Altcoins

Coinbase Leads Users Astray By Recommending Everything Besides Bitcoin

21/05/2022 by Idelto Editor

Coinbase capitalizes on the altcoin craze to profit off users. Their “Top 10 Picks” omits bitcoin and everything else on the list has performed poorly.

The below is a direct excerpt of Marty’s Bent Issue #1212: “Save a friend, tell them to get out of the Coinbase casino.” Sign up for the newsletter here.

You’ll often hear “Bitcoin maximalists” derided for being anti-free market when cautioning newcomers to stay away from altcoins and the exchanges that push them. Those snake oil salesmen who hiss at Bitcoiners often say that they are simply afraid of competition and don’t want to admit that “Bitcoin has stagnated” and “the devs have gone elsewhere.” In reality, many Bitcoiners warn newcomers to stay away from shitcoins and the casinos that list them for trading because they have seen hoards of people led to slaughter by the siren calls of opportunists who care not about human freedom, sound money or decentralization, but being able to make as much money as possible. No matter how unethically it is acquired.

I highly recommend you freaks — especially any of you who have fallen prey to the siren calls of “a better Bitcoin” — to read through this thread from Sam Callahan, which dives into the overtly predatory tactics of Coinbase and their penchant for listing pre-mined altcoins that are utter trash and get auto-dumped on an unsuspecting retail market. Not only that, but Coinbase tends to hide bitcoin deep in the app so their customers overlook it or simply never find it. They are much more incentivized to siphon off fees from shitcoin trading than actually educating individuals about bitcoin and helping them acquire as much as possible.

I would call it a shame, but it’s really worse than that. It’s quite disgusting actually and Coinbase and its backers should be utterly ashamed of themselves for engaging in this type of bucket shop activity. A once somewhat respectable brand has completely turned itself into a contemptible bad actor that should be avoided at all costs.

Save yourself, your family and friends. Get your bitcoin off Coinbase and advise your network to do the same.

Like Ruble, Like Shitcoin — Only Bitcoin Gets Its Value Organically

20/05/2022 by Idelto Editor

On examination, fiat and shitcoins share the same trick of getting people to give up real value for promises.

This is an opinion editorial by Joakim Book, a Research Fellow at the American Institute for Economic Research, and writer on all things money and financial history.

All (fiat) monies struggle with getting their users to hold the liabilities of their issuer. Put differently, only issuers with some degree of trust or credibility manage to “monetize” some part of their debts, by literally having others carry it for them for free. In the extreme, it means that the issuer gets a perpetual, non-redeemable, interest-free loan with which it can finance a portfolio of assets — the profits of which they may spend as it pleases. The most well-known instance of this is the Federal Reserve Board, and its seigniorage profits are remitted back to the U.S. Treasury.

Commercial banks do this too, but on a lower layer in the monetary hierarchy. When you’re depositing Fed notes at a commercial bank, you’re giving up a higher-level fiat liability for a lower-level bank deposit — and you’re financing the bank’s portfolio, these days usually earning interest rates of zero.

In the past, commercial banks would issue private bank notes (non-interest-bearing liabilities) that could only stay in circulation if its clients decided to hold them, which they only did if they found some convenience in doing so. British banks of the 1700s and 1800s, for instance, offered highly decorative notes, proudly displayed their balance sheets and bragged about their conservative lending standards, deep-pocketed owners and other reasons for clients to trust that their hard money was safe. Banks competed for note-issuing business, since notes kept in circulation meant interest-free financing of its assets.

A few steps down in the modern debt-based fiat monetary hierarchy we find a company like Starbucks. While not a bank, it still issues money — although debt-money of a peculiar kind. Starbucks have dollar-values stored in outstanding gift cards: value that consumers have essentially lent to the company at zero percent interest. About 6% of the company’s outstanding liabilities are in this form, redeemable and repayable not in dollars but in coffee (which lets it avoid banking licenses or regulations for money transmitters). For promises of future coffee and/or loyalty rewards, customers are willing to give Starbucks their dollars up front.

All of this is to show that swaying customers to hold your liability is the secret to monetary superpowers.

All Monies Have Value Because You Hold Them

While all cryptocurrencies are outside money rather than inside money as the trad-fi entities discussed above (i.e., they are assets, owned outright, outside the banking system, rather than debt claims on a bank-like entity inside that system), they struggle with a similar problem of acquiring liquidity. For your “crypto” project to be successful, you need to somehow sway clients into holding its tokens — to hand over valuable financial resources in exchange for a stake in its cryptocurrency.

As the most mature and secure cryptocurrency, bitcoin has a major (and uniquely distinguishing) advantage over every other cryptocurrency: it doesn’t have leaders in control of the money supply, known founders or venture capitalist backers, pre-mines or any other feature that makes cryptocurrencies more like financial securities than the pure monetary asset that is bitcoin. People want to hold bitcoin for its use as (future) money, and not for any loyalty reward or promise of yield or scammy pump-and-dump promise of future glory.

Link to YouTube video.

Every single shitcoin, ETH included, fights over available liquidity, and must therefore come up with schemes and reasons to make their users hold their (worthless) token. See all the “staking” practices around, where nifty “crypto” projects tap into illusions of “yield”: if you hold the token today, we’ll pay you more of that token in the future (never mind the dilution and price change, lol!). Dreaming of untold riches, venture capitalists ape in and the hope is that their funding lets projects continue long enough that millions of users have acquired an organic(-ish) money demand.

To engineer money demand, most shitcoin issuers literally bribe their users with newly created or previously minted tokens — digital funny money with no purpose whatsoever. Incentivizing people to part with real-world value for fake-world shitcoins is the only way they can bootstrap their worthless digital plaything into some kind of value. Fool enough people, for long enough, and you can engineer your way into a stable, continually rolling-over money demand, interest-free liabilities or exciting seigniorage (cue Tether).

Matt Levine at Bloomberg writes:

“Much of crypto economics consists of some version of ‘if you assume this thing is valuable, then it is valuable.’ That is true in some loose sense of lots of other investments, too, but crypto has really managed it at scale.”

He extends that take to “algorithmic stablecoins,” stablecoins that aren’t backed by (a semblance of) reserves, like commercial banks of the free-banking past, but relying on trading arbitrage between two cryptos that the project controls:

“The way you dress it up will generally be with some sort of Ponzi-ing, because that is the main way for self-contained crypto projects to create value these days. You say ‘hey if you deposit dollarcoins we’ll pay you a 20% yield in sharecoins,’ or ‘if you stake sharecoins we’ll give you a 20% yield in sharecoins,’ or whatever, and the interest rate on this — the rate at which people are given new sharecoins created out of thin air — is high enough that people get excited and do it for a trade, even if they understand that it’s all made up.”

The result is that “You Ponzi your way to widespread acceptance, and then you maintain the value mostly through the widespread acceptance, not through the algorithmic peg mechanism.” Which, incidentally, isn’t far from how governments persuaded (forced?) their citizens to accept worthless pieces of paper rather than commodity-backed money.

Without a way to replicate Bitcoin’s immaculate conception, proof-of-stake chains must compete for money issuance by persuading their users to part with valuable assets in exchange for promises of a larger share of a future shitcoin print.

In contrast, bitcoin bootstrapped its value from zero to something by users — freely and willingly and without faux promises or financial incentives to hold the token — using electricity and computer hardware to validate blocks and mine bitcoin into existence.

Russia’s Pretend Gold Standard And The Ruble As Just Another Shitcoin

Depending on who you’d believe, and whose faulty economic framework you follow, in recent weeks Russia has both established a gold standard and abolished it. Give it enough time, and I’m sure some clever-by-far economist will comment how this once again shows the impracticality of tying money to hard assets, like commodities.

One day in late March, officials in Putin’s administration were not-so-credibly promising to buy gold at 5,000 rubles per ounce, which quickly made the ruble trade higher against other currencies (though with pretty restricted capital flows). A few weeks later, as Russia’s currency had strengthened enough to make 5,000 rubles a decent above-market price for gold, the central bank stopped its one-sided price-fixing of gold. Nothing to see here.

When a government promises to tie its currencies to some assets it doesn’t control (other countries’ currencies or commodities like gold), its monetary authority stands ready to buy and sell at given prices. If the financial market traders with which it interacts believe in them (credibility), or if the monetary authority has enough foreign reserve/hard-money assets in store, this policy of pegging one’s currency can be successful. If not, sooner or later speculative attacks take place, and the government is forced to correct their course. Markets, like physics, can be brutal.

Since the gold announcement, the ruble has recovered the level it held against USD before the Ukraine invasion. Did the gold-backing stunt therefore work?

More likely, this was all a quick-fix credibility play, making the ruble somewhat more desirable for others to hold — if only briefly for transactional purposes. For The Financial Times, Robin Wigglesworth summarizes: “Imports have been crushed, interest rates have been doubled, harsh capital controls have been put in place, and Russia’s oil and gas sales means it continues to accumulate foreign earnings.” No wonder the ruble trades higher on a much smaller market.

Besides:

Gold standards operate on trust: and nobody trusts Vladimir Putin, so it’s very unlikely that this would do much.
The ruble-gold play still lacks the redeemability feature that makes for true outside money. Depositors of, say, BlockFi can redeem their BTC deposits into sats; depositors of, say, Bank of America, can withdraw bank money into outside-money cash notes. Holders of rubles can … not do anything. Redeem them for gold …?

All currencies fight for liquidity and one tool they use in that fight is offering reasons for their users to hold their debt or token. In that sense, the plethora of shitcoins aren’t that different from the ruble, its issuer desperately trying to shore up fake demand and limit outflows from its monetary network. Levine again:

“… people mostly don’t trust the dollar because you can earn 100% interest on dollars, or even because you can earn a small amount of interest on dollars; they trust the dollar because they trust the dollar, in a circular, widespread-social-adoption sort of way. You don’t need to end up with a Ponzi scheme.”

It’s hard to tell where the ruble, freed of internal capital controls and foreign sanctions, would trade against the USD. And it’s hard to stipulate where fiat currencies would trade against hard assets like gold or bitcoin were they freed of government control and taxation.

The circularity of monetary demand is what all currencies aspire to, and the Central Bank of Russia has recently shown us some of the shitcoin tools it wields. The Russian currency may be one step up in respectability from shitcoinery, but it’s shitcoinery nonetheless. In contrast to many of its digital rivals, it has large supplies of commodities, natural gas and gold supplies that it can use to defend its token or engineer monetary demand for it — not to mention an army, a bureaucracy and a tax system.

The sociolinguist Max Weinreich is supposed to have quipped that “A language is a dialect with an army.”

We could say the same about shitcoins and fiat currencies.

This is a guest post by Joakim Book. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

L1 Ethereum Network Fees Drop to Levels Not Seen in Over 2 Months, L2 Fees Follow

17/05/2022 by Idelto Editor

Ethereum network fees have dropped a great deal this week, sliding under $10 per transaction to levels not seen since March 10, 2022. On May 17, the average ethereum transfer fee is 0.0027 ether or $5.68 per transaction. The cheaper fees on layer one (L1) have made it so layer two (L2) fees have been between $0.02 and $1.13 per transfer.

Ethereum’s Onchain Fees Slide Lower Following a Brief Spike Last Week

This week is an optimal time to send ether or use the Ethereum network to swap coins as onchain transfer fees have dropped below the $10 mark. In fact, ether fees on average on May 17, 2022, are roughly around 0.0027 ether or $5.68 per transaction.

L1 fees on Ethereum have not been this low in 68 days, or since March 10. The lower fees follow a brief spike that took place during the Terra blockchain carnage on May 12, as fees were $31.19 per transfer on average that day.

With average network fees down this week, both median fees using L1 and L2 have dropped a great deal as well. At the time of writing on Tuesday morning (ET), the median network fee to transact on Ethereum is 0.0012 ether or $2.59 per transfer.

Median fees have dropped as low as $1.01, according to etherscan metrics on Tuesday. Etherscan data indicates that an Opensea sale could cost around $9.72 today, a decentralized exchange (dex) swap will cost $8.86, and transferring an ERC20 token will cost $2.60.

Ethereum’s L2 Fees Follow Drop in Onchain Transfer Costs

As usual, because onchain fees are cheaper, L2 fees have also seen a significant drop over the last five days since May 12. For instance, it costs roughly $0.02 per transfer using the Metis Network and roughly $0.10 to swap tokens.

While Metis is the cheapest L2, Loopring transfer fees are only $0.03 per ether transfer, and swapping tokens via Loopring will cost around $0.52. Zksync transfers are around $0.05 on Tuesday and swapping a coin will cost $0.13. The most expensive L2 today is Arbitrum One, as transfer fees are around $0.25 and a coin swap on Arbitrum is around $0.35.

The lower ether fees follow the network’s all-time hashrate high on May 13, 2022, at block 14,770,231. The network’s computational power hit 1.27 petahash per second (PH/s) that day, and continues to ride high.

Ethereum’s value has lost 41.8% year-to-date but ETH is still up over 482,570% since October 20, 2015, or roughly six years ago. ETH’s market valuation is 18.4% of the entire crypto economy’s net USD value, with a market capitalization of around $253 billion.

What do you think about Ethereum network fees sliding to new lows not seen in over two months? Let us know what you think about this subject in the comments section below.

Bitcoin Songsheet: Wind And Solar Are The Altcoins Of Energy

16/05/2022 by Idelto Editor

A misdirection of resources and an obstruction of progress, wind and solar energy reflect the same distracting qualities of altcoins.

Wind and solar are altcoins.

They are unreliable, costly and make as much sense as LUNA. “Green” energy takes up too much real estate for the energy they provide but they grow through propaganda and subsidization like preferred pronouns on Facebook. Despite claims of being renewable, they require resources from the earth like everything else and have a finite lifespan. They are ridiculously inefficient and if governments stopped subsidizing them, they would not survive. But through fiat money, these boondoggles continue their rent-seeking existence like a gender studies professor at a mid-tier university.

If you’re reading this column, you already know where I’m coming from and my opinion is probably not surprising. But like the degeneracy of Hollywood, wind and solar are much worse than you think.

Few People Understand Energy

Energy is like money, which people think they understand, but really don’t. The average person uses a lot of energy day to day, whether it’s the electricity to power their computers, gasoline to power their cars or natural gas to heat their homes. Like money, usage gives people the illusion that they understand it. But this is like thinking you can run a semiconductor manufacturer because you use a phone.

Furthermore, the government is actively deceiving the public about how both money and energy work. They assert the U.S. dollar is the same now, in the past and forever more, just like they assert that solar and wind are the same as coal and oil but cleaner. There’s little to no discussion of the downsides of the schemes they favor, like inflation from rampant money printing or the unreliability of “green” energy. They’re like altcoiners who change topics when you point out that the founder of their altcoin is a serial scammer or that the incentives of their system will result in a death spiral. Like a procrastinating teenager, they believe that not thinking about something will make it go away.

The downsides of green energy are enormous. Wind and solar are unreliable, take up too much real estate and are only good for electricity. They ignore the role of fossil fuels for heating and transportation, which are much less efficient using electricity. The upside is relatively modest: lower emissions of CO2. The public perception is that green energy is good and more expensive on the front end but pays off over time. This is far from the truth and the perception speaks to the effective propaganda that comes from the government. The nightly news plays like an infomercial. Think of all the benefits! Buy now! Similarly, we’ll regret paying for these wastes of money years later when it doesn’t save us money and takes up a lot of space.

Similarly, the downsides of fossil fuels are exaggerated and the upsides completely ignored. The environmentalist claims are not lies, per se, but omission of key facts. After decades of fiat subsidization, wind and solar supplies a scant 3% of the world’s energy, all in electricity. They cause more power outages because they only generate electricity when it’s sunny or windy. In addition, removing petroleum would remove lots of other goods and services in the economy. They ignore possible downsides more than an altcoin founder.

Energy From First Principles

To really understand energy, we need to go back to first principles. What is energy? What is it used for?

You might remember the definition from physics: energy is the capacity to do work. Work is what builds and maintains the things we use and work requires energy. Work is what builds everything. Without work, we wouldn’t have civilization. Without energy, we wouldn’t have work. Therefore, civilization needs lots of energy.

As humans, we get our energy through food and we are able to do work like walking, or digging or typing on a keyboard. For most of human history, we mostly harnessed energy from food, either through manual labor or using the labor of domesticated animals.

We discovered that we could use fire for energy, particularly for heat and cooking. We also captured energy from wind and water, with windmills and dams. Capturing energy is a productivity multiplier. Tilling soil with picks and shovels is much more difficult than using a horse to plow a field. Using farm equipment to do the same is even more efficient. Energy is the input that makes this efficiency gain possible. Food is not very efficient energy for the task of tilling soil, but gasoline is.

The productivity gains from energy abundance are dramatic. A hundred years ago, 26% of the US labor force was involved in farming. Now, it’s 1.5%. The productivity gains come from new technology, which requires energy. In every aspect of life, technology multiplies the effectiveness of labor through energy use. In a sense, we’ve all become Iron Man, able to work way more than one person could a hundred years ago.

Energy, in other words, is a way to multiply the effectiveness of our time. As we use more energy, fewer people are needed for what was once a labor-intensive task. The freed up people can then do other work, bringing in more goods and services to the market. Civilization grows when more work is done and new sources of energy have been how that work has been done the last 200 years. Each person has been given the tools to do as much work as hundreds of people from a hundred years ago. Energy has made us all 100x laborers.

Fossil Fuels

Energy abundance has primarily come through the harvesting of coal, oil and natural gas. These so-called fossil fuels are incredibly energy-dense and we can capture the energy for tremendous productivity gains. They are abundant, easily portable and incredibly efficient. Fossil fuels have contributed greatly to things we take for granted, like air travel and heating. They are demonized, however, because of carbon dioxide emissions.

I get it. CO2 is bad. It causes the atmosphere to warm. I’m not denying that. But how bad is the warming compared to all the other things that fossil fuels enable us to do?

That’s the topic of the book I read recently, Fossil Future. The book takes a balanced look at fossil fuels and the benefits it provides versus the drawbacks. Instead of only looking at the negatives, mostly the CO2 emissions, the book looks at the whole of what fossil fuels enable civilization to do, like the labor productivity multiplier I mentioned earlier. The book is a total red pill for thinking about energy and it woke me up to the reality of energy much in the same way Bitcoin woke me up to the reality of money.

The two uses of fossil fuels which were really compelling are the role of fossil fuels in transportation and everyday products. Neither cheap transportation or petroleum-based products are possible with wind or solar.

Airplanes, for example, are too heavy to fly using just electrical energy. An electrical plane is currently impossible because the batteries that are required would be too heavy to lift. It’d be like making a 400 pound person to run a 4 minute mile. The physics doesn’t work. You need a much lighter energy source such as jet fuel to make airplanes fly.

There are also all manner of petroleum based products that few people realize are made with oil. Nearly everything you own has petroleum products in it. Your clothes, your house, and your computer all have components that require oil as an input. Thus, the goal of net zero emissions, or canceling use of fossil fuels is sheer lunacy. Ending fossil fuel use would cause the collapse of civilization as we know it by making labor less efficient, energy more expensive and goods we use every day much more expensive.

The World Post-1971

This points to something that’s been prevalent in the world since getting off the gold standard in 1971. There’s been a persistent push to devalue human labor. The monetary case, we know; debasing money through inflation devalues our work. Monetary expansion is an implicit tax, time-theft and a form of economic slavery.

Similarly, fossil fuel reduction devalues our labor. Our time is enormously valuable because our labor is multiplied through energy. Taking that multiplier away or even curtailing that multiplier effect significantly shrinks our labor output. We won’t be forcing farmers to use horses again to till their land, but we will need a lot more farmers and many other manual laborers if we take away fossil fuels. By taking away cheap energy, we are being taxed on our labor.

Yet despite all that, labor productivity in the US has grown over 10% in the last 10 years. How is that possible? Even with all the regulation, fossil fuel providers have gotten better at producing cheap energy. Our productivity increased because cheaper energy further multiplied the output of our labor. If you think about it, productivity gains are ways of measuring this multiplier effect. Energy gains result in productivity gains, which builds civilization.

Yet since 1971, both monetary policy and energy restrictions have persistently debased human labor. What is going on?

A Drag On Growth

Our productivity increases when energy gets cheaper and more abundant. The energy sources that have proven to be the most reliable and abundant over the past 200 years are fossil fuels. Regulations on fossil fuels, and the clear bias against them in favor of solar and wind have come at the cost of civilization. Like the dollar hegemony, fossil fuel monopolization has oppressed developing countries.

Developing countries are prevented from multiplying their labor through the use of fossil fuel energy because the developed countries won’t let them. Instead of giving them reliable electricity through coal power plants or transportation fuel through oil refineries, they’ve essentially imposed on developing countries the use of solar and wind, the least reliable, most expensive and most limited sources of energy. It’s like they’re being forced to buy outdated Windows phones at full price.

Instead of building infrastructure and developing, these countries are saddled with worse tools and prevented from growing through western countries’ energy imperialism. Neo-environmentalism is similar to the IMF, which is viewed as benevolent, but is, in reality, a form of control and exploitation over developing countries. Like any rent seeker, they tell you that their restrictions are for your own good, when it’s for their own good.

It’s no wonder the best and the brightest in developing countries immigrate. They’re multiple times more productive in developed countries because they have access to abundant energy!

Bitcoin Fixes This

As usual, we can trace this hysteria around fossil fuels back to fiat money. The ending of the Bretton Woods system in 1971 meant that the US needed a new system to perpetuate the dollar. The dollarization of oil created an oil crisis in the 70’s that turned public sentiment against fossil fuels. The propaganda at the time blamed greedy Middle Easterners as the reason why gas was so expensive, when in fact it was the creation of the petrodollar standard. Fossil fuels became the scapegoat and renewables became salvation.

The resulting demonization of oil, gas and coal has been nothing less than disastrous for the developing world. Though we do get power outages once in a while, it’s been less devastating for developed countries. The subsidization of solar and wind have directed a lot of resources toward these boondoggles rather than making fossil fuels a lot more efficient and available. The blue haired environmentalist has gotten favorable treatment at the expense of the blue collar worker. Is it any wonder we’ve gotten more of the former and less of the latter?

As we go toward a Bitcoin standard, we get better incentives with respect to energy. First, more energy is explored and made viable through proof-of-work. Because bitcoin mining is a portable customer, energy development is more economical everywhere in the world. Traditionally, energy producers had to make sure there were enough customers first before building out energy facilities. Now, they don’t because Bitcoin mining will be a customer, provided the energy is cheap enough. Economic incentives get realigned around energy production, not what the government deems acceptable.

Second, bad ideas like solar and wind are no longer subsidized through money printing theft. The market chooses what it wants rather than the government. This means that the best fuels will win and more development of sources like nuclear will commence. We developed nuclear submarines in the 1950s which never needed refueling! Nuclear has stalled due to environmental concerns. Much like their restrictions on developing countries, their restrictions even on developed countries have been a significant drag on progress. Blame squarely goes to them for the fact that we don’t have nuclear cars or airplanes that don’t need refueling.

Bitcoin will remove the bad incentives and create good incentives for energy. That means a more productive work force through the multiplicative effects of energy use. I reject the charlatanism of wind and solar. I am an efficient energy maximalist.

Fossil fuels are sound energy.

This is a guest post by Jimmy Song. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

What Sets Bitcoin Apart From Other Cryptocurrencies

11/05/2022 by Idelto Editor

Bitcoin is in a league of its own compared to other cryptocurrencies and it’s important to know the distinction to protect financial freedom.

As someone who learned the importance of “Bitcoin-only” from the personal experience of getting rekt, I feel a determination and duty to ward off newcomers from other cryptocurrencies, which I believe to be outright scams at worst (or subtle ways for others to take your bitcoin, at best). In my experience leading meetups and teaching lessons about Bitcoin, I’ve found that many people, if not most, feel that bitcoin is boring or that some other cryptocurrency is better than bitcoin for various reasons.

The reasons are familiar to me. I, too, thought Bitcoin was slow and inefficient. I bought ETH before I even bought bitcoin. It wasn’t until I had spent hours and hours reading books, listening to podcasts, lurking on Twitter and perusing Bitcoin guides that I learned the value of Bitcoin, specifically, and why other cryptocurrencies are unnecessary and are most likely scams. But hundreds upon thousands of hours of studying to the point of obsession is not enough for people who are new to cryptocurrency and are sure [insert coin name] is different.

Oftentimes, I hear newcomers express excitement about some cute opportunity to collect 8-bit art that they think is unique or rare. The contrast between bitcoin and other cryptocurrencies does not hinge on the differences in their utility, but in the ethos of their users. Bitcoiners are here for a peaceful, monetary revolution to create a brand new society in a way that’s never been done before and without any rulers. Most people who are into cryptocurrency are here to mint some monkeys on a blockchain and make a quick buck. The more time one spends in the digital asset space, the easier it is to notice the major differences between the two groups.

Unfortunately, on a regular basis, I find myself blue in the face trying to convince many people I know personally and who I otherwise respect, that they are at serious risk of losing all of their money by getting into glorified gambling schemes as they attempt to make wise investments based on YouTube personalities or random finance bloggers.

This article stems from one such group of people, where a recent in-person information session was held and an article was shared that recommended “five compliant cryptos” that will apparently do well in 2022. (Ironically, this private group was formed around the fact that these people were decidedly non-compliant with mask mandates and lockdowns.) I felt an obligation to write a piece that demonstrates why bitcoin, and bitcoin only, is the cryptocurrency of sovereignty-seekers and those who want to thwart an agenda of globalization and centralization. This article is written from the perspective of those who wish to remain sovereign in body, mind, spirit and wallet.

Bitcoin Is A Leaderless System Of Rules, Not Rulers

Leaders are not the most trusted group of people for many of those who questioned the decisions made by those in power in response to COVID-19, such as making society lock down and forcing questionable health mandates. Because of this, it may be prudent to seek a system for our money that is not impacted by the whim of humans who wield political power.

It is possible for a monetary system to run without leaders. Currently, our money system is operated by a group of people who make decisions based on their assessment of what is happening and on predictions of what may happen in the future.

When it comes to other cryptocurrencies, the issuance is decided by a group of people who are public-facing and susceptible to greed and coercion. In addition, the issuance of other cryptocurrencies is not necessarily based on a fixed schedule. Bitcoin’s issuance is predetermined, based on code and public for anyone to see. Anyone who runs a node has complete freedom to choose the rules they wish to follow. Should some millionaire want to change the Bitcoin code to become proof-of-stake, he is free to do so, but my node will continue to run the current code. Everyone who runs a node is an equal participant and it doesn’t matter if they have 2 million bitcoin or 2 satoshis — running a node levels the playing field.

One of the greatest things that the pseudonymous creator of Bitcoin, Satoshi Nakamoto, ever did was to disappear after launching the protocol. It means that there is no single person to take to court, to physically come after or to attempt to persuade a change in the protocol. Bitcoin is a system of rules, not rulers.

(Source) Which of these two issuance schedules seems the most reliable?

Bitcoin Is Actually Decentralized

Decentralization is a much-overstated buzzword that is an untrue property of the majority of cryptocurrency projects that claim it. Decentralization is important for people who believe world powers are working in conjunction to limit freedoms and mandate measures that deny bodily autonomy. It matters because it makes a system antifragile in a hostile environment.

If a protocol is decentralized, then it can withstand attacks from antagonistic governments or military forces. This is what happened when China banned Bitcoin mining and the network continued to operate as intended. A combative government tried to shut down Bitcoin, and it stayed online — producing blocks and processing transactions.

I’ve heard some people say that decentralization is a spectrum. I disagree; something is either decentralized or it isn’t. If your blockchain of choice can go offline for 72 hours, or just be shut off to give developers uninterrupted time to fix it, then it isn’t decentralized. If it isn’t decentralized, your money is susceptible to the inclinations of internet service providers. Bitcoin is actually decentralized because its hash power is distributed across the globe and copies of its ledger are similarly spread throughout the world through users who run full nodes.

Bitcoin Is Censorship-Resistant

Another one of Bitcoin’s important features, especially for people who spoke out against mandates, is freedom of speech. In Citizens United, the Supreme Court famously held that money is, indeed, speech. The last few years saw numerous attacks on free speech, including a sitting President being permanently banned from Twitter, doctors losing their licenses for sharing information about COVID-19 that didn’t fit with the narrative, and Canadians having their bank accounts frozen for donating to a cause that was deemed unacceptable by their government.

Considering money as speech under the law, it is imperative that it cannot be frozen or stopped for any reason. Bitcoin fits that bill. Should an entity attempt to blacklist an address, said owner can elect to pay a higher fee to get their transaction included in the next block. Only one mining pool has attempted to censor transactions, and they changed their mind shortly afterwards to validate transactions like every other miner.

Not all cryptocurrency is censorship-resistant. The Ethereum blockchain had an exploit in a decentralized autonomous organization (DAO) in 2016, which resulted in $150 million being stolen and the code being hard-forked in order to pretend the hack never happened. If the code can be changed to pretend a hack never happened, it can be changed to prevent certain transactions going through. For example, the most widely used Ethereum wallet and the biggest NFT platform, Metamask and OpenSea respectively, blocked users from Iran and Venezuela from using their platforms because the countries are on the U.S. sanctions list. Similarly, Metamask and Infura (both inextricably linked to Ethereum infrastructure) blocked unspecified areas of the world due to a concern of legal compliance. If people are limited from accessing their money, they are limited in their freedom of speech. Bitcoin is censorship-resistant.

Bitcoin Is Seizure Resistant

This is a complicated topic and needs to be clarified. Bitcoin is not seizure proof, but it is seizure resistant. This property of Bitcoin came into question recently when the Canadian Freedom Convoy had bitcoin funds that were raised and subsequently confiscated. A private key was handed over during a police raid and some of the bitcoin funds were able to be impounded. Importantly, not all of the funds were taken, with some being locked in a multisignature quorum or having already been handed out to protestors. As quoted in the first article referenced, “No matter how immune bitcoin is from governmental power, its value and utility will always be undermined by the fact that its users are not.”

Bitcoin users have the choice to make their bitcoin as easy or difficult to confiscate as they wish. Recently, hackers who were able to make off with 120,000 bitcoin had the funds sequestered by the FBI after it was found that they were keeping the private key online in cloud storage. (Remember folks: The cloud is just someone else’s computer.) If they were wiser, they would have locked their funds in a multisignature solution that was geographically distributed around the world.

In another story with a different outcome, a German hacker was able to successfully evade having his bitcoin seized when he served a two-year jail term for surreptitiously installing mining software on people’s computers and amassing over 1,700 bitcoin. He refuses to give up the passphrase and police are unable to access the “seized” funds. Bitcoin is as seizure resistant as you make it.

Bitcoin Had A Fair Launch

Satoshi Nakamoto announced Bitcoin on a public forum for anyone who was paying attention to see. When it was officially launched in early January 2009, anyone who was running the protocol could earn bitcoin in exchange for using the electricity to power their computer. The same cannot be said for any other cryptocurrencies. The people launching the Ethereum Network gave their insiders 9.9% of initially created tokens with the creator, Vitalik Buterin, praising this premine.

In Vitalik Buterin’s own (though satirical) words, “One noisy proxy for the blockchain industry’s slow replacement of philosophical and idealistic values with short-term profit-seeking values is the larger and larger size of premines: the allocations that developers of a cryptocurrency give to themselves.” Bitcoin’s genesis was a once-in-a-lifetime chance for a fair launch for anyone to participate. The chart below shows popular cryptocurrencies, their launch date on the x-axis and the percentage that was premined on the y-axis. It’s extremely clear how Bitcoin is in a class of its own with almost no percentage going to insiders or even the creator before it was released. Satoshi ran the code with everyone else who opted in and had the likelihood of finding a block proportional to the amount of CPU they were using in the process.

*Source for insider allocations:* *Messari*.

According to Camilla Russo who wrote the article cited above which detailed the Ethereum premine, “Satoshi Nakamoto gave anyone who was interested the same opportunity to gain bitcoin when the network was launched, as he announced when mining would begin and published the software beforehand.”

To this day, anyone who wishes to join the network, needs only to download a wallet and earn bitcoin. Or if they have the resources, they can purchase an ASIC miner and plug it in to earn bitcoin by mining. Bitcoin was the only fairly launched cryptocurrency and there will never be another opportunity to fairly distribute money in this way.

Bitcoin Is Issued Based On Proof-Of-Work

Other cryptocurrencies that operate based on proof-of-stake are able to have the code changed by those with the most amount of money “staked,” if they only vote for the change. This sounds eerily similar to the way governments operate today, with Big Pharma, Big Agriculture, Big Tobacco and other “Bigs” using their deeply lined pockets to lobby politicians for the changes they wish to see enacted for their benefit. Bitcoin’s proof-of-work algorithm means that each player is an equal participant in the network.

In a recent article for Forbes, Pete Rizzo outlines why Bitcoin uses energy in the first place. “By tying Bitcoin issuance to the energy market, however, bitcoins became fairly and widely distributed.” Most people around the world have access to electricity, which could be used to mine bitcoin if so chosen. Because Bitcoin uses energy, it allows the value it creates to be distributed fairly by anyone who is using energy to mine it, while securing the history of transactions by writing them onto the blockchain. Using electricity means that miners have to sell some of the earned bitcoin in order to pay for energy costs, which further distributes the bitcoin.

Rizzo’s article is a great starting place for those curious about cryptocurrency, but concerned about a possible climate catastrophe, or for those who think proof-of-stake is a better option. Ultimately, proof-of-work is what separates Bitcoin from other cryptocurrencies and gives it advantage over government or centrally planned money.

Bitcoin Is Scarce

Unlike other assets that cannot be audited, Bitcoin is extremely easy to audit with a simple command. For users that run a full node, there is the command “gettxoutsetinfo” that tells anyone who runs it exactly how much bitcoin there is in circulation, as well as other relevant information about the Bitcoin blockchain — such as block height, estimated size of the blockchain, etc. This command is one of the things that set the bitcoin asset apart from other cryptocurrencies because its users don’t have to trust the calculations of other people to determine the circulating and total supply. In addition to having to trust other people to calculate correctly, this also does not provide a fool-proof way for multiple, distributed parties coming up with the same answer.

Some proponents of other cryptocurrencies may claim that a hard-capped supply is not the main marker of utility. They may insist that their cryptocurrency of choice has more things built on top of it. In response, one must think of architectural design when building on top of alternative blockchains. It is impossible to build a robust, resilient, decentralized system on a centralized platform. This goes back to a previous point that Bitcoin is decentralized; should an internet service provider shut off access to the base layer, then any program or DApp built on top of it will no longer work (because it’s not decentralized).

Bitcoin’s hard-capped supply of 21 million bitcoin is one of the main innovations of Bitcoin. No one can change this limit. If they do, anyone who runs a node can (and will) choose to keep running the true Bitcoin codebase. Until Bitcoin’s creation, there had never before been true digital scarcity.

Bitcoin Requires Personal Responsibility

Apparently, one of the arguments in the cryptocurrency discussion that was the inspiration for this article was that there will be some type of wealth redistribution by whomever takes down the one world government in the future. I hate to be the bearer of bad news, but the wealth redistribution is already happening and it’s Bitcoin. Everyone feels late when they first get into Bitcoin, but we are still so early. Though the rate of global adoption is extremely hard to quantify, data by Chainanalysis show that the majority of the world has still not adopted cryptocurrency in a significant way.

Bitcoin is a newer way of engaging with financial sovereignty; it requires you to take full ownership of your assets, which can be frightening for some because there is no entity to help you if you lose access to your private key.

Luckily, there are many services that provide alternative means of custody, such as Casa or Unchained. These companies support customers who may be ready to take ownership of their private keys, but want a backup, just in case. Though there are ways to alleviate some of the pressure of needing to be completely responsible for all of your assets, Bitcoin requires a high degree of personal responsibility.

In Conclusion

This is my final attempt to bring attention to the momentousness of Bitcoin and forewarn against its imitators. The aforementioned reasons why Bitcoin is paramount to all other competitors are significant enough for this author to stay away from other cryptocurrencies. Bitcoin is the only viable option because of node decentralization, immutability, a hard-capped supply, fair launch and proof-of-work mining. If, after reading this, someone chooses to purchase anything besides bitcoin, I have done everything I could to sway them otherwise. A wiser person than myself once said, “If you don’t believe me or don’t get it, I don’t have time to try to convince you, sorry.” That being said, if you walk away from this article curious for more resources about Bitcoin, I’m happy to share.

This is a guest post by Craig Deutsch. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.