Bootstrapping Bitcoin

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In this video, I discuss the challenges that come with trying to launch a new cryptocurrency network and blockchain, and how fortunate Bitcoin was to have been able to negotiate this quagmire successfully.

To bootstrap a new network, you need to compensate miners either through new issuance (which dilutes existing holders) or through transaction fees (which assume organic long-term demand for block space).

While you are bootstrapping the miners, you also need the node count to grow, driven by authentic hodlers who want to use their own nodes to transact, and also want to participate in a circular economy, rather than participate in a quick pump and dump.

It's unlikely that Kaspa mining will be able to survive once its bootstrapping phase is over, thus adding one more crypto casualty to the 15 year body count.

Only Bitcoin has successfully negotiated this initial bootstrapping phase and begun to enter the circular economy phase.

Bitcoin has been very fortunate to survive the ongoing transition from block subsidy revenue to transaction fee revenue. Most of this is attributable to Bitcoin's fiat price going up.

Why has Bitcoin's price gone up? Because its foundation is a fanatical group of hodlers who aren't just sitting around waiting for a pump so that they can dump their coins and move on to the latest new shiny object crypto.

These hodlers buy a little Bitcoin, then start to go down the rabbit hole and get hooked. They start to run their own nodes (previous node bootstrapping problem solved).

They demand to be paid in Bitcoin, and they encourage merchants to accept Bitcoin-- both of which actions create transaction fee revenue for miners and help them to transition away from block subsidy revenue.

Over time, these hodlers are hardened and personally transformed by their hodling journey. They become stronger men and women. They move from high time preference living to low ..