When Elon Musk Met Jack Dorsey Over Bitcoin: The Key Takeaways From B Word
Hosted by the Crypto Council for Innovation and sponsored by Square and ARK Invest, “The B Word” was a day-long Bitcoin centric online event that aired on Wednesday, aiming “to correct mainstream narratives around Bitcoin, explain how institutions can embrace it, and raise awareness around areas of the network that need support.”
While there were many profound speakers and stimulating discussions throughout the conference, the first two tracks featured some of the most important contributions to current public discourse surrounding Bitcoin. They do well to address and ease popular concerns that have plagued the network’s image over the past few months while re-focusing viewer’s attention on what makes Bitcoin such an important technology.
The most important contents of these two tracks are summarized below- including key details from the long-awaited discussion between Elon Musk, Cathie Wood, and Jack Dorsey.
Nic Carter: Debunking “Bitcoin Wastes Energy”
To begin the first track titled “Demystifying Bitcoin,” co-founder of Coin Metrics Nic Carter addressed and debunked the popular criticism that Bitcoin wastes energy or is harmful to the environment.
He starts by framing “waste” in terms of costs and benefits. Something can only be considered wasteful if the resources it consumes outweigh the utility it provides– and Bitcoin certainly has utility:
“As a neutral, global monetary network, Bitcoin has a valid claim on some of society’s resources.”
Bitcoin is also remarkably, and increasingly, powered by sustainable energy- and miners are in fact incentivized to do so. Carter’s figures range from 34-46% sustainable energy use while only being responsible for 0.1% of the world’s CO2 emissions.
Furthermore, as miners are now being ejected from China, hash power is now likely to concentrate in more politically stable and less carbon-intensive areas such as the United States, Canada, and Northern Europe. This will undoubtedly reduce carbon intensity across the network in the long term.
Arjun Balaji: Debunking “Bitcoin is Unscalable”
Another section of track 1 was hosted by Arjun Balaji of Paradigm, where he debunked the idea that Bitcoin cannot scale to settle transactions for billions of people.
He rejected the idea that Bitcoin must increase its blocksize to support larger transaction volume- as this will sacrifice Bitcoin’s decentralization by making it difficult for an average person to run a full node.
Instead, he proposes that Bitcoin can scale through layers. Technologies like the Lightning Network scale settlement assurance through deferred settlement, which is ultimately secured by the base layer.
“Bitcoin is a settlement network which scales like an onion, in ‘layers’.”
Alongside other technologies such as sidechains and Bitcoin banks, users have versatility in terms of the methods they use to settle transactions, which all feature differing tradeoffs of decentralization, security, and scalability.
Nate Madrey: Debunking “Bitcoin Ownership is Concentrated”
Track 1 featured another crucial section from Nate Madrey, a research analyst at Coin Metrics, who debunks the notion that Bitcoin is overly concentrated in the hands of whales.
This notion is often put forth by misleading headlines based on publicly available blockchain data showing relatively few addresses with massive amounts of Bitcoin inside.
However, a Bitcoin address does not necessarily represent an individual. It could represent an exchange, institution, or multisig wallet using one address to represent hundreds or even thousands of individuals. Also, many of the aforementioned “whale” addresses are dead wallets, likely held by people who accumulated much bitcoin long ago but have lost their keys since.
Furthermore, when compared against other cryptocurrencies such as Ethereum and Dogecoin, Bitcoin has the evenest distribution of all across various percentiles. This is largely due to Bitcoin’s proof of work consensus mechanism, which forces the initial recipients of Bitcoin- miners- to quickly sell much of their Bitcoin in order to cover the costs of running their operations, which helps spread Bitcoin on the open market.
‘The Talk’: Cathie Wood; Jack Dorsey, and Elon Musk
While spectators eagerly awaited this event, expecting a fierce debate between the two tech moguls, the reality was a mild-mannered discussion among three people in united support of Bitcoin’s development and adoption- including Musk.
The three began by explaining what sparked their initial interest in Bitcoin. For Cathie Wood, CEO of Ark Invest, it was a combination of disruptive innovation, economics, and the massive misunderstanding surrounding it.
Musk, Technoking of Tesla, said he was interested in supporting something which improves the quality of information that supports the economy.
Dorsey, CEO of Square and Twitter, says he saw “a chance to replace the whole foundation” of the financial system, which he says “cause[s] so much distraction and so much cost” when he encountered Bitcoin in 2009,
Dorsey further elaborated on why Bitcoin “changes everything” in reference to earlier comments. Because any person can verify transactions, and the network is not controlled by any particular state. He sees it as the future currency of the internet.
“Any person can own it. They can verify it themselves. You don’t have to have trust going in, and any particular person can help drive the future of it, and at the same time it’s not controlled by any state, bank, or corporation… it’s a beautiful thing.”– Jack Dorsey
Wood sees the benefit of Bitcoin from an economist’s point of view. When asked by moderator Steve Lee about Bitcoin’s 21 million supply cap, Wood explained that this allows Bitcoin to play a store of value role– one of the three roles of money– by preventing inflation. She also believes that the medium-of-exchange role will be carried out by Bitcoin as apps are built on top of its protocol.
“First global rules based monetary system ever… this is a very big idea”– Cathie Wood
Musk, surprisingly, had a positive view of Bitcoin during this talk, compared to some of his recent Twitter rhetoric on the topic. While critiquing its small block size, he acknowledged that a properly implemented second layer solution would allow bitcoin to “scale to do a vast number of transactions.”
Most notably, he’s also acknowledged that Bitcoin is rapidly trending back towards renewable energy sources for mining and that he may therefore open Tesla to accepting purchases in BTC again.
Currently, the three speakers agree that the usability of the Bitcoin network is a bit of an issue. However, solutions are already being worked out by developers, including Dorsey’s own Square, which is currently building a Bitcoin hardware wallet.
Conclusion: Optimism for Bitcoin’s Future
In closing, all three stated what they hope to see from Bitcoin in the future. Wood hopes for a “convergence between blockchain and AI to change the world in ways we cannot even imagine.” Musk would like to see cryptocurrency generally “improve the efficiency of the information system we call money,” leading to a “better standard of living.” Jack Dorsey’s hopes are the greatest of all:
“My hope is that [Bitcoin] helps create world peace. We have all these monopolies of violence, and the distractions within our monetary systems are real.”
The discussion fulfilled the primary objective of the conference: to “explain how institutions can embrace Bitcoin and how we all can support the network.” Seeing such major players affirm their support of the network, devote resources to it, and clear the air about common misconceptions surrounding it, may even spur confidence back into the Bitcoin market.
Recordings of every track from “The B Word” conference can be found here.