Among the legendary builders of the last Silicon Valley generation, one has always held an unusual fondness for Bitcoin: Jack Dorsey, the co-founder of Twitter and Square.

What first drew my attention was how different he was from his peers. Most successful founders either ignored Bitcoin or dismissed it outright. Dorsey was the exception — not only in what he said, but in what he did. The most famous example is how, years ago, he poured money and energy into promoting Nostr, a decentralized social protocol [2].

Recently I came across an old interview of his (the link is in the references). In it he made a point that caught my interest:

“If this ends up just being digital gold, I think it’s failed.”

Loosely translated: if Bitcoin ends up as nothing more than digital gold, then it has failed.

Whether Bitcoin is digital gold is a debate I have had many times, so I will not rehash it here, and I will not argue about whether his statement is right or wrong. For the sake of discussion, though, we can treat Bitcoin as a crypto asset with a store-of-value function — something I believe most people can agree on, and which its fixed supply actually makes a feature rather than a flaw.

Reframed, his point becomes: if Bitcoin is only a store-of-value asset, then in his view it has failed.

Personally, I think the word “failed” is an exaggeration.

Even if Bitcoin were nothing more than a store-of-value asset, I would still call it a success — and I expect it to keep succeeding, and to keep climbing, in the years ahead.

But the deeper point he was making is one I do agree with: Bitcoin should not be only a store-of-value asset. It should return to the vision laid out in its white paper — a peer-to-peer electronic cash system.

In other words, he believes Bitcoin must have real use cases (becoming, say, an electronic cash system for everyday transactions), rather than merely being bought, hoarded, and held for appreciation. That is the part of his view I resonate with most.

In fact, the earliest Bitcoin pioneers spent years running experiments precisely to find those use cases. Beyond the well-known push to put Bitcoin into daily commerce, they even tried issuing entirely new kinds of assets on top of Bitcoin — Counterparty (XCP) being the most famous example [3].

All of that effort was a search for Bitcoin’s application layer.

That search reached its loudest peak with the inscriptions craze a few years ago.

But as we all know, those experiments only ever sprouted — they never bloomed, and certainly never bore fruit.

The reason is simple: because the Core team held firmly to Bitcoin’s existing properties, it effectively rejected every proposal that would change how Bitcoin’s scripting actually works — a conservatism that, as we have seen in the fight over who even gets to change Bitcoin, runs deep in the protocol’s governance. That left Bitcoin unable to run Ethereum-style Turing-complete contracts on chain. Any extension built on top of Bitcoin that hoped to run complex logic turned out to be technically weak at the center, easy to attack, and simply unable to carry the transaction volume that a real business needs [5].

At that point, Bitcoin’s future was already legible. The most likely outcome is that Bitcoin remains, for the foreseeable future, an asset whose main function is storing value — whether you call it digital gold, or, as I prefer, a digital collectible. That institutional framing has now been made explicit: in its first long-term forecast, JPMorgan pencils Bitcoin in as a 10% compound annual return asset and nothing more — we trace that number in our piece on JPMorgan’s first Bitcoin forecast.

Dorsey’s hope that Bitcoin would find a real application layer will probably not come true.

Still, as I said earlier, even as “merely” a store-of-value asset, Bitcoin is a success. It is just that, with this limitation, I think its upside from here is also limited.

Dorsey’s insistence that Bitcoin become a peer-to-peer electronic cash system is, to me, hard to share.

First, Bitcoin basically cannot be used at scale as a medium of exchange in everyday life — at least not today.

The consensus in today’s society is still that fiat currency is the measure of value, not Bitcoin.

Beyond that, both the prevailing consensus around Bitcoin (most people treat it purely as a store of value) and its own technical architecture (no support for Turing-complete contracts) dictate that it will struggle to find real, practical use, and will rarely show up in commercial scenarios.

That dictates its low frequency in daily life. And low daily frequency makes it hard to become a daily payment method.

So I expect Dorsey to grow ever more disappointed with Bitcoin over time. For a technologist as pure-hearted an idealist as he is, that will be a deeply painful thing.

References

Source: mr.nickyam.com | Author: Nick Yam