Ethereum (ETH), which grabbed attention of traders for the past few weeks as it completed the Merge upgrade, continues to be in red. The blockchain supporting smart contracts had lost 4.40% in the last 24 hours to trade at $1,276. Binance chain (BNB) inched up 0.10% to trade at $266. XRP, interestingly, had surged 6.60% to trade at $0.4231. Cardano (ADA), which is another notable crypto, has lost 0.30% to trade at $0.4469.
If you have ever tried to criticize the crypto realm, there is a good chance you have gotten some beautiful rebukes. Your comments have likely been disregarded as “FUD” (fear, uncertainty, and doubt), and you may have been called a “salty no-coiner.”
The frequency with which I get a little more sophisticated kind of counter-criticism is growing. It often begins with something intended to please, such as an agreement that cryptocurrency is unethical, a swindle, or a Ponzi scheme. However, it abruptly switches direction to emphasize that none of this pertains to bitcoin.
Bitcoin, according to bitcoiners, is not crypto. And, as you know, crypto is evil and bitcoin is nice. Very very excellent. Recently, an altruistic bitcoin holder told me, “Bitcoin is a lifeline for so many people throughout the globe.” Please stop associating it with crypto, which is ethically repugnant.
Recently, I argued that one method to practice the art of “intellectual humility” is to “steelman” your opponent’s stance — that is, rather than fighting against their weakest aspects, you provide the strongest version of their argument imaginable. Before explaining why I feel they are mistaken, I will thus attempt to implement this strategy.
Why do “bitcoin maximalists,” who contend that bitcoin is the only cryptocurrency with value, make this claim? They assert that the organic process in which bitcoin arose cannot be recreated and that, while bitcoin may be replicated, it will always have first-mover advantage and hence never be dethroned.
They also note that there was no market for bitcoin when it was created, therefore the network was maintained not for profit but by individuals who believed in the system’s worth, unlike subsequent currencies, some of which were issued by large businesses. Bitcoin did not originate as a method of making money, but rather as a result of a libertarian online subculture that felt technology, and encryption in particular, was the key to achieving social and political change.
Maximalists argue that bitcoin’s incentive structure, the energy-intensive “proof of work” mining procedure that Ethereum abandoned only last week, is the only way to guarantee a fully decentralized system. However, although it is understandable why bitcoiners would want to disassociate themselves from the variety of frauds and disasters that have happened in cryptoland, their justifications are unconvincing.
First, the origins of bitcoin are irrelevant; individuals who promote it today have the same financial motivations as those who promote any other crypto asset. Bitcoin’s inventor, Satoshi Nakamoto, may have meant for it to be used as currency, but it does not make it such; it does not meet any of the essential characteristics and instead functions in a pyramidal structure that depends on continually recruiting new members.
Second, bitcoin is not decentralized in reality; not only do miners establish “mining pools,” but wealth is also highly concentrated. MicroStrategy said on Tuesday that it has acquired an additional 301 bitcoins, bringing its total holdings to 0.7% of the total supply.
Thirdly, the “first-mover advantage” is not necessarily sustainable. Other crypto currencies already have characteristics that bitcoin lacks, and there is fresh discussion of a “flipping” in which Ethereum’s value surpasses bitcoin’s as a result of Ethereum’s transition to a less carbon-intensive mining method.
Finally, there is no consensus on the definition of bitcoin. For the great majority, it is the digital currency commonly known as “BTC,” which trades for around $19,000 at present. However, other versions have diverged, such as the one supported by Craig Wright, who claims to be Satoshi and believes that BTC is a fraud.
Bitcoin maximalists aim to divide bitcoin from other cryptocurrencies in order to create the sense of scarcity in a world where there is none. More than 21,000 distinct crypto tokens are currently listed on CoinMarketCap, which bitcoin maximalists refer to as “shitcoins.” Obviously they do; if there is an unlimited supply, then there cannot be any value. This remains the fundamental issue of cryptography, and Bitcoin cannot address it.
This does not mean that certain crypto projects and tokens are not superior to others. But a spade, whatever of its luster, is still a spade. And Bitcoin is still crypto, I’m afraid.