IMO, one of the biggest threats to Bitcoin is the ratio of Bitcoin held by exchanges and ETFs compared to the total supply.
We sort of got lucky that Wall Street ignored Bitcoin for the first 15 years, resulting in an ownership distribution that currently favors individuals (>50%).
2 problems:
(a) it could be temporary
(b) high coordination costs among individuals in the event of a fork
As Bitcoin goes mainstream, complacency and a loss of vigilance among ‘Bitcoiners’ is almost inevitable. The further we get from the last fork crisis, the more likely this becomes — if not with today’s Bitcoiners, then perhaps in 10-20 years.
And I want to emphasize that this is a UNIQUE problem to Bitcoin.
Gold doesn’t have this problem. You can perhaps find ways to inflate its supply, but you cannot fork gold. Or real estate.
It is a unique problem because Bitcoin relies on continual PoW/Nakamoto Consensus.
At the heart of Bitcoin is a system that sustains itself with ‘heartbeats’ roughly every ~10 mins. Each one secures the network, but also retroactively locks down the entire ledger, all the way back to the genesis block.
In other words, Bitcoin is a LIVING thing. Unlike gold which is an inanimate object.
And because Bitcoin is a live and living thing, it CAN be tampered with. Extremely difficult, but possible.
Bitcoin incentive scheme must hold and Bitcoiners must remain vigilant for the whole thing to work. Proper checks and balances.
This is why self-custody is so incredibly critical to Bitcoin’s success.
Without the economic majority holding Bitcoin in self-custody, the system can be co-opted, bringing us back to square one: the reunification of money and state.
This is also why I see most concerns about Bitcoin as secondary. Yes, Bitcoin can and will improve on privacy. Yes, it can be a decent, “good enough” MoE. But it doesn’t need to excel at these.
It must first lock down the self-custody and SoV use case — or the whole system will collapse like quicksand.
To reiterate: it must be INSANELY EASY to self-custody Bitcoin, or the rest of the stuff we build doesn’t matter. Not one bit.
P.S. About Saylor, I suppose his vision is a future where Bitcoin and the state co-exist peacefully. In other words, the state will gladly accept Bitcoin as a check on its once unchallenged power to print money.
But that’s just one possibility — and it doesn’t seem like the likely one.
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