Bitcoin Standard Ch. 10

 Well, I did it, I finished reading the Bitcoin Standard. Ok, I sort of finished it. Confession: I skimmed over a large portion of the last chapter, since it was largely repetition of earlier points and glowing praise of why Bitcoin is worth the large amount of energy it uses. I did want to write about one thing that I don't think I mentioned before that was reviewed in this final chapter. 

Bitcoin uses a lot of redundancy in its blockchain, which is why it consumes so much power and also why it is so impervious to manipulation. This means that one of the weaknesses in Bitcoin is that it is limited in how many transactions it can handle in a given period of time. Visa and Mastercard handle around 2.000 transactions per second, while Bitcoin can handle around 4. (I think those are the numbers given in the book. In any case, Visa and Mastercard handle much more than Bitcoin can). This means that Bitcoin's blockchain can never take over all transactions. This does not mean that Bitcoin can never be universally used for transactions, it just needs what they call a second layer solution. In the early days of the gold standard, banks and paper notes served as that second layer solution to carrying gold around everywhere and the difficulty of scaling it exactly. The author posits that banks run on a Bitcoin standard could digitally process payments with the technology already in use (eg Visa and Mastercard) and then settle their accounts daily on the blockchain. This would mean that Banks would be auditable at any time by any member of the blockchain. They would not, for instance, be able to lend money beyond the Bitcoin that they actually hold or artificially increase their supply in any way. 

A second layer solution that is already in use is called Lightning, or the Lightning network, I think. I don't yet understand  this network well and certainly haven't used it (I have no desire yet to use my Bitcoin for anything beyond a store of value). But this is the most helpful analogy that I have found: It's like a bar tab. When you are at a bar, you don't pay for each drink individually, you give the bar tender your card, and when you're done for the night, you settle your tab and leave. Or like a Casino, where you spend your evening losing and acquiring tokens and then cash out at the end of the night. 

So that's the Bitcoin Standard. I still have a lot to learn, especially about the technicalities of it all, and I'll probably never understand that, but I feel like I know enough to start "orange pilling" people, which means converting them to the usefulness of Bitcoin. In fact, just yesterday someone asked me to help them buy their first Bitcoin. 

Now, what to read next....... My list is growing so much faster than I can keep up!

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