This is an opinion editorial by Jimmy Song, a Bitcoin developer, educator and entrepreneur and programmer with over 20 years of experience.
“We are all in this together.” So say the altcoiners when regulators are bearing down on them. Also altcoiners: “Bitcoin is wasteful, outdated and toxic.”
The weird frenemy status that Bitcoin enjoys among altcoiners is as arbitrary as it is confusing. On the one hand, they try to present a united front because clearly, Bitcoin adoption is greater than that of any altcoin, or even the entire space of altcoins combined. On the other hand, they criticize Bitcoin whenever they get a chance to build interest in their own coin. Altcoiners practice self-interested mental gymnastics worthy of the most partisan politician.
The reason for their flip-flopping inconsistency is due to monetary incentives and in that light it’s fairly easy to understand. They will argue for whatever will pump their coin. There is no sin so grave, no security exploit so big, no rent-seeking so obvious that altcoiners won’t excuse it for the sake of the pump.
Some Bitcoiners find their behavior annoying, some find it irrelevant. This is understandable because in many ways altcoins really have nothing to do with Bitcoin. Yet to ignore them would be a mistake, because they are causing tremendous amounts of harm.
And that harm is what I’m writing about today. You may think the damage of altcoins is limited, or think of those that lose out as suckers getting their due. And indeed, there’s some amount of distance that’s healthy to keep from their antics. Still, there’s a lot of collateral damage from their actions and it is for that reason we must make the argument against altcoins.
There have been many arguments against altcoins. They don’t provide anything from a technical perspective. They’re terrible assets from an investment perspective. They’re piss-poor from a security perspective.
We look frequently at their shenanigans dispassionately and even make fun of their many obvious failures, but to really convince people of the futility of altcoins, we have to argue at another level.
We must make the moral case against altcoins. In this article, I will explain how altcoins impede Bitcoin adoption, destroy value and create terrible habits. In short, I will explain how altcoins are unequivocally immoral.
Altcoiners Are Rent Seekers
The confusion that most people have when they learn about Bitcoin is based on this idea that altcoins are “similar” to Bitcoin or that they’re even in the same category. This confusion is understandable. Media organizations lump Bitcoin and altcoins into the same category of “crypto,” but more importantly, VCs and altcoin founders benefit enormously from altcoins’ association with Bitcoin. The price rise of Bitcoin and its long history of security give legitimacy to the entire category.
As a result, VCs and altcoin founders have a strong incentive to associate altcoins with Bitcoin. Of course, it’s well near impossible to copy the main property that makes Bitcoin interesting, which is decentralization. And also, it’s very difficult to value-capture and get rich without being a trusted third party in the middle, so they make up this fiction that they’re “working toward decentralization.”
Of course, even if they could add decentralization, which they don’t know how to do, they don’t want to do it because that would mean they no longer would be able to profit from the project. Still, they keep up this fiction about decentralization being a spectrum and that somehow, they’re not in the middle, stealing value. The fiction of decentralization, or being decentralized in name only (DINO) serves two functions which reveal their rent seeking.
First, it associates them with Bitcoin, which legitimizes their project in the eyes of the public, or at least to the extent that Bitcoin is legitimate. The halo effect of Bitcoin is used for marketing. The halo effect gives their coin a completely undeserved frenzy. They are…
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