Bitcoin may be the most revolutionary technology ever conceived.
That’s a big statement, I know, but when you truly understand what Bitcoin is, you begin to realise the scale of impact it will have on society.
A fully decentralised digital currency that combines economics, maths, physics, and perhaps most profoundly, psychology. At its core, Bitcoin is actually an incentive structure for human flourishing.
Like any major innovation, from the horse to the automobile, or candles to electric lights, it’s difficult to fathom how society will change as new innovations take hold. In this article, I’m going to attempt to tease out a few of these incentives for the inquisitive, layman entrepreneur.
By the end, if I’ve done my job well, the reader will have a hint of where Bitcoin might lead and why their entrepreneurial activity might be best directed towards the Bitcoin ecosystem.
What is Bitcoin, in a nutshell?
Bitcoin is a decentralised global digital currency. It operates on a blockchain, which is a publicly shared (peer-to-peer) system of records that uses cryptography (hence the name cryptocurrency) to create an incentive structure that encourages honest participation.
Proof-of-Work
Bitcoin uses a system called Proof-of-Work, which rewards participants for solving cryptographic puzzles to create blocks of transactions in a process called 'mining'. Miners are rewarded with newly minted bitcoins and transaction fees.
By design, mining requires enormous amounts of electrical energy. In fact, mining a single block, which takes about 10 minutes, uses as much electricity as an average household consumes in 25 years! In contrast, verifying these transaction blocks can be done by a consumer laptop in a matter of minutes.
These verifying 'nodes' check the results of mined blocks against pre-agreed consensus rules. If the blocks fail to meet these rules, they are rejected, and all the energy (twenty-five years’ worth!) is wasted. Instead, miners are incentivised to produce valid blocks, as they receive significant rewards for doing so. Hence, the incentives (and disincentives) motivate honesty.
[In Bitcoin's early stages, there was a risk of bad actors gaining control of 51% of the total global mining power to fake transactions. However, mining power is now distributed globally, and no single pool controls that much power, making such an attack very unlikely.]
Proof-of-Stake
Other blockchains, like Ethereum, use a system called Proof-of-Stake, which relies on participants staking their cryptocurrency as collateral to prove transactions are valid. This concentrates power in fewer hands, as the more you stake, the more weight your vote carries to validate or invalidate a block.
Bitcoin is therefore considered the most decentralised and (some would say) democratic blockchain because the power to verify transactions lies with nodes that do not need to stake any cryptocurrency. This minimises corruption, making Bitcoin the most trusted blockchain of all.
The Impact of Bitcoin on the Economy
The world operates on what Saifedean Ammous terms a 'Fiat Standard'. This means it runs on money issued by governments as they deem fit ('fiat' is Latin for 'to decree').
Bitcoin operates on a fundamentally different system:
Limited Supply: Governments can print as much money as they like. This increases the amount in circulation, reducing its purchasing power, causing prices to rise. Most people take this for granted until they realise it's bug, not a feature. Bitcoin, on the other hand, is cryptographically limited and therefore impossible to inflate. On a Bitcoin Standard, prices wouldn't rise. In fact, prices would fall, logically, in line with increased competition and advancing technology.
Value Preservation: In a Bitcoin-based world, people wouldn't need to constantly seek ways to preserve their savings and increase their earnings to keep up with inflation. As prices fall, people would be more discerning with how they spend their time and resources.
Investment in Capital Goods: With less money wasted on spending at higher prices and investing in inflated asset classes to keep up with inflation, more savings would be available to invest in truly productive capital goods—those that create real returns for investors, showing that society truly values them. This would advance society in a more considered and sustainable way.
Collaboration: As people are no longer racing to keep up with inflation, they would become calmer and more intentional in their interactions with others. From here, higher degrees of voluntary collaboration would emerge at both the local and global levels, encouraging diplomacy over endless wars and prioritising human health over increasingly higher demands for profit to keep up with inflation.
While this vision will take time — most likely decades — to realise, in the short-term any company who adopts a Bitcoin Standard will ride the wave of Bitcoin as it grows and becomes the dominant global money.
A Bitcoin-native company not only uses Bitcoin for transactions but also builds products that embody Bitcoin's core values, which are:
Decentralised: No central authority controls Bitcoin, making it highly resistant to manipulation.
Secure: Bitcoin's cryptographic security makes it nearly impossible to hack, inflate, or counterfeit.
Permissionless: You don't need anyone's permission to use Bitcoin, and no one can stop you from using it.
Borderless: Since Bitcoin is a single currency, it can be accepted by anyone, anywhere in the world.
Any business that simply believes in these values is arguably already a Bitcoin-native business, even if they don’t realise it.
A more tangible attribute for being 'Bitcoin-native' is that you're supporting the growth of the ecosystem.
The Bitcoin ecosystem currently has two main challenges:
Acceptance
Many people still don't accept Bitcoin as a method of payment. This is partly due to the cold start problem—where not enough customers lead to fewer merchants, and vice versa. It's also because today's main use case for Bitcoin is as a store of value, and a hedge against inflation, so not many people who own Bitcoin actually want to spend it.
A survey I conducted recently found that the ability to pay for everyday goods in Bitcoin is a major adoption challenge and contributes to decreased visibility overall. If left unaddressed, this may delay Bitcoin's rise as the global store of value. Therefore, any business that simply accepts Bitcoin as a payment method is a Bitcoin-native company.
User Experience
Bitcoin products are often too technical for most users. Therefore building products that make interacting with Bitcoin easier makes you a Bitcoin-native company.
Some examples of Bitcoin-native products with excellent user experience are:
Bitcoin exchange and wallet for both personal and business use.
CoinCorner provides a simple way to accept Bitcoin and Lightning payments in store, online, and by email. It's the company I use to accept Bitcoin payments into my marketing consultancy, Northbound.
I also use their lightning wallet to pay for business expenses in Bitcoin, like on my recent trip to BTC Prague.
They're helping more companies become Bitcoin-native by the week (which puts them in a class all on their own) and I highly recommend them for individuals, freelancers or U.K. businesses getting started.
Self-custodial: “Not your keys, not your coins.” If you don’t store your Bitcoin keys locally, they can be stolen (or confiscated) from an online exchange. Self-custody means your keys are stored on a local device, like a phone or hardware wallet. Here's Investment Strategist Lyn Alden explaining why self-custody for Bitcoin is generally a good idea. Lyn also created an excellent explainer video recently: How Money & Banking Work (& why they're broken today)
Multisig: If you're just starting out buying Bitcoin, this won't be as important for you. However, when you accumulate more than 3-6 months' worth of your monthly income, it's important to take precautions in case of loss, theft, or simple mistakes. A multisig wallet requires multiple unique signatures (hence multi-sig) to authorise and execute a transaction.
Non-KYC: Avoiding (Know Your Customer) identity checks to buy Bitcoin. Since any company can be hacked, and details of how much Bitcoin you own, and where you live could be stolen, being able to buy Bitcoin privately is considerably safer. Not to mention the risk Lyn highlighted above of Bitcoin being confiscated by an authoritarian government, similar to how the U.S. government confiscated privately owned gold in 1933 under Executive Order 6102.
P2P: Peer-to-Peer exchanges allow you to buy and sell Bitcoin directly with others, without involving an intermediary. Most non-KYC, P2P platforms connect you with random sources to buy Bitcoin, which can be a bit nerve-wracking for newbies. Vexl allows users to buy Bitcoin from their phone contacts and 2nd-degree connections while remaining anonymous if they choose.
Technical Bitcoin-native Companies
The Bitcoin ecosystem is broadly divided into layers:
Layer 1: Bitcoin itself, the main blockchain that secures transactions.
Layer 2: Technologies built on top of Bitcoin to improve aspects like speed, cost, and interoperability.
One of the most well-known advancements in Bitcoin is a layer 2 technology called the Lightning Network. This allows multiple off-chain transactions to be rolled into a single on-chain transaction, improving transaction speed and reducing fees, while retaining the high security of the main chain.
As Bitcoin has become more popular, on-chain (layer 1) transaction fees have increased exponentially, making micropayments like buying a coffee unfeasible.
Lightning has reduced this cost to fractions of a penny, making it not just economical, but far cheaper for merchants and, by extension, customers to transact compared to fiat currencies (USD, GBP, EUR, etc.)
Layer 3: The application layer, leveraging the trust and security of Layer 1 and the scalability of Layer 2 to address real-world use cases like decentralised finance (DeFi), media, and social apps. Examples include:
Nostr (Notes and Other Stuff Transmitted by Relays)is a decentralised messaging protocol popularised by former Twitter CEO Jack Dorsey, and further highlighted by the banning of Nostr's main developer, fiatjaf, from Twitter (now X).
What Makes Nostr Unique?
What's unique about Nostr is its use of decentralised servers (relays) that each hold a copy of user data, making censorship difficult. Users can hop between different platforms and apps, like Primal or Damus, taking their posting history (feed, likes, follows etc.) with them.
This not only makes censorship extremely difficult, as anyone can operate a relay and broadcast messages that another relay might have deleted or censored, but it also creates a fantastic user experience since users only have one profile to manage across multiple apps and platforms.
Here's a deep dive into the current and possible future use cases of Nostr.
How to start a Bitcoin-native business?
If you're a developer interested in exploring Bitcoin (and Nostr) I would highly recommend checking out Alby's developer guide.
For regular UK businesses, CoinCorner is an excellent resource to start accepting Bitcoin and Lightning payments. Strike is also a good option.
BTC Map
When you're up and running, make sure to add your business to BTC Map. Currently, I seem to be alone in Glasgow, Scotland, but I expect that to change soon.
₿itcoin Studios
If you're unsure where to start, but you're interested in launching a Bitcoin-native business then ₿itcoin Studios might be the place for you. I'll be opening applications over the next few months, and taking a small cohort of 5-10 developers through the startup discovery, launch, and build process.
As I mentioned in a recent LinkedIn post, I'm fully committed to Bitcoin and have started to identify key problem areas to target in the space. This is just the beginning, but I'm already seeing some interesting insights that will support the discovery phase during the first cohort.
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If you’ve got this far, you're hopefully a bit clearer on what the future holds for Bitcoin, the wider economy, and your part in it.
