December 16, 2021

Why Bitcoin?

Why LVL is focused on Bitcoin.
Clifford Osborn

What is the point of money? What should we use as money? And what does this have to do with LVL’s mission? That’s what we’ll discuss today.

Human civilization currently requires money as a medium of exchange, and good money at that. The point of money is to transport value across time and space. Individuals use their talents and skills to contribute work, that work is valuable and rewarded as such, and then we need to use that reward later on and in different places. In traditional barter economies, goods are traded directly for each other, and that can work well when there is a “coincidence of wants”. This means, when you have a cow and your neighbor has some wheat, and you both want what each other have, then a trade between the two makes sense. However, that is usually not the case. You may have a cow, your neighbor may have wheat, but perhaps you really want a chicken and they want corn. Without that coincidence of wants, a medium of exchange is needed. This allows trade between parties for different goods and services across time. This is why having money is an improved economic system.

The fiat US Dollar is the main money used today. While it has provided many benefits, the negative qualities are becoming much more prominent. This is priming the need for an improved form of money. We have spoken about these negative qualities before. Mainly, that the dollar is inherently rent seeking, the monetary policy of quantitative easing literally inflates value out of the poor and into the rich, and it is used as a tool for incessant government spying. A medium of exchange doesn’t need any of these qualities, however, a fiat money created by any central government will inherently have many of these qualities. Therefore, we need better money, and any fiat money seems unable to fill this need.

LVL’s mission is to help individuals use better money and create systems that make using this better money simpler and more intuitive. There have been many new types of money proposed: gold/metals, different types of fiat, commercial money, and now cryptocurrency. Using metals seems unscalable, all fiat and commercial money are susceptible to the same centralization issues as the dollar, and so we are left with cryptocurrency. Bitcoin was the first true cryptocurrency, and it was created to be money. This is often a point of confusion, as many people today interpret Bitcoin as a type of investment. That is not the point of Bitcoin. Satoshi named the white paper “Bitcoin: A Peer-to-Peer Electronic Cash System” because they were creating bitcoin to be an improved type of money and medium of exchange - not a meme stock. As more people adopt and use bitcoin, this does drive the price up, so it can work out to be a good investment. But that is just a great side effect. Its core purpose is to replace fiat money.

LVL is married to the money problem. We’re building a bank for the next 100 years, not another shitcoin casino. And, to date, Bitcoin seems to be the best replacement for fiat money. The founding principles and features of Bitcoin, outlined very well by Nic Carter in this podcast, serve as proof. Why Bitcoin good:

  • Bitcoin was created by the pseudonymous Satoshi Nakamoto, who is the opposite of a cult leader or enigmatic founder. They are an unknown person/group that sought neither fame nor fortune, of which they could have easily had both. Bitcoin survives based on nothing but consensus and fundamental merit, not a founder’s words.
  • It remained in relative obscurity for a long time, democratizing access to it for cheap and spreading it around the world. It was not propped up by venture capital, and it was not premined or given to insiders.
  • It was designed for trust, by non-intuitively requiring no trust. It is an open sourced public ledger, so the trust comes from the ability to easily verify.
  • With a total coin-cap of 21 million, and a set mining rewards schedule, it is inherently deflationary.
  • Bitcoin is permissionless. No one can stop you from using it even if they wanted to.
  • Bitcoin is scalable and has the best and most uncompromising group of core developers.
  • Bitcoin has extremely strong and positive network effects. The more people that use it, the better it works, and the more valuable it becomes.
  • These qualities seem unlikely to be recreated, or if so, with a smaller network of users.

It really seems that if you were to sit back in a leather armchair and dream up the ideal features and behaviors of a new and improved type of money, in a first-principles way, you would end up describing bitcoin.

For these reasons, LVL is proud to announce that our primary focus is Bitcoin. We are working to make bitcoin as useful as cash in day-to-day finances. To get there, Bitcoin needs UI enhancements to make securely using it more intuitive for new people, and it needs to be able to be spent more easily and used in daily finance applications. These are the things LVL is working on, as we described in our Master Plan. Bitcoin is a journey for everyone, including us at LVL, and we are excited to arrive here. This is not because of blind maximalism nor to win gold in the virtue signaling games. It is because we share the same focus on improving money. Focus is crucial for us to move fast towards killing the dollar.

Here is our plan moving forward, and we would love to hear your thoughts.

Litecoin

Our first priority is always our customers. In this case, our customers' actions indicate they do not greatly care about Litecoin. It is our least used, held, or traded asset. In addition, it is a clone of Bitcoin which bitcoin’s own improvements have since made mostly irrelevant. So, we have decided to delist and remove Litecoin. No customer funds will be negatively affected, and we will share a strategy for this soon.

Ether

Our first priority is always our customers. Our customers like and hold Ether, and we do not want to control them. However, we do have to make a decision for our company. Ether has some positive and negative aspects, which is what makes this decision difficult.

Pros: The crypto market as a whole seems like a bubble, similar to the Dot Com boom of the 90s. Out of that bubble, we got survivors like Amazon and Ebay that are successful and generally a good thing for humanity. Ethereum could be similar to this. Ethereum also has a large number of people putting in good-faith efforts to make something great. Many of these human efforts in Ethereum have analogues in Bitcoin as well (Taproot for smart contracts and Lightning for Layer 2 scaling). Perhaps these experiments may ultimately contribute to the development of Bitcoin. Also, NFT’s are rad. We love art, and we love how NFT’s could change the future of art, music and gaming.

Cons: During that Dot Com bubble, a ton of people got burned. Badly. Many of the projects being built on Ethereum seem to be actively building scams and rug pulls. Ethereum is becoming hyper-financialized, which just seems to be a breeding ground for corruption and tomfoolery, and for the sole benefit of insiders. Really, many of these negative qualities are similar to the fiat dollar. While Bitcoin is staunchly trying to replace money, Ethereum does not have this same core belief.

Because of this, Ether is currently being placed in a “under review” status. It will remain available on LVL, and we will share more information about this on January 12th.

Please feel free to reach out to us with feedback about this: support@lvl.co.

If this mission excites you, we would love for you to join the LVL team: careers@lvl.co.

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