Ari Paul, the CIO of crypto asset investment firm BlockTower Capital, recently made headlines claiming that Bitcoin has decidedly more significant value than its underlying technology, blockchain.
Explaining the rationale behind this conclusion, Paul recently took to Twitter underscoring the marked difference between Bitcoin and blockchain, arguing that while Bitcoin appears independent, the godfather of this nascent technology Satoshi Nakamoto made currency programmable with its anti-establishment system, allowing users to build on that foundation.
1/ I'm used to talking to traditional finance folks about why "blockchain not bitcoin" makes no sense. (tweestorm link below). I'm increasingly excited about crypto folks understanding that Bitcoin is bigger than the Bitcoin blockchain. https://t.co/jgq10UD0HI
— Ari Paul (@AriDavidPaul) February 8, 2019
Elaborating on this concept, Paul explained how the industry has undergone a paradigm shift, with Bitcoin now being utilized for alternative use cases across other ecosystems.
As Paul added:
“If [BTC was just transacted only on its network], that would be a problem, since the Bitcoin blockchain is first generation technology with limited throughput and features. But… BTC can be used on other protocols and networks.”
Paul went on stressing how Bitcoin is now being used within “sidechains,” as well as in “second, third, and so-on layers.” Case in point, the Lightning Network has recently been gaining significant traction among investors, a layer two protocol capable of facilitating a more efficient and inexpensive BTC transfers, “settled and secured by the main Bitcoin chain.”
While improving Bitcoin’s footing as digital money remains the Lightning Network’s paramount objective, Paul predicts that in time, Bitcoin will be increasingly integrated in sidechains, drivechains, and other similar solutions anchored on the digital asset. Highlighting the significance of this growing trend and its implications on other blockchains and digital assets, Paul concluded that:
“[Bitcoin’s programmable nature] means that BTC is unlikely to be rendered obsolete by competing protocols that offer incremental improvements. It is not limited to the Bitcoin blockchain’s features or throughput limitations.”
He, therefore, concluded that Bitcoin’s dominance in the crypto industry cannot just be toppled by other digital assets by merely “adding features, or with incrementally better transactional throughput,” but by employing divergent governance, consensus mechanisms, as well as monetary and security models.
Global management consulting firm A.T. Kearney also supports Paul’s conjecture, predicting that Bitcoin’s total market cap could very well inflate by over 66% in the coming months and years, particularly now that institutional investors are increasingly piloting Bitcoin-only projects, proving that Bitcoin will most likely remain the flagship digital asset in the crypto markets for years to come.