Bitcoin has been having a bit of an identity crisis over the past few years. Right on the can (whitepaper), it says it in bold, “A peer-to-peer Electronic Cash System.” Bitcoin was designed to be an alternative to cash after the world witnessed just how bad things can go with traditional finance after the 2008 financial crisis.
And so, Bitcoin was to be cash-like, but on the internet. Its first transaction was the famous Bitcoin Pizza’s when two pizzas were bought for 10,000 BTC – a mere $111 million at today’s prices.
As Bitcoin became more popular, it continued being a means to buy things on the internet – unfortunately, a lot of these things were drugs and guns and other such nefarious goods and services. Bitcoin was the currency of the dark web.
Still, not one to hang with the wrong crowd too long, Bitocin broke away and started getting some mainstream attention. Its price booms made for good, clickable, news stories and when the price was way up, the stories of people who foolishly threw away their Bitcoin-laden hard drives made even better stories.
However, this is where Bitcoin started getting a new label – digital gold. The mainstream interest saw macroeconomics at play as the demand for the digital currency went up, along with its price. So, although it had a few spending use-cases, people were called mad for blowing it seeing as the next day it could be worth 20 percent more.
And so, HODL was born, and Bitcoin was an asset – for better or worse. It performed remarkably well as an accruing asset, exploding in value almost daily in the lead up to December’s all-time high. However, it wasn’t attracting the right people, nor being used for the right reasons. It was just blowing up into a bubble.
That bubble popped, and those who had got in late were suddenly shell shocked that what goes up must come down; Bitcoin was forced to rebuild… with a lot less HODLing now.
In this rebuilding phase, Bitcoin still performs well as an asset, and there is merit in holding it as it appreciates, but its other uses, as a payment system, is strengthening too.
A lot of this is down to the Lightning Network, which is still finding its feet but promises to bypass some of the sticking points that make Bitcoin a below-average payment system. The Lightning Network could be the answer to making Bitcoin that Point of Sale tool we all hoped it would be.
Lolli CEO Alex Adelman has said of the Lightning Network: “. We all know that Bitcoin’s processing time is not instant. So we need Lightning or a second layer that can reduce fees and processing times for instances like that.”
OpenNode CEO Afnan Rahman, adds:
“We believe that the Lightning Network not only fulfills those promises but also negates the use case for 90 percent of the altcoins you see on the market today.”
Bitrefill COO John Carvalho also chimed in, saying:
“Merchants, for example, can issue exact invoices and receive instant payment in BTC using Lightning. This is a much better experience than standard BTC when shopping or using an ATM.”
All the companies, as mentioned above, are startups looking to champion Bitcoin as a payment method, and all are looking at the Lightning Network to be a tool towards that.
So, is Bitcoin heading back to an era where it can deliver what it says on the can? Probably, but it is going to need some help.