multiple Bitcoin futures ETFs that were submitted to it earlier this year.
The Bloomberg article stated that the information had been confirmed by multiple sources close to the SEC and to the matter in question.
The media giant’s ETF analyst, Eric Balchunas, believes that the likelihood of Bitcoin ETFs getting the green light has now risen to more than 90%. Still, he is not ready to “close the case” yet.