By Pete Sokolow, S9 Co-Founder & CEO
I was recently talking with some people in the cryptocurrency space and we were discussing our motivations behind becoming interested in Bitcoin in the first place. As we were all busy pontificating, it was clear that there are two distinct camps. Either you are in it for the 21 million Bitcoin cap and the technology is a side-effect, or you are in it for the technology and the 21 million coin cap is a side-effect.
Personally, I’m interested in cryptocurrency for the technology. When I first read the white paper for Bitcoin in 2011, what connected with me was the idea that transmitting value in a trustless way through the internet was completely new and would become a core part of the internet stack of technology.
The fact that Bitcoin has a limited supply, in my mind, was actually a limiting factor long-term. The gold standard has been tried extensively in the past and is basically regarded as a failure when compared to modern monetary systems. It seems almost self-evident that the “perfect” monetary supply system would be totally flexible and would be able to adapt to changing economic conditions automatically.
No one has yet designed that perfect monetary policy, but putting our hands up and deciding to regress to a gold-like, fixed supply policy seems to be going in the wrong direction for progress. It seems that for all of the great things Satoshi did in inventing Bitcoin, deciding it needed to mimic gold supply was one that was decided more out of personal belief than technological need.
There is nothing inherent in the functioning of a Blockchain consensus mechanism that requires the supply to be limited. In fact, the past 10 years of Bitcoin history demonstrate that an inflationary blockchain currency is completely viable.
One of the guiding principles when building out this technology for the future should always be to distinguish what is necessary from a tech standpoint from what is merely desired due to other factors. I’m writing this not because I believe that inflationary money makes for a better transactional medium, although I do. Instead, I am hoping to get people to understand their own biases when they can’t divorce their personal beliefs about monetary policy from the underlying technology of blockchain.
Satoshi’s appeal to those that believe in hard money was the seed for which a lot of ideologues initially grew up around Bitcoin. Today, merely mentioning you believe that central banks did a good job of handling the 2008 financial crisis can cause you to be an outcast in the community. This ideological war inside of Bitcoin has nothing to do with the actual functioning of the technology and it shouldn’t be a litmus test for whether someone is on the “right” side.
There is a lot of work to be done in furthering blockchain tech, and it will require all hands on deck. Designing systems to work for the future and gain the greatest amount of adoption will take many varied views to achieve. Bitcoin must not become another battleground for political battles, that isn’t what it is about. It is about the technology, and we must always be asking ourselves when making decisions about its future, whether the issue we are addressing is one about technology.
Keeping the transfer of value over the internet as our guiding light will see this technology continue to grow and prosper. Insisting on narrow definitions and mixing ideology with technology will hinder our growth and forestall adoption while gaining nothing in the process.