Bitcoin maximalist.

Thoughts & Technical Writings.

WorldWideWebCoin: A Thought Experiment

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WorldWideWebCoin - WWWCoin vs. Bitcoin - More usefulness leads to more adoption leads to more usefulness

Bitcoin is many things - open source peer-to-peer (p2p) digital money; an alternative asset class for investors; and possibly the global reserve currency of the future, when machines are participating in marketplaces autonomously without human intervention.

The value of one Bitcoin (1 BTC) in essence is a reflection of its usefulness across the many functions in which it’s being used.

Bitcoin starts to look more like a safe haven asset that’s decorrelated with, say, the S&P500? Its value should increase.

Bitcoin can be used more and more places to buy goods and services? Its value should increase.

More companies offer employees compensation partially of wholly in Bitcoin? Its value should increase.

WWWCoin Hypothetical Price History

Let’s say there had been a WWWCoin back in 1994 shortly after Tim Burners-Lee invented the World Wide Web in the late 1980s.

Now picture a chart of that coin’s valuation from its inception in c. 1989; through the dot-com bubble’s bursting beginning in 2000; and finally bring it through to the present. What would that chart look like? Here’s my take…

Bitcoin Realized Price History

Just for fun, let’s see how our hypothetical WWWCoin chart compares to the realized BTC price chart to date.

Some similarities of note:

  • Early precipitous rise leads to a bubble, i.e. overdone price increase relative to the actual + potential usefulness of both the internet and Bitcoin
  • Steady, grinding recovery following the first major crash in price as the technology continues to make strides in terms of usefulness and applicability
  • No clear upper bound on price as usefulness enters into a virtuous feedback loop - more adoption means more usefulness means more adoption, ad nauseam.

The last point has only been realized to date in the case of the Internet; my prediction is Bitcoin will follow a similar pattern. Have you heard of micropayments? The technology that will finally kill YouTube ads? Well, they’re almost here, courtesy of Bitcoin and the Lightning Network.

I think we’re standing on the precipice of an inflection point in Bitcoin’s history - at which the feedback between Bitcoin’s expanding utility and increasing price becomes obvious to just about everyone. Do you want to participate or not?