Place/Date: Amsterdam, Netherlands - June 11th, 2020 at 5:43 pm UTC · 5 min read
Contact: Emma Wu, Source: BitGesell
Crypto asset BitGesell is quickly shaping up to be one of this year’s most promising projects, focusing on practical application with incentive propositions that appeal directly to miners, investors and network participants.
Its latest listing on popular crypto exchange HotBit Exchange is only the latest milestone for BGL, now allowing better access via trading on the open market, to allow more people to experience what it really means to own digital gold.
While Bitcoin’s role is firmly established in the cryptocurrency industry, foremost as the world’s most liquid digital asset, there remain questions as to what its true purpose could be in the near future.
Throughout its evolution over a short 11 years of existence, the symbolic father of crypto has carried several different tags. And as Bitcoin changed its form, community and found new and different uses, so have the meanings of these tags changed.
If Bitcoin was originally the peer-to-peer digital money that people would use to send to each other as payment for goods and services, today, that usage has arguably moved away to cheaper and faster alternatives as scalability issues that have plagued Bitcoin from the beginning have not been fully addressed.
Even up to 2017, it was still possible to send Bitcoin transactions with little to no fees, but each time the network experiences a surge in activity, just as it has been since May 2020, congestion has led to fee wars, as Bitcoin users bid to have miners include their transactions for confirmations before others.
According to some sources, average Bitcoin fees in 2020 grew more than 2,200%. Second-layer solutions like Lightning Network have seen some success in speedy and cheap transactions, but at the cost of taking the transaction off-chain. Lightning Network solutions, along with Segregated Witness introduced in 2017, have also a long way to come in mass adoption, with most major service providers and client wallets yet to be compatible with these.
Bitcoin’s situation also becomes less obvious even when taking into account Lightning Network and scalability uptakes. For miners, halved block rewards, compounded with negligible fees over Lightning, and increased block size from SegWit, mean that miner costs can no longer be covered by block subsidies or fees. Miners will be forced to switch off, leading to network difficulty decreases in the long term.
BitGesell Head Developer Emma Wu outlines how BGL has addressed each of Bitcoin’s shortcomings, ensuring that it is designed especially to fit the digital gold premise of maintaining and growing in value over the long term.
In particular, the programmed burn feature of BGL, whereby 90% of every transaction fee sent to miners will be irrecoverably destroyed. This isn’t just a promise of buyback and token burns, like most projects do, relying on centralized decisions to burn tokens. This is a hard-coded programming that forces burning to happen with every transaction.
Token burning is a proven token economics model that uses basic supply and demand principles. In this economics model, when supply is decreased, and demand remains, price equilibrium will become higher. Essentially, every BGL transaction increases the scarcity of the coin, thereby increasing its price equilibrium and giving it more value in dollar terms.
Compare this to gold, which rate of extraction is a very low 1.8% annually, or to national currencies which are entering unprecedented money printing to infinity. With all the world’s major assets and currencies, inflation is happening at a steady pace. Bitcoin was designed as a deflationary currency because of its rigid supply constraint, which is the basic fundamental of Bitcoin’s utility and demand: there will only ever be 21 million Bitcoin.
And because BGL is built off the Bitcoin source code, there is also only ever going to be a maximum possible amount of 21 million BGL. But because Bitcoin has technical shortcomings like halvings once only every four years, and low-transaction fees, it’s scarcity factor will play out over decades.
However, with BGL, the deflationary pressure is quicker with token burning and shorter halving times and smaller blocks, seeing a max supply of 21 million BGL ever mined in just a few years, after which, max supply can only drop with transaction burning.
The balance and transactions of this wallet can be viewed publicly on the blockchain, with the usage of funds there reported periodically to the community. This is BGL’s statement of commitment for building and expanding BGL infrastructure.
While Bitcoin holders today will never live to see the day Bitcoin achieves zero emissions and lives up to its digital gold tag, BitGesell holders need only wait a few years to see Bitcoin the way its economic model described it to be.
Disclaimer BitGesell is the source of this content. This Press Release is for informational purposes only. Virtual currency is not legal tender, is not backed by the government, and accounts and value balances are not subject to consumer protections. Cryptocurrencies and tokens are extremely volatile. There is no guarantee of a stable value, or of any value at all.