The Nature of the Bitcoin Peer-to-Peer Electronic Payment System

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In 2009, miners earned 50 bitcoins per block but $0 since Bitcoin was not priced at launch. In 2023, miners earn 6.25 BTC per block, or around $162,500 (at the time of writing). Miners earn far fewer satoshis today, but far more fiat currency. Even when demand and fees reached all-time highs on the BTC network in May 2023, where fees earned in a block exceeded subsidy for the first time since 2017, miners were still earning less or the same BTC per block as they did. in 2017 (12.5).

Notably, if miners held on to their BTC tokens from then on, they saw the biggest price appreciation of any asset in human history. Of course, in hindsight, everyone wished they had mined in 2009, or 2013 at 25 bitcoins per block, or 2017 at 12.5 bitcoins per block. At each halving event (approximately every 4 years), the price of BTC USD has been much higher than the previous one.

Source: Cryptocurrency Facts

Between these points, when prices are falling and volatile, this mentality is not so clear. Miners come and go, as do participants in the system. What is clear is that the incentives are to earn as much BTC as possible today, because generally speaking, there will be less coins available to earn tomorrow, because at each halving, the coins distributed are less less numerous.

Source: Coinmama

Given the price increases, the incentives are to HODL, not to spend coins in hopes of greater price appreciation. The incentives of this interesting economic reality are staggering.

For example, this implies that entrepreneurs should create as often as possible, as soon as possible, to earn as many coins as possible instead of working headlong for weeks or months for a product. This is completely contrary to traditional business practices, as it takes time to develop a product that works well. However, in a system where coins circulate freely, with no capital controls, and where information travels so quickly, the traditional approach is now obsolete. Two of Bitcoin’s biggest selling points haven’t been your keys, nor your coins, and your own bank.

Although these naïve concepts have negative and unintended consequences, the most important and positive implications are ownership and creation.

Anyone can create anything and own that thing on chain. The clean word implies that they can do whatever they want with this thing. The Bit in BitCoin represents data, and Coin means the token, but also the ability to invent or create.

Source: Merriam Webster

While one developer works on a product in 3 out of 6 months, another can create something else out of nowhere that renders previous work obsolete within 24 hours, that’s the nature of the system , because in 14 years Bitcoin has absorbed more and more of the traditional financial system over time and while absorbing more of the black hole-like fiat currency.

We saw the fastest example of this with Ordinalson BTC. In less than 150 days, we’ve seen token protocols, non-fungible tokens (NFTs), businesses, and exchanges built on BTC where none existed before January 2023. If anyone was working on a token protocol fungible on BTC before March 7th, this work was deprecated via a tweet on March 8th. If someone was working on a centralized exchange for NFTs on BTC in February, that work was deprecated when Ordswap launched trustless trading via PSBT a few days later.

The nature of the system is to create something people want today, not tomorrow, and to create for those who own bitcoin today, not tomorrow, because the coin will have more on-chain value and more creations tomorrow than today.

Watch: Direct communication is what peer-to-peer is supposed to be, says Craig Wright

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about the Bitcoinas originally envisioned by Satoshi Nakamoto and blockchain.

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