Good thread.

I disagree with some points...
/1 https://twitter.com/AdamScochran/status/1343641935265869831

2/ I think layer two can pick up the slack. This is like a "BTC as gold bars" theory in the sense that people hold gold bars, then transact in paper money that represents claims on those gold bars (or stablecoin.)

3/ Important caveats to the above:

I don't view BTC as just "gold", I view it as more... base money, or "pristine collateral" if you will, to borrow the @RaoulGMI term. Disrupting bonds and everything around it, not just the small potatoes of physical gold.

4/ Second important caveat:

Layer two doesn't mean I'm necessarily bullish on LN (in fact I'm generally not.) It can mean cefi, or high performance sidechains. Contrary to popular belief, using cefi, especially to trade small amounts of crypto is totally legitimate.

5/ New point. We need to examine the world in which BTC has $100 tx fees. ETH has more tps (incl. in the future with upgrades), but even then one can reasonably expect fees will go up anyway.

6/ In these supply-limited settings, it is inevitable that financial operations will crowd out other smaller use cases.

7/ I think it is plausible that ETH takes over. Definitely the arguments make sense, and I am not ruling it out. However, it is more likely to me that it always stays gas, barring a fundamental failure in Bitcoin itself.

8/ One thought experiment is to imagine some kind of new Bitcoin-like coin came out now, with all the latest tech. It was superior in every way technically, say with 100x more throughput somehow. How would it fare against the current coins?

9/ In my opinion, probably not good, but some chance to be very good. (There is one team trying in this space! With potential.) Because new technology is a solution in search of a problem, and it doesn't have the most important things, which are trust and the network effect.

10/ It's obvious when you think about it: the most important quality for base money is that everyone believes it is base money.

11/ And that's not something you see in the "qualities of money" chart. And that's not a technical problem, it's a social one. Barring that, Ethereum performs very well in a cross section of settings. I view Ethereum as a great "all around" player.

12/ Ethereum also has a fundamental strength in that it has massive amounts of intellectual (and actual) capital to improve. This cannot be ignored.

13/ However, in winner-take-all settings, of which the cryptocurrency space is (because of 0/low friction), being "the best at X" proves to be more than just useful, it's critical.

14/ As long as interoperability exists, we can interface between different "best at X" things and take the best parts about what we like.

15/ Ethereum is very useful, and it will probably always be very big. But it seems to be a jack of all trades, the common postage stamp of the internet.

16/ Long term, high performance sidechains such as @solana will be what is necessary to take us to the next level. Right now, we don't yet need the power, so they remain mostly dormant.

17/ But in the near future, decentralized apps will replace all sorts of intermediaries, especially financial ones. And this will cause an explosion of demand.

18/ This cycle (over next 2-3yrs), for various reasons I expect ETH to go sky high. But I don't think there's any way a "flippening" can occur now - we punt the ball another 5 years to wait and see.

Maybe Vitalik will finally get his wish and maxis won't call ETH a shitcoin :)

19/fin

https://ftx.com/#a=wice  - Get 10% off fees NOW or Vitalik will take over Bitcoin.