2023 was supposed to be a good year for Bitcoin Maximalists. And on the surface it looks so. The Bitcoin price, that was more or less in the toilet in November 2022, recovered spectacularly and those who had the courage to buy when everyone else is selling and maintained their HODL and DCA investing strategies have all the reasons to await Christmas with huge smile on their faces.
Things look even better when Bitcoin is compared with other cryptocurrencies and this is what would usually delight Maxis the most. Ethereum, Bitcoin’s greatest competitor, was rising in price, but this rise was significantly slower, a phenomenon that is painfully known to all those that, for example, hold and use Hive. Bitcoin dominance over the rest of crypto, although typical for bear markets and their immediate aftermath, is likely to continue.
That, on the other hand, doesn’t mean that anything is good in Bitcoin land. On the contrary, world’s first cryptocurrency is actually in crisis. The community is slowly but painfully facing the facts that Bitcoin has strayed from the original vision of its founder of Satoshi Nakamoto and all but abandoned its presumed role as “peer-to-peer electronic cash”, instead embracing the new role as store of value. This is accompanied with steady but annoying increase in transaction fees, making Bitcoin slow and expensive to use, and, as such suitable only for those people who can afford large sums, making it digital equivalent of gold or, more precisely, real estate.
Attempts to find some alternative solutions that would make Bitcoin quicker and more affordable have so far failed. Lightning Network, which was until recently hailed as the simple and easy way for Bitcoin users to transact, is burdened with issues of centralisation and, what was even more important these days, government regulation. Wallet of Satoshi, popular Lightning wallet, was, for example, forced to abandon US market, showing the all Lightning Network users how vulnerable they are to the whims of corporate entities and governments.
But the factor that recently damages the cause of Bitcoin the most is proliferation of Ordinals and inscriptions that use Bitcoin network or, to be precise, try to use Bitcoin network in the same ways altcoins use Ethereum network and its derivatives. Needless to say, Bitcoin network wasn’t built for this and all it achieved it was to clog the increasingly precious blockspace and further increase transaction fees.
For cryptosphere veterans this would bring memories of early 2018 when exactly the same thing happened with Ethereum network. The Ethereum continued to rise even when Bitcoin began to fall, but this rise wasn’t organic. It was built partly on speculation and partly on demands created by Cryptokitties, increasingly popular online game which used network resources and, consequently, increased Ethereum gas fees to unacceptable levels.
Ethereum and its community, a market cycle later, still haven’t solved this problem and the world’s second cryptocurrency is in the same doldrums as the first. Yet, its issues aren’t as annoying as they were because cryptosphere got used to them and notable absence of Vitalik Buterin from public spotlight helped in avoiding bad PR. Bitcoin, on the other hand, doesn’t have that luxury and more and more people are going to begin noticing disturbing similarities with its main competitor.
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Perhaps, bitcoin core developers will have to go back to the drawing board to find a good solution to the mounting problems that the network is facing. I think straying from the vision of its founder is a regrettable move, although evolution often require making some changes.