Techno-friendly business leaders who are overhauling legacy systems in the financial system, among many other industries, champion Bitcoin’s underlying tech: blockchain. According to the argument, the financial system can be optimized and overhauled through the use of permissioned blockchains – without Bitcoin or cryptocurrencies.
But for all the blockchain enthusiasts who envision a world without Bitcoin, Bitcoin advocates keep reminding the naysayers that Bitcoin is just code – that can be augmented, improved and scaled.
Just like dollar bills, the horse and buggy of modern money, once required people to count pennies, loose change and dollar bills one by one, layer-two solutions like Visa came along. They digitized dollars and cents, which generated a tidal wave of swipes and on-line purchases, powering faster transactions and easier bookkeeping. A patchwork of in-store paper receipts turned into a seamless monthly credit card statement.
Bitcoin proponents say that Bitcoin can evolve in a similar way and that daily use cases can increase with Bitcoin payments powering the internet.
Chief financial officer and co-founder of BlockTower Capital, Ari Paul, a former derivatives trader at Susquehanna and former portfolio manager for the University of Chicago’s $8 billion endowment, says he’s used to people pushing for blockchain over Bitcoin, but he believes the real turning point will be when people see that Bitcoin is bigger than the Bitcoin blockchain because it can generate a new wave of use cases.
“Bitcoin blockchain is first generation technology with limited throughput and features.
BTC can be used on other protocols and networks. The Lightning Network is a layer 2 protocol that allows for numerous fast and cheap BTC transfers that settle to and are secured by the Bitcoin network.