Why Bitcoin Only

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Audio by @DelioPera

This is a reply to a comment in YouTube I wrote in a fit of insomnia at 3 am. It was surprisingly coherent and expressed my thoughts on why altcoins should not be accumulated, and you should buy bitcoin only. I posted it to Twitter, and reproduced it here with spelling corrections:

I appreciate your detail in replying. I want to start by stressing that it all comes down to scarcity. Without scarcity, cryptocurrency may as well be fiat. Good money is scarce. The biggest weakness of cryptocurrencies is that they can be created easily from nothing. All alts are like this. But Bitcoin is different. It has miraculously been born and has gained a huge lead in network effects. This can not be copied. Thus, it has gained scarcity. It is extremely decentralised, and has by far the greatest hashing power on the planet, and distribution of full nodes, which makes it not possible to tamper with the monetary policy. Bitcoin has scarcity due to network effect lead and “un-tamper-ability”.

The Lindy effect will only make it stronger as day after day it doesn’t die. It can’t be eradicated, just like a cancer that has spread too far.

The copies cannot compete with this. It needs the majority to not only leave Bitcoin, but mostly leave to the same choice. There are thousands of choices, so those few people that abandon Bitcoin will not all go to the same choice. In other words, defectors will disperse, not concentrate. The only way this could theoretically happen is if there is some fatal flaw with Bitcoin, AND it can’t be fixed, AND an altcoin can, AND only one altcoin can.

E.g. let’s say Bitcoin’s privacy weakness (really it’s a trade-off, not a weakness and any other coin with privacy just chooses a different trade-off) is suddenly critical and everyone is exiting. Where will they go? Monero, Zcash, DASH, some to ETH and XRP (not private btw), Cardano… Can they all be money? Money printer go brrrr much?

So how else can an Altcoin take over? Remember that people will save in the best money. An Altcoin must become fundamentally better. In the open-source world, how is that possible? It’s like thinking it’s possible for a better operating system to exist than the dominant open-source one today (GNU Linux). The open-source leader just gets better and better. All new ideas get absorbed.

Let’s imagine another currency finds a good use case. Let’s say smart contracts. First, that’s like saying paper is money and valuable because contracts can be written on it. No, you need to make good money first, not find other uses for it. Aluminium has more uses than gold but it’s less valuable because it is not money. It can’t be money because it is not scarce. But even if smart contracts makes a cryptocurrency into good money, there are too many: ETH, Cardano, TRON, Iota, and probably others.

As soon as any becomes valuable, it will invite competition and it will be copied. There is no scarcity. For goodness sake, ETH doesn’t even work yet. Its Turing completeness is not even used. Bitcoin has smart contract capability and I understand nearly everything ETH is doing program-wise can be done with Bitcoin. Let’s face it, it is competing with Bitcoin as a money and is far far behind and has no credibility. What will Vitalik Buterin do with the monetary policy next?

ETH is just another fiat with a central banker. That is not a true cryptocurrency. Remember why Bitcoin was born – we are fighting central banking and trying to separate money and state, not shoot ourselves in the foot by losing focus, trying to get rich by improving on the solution we already miraculously discovered. Bitcoin is that: a miracle – and we should embrace it.

Also, you mention ROI. Bitcoin doesn’t exist so you can buy it and sell it for more fiat later. It is a REPLACEMENT for fiat. You buy and NEVER sell. You spend once it achieves its true value. You don’t need an exit strategy. You just save in Bitcoin. With alts, you need to time your exit and sell to a greater fool, because alts are scams, holding forever will get you rekt. Just DCA Bitcoin.

It’s like picking up gold off the ground before anyone else realises it will become money. Don’t pick up pebbles or seashells (alts), your pockets have limited space. Finally, the most important problem to solve is separating money and state. All other problems are tiny in comparison. We don’t need to replace the legal system with smart contracts. We don’t need a token for everything. We don’t need to put bananas on a blockchain.

Bitcoin is an invention that solves a humanitarian problem. Altcoins take a solution (blockchain) and try to find a problem. Remember that.

On-chain or Lightning

Additional thoughts that came later…


Static Lightning Address: dandysack84@walletofsatoshi.com

On-chain or Lightning