Bitcoin Fundamentals Will Allow it to Endure Near Any Crisis

Over the past few years, there have been countless anticipated blockchain projects that withered and died when faced with a crisis.  Whether it be due to regulatory oversight, hacks, poor design, or something else entirely, very few have become actual mainstays.  Throughout it all, there has been one constant within the sector that has proven to have unmatched resilience that will continue to allow for it to endure near any crisis – Bitcoin (BTC).

Looking forward, investment firms like ARK Invest continue to view Bitcoin as having massive potential.  Citing the strong fundamentals of its network, ARK Invest believes that, “the price of bitcoin could exceed $1 million in the next decade”.  Below, we look at and build upon a few of Bitcoins ‘value propositions' noted in ARK Invest's ‘Big Ideas 2023‘.

Industry Investments

Before diving in to exactly what fundamentals underpin the Bitcoin network, here are a few publicly traded companies taking part in the sector, furthering and fostering network growth.  These are not recommendations, but rather examples of publicly traded companies closely associated with digital assets like Bitcoin.

MicroStrategy (MSTR)

At this point, MicroStrategy stock is essentially a proxy for investing in Bitcoin (BTC) itself.  For multiple years now, MicroStrategy has rapidly been accumulating BTC for holding in its treasury, as the company believes it is the ultimate hedge, and the currency of tomorrow.

Aside from its operations as a software and analytics company, MicroStrategy has now embarked on various initiatives meant to further development of Bitcoin scaling solutions like the Lightning Network.

In 2022, MicroStrategy boasted a revenue of nearly $500M.

Coinbase (COIN)

Since its launch in 2012, Coinbase has been a fixture in the digital asset sector.  Not only is it one of the most recognizable names, it has acted as an onramp for beginner enthusiasts looking to gain exposure to assets like Bitcoin.

Now, Coinbase is one of the most trusted exchanges of its kind, as it is both publicly traded and regulated.  In 2023, notable investment funds like ARK Invest have been loading up on ‘COIN', with the belief that it will not only survive, but thrive well in to the future.

In 2021, during the peak of the bull market, Coinbase boasted a revenue of $7.84B.

Riot Platforms (RIOT)

Operating out of Colorado, Riot Platforms is one of the more successful names in the Proof-of-Work (PoW) mining sector.  As such, it plays an important role in securing the Bitcoin network by adding to its cumulative hashrate.  Like MSTR, investing in RIOT can be likened to investing in BTC via proxy.

In 2021, Riot Platforms boasted a revenue of nearly $215M.  At time of writing, various analysts list RIOT as a ‘BUY'

Bitcoin Fundamentals

So what is it about Bitcoin in particular that has allowed for it to retain its spot atop the digital asset sector since inception?  While examples of early adopters striking it rich, and use cases like its place in the remittance industry may have helped with its adoption, it is the fundamental structuring of the project that has allowed it to persist and thrive.  The following are a few examples of this, and why they are important.

Initial Distribution

From the moment the Bitcoin network went live, the full 21M BTC was on tap for anyone looking to become a miner.  There was no pre-mine, with network developers keeping a portion of BTC for themselves.  In addition to this, miners were given months notice by Satoshi Nakamoto of when the network would go live.

It is important to recognize that at the time, digital assets were essentially an unknown.  With this being the case, no one was rushing to buy BTC.  No one was struck with a case of ‘FOMO'.  This meant that Bitcoin grew slowly and naturally – something that allowed for it to attain high levels of decentralization, as very few were accumulating an asset in large quantities that was not worth much of anything at the time.  It was only over the course of years, and through the use of incentives like ‘faucets', that Bitcoin eventually established a foundation of users large enough to ensure network security, use cases, and continued organic growth.

In the present day, hype and interest in the sector simply does not allow for the launch of Bitcoin to be recreated.  Even if someone where to attempt replicating it, which can easily be done with its open-source code, what would incentivize users to use it?  The new network would not be decentralized, it would not be secure, and it would not be able to grow naturally while fortifying its foundation.

Security

Speaking of security, this is one of the main fundamentals that makes the Bitcoin network so resilient.  By leveraging decentralization and blockchain technology, Bitcoin removes the need for trust and reliance on third parties to facilitate transactions.  The less parties involved in a transaction, the less chance of something going wrong.

It also means that transactions are simultaneously broadcast to nodes around the globe, only to be recorded on the network ledger for all to see.  If one node were to go down, there are scores of others that just keep on working.

Due to how expansive the Bitcoin has now become, for a bad-actor to try and manipulate the network, only a massive coordinated attack costing billions has a chance at working.  This means accumulating enough hash-power to account for at least 51% of the network – something which may sound simple, but would be insanely cost prohibitive and unlikely to have any lasting effect.

Accessibility

As corrupt, inefficient, and predatory as modern banking services can be, they are still a luxury that many do not have access to.  Bitcoin however, functions on a global scale, and is accessible to anyone, anywhere.  With increasing global connectivity, this means that Bitcoin is able to offer a level of financial inclusion not seen before.

Its accessibility goes beyond who can leverage the network, and expands to when they can.  Since its inception, the Bitcoin network has remained fully operational for 99.99% of the time.  It does not shut down for the weekend, or limit its services after 5pm.  If a user needs to make a transaction on the network, Bitcoin remains functional anywhere, and at anytime for users to rely upon.

Consensus Mechanism

The mechanism through which Bitcoin processes and validates transactions is known as ‘Proof-of-Work'.  Simplified, this involves network miners competing, by solving complex mathematical equations, in a lottery for BTC which is released every 10 minutes.  While random, the odds of receiving this block reward increases alongside the computational ability of the mining units.  While PoW may get flack over energy usage, it has allowed for the creation of one of the worlds most robust and trusted networks than transcends borders.  Many perceive the power used to mine Bitcoin as providing an additional intangible ‘backing' to BTC, viewing it as monetized energy.

Beyond providing the network with a fair and robust means of a consensus, PoW on the Bitcoin network is quite flexible, readjusting itself to match market conditions automatically.  The more miners participating, the harder the difficulty becomes, and vice versa.

Technical Metrics

From a more technical standpoint, there are various metrics which give context to the underpinnings of the Bitcoin network.  Each of which point to a bright future.

Source – ARK Invest ‘Big Ideas 2023', Page 58

In its paper ‘Big Ideas 2023', ARK Invest notes that despite most recently weathering a turbulent 2022, Bitcoin is boasting all time highs in hashrate, Lightning network capacity, and various other metrics.  No doubt, these and various others, influencing its lofty price forecasts for the coming decade.

Ideology

Finally, one of the most important fundamentals of the Bitcoin network that has allowed it to thrive, is the set of ideologies on which it is based.  By utilizing blockchain technology, Bitcoin is able to boast complete transparency, and immutability.  Each of these traits also allow for the the network to be easily audited.

Furthermore, Bitcoin has a fixed supply with a known issuance rate, that is free of any controlling body.  While not perfect, it is the only offering that works on a global scale, putting all participants on equal footing.

It is this group of ideologies that spurred early adopters in to action, and for them to nurture the network when it needed it most.  An autonomous and decentralized medium for value transfer that removes the need for trust, and boasts a fixed supply.

To this day, much of the adoption experienced by the network is not by people looking to strike it rich, but to take part in a safer, fairer, system that brings the entire world closer.

Final Word

When considering each of the above points as a whole, it is clear that Bitcoin is a fortunate anomaly.  It shouldn't have survived its early days, but on the backs of a forward thinking few, it did.  Now, the Bitcoin network has essentially snowballed in growth, to the point that it cannot be stopped.

Sure, Bitcoin has had hiccups, and still has issues which need addressed – but it would be folly to overlook the fundamentals that got it to where it is today, and not recognize that they are what will allow for it to endure near any crisis.

Bitcoin is fair, secure, accessible, adaptable, and well intentioned.  Combined, these have created one of the most robust and revolutionary financial mediums known to date.