This is part 2 of a series on Bitcoin. If you missed part 1, click here.
The mission statement of any venture helps define its intentions. Like the definition of a word, a mission provides accountability; an opportunity for measured integrity. Using the word circle, when you are actually referring to a square, will undoubtedly cause confusion. Stating you are a rose broker, when you primarily sell tulips, will also cause confusion. This is why evaluating the definition of any project becomes a valuable endeavor. Are you getting what you think you are paying for?
Although Bitcoin does not have an explicit mission statement, this description (featured on the official site’s landing page) does a good job of defining intentions:
“Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.”
Overall, Bitcoin does a solid job of adhering to this definition. The biggest features that help Bitcoin disrupt the status quo is how it removes extra fees, lag, and censorship of traditional payment systems. With debit cards, credit cards, PayPal, Venmo, remittance companies, etc. users rely on a central authority to process transactions. With Bitcoin, users rely on a globally decentralized network, and its established (tamper proof) rules, to verify transactions. Miners that contribute their computing power to verify transactions within the system are rewarded with the underlying asset being used (in this case, bitcoin).
Bitcoin is set up to be highly decentralized, thus democratic. Anyone with access to the internet (and ideally a permitting government) can transact with, or mine bitcoins. Despite its democratic nature, there are factions of Bitcoin users that gain considerable influence over the community. When there is enough of a disagreement within the system as to what the transaction rules should be, a fork happens. Decentralized user nodes (miners) vote on a new proposal (fork) by choosing whether or not to upgrade their nodes and mine using the new software rules. Such a disagreement is how we got Bitcoin Cash.
Related Article: Bitcoin’s Relative Prowess, Part 3: Is it legit money?
Related Article: Bitcoin’s Relative Prowess, Part 4: Network Protocols
When a hard fork happens, resulting in a completely new currency and project, with its own set of rules, a new mission statement is in order. Over time, forks like this can strip away at the integrity of the original project, and its associated value. For instance, you have to wonder what Bitcoin would be worth today if Bitcoin Cash never happened.
Check out my website: cryptkeepers.club which is dedicated to providing solid valuation metrics for the blockchain ecosystem.