Article Summary
- Introduction: Exploring the idea that Bitcoin, unlike other pioneering technologies, maintains its position due to its role as a protocol layer.
- First-Generation Technology Curse: Analyzing why other pioneering technologies failed, and how Bitcoin is an exception.
- Payment System vs. Settlement System: Explaining how Bitcoin is a global settlement system unlike any other.
- TCP/IP Inspiration: How Bitcoin's focus on simplicity and openness makes it indispensable.
- Proof of Human Ability to Collaborate: How a small team of developers supports a trillion-dollar protocol.
- Protocol Strategy: How Bitcoin is transforming into a robust settlement layer.
- Protocol Layer Value Capture: Why Bitcoin succeeds where TCP/IP failed.
- The AI Era: How AI will need a global settlement layer.
- Conclusion: Why Bitcoin represents a convergence of many values, and how we should think about its valuation.
Bitcoin: More Than Just a Cryptocurrency
Whenever the winds of skepticism blow, the notion that “Bitcoin is dead” often resurfaces. This argument hinges on the assumption that Bitcoin, as a first-generation blockchain technology, will eventually be superseded by newer technologies, much like other pioneering technologies in history. While this assumption seems logically sound, it overlooks Bitcoin's unique nature.
The Curse of First-Generation Tech and Bitcoin's Exception
Technological history teaches us that technology is often cruel to pioneering companies. For instance, Western Union controlled 90% of the telegraph business in the United States in 1866. However, when Alexander Graham Bell offered the telephone patent to the company in 1876, executives declined. Bell then created Bell Telephone, which later became AT&T—the world’s largest company in the 20th century. What about Western Union? Today, it has a market capitalization of $2.7 billion, ranking 3990th globally.
Similarly, Intel invented the commercial microprocessor in 1971 and dominated the PC chip market for three decades. At the peak of the dot-com bubble in 2000, it had a market capitalization of $509 billion. Today, 25 years later, investors who bought at the peak have yet to recover their investment. The company's current market capitalization is $160 billion—less than one-third of its peak. Intel was not only defeated by faster chips but also overtaken by architectural shifts (the rise of ARM and TSMC's process leadership).
Cisco is another example, being the king of internet infrastructure. Its market capitalization surpassed $500 billion in 2000, surpassing Microsoft to become number one globally. After the bubble burst, its stock price dropped by 88%. Despite quadrupling its revenue since then, the stock price has never returned to its previous high. The value of the equipment layer was absorbed by the protocol and application layers.
The pattern seems clear: first-generation technologies create proof of concept, while second-generation technologies reap market rewards. However, 16 years after Bitcoin’s birth, the situation is quite different. Bitcoin’s market capitalization today is around $1.8 trillion, accounting for over 58% of the entire cryptocurrency market. Ethereum, the second-largest cryptocurrency, is valued at around $300 billion, less than one-sixth of Bitcoin’s value. All the “Ethereum killers” and “Bitcoin alternatives” combined do not amount to half of Bitcoin’s market capitalization.
Over the past sixteen years, Bitcoin has not only failed to be replaced by newer technologies but has also widened the gap. The difference lies in the fact that telegraphs, chips, and routers are tools. Their value depends on functional efficiency, and when other functions replace them, their value evaporates. Bitcoin is not a tool; it is a protocol layer—a permissionless global consensus system. The value of a protocol layer does not depend on the speed of functional iteration but on network effects, immutability, and the accumulation of the Lindy effect. TCP/IP will not be replaced by “faster protocols” because the cost of replacement outweighs the gains in efficiency. The same logic applies to Bitcoin.
The Misconception – From Payment System to Global Settlement Layer
Bitcoin’s biggest narrative challenge is being evaluated as a “payment system” and then deemed a failure. Transactions are slow, fees are high, and throughput is low. These criticisms are valid. But they criticize something Bitcoin never attempted to be. Payment and settlement are two different things.
When you swipe your credit card at Starbucks, the transaction is completed in 2 seconds. But has the money actually been transferred? No. Visa simply records a promise, and the actual transfer of funds will occur upon clearing between banks—perhaps on the same day, or perhaps a few days later. Visa processes tens of thousands of transactions per second, but it processes promises, not settlement.
Settlement solves another problem: Has the money truly and irreversibly moved from A to B? To this day, the final settlement between global banks relies on SWIFT and national central banks—a system that takes days, requires permission, and requires trusted intermediaries. Bitcoin is not a competitor to Visa. It is a competitor to SWIFT—a permissionless global settlement layer. This is not theory. According to research data from Riot Platforms, the Bitcoin network settled over $19 trillion in transactions in 2024—more than double that of 2023, with a daily peak of over $30 billion. Lightning Network, Ark, RGB—all these L2 protocols consider the Bitcoin main chain as the final settlement anchor point. This is precisely what a settlement layer should be: the underlying layer does not pursue speed, but pursues irreversible finality.
From this perspective, Bitcoin’s “shortcomings” are by design: block time of 10 minutes, limited block size, conservative scripting function—these are intentional choices to ensure anyone can run a full node, verify the entire history, and not rely on any centralized entities.
TCP/IP Inspiration
In the 1970s, TCP/IP's performance metrics were quite “poor”—high latency, low bandwidth, and no native encryption. IBM’s SNA and DEC’s DECnet were technically more “advanced.” But TCP/IP won. Not because it was faster, but because it was simple enough, open enough, and hard enough to control. Fifty years later, no one is trying to replace TCP/IP with a “faster protocol.” It’s not that there are no faster solutions, but the cost of replacement has become prohibitive. This is the profound inspiration of the protocol layer: once it becomes a foundation of trust, efficiency is no longer the primary metric, but rather the ability to be irreplaceable.
Proof of Human Ability to Collaborate
In November 2025, Bitcoin Core completed its first independent security audit since its inception 16 years ago. The result: zero high-risk vulnerabilities, zero medium-risk vulnerabilities. Behind this number is an even more astonishing fact: a protocol that supports a market capitalization of nearly $2 trillion, has only 41 global core developers, with annual funding of just $8.4 million. Compare this to Polkadot—with a market capitalization of less than 1% of Bitcoin, and annual development spending of $87 million.
We may have underestimated humans' ability to self-organize. Without a company, without a foundation, without a CEO, a group of developers distributed around the world maintains the largest decentralized financial infrastructure in human history with extremely low resources. This in itself is proof of a new form of organization. The underlying infrastructure is also evolving. v3 transactions, Package Relay, Ephemeral Anchors—these upgrades aim for the same goal: to make L2s more reliable in anchoring to the main chain. This is not function stacking, but a structural-level improvement. The protocol's grand strategy: the last few pieces before petrification.
The Grand Strategy of the Protocol
Adam Back—inventor of Hashcash, the intellectual pioneer of Bitcoin's proof-of-work mechanism, and CEO of Blockstream—recently clarified Bitcoin's direction for the next decade: L1 should be conservative and minimalistic, and ultimately “petrify”—not to not upgrade, but only to do the final, most important upgrades. Before that, several key primitives must be completed: BitVM, Covenants, Simplicity. These terms mean nothing to most people, but their common goal is clear: to make Bitcoin a powerful enough “anchoring layer,” and then move all innovation to L2. The roadmap is: minimal L1 → key primitives → innovation moves up → final petrification. This is a grand strategic planning at the protocol level. It is strikingly similar to the evolution of TCP/IP: the core protocol remains stable, and complex functions are achieved in the upper layer. Bitcoin looks weak on the payment side, but it is getting stronger on the structural side. This is a design, not a defect.
Protocol Layer Value Capture – Bitcoin’s Mother Currency Status
TCP/IP is one of the most successful protocols in human history, but it has a fatal regret: there is no mechanism for value capture. The network created trillions of dollars of value, almost all of which went to the application layer—Google, Amazon, Meta. TCP/IP itself is worthless. Vint Cerf and Bob Kahn changed human civilization, but the protocol itself did not capture any economic returns.
This is the classic dilemma of protocol layers: the more fundamental and open it is, the harder it is to charge fees. Bitcoin broke this dilemma.
A Financially Native Protocol
Bitcoin was financially native from day one. Value transfer is a function of the protocol itself, and every transaction and every settlement directly involves the flow of BTC. The success of the protocol is directly tied to the value of the token. TCP/IP does not have a “TCP coin.” HTTP does not have an “HTTP coin.” But Bitcoin has BTC. When Bitcoin becomes a global settlement layer, BTC will automatically become the unit of account for that settlement layer—in financial terms, the mother currency.
Observe actual market behavior: the main trading pairs on exchanges are Bitcoin-denominated; when institutions allocate crypto assets, Bitcoin is the benchmark, and the rest is “exposure to Bitcoin risk”; the risk parameters of Stabile coins, DeFi, and AI computing networks are ultimately tied to Bitcoin. This is not faith; it is market structure.
More Than Gold and More Than TCP/IP
“Digital gold” only tells half the story. Gold is a store of value, but it is not a protocol layer. You cannot build applications or run L2 networks on top of gold. Gold's value comes from scarcity, but it does not generate network effects. Bitcoin is both a store of value and a protocol layer. Lightning Network, RGB protocol, and various L2s are built on it, and their existence in turn strengthens Bitcoin's network effects. This is the compound growth logic that gold does not possess.
Conversely, TCP/IP is a protocol layer, but it does not capture value. Bitcoin is both a protocol layer and can capture value. So, Bitcoin’s end-game positioning is: TCP/IP’s technological network effect + gold’s value storage attributes + financially native value capture capabilities. Three overlap, rather than replace.
The AI Era Add-on - Why the Big Picture Has Changed
All three of these layers of logic are based on inferences from the “inventory” world. But the real variable lies in: we are entering a completely different era. The network connects people and data. AI connects algorithms, computing power, and autonomous agents. This is not a change in degree, but a change in nature. In the network age, the main entity of value flow is humans—humans create content, humans consume services, and humans make decisions. The financial system is designed for humans, and frictions such as KYC, working hours, national borders, and manual approval are tolerable for humans. In the AI era, the main entity of value flow will include a large number of non-human agents. There is a key structural constraint: AI agents cannot use the existing financial system. It’s not “inconvenient”; it’s “impossible”:
* AI agents cannot open bank accounts - there are no ID cards, and they cannot pass KYC
* AI agents cannot wait for T+2 settlement - their decision cycle is milliseconds
* AI agents do not understand “workdays” - they operate 24/7
* AI agents cannot tolerate manual approval - any human process is a bottleneck
Every feature of the existing financial system is not friction for the AI-driven economy, but a fundamental obstacle.
An Algorithmic Economy Needs Algorithmic Money
When AI agents begin to trade autonomously—buying computing power, paying for API calls, exchanging data, and settling services—they need a “mother currency.” A benchmark that all agents can recognize, trust, and use to price things. The US dollar is not suitable for this role because it relies on the intermediation of human institutions. Ethereum is not suitable for this role because its monetary policy can be changed through governance, and it has a clear leadership—Vitalik and the Ethereum Foundation can influence the direction of the protocol.
But BTC—a fixed cap of 21 million, a predictable issuance curve, rules that cannot be modified by any entity, no founder, no foundation, no CEO—has all the properties required of the “mother currency
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