Originally published in The Bitcoin BullBear Report released on 11/16/2015. Partial excerpt only. Written by @AKWAnalytics.
Bitcoin seems to be in a pretty good place right now. Fundamentals remain strong as transaction volume continues to grow, price is well below ATH’s but appears to be entering a bullish period, and dialogue regarding the blocksize is opening up.
So with the technology and community in a relatively encouraging mode, we thought this would be a good time to fully explain our stance on block size. To be clear, we have no technical objection to an increase. Our objection has always been economic. We know that in order to attract the level of capital that we want and need to grow bitcoin to an international force, we need to be able to provide a level of assurance to investors as far as long term sustainability. We also know that bitcoin’s block reward decreases over time and that this reward is the main reason that miners mine for blocks. What happens when there is no more reward? How do we sustain the network?
The answer is, and has always been, transaction fees. Now we know some will posit the old “more adoption will lead to a greater volume of lower value fees” however how does this logic work in a world with no fiat money to value bitcoin relative to? What if we have a closed loop crypto economy in which network participants must pay all expenses, etc. with bitcoin, of which they will be getting less and less? This will not work in our opinion. What we need by then is a multi-tiered system of tx prioritization that will allow for customization between speed and cost. Of course this is above our pay grade logistically, however those that are in a position to act on this should always keep this calculation in mind. Please do not sacrafice sustainability for short term price gains. It is not worth it and will end up hindering price in the long run, not helping.
Smart money thinks in terms of millenia, generations down the road, not decades like most of us do. If we are to pull in that money and talent into this space, we need to keep them assured that bitcoin will be alive and well in 100, 200, 300 years.
Cheers,
@AKWAnalytics
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