BitGesell represents a deflationary cryptocurrency that closely resembles bitcoin, but comes along with a few design changes. Its value proposition stems from Silvio Gesell’s financial market philosophy, who imagined monetary units that lose their value over time through demurrage. To keep things simple, BitGesell achieves scarcity through the means of accelerated block reward halvings and transaction fee burns.
The Dawn of the Crypto Age & Replacing Outdated Fiat
Over the last few years, the worldwide financial system has continuously lost its legitimacy, thereby positioning itself on the path to collapse. The key reason behind this downfall consists of monetary devaluation fueled by soaring levels of public debt. Instead of employing viable strategies for debt management, some governments prefer to keep themselves solvable via shameless money printing. In doing so, inflation rises so fiat money loses its purchasing power.
Luckily, this is the onset of a new era – the cryptocurrency age. Digital currencies follow strict rules that are hard-coded into their design, so no policy changes can shift their operational parameters. For instance, nobody can hope to change bitcoin’s 21 million minting limit. Doing so would entail a positive vote from the decentralized and independent community of miners, an improbable outcome.
At this time, blockchain-based digital currencies follow a common set of design principles. These include decentralization, transparency, immutability, security, privacy, versatility, low costs, and high transaction speed. Today’s cryptocurrencies are able to fulfil plenty of purposes, but the market still needs a coin that’s centered on becoming a veritable store of value for worldwide wealth. Such is the case with BitGesell, a newly-launched digital currency featuring a deflationary philosophy designed to increase its value over the long-term.
An Introduction to BitGesell
BitGesell represents a deflationary cryptocurrency that closely resembles bitcoin, but comes along with a few design changes. Its value proposition stems from Silvio Gesell’s financial market philosophy, who imagined monetary units that lose their value over time through demurrage, whilst adopting a minting mechanism that encourages economic activity and value growth. Referred to as Freigeld, Silvio’s financial philosophy could be utilized to consistently manage inflation while inducing scarcity.
BitGesell is based on a similar mechanism, yet opts for a few key design changes. BitGesell could be pictured as gold with a limited supply and constant reductions in its existing volume. The idea is simple – gold is valuable, but with supply shortages, its value will grow relative to all other commodities. Thus, those who choose to store a part of their wealth via gold will find themselves in the presence of an ever-growing portfolio. Such is the case with BitGesell. As a digital currency, it features numerous use case scenarios as it can be easily traded whenever necessary. After all, selling and purchasing gold is not too easy due to its physical form. This is in no way an issue when dealing with a scarcity-focused digital currency like BitGesell.
To keep things simple, BitGesell achieves scarcity through the means of accelerated block reward halvings and transaction fee burns. These scarcity-inducing mechanisms will be thoroughly described in a subsequent section.
Why Bitcoin’s Scarcity Strategy Is Outdated
To fully understand BitGesell’s value proposition, a comparison to bitcoin’s scarcity strategy is warranted. Every four years or so, bitcoin undergoes a scheduled halving event. This entails that miner rewards for adding a new block to the chain are halved, thereby limiting the supply of new coins. This mechanism was coded into the original version of bitcoin, and has remained unchanged ever since. From a technical standpoint, the event occurs after the successful mining of 210,000 blocks. Bitcoin started off with a 50 BTC miner reward, which was essentially halved every four years – first to 25, then to 12.5, and recently to 6.25. This event will continue occurring until bitcoin reaches its supply limit of 21 million BTC, scheduled for 2150. Afterwards, miners will continue to be incentivized for their services via transaction fees only.
Historically, the halving event was directly correlated with significant price uptrends, leading to newly-established all-time highs. This makes economic sense. As long as bitcoin continues to be popular, a decreasing supply and an increasing demand will drive up the prices. This is the result of the well-known economic laws of supply and demand.
So far, reports indicate that over 18 million bitcoin are already in circulation, with around 2.5 million left to be minted. However, many of the existing coins have been lost as a result of forgotten passwords, broken hard drives, and unwitty trading decisions. These coins continue to exist, but are unable to provide any value.
It has become clear that bitcoin’s scarcity mechanisms lead to value growth. As such, it is easy to imagine that additional scarcity actions may propel prices even further. Such code changes are unlikely to take place since bitcoin’s development team is well-known for being conservative. After all, you cannot ignore the heated block size debate aiming to decide whether bitcoin’s block size should be increased to sustain a higher transaction volume. No actual consensus has been reached amongst the network of miners, which is why bitcoin remains relatively unscalable, especially when utilized as a means of payment. Bitcoin’s use case as value storage remains questionable, as increased volatility during the bear market is prone to wipe out billions of dollars in value within a matter of hours.
Together, these challenges lead to questions and uncertainty. Given the goal of creating a crypto-based value storage, would another digital currency be better suited than bitcoin?
Highlighting BitGesell’s Key Features
BitGesell’s design solves many of the challenges highlighted above. As part of this section, readers will come to understand how BitGesell achieves optimal value storage through its deflationary mechanism.
BitGesell (BGL) is a hard fork from Bitcoin Core, employing a series of design challenges that differentiate it from its older brother. First off, BGL also relies on halving, but the development team has chosen to accelerate the process. Rather than occurring every four years, BitGesell undergoes a halving event once per year. The software architecture makes it impossible for this mechanism to ever change, so it’ll take significantly shorter for the total supply of BGL to be minted. Other than reducing block rewards, BitGesell also features a coin burning mechanism. This entails that 90% of transaction fees are burned, similarly to Silvio Gesell’s Freigeld principles. By withdrawing money from circulation, BGL’s price is incentivized to grow as long as there’s a demand for the coins.
As expected, BitGesell has opted to include the same minting limit as bitcoin. With a hard-capped limit of 21 million BGL, the consistent halvings and transactions burns will yield considerable value increases for coin owners, thereby transforming BitGesell into an optimal means of value storage. Miners have no need to worry; despite the shrinking supply and transaction fee burns, those who choose to hold onto their crypto will harvest a considerable payoff as the coin’s value grows at an accelerated rate.
Regarding its technical specifications, BGL has a block weight of 400KB – ten times lower when compared to bitcoin’s. This helps BitGesell’s blockchain achieve significant performance by being able to sustain a sufficient transaction throughput, even if mass-adopted. With a lower block time, transactions are bound to confirm within a few minutes, largely unaffected by potential network congestion.
BitGesell does not sacrifice any of the benefits associated with bitcoin. Its blockchain retains all advantages, including decentralization, immutability, transparency, low costs, and optimal security. In fact, BGL even retains SegWit compatibility.
Resources and Project Roadmap
It is imperative to keep in mind that BitGesell is a community-driven open-source project. All relevant decisions are taken by the community, which collaborates on aspects like code development, user base building, branding, and marketing.
Developers, investors, and futurists that believe in BitGesell’s ascension as a value storage cryptocurrency can easily get involved. BGL’s value remains relatively stable, as it’s only been made available since April 2020, when the genesis block was mined. Developers are welcome to get involved with BGL Core, the open-source software designed to govern the cryptocurrency’s operations. On the other hand, users might want to consider purchasing BGL via Hotbit, Crex24, AlterDice and Catex. The block explorer is live and ready to use, and so are the mining pools for those looking to sustain BitGesell’s operations. The BGL wallet software is the go-to method for storing BGL.
The BitGesell community is currently working on increasing branding and marketing efforts, while building the BGL-API server destined for service building.
Based on these aspects, BitGesell comes forth with the use case of efficiently storing value over the long-term. By employing Silvio Gesell’s financial philosophy and retaining its similarity to bitcoin, BitGesell’s value is destined for growth thanks to its deflationary strategy, fueled by accelerated halvings and transaction fee burns.
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