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Comment by 2bitencryption | Hacker News Reader

Once thing I've noticed about Bitcoin is that there are many "alt-coins" that seem to deliver better on Bitcoin's promises from a technical perspective, but those coins are forever stuck in Bitcoin's shadow because BTC has that first-mover advantage. And as a currency, the first-mover advantage is HUGE, because who wants to convert their investments from a hugely popular coin to one that could disappear tomorrow?

So everyone seems stuck -- we agree cryptocurrency can be an amazing idea, and the first version of it is something of a technical (and economic?) miracle, but now we're stuck with the V1 flaws forever (unless the group governing it decides to 'fix' those flaws, but there's another issue, I don't want you messing with how my money works...)

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What first mover advantages does it have exactly? I know many people who have bought bitcoins, but absolutely zero people who use it in their day to day lives.

The first mover advantage in this case is the fact that early adopters of crypto bought BTC, because BTC was all there was.

Now that those people already have BTC, they are less likely to purchase a second coin. For one, they already have money invested in the space. Secondly, BTC has shown that it has staying power - outlasting many altcoins which came after it - which further solidifies BTC as the top contender (for now).

So, those already invested in BTC have little impetus to change from BTC to another coin == a first mover advantage.

Isn't it just as plausible that early adopters bought BTC because that's all there was, then bought altcoins as they appeared in order to diversify their crypto portfolio? It'd be interesting to find out if there are more investors in "crypto" as a strategy versus BTC specifically.

I mean, of course that's plausible. If I gave the impression that it wasn't, my bad. I was just hoping to clarify to eugeniub why BTC enjoys a first mover advantage, and why first mover advantage has nothing to do with how often "people use it in their everyday lives".

Assuming a limited amount of resources to invest, someone who is already invested in X, is less likely to remove their money from that and invest into Y, unless Y is really good. All things equal, there is no reason to move from X to Y if X came first and you already invested into X.

So, the first mover advantage for BTC is the fact that new coins need not only be equal (in the eyes of the investor) to BTC, but better enough to convince that investor to move out of BTC in favor of that coin. People who are, in addition, buying other alt coins are still solidifying BTC's first mover advantage if they do not remove their investment in BTC in favor of something else.

They use it to talk endlessly about their coins, that might be an end in itself...

Bitcoin's governance model is what makes it special. 1) The founder declared it would have a maximum of 21 million coins with a set mining schedule 2) Many/most of the people who bought into it implicitly agreed that this is the core feature of bitcoin - that it would only ever have 21 million coins 3) The founder disappeared/died/whatever 4) Now, everyone continues to agree on the 21 million coin cap. If anyone tries to change this, they are opposing the founder and the reason many people bought bitcoin. At that point bitcoin will become the most used chain that maintains the set 21 million cap

This lack of governance as well as scarcity consensus is by far the strongest mechanism to maintain a scarce supply that we have in existence. It is not totally infallible - maybe a superhuman AI could social engineer the entire bitcoin community to increase the cap. But it is the best I can imagine is possible. The network effect of more people buying into it makes that 21 million meme stronger and stronger, and satoshi being "gone" reduces the risk that he comes back and declares that he has "changed his mind". Even if he did do that the core 21 million devotees will fork the coin to a 21 million and that will be the truly scarce bitcoin.

Therefore, this is the most securely scarce asset in existence.

Bitcoin has two things going for it:

The inflation is fair, in the sense that it is well known. It is also fair in the sense that nobody decides who gets the newly minted coins, everyone has an equal chance.

There is no creator still around. Nobody can dictate any changes to the rules. Sure, development is still ongoing, but if a change does not have close to unanimous consensus it's not going in. There seems to be a general understanding that unless this is so the community would be splintered which not make for a working economy and everyone would lose. Game theory holds this system in place.

(There have been a few coins which mostly shares Bitcoin's history, but so far the market seems to treat them as separate projects in their own right and valued separately, which so far seems to validate that theory.)

Not many other projects have managed to replicate the above (although some come close), so talking in terms of first mover advantage is selling the project a bit short.

You've accidentally stumbled upon the Bitcoin's true strength in your own answer.

> unless the group governing it decides to 'fix' those flaws, but there's another issue, I don't want you messing with how my money works...

That's exactly the reason why arguably technically superior projects are worth less - they are constantly messing with how their money works.

The community around Bitcoin, it's so called "immune system" is incredibly conservative. All they care about is stability and security. Every new feature is being introduced as an opt-in soft fork. It can take around 3 years of rigorous testing and discussion to go from a BIP to a protocol upgrade. Yes, other projects may be technologically superior, but it doesn't matter because they are funny money and Bitcoin's rigor and resistance to change make it hard money.

This is inaccurate. Bitcoin could handle many, many more transactions per second than it currently does with less risk and technical complexity than has been introduced since we hit the blocksize limit in 2017. There's a lot of money making sure it does not get bigger. Instead it's being rate limited with high fees and limited throughput to force transactions onto "layer 2" systems that allow 3rd party companies (ironically acting like banks) to extract fees. This is what caused most of the original Bitcoin community to fork off to Bitcoin Cash, which has improved upon the original code base and proven Bitcoin can handle far more transactions per second.

> most of the original Bitcoin community

While it's hard to define what the "original" Bitcoin community really is, you'd struggle to make up a definition under which the above is true.

Looking through the commit log, none of the developers match any known Bitcoin developers at all, neither past nor present. It's hard to know for certain of course since there are many pseudonymous developers in this space.

A large reason might be that drumming up interest in consensus breaking changes is difficult enough as it is, and interest in a completely different codebase with incompatible rules is likely to be even harder.

How does that make the previous post inaccurate?

Calling the development team "incredibly conservative" isn't accurate. The idea of Bitcoin is peer to peer electronic cash directly between two counterparties. The current roadmap doesn't focus on that as a priority and instead focuses on intermediaries for scaling. That isn't "incredibly conservative", it's a different system of priorities entirely, that have little to do with technical risk or original vision of Bitcoin.

> we agree cryptocurrency can be an amazing idea

Do we?

We all agree that currency can be just a pyramidal scheme.

Sidechains allow you to migrate to a completely different system without losing the storage of value property.

Are there any live sidechains in production? I thought the team behind them moved on to the Lightning Network.

Blockstream launched the Liquid Network sidechain fairly recently.[0] The features that distinguish it from the Bitcoin main chain are fast settlement times (1-minute blocks), confidential transactions (versus BTC's transparent txs), and the ability to issue unique assets such as tokenized fiat, crypto assets, and other pretty exciting digitized assets.

[0] https://blockstream.com/liquid/

Disclosure: I work at Blockstream.

Thanks, I’ve missed that development.

I have never thought of bitcoin as a currency -- it is clearly some kind of commodity given that it is modeled after gold. Yes, we do want stability in prices denominated in currencies.

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