Summary
TLDR: Bitcoin has two components – the asset (bitcoin) and the network/protocol. The fixed supply of 21 million bitcoin already exist but have not been unlocked or released yet. The network operates on a market model, with Layer 0 focusing on security and supply release, and Layer 1 on final settlement and transactions. Layer 2 is still being built for fast settlement and payments. Miners are incentivized to continue mining due to strong financial incentives and the emergence of new energy technologies. Bitcoin operates on a decentralized market system that secures the network without the need for central bankers.
Key Points
1. Bitcoin has two main components – the asset with a fixed supply and volatility, and the network and protocol that maintains an immutable ledger that has never been hacked.
2. Dhruv Bansal’s view simplifies the concept of bitcoin’s fixed supply by stating that all 21 million coins were created on January 3, 2009, but have not yet been released or unlocked. This reframing helps understand the mining process as purchasing existing coins rather than creating new ones.
3. Bitcoin’s base layer operates on two markets – Layer zero for security and monetary policy enabled through an auction every block, and Layer one for final settlement and transaction processing. These two markets work in conjunction to secure the network and ensure the fair release of the fixed supply of bitcoin over time.