A Bitcoin Battle Is Brewing

Did you know the Bitcoin community is riven by tension, drama, competing agendas, and at least two starkly different visions of our economic future? That even as major banks who thought of Bitcoin as snake oil re-assess its blockchain technology as a major breakthrough, and smart money pours into blockchain startups, the few at its cutting edge are increasingly divided against themselves?

This is no bad thing. Bitcoin believersand Ive come to number myself among them believe that, one way or another, it will usher in a new era of frictionless commerce and programmable money. Bitcoin true believers think it will ultimately do to Wall Street what the Internet did to fax machines, while also decentralizing much of the Internet. Bitcoin extremists believe it will replace fiat currency like the US dollar or the euro (in the Bitcoin world, fiat is a four-letter word) and bring on the Libertarian Rapture. If those are the stakes, then obviously we want competition.

What you may not realize is that were already close to a fairly critical decision point.

The War of Blockchains

A flawed but illustrative analogy: think of this as a modern-day equivalent of the famous War of Currents between Thomas Edison and Nikola Tesla. Bitcoin is like Edisons light bulb; the Bitcoin blockchain is like DC electricity and the champions of the many altcoin blockchain alternatives which have bloomed in Bitcoins wake are like a thousand mini-Teslas. (Lest you think Im taking sides already, let me stress that its not at all clear that AC is actually better than DC.)

Prominent among those mini-Teslas is 20-year-old Vitalik Buterin: Thiel Fellow, dropout from my alma mater, and founder of the potentially extraordinary Ethereum project, built to decentralize the web with its blockchain, which recently raised $15 million (in bitcoin, of course) by pre-selling its cryptocurrency prior to next years launch. Buterin recently penned a blog post condemning so-called Bitcoin Maximalists:

essentially, the idea that an environment of multiple competing cryptocurrencies is undesirable, that it is wrong to launch yet another coin, and that it is both righteous and inevitable that the Bitcoin currency comes to take a monopoly position in the cryptocurrency scene [] Bitcoin maximalists often use network effects as an argument, and claim that it is futile to fight against them.

Thats not a bad introduction to the conflict. Ladies and gentlemen! In this corner, weighing in at 800 pounds, the gorilla King Bitcoin! In the otherweighing a collective eight poundsa thousand Lilliputians!

One Coin To Rule Them All

It is hard to overstate Bitcoins dominance in the world of cryptocurrency. Id say its name recognition, blockchain hash rate, transaction count, real-world applications, startup ecosystem, and VC interest dwarf those of all other cryptocurrencies combinedexcept that dwarf seems like much too weak a word. Completely obliterate might be closer. I suspect most people who have heard of Bitcoin dont even know alternatives exist.

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A Bitcoin Battle Is Brewing