bits as cash

Bits as Cash

Many people got into crypto so replace the cash in their wallet, effectively dematerializing cash using software and subscribed to the mission of “give me more places to spend my crypto cash”. When bitcoin transactions were not worth much this worked great but when more people want to do the same thing at the same time we hit the limit and you needed to pay a lot more to do the exact same thing.

Later on Ethereum hit this limit when a silly cat game called crypto kitties did the same thing to it. This lead to many many people trying to sold the problem of unlimited transactions per second (TPS) for free. What a lot of people didn’t realise is that if you wanted to increase the TPS all you needed to do was copy and paste bitcoin and magically you have double the TPS but you lose all the magic like developers, wallets, etc so people who thought they could do it easily would fork so you keep the database but control the software layer.

A funny story I heard about ethereum apps or dapps is one where the developers were using the testnet to power the database because it was cheaper than the mainnet.

A more recent trend is people making their own “token” and using that as cash, that way they can do whatever they want with the currency like exponential inflation to ensure a ridiculous interest rate without the risk of running out of a backed currency like bitcoin or ethereum. This is a bit like airline miles that became tradeable without an airline instead an ambitions (usually too ambitious) entrepreneur or more sinister backing it.

Bitcoin and Ethereum have lost their ability to be cash because of the transaction fees although they do retain the trust of handing over atoms called like cash. The smaller currencies like bitcoin cash are far more applicable because they tweaked the code for transaction cost being low but they are doomed to be more inflationary than bitcoin simply because there less barrier when transferring them but when used like a cold shower getting in and out as quickly as possible but this means it will not hold value like an asset as well as bitcoin will.

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