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The price of Bitcoin (CRYPTO: BTC) is treading near its lowest level in the past 12 months. After failing to continue its rebound in August, demand for the weathered crypto asset has waned.
Today, Bitcoin is hovering around US$18,780, down a gut-wrenching 73% from its 52-week high. The harrowing fall has coincided with monetary tightening by central banks around the world. As a result, liquidity for this alternative has evaporated right in front of our eyes.
At the same time, greater scrutiny around proof-of-work (PoW) — Bitcoin’s consensus mechanism — has increased awareness of Ethereum (CRYPTO: ETH) and its recently adopted proof-of-stake (PoS) mechanism. The Ethereum network now uses approximately 99.95% less energy post-merge.
But here’s why I continue to hold Bitcoin… and no, I don’t hate the environment.
Why I still see value in Bitcoin
We have all seen them, the comparisons of Bitcoin’s network energy consumption relative to whole countries.
According to estimates by the University of Cambridge, the network is currently operating on annualised energy consumption of approximately 93 terawatt-hours (TWh). This would put the decentralised blockchain’s consumption roughly on par with all of Pakistan.
Though, I personally don’t consider this a negative if there is something of a corresponding value from it. In this case, the value proposition is a highly secure, immutable, and deflationary form of monetary exchange.
For context, YouTube demands around 244 TWh per year — pictured below — and no one bats an eye. Why is this? Because instant access to a library of content at your fingertips has value… immense value.
In the same way, I believe there is a huge need for a means of exchange that is governed by a decentralised cohort, accessible globally, and eliminates the inequality-inducing economic problem of inflation.
But why not Ethereum? And I agree, Ethereum has great value in its own right — bringing decentralisation to all forms of finances. However, in the process of converting to PoS, I personally believe the network removed an important tangible aspect.
To be fair, Ethereum has implemented some highly sophisticated tech that should maintain network security. However, there is something to be said for a network — such as Bitcoin’s — that is reliant on something that cannot be imitated, created, or destroyed… real and tangible energy.
I’m still in the process of understanding all the intricacies of Ethereum 2.0.
Simple and stable
Speaking of intricacies… another reason why I personally still hold Bitcoin is because of its relatively straightforward concept. As my engineering days taught me: the more parts, the more points of failure.
While Ethereum quite honestly needs to be complex to achieve its goal, a decentralised store of value doesn’t need to be. And, quite frankly, if I’m keeping a large sum of money there, I don’t want it to be either.
Each time a protocol undergoes a change, it presents a risk. Thankfully, Ethereum successfully completed ‘The Merge’ unscathed, but there were likely a few people sweating in the process.
In contrast, Bitcoin rarely makes substantial changes to its foundational code. Personally, this is another reason why I like it as an alternative store of value. It may not be as ‘smart’ as Ethereum, but it sure is reliable.
