12/29/2023 0 Comments Lyn alden network effect![]() Rather than quickly fall to upstart competitors like Myspace did to Facebook, Bitcoin has retained substantial market share, and especially hash rate, against thousands of cryptocurrency competitors for a. ![]() There is no free lunch, and these other forms of consensus are not strictly “better” than Bitcoin’s proof-of-work model since they have more attack surfaces and greater risks of centralization. The ongoing stability of Bitcoin’s network effect is one of the reasons I became more optimistic about Bitcoin’s prospects going forward. Like any functional financial system, Bitcoin uses a layered scaling approach.īlockchains that use other consensus models with lower energy requirements, like proof-of-stake, make trade-offs to do so. Plus, additional layers like the Lightning Network dramatically expand its per-transaction energy efficiency even further as they are built out and become increasingly operable. The network continues to be more energy efficient each year due to pre-programmed declining block subsidies (structural disinflation). Lyn Alden, CEO and founder of Lyn Alden Investment Strategies, and Raoul Pal, CEO & cofounder of Real Vision Group & Global Macro Investor, explain their thinking about Ethereum and its native token, and talk about their perspective on GameStop. This isn’t very fast inflation, and yet it would be more than 3.2 above April 2020, since April 2020 was a low month (easy year-over-year base effects). Alden tells Peter McCormack on the What Bitcoin Did podcast that Bitcoin is one of a kind due to its network effect, or the phenomenon where the number of users directly contributes to the value of the network. The dollar system is such a powerful large Network effect that its at least tens of trillions of dollars, and all the structures built on top of it are. This is because Bitcoin miners have the unique capability to go to remote locations and deal with inconsistent power that other consumers can’t use, as long as it’s cheap. If March 2021 CPI increases by just 0.25 from February 2021, and April 2021 CPI increases just 0.25 from March 2021, then the April 2021 CPI will be 264.48. Macro investment strategist Lyn Alden says that one fundamental factor sets Bitcoin apart from all other digital assets. For example, back in December 2017, Newsweek ran a piece called. It’s often criticized for using too much energy, or not making efficient use of its energy, or in extreme cases, being an outright climate/energy disaster. Bitcoin’s energy usage has been in the news for years. Like anything of value, it consumes energy.īitcoin mining uses less than 0.1% of global energy and, by design, cannot use more energy than the utility it provides to users.Ī sizable chunk of the energy used by Bitcoin is otherwise stranded and wasted energy. Originally published: August 2021, updated January 2023. So far, the market of millions of participants has decided that this network has value. Bitcoin provides a service that people can use to store and transfer value.
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