Have we found the god protocol?
With the explosion of interest in cryptocurrencies in recent months that saw Bitcoin pump and 100m new wallets opened, large asset manager BlackRock slow to the party made a move investing blockchains and mining. The Elon Musk effect shows how fickle Bitcoin can be, with MicroStrategy doubling down on a BTC BUY strategy, and of course the feeding frenzy around NFTs and DeFi projects — investors are looking for the next Bitcoin.
We know investors like to get in early as the multiple crypto-billionaires can attest. Everyone now realises Blockchain as a significant technology is here to stay. We have witnessed the explosive growth in the value of Bitcoin, and their forked brethren Ethereum, whos recent move has surprised many, have accelerated Ether supply, that will impact price at some point, versus Bitcoins fixed supply, an important factor is supporting price.
But here is the thing, the investors who were not early adopters, and that is 99% feel aggrieved they missed out when BTC when it was under $100 or even $1000. They didnt see the light early enough, further annoyed because they also missed out when Ethereum was under $50. In many ways investors at the time were forced to accept second best as they pile fresh capital into new projects built on Ethereum — Solana, Polkadot, Chia Network and Algorand. In a way its like eating second hand protein — known as meat. The price paid already at a few dollars and not $50cents. It’s worth remembering $100 spent on BTC in the early days would be worth $30million++ today.
The primary issue with investing in blockchains built on another protocol stack — Ethereum, they cannot experience the same gains as pure ‘protocol tokens’ of which there are few. The world needs new blockchains that can surpass what we have today, correcting some of the technical shortcomings and most of all offers something fundamentally different. In other words we need a real ‘breakthrough technology’ which is incidentally one of the pre-requisites in Peter Thiel’s investment thesis described in his book Zero to One.
The key differences are easy to see in the diagram below.