Bitcoin vs Crypto

Hello, in my last blog post I said I'd be writing more right, so here I am... a month later. I guess that's still improvement right? We keep on churning!

When I first decided to start investing in crypto, of course my first topic of study was Bitcoin. It's the most popular cryptocurrency out there. Bitcoin was also the first coin that I bought, but soon one type of coin became three as I added Ethereum and Cardano into my portfolio (a moment of silence to fellow $ada hodlers). 

As I dived more and more into crypto, I learnt about the differences between proof of work and proof of stake and how supposedly PoS is more environmentally friendly than PoW. All these claims got to me and I figured that all these cryptocurrencies could serve side by side as money alongside Bitcoin as there are many different type of fiat currencies such as the Dollar, Ringgit Malaysia, Euro etc. 

Twitter is one of my favorite mediums to learn as there are many bright minds and established figures in the industry to follow and soon I found out that crypto twitter was a war ground of ideologies between Bitcoin maximalists and crypto enthusiasts. "Bitcoin, not crypto." Is one tweet that is commonly chirped among Bitcoin maxis and this intrigued me. How is Bitcoin not crypto, when it is a cryptocurrency? What makes Bitcoin so special that these people would outright call other projects a scam and that they're 'NGMI' and 'HFSP'. After another hundred hours of studying, I think I've finally grasped it somehow. There is one thing that Bitcoin has that no other altcoins or shitcoins have. And that is the immaculate conception. Bear with me, this is just my understanding and therefore my thesis on why Bitcoin is money, while other cryptos are 'internet tokens' or more like tech stocks of a new and upcoming industry which is web 3.0.

1. Bitcoin is made by the people, for the people

Who is Bitcoin's creator? Satoshi Nakamoto you would say, but who the heck is Satoshi? That's the brilliant thing. No one knows! He could be a group of people or one man, he could even be a woman! My favourite theory is of course that he's a time traveller, from when the world is already hyperbitcoinized and technology is so advanced that time machines are invented thus he went back in time to introduce Bitcoin after the 2008 housing market crisis to save humanity from their own fiat misfortunes.

The lack of a leader or CEO or founder in Bitcoin maybe something that would be rejected in traditional tech companies. Like who would trust Facebook if the CEO had no face? What if Mark Zuckerberg was just a name? Would people actually trust the social media in which people share their many private information and would the market buy Facebook stocks not knowing who the guy behind this data collecting website? The lack of a leader may be bad for a company, but for MONEY... money cannot have no leader! Who founded gold, which has been considered money for thousands of years? God right? 

The lack of a leader means that Bitcoin has no one that is controlling it, it is made by the people for the people. Satoshi himself has more than a million bitcoin which he has never moved from his wallet, this is a $40,000,000 (at current price) sacrifice from Satoshi to the world to ensure that there is trust in the network, that he himself has dedicated so that the world could have a sound and secure monetary network to depend on. Satoshi also realized that his presence in the development of the Bitcoin code could be a point of attack as the thesis of Bitcoin is that it is leaderless and any changes in the network should be decided by everyone, and not a single point of entity. Him removing himself completely from the development of Bitcoin is therefore a massive plus for the Bitcoin network to grow as a commodity.

This differs to all other cryptocurrencies, which has a face you can point at as its leader. Ethereum has Vitalik, Cardano has Charles, Dot has Gavin. All other cryptocurrency still has a leader which still has influence towards the development of the crypto. This would mean that the assets are still one way or another influenced by the founder.

2. Changes in Monetary Policy

The Fiat monetary policy is controlled by federal banks and governments. The FED has the power to 'grow' the economy or slow it down by printing more money and hiking interest rates. Fiat money is a flexible system in which they can change it however they want, but the power of printing money that is bethrown to them is what made fiat money corrupt. The powers that governments and banks have is the exact reason why our money currently keeps undergoing inflation, which is basically time theft. You'd work 50 hours a week to make money, which is then stolen from you as the govt prints more money.

Bitcoin has a fixed monetary policy. We know that there will only ever be 21 million bitcoin, that new bitcoin will be issued every 10 minutes, that the issuance is halved every 4 years and all 21 million bitcoin will be mined by 2140. And if some people decided 21 million is not enough and enforced a change in the code, all the nodes would simply reject it. If more people wanted to increase the supply, the Bitcoin network would simply undergo a hardfork and the new supply of coin would simply be another version of Bitcoin, and not the real Bitcoin. This has happened before in which some people in Bitcoin wanted to increase the size of the blocks to allow for more transactions per second and Bitcoin forked into Bitcoin Cash and Bitcoin Satoshi Vision, but the market has decided that the original Bitcoin was the most valuable as it allows for normal people to set up their own nodes and focus more on security, thus the other 'bitcoins' are actually just shitcoins! (Read up the blocksize wars)

In Ethereum, you could see that they have changed their monetary policy many times, depending on what seems to be in trend. The latest change that eth made was the EIP1559 which introduced burning of coins and ethereum is marketed as 'ultrasound money'??? Another change that's happening is the change in how the coin is mined from proof of work to proof of stake, which is basically another version of the fiat system - another big topic for me to write about later.

Thus from how these coins could basically change their monetary policy, is proof to me that they could never be true hard money for the whole world to use. 

Difference between Bitcoin and Ethereum

3. A Fair Launch vs Pre-mine

Bitcoin was a fair launch. What does this mean? Satoshi initially introduced the world to the Bitcoin whitepaper on October 31st 2008, which is coincidentally during halloween (it's scary to traditional finance) and after the housing market crash. The first bitcoin Satoshi mined was on 9th January 2009 and the code was released to the public, free for anyone to mine along with Satoshi. The number of people participating in the Bitcoin network then increased exponentially as crptography nerds, tech geeks and many others learnt about Bitcoin as it grows naturally by word of mouth.

This differs to many other alt coins, which most were pre-mined initially and distributed amongst the team and venture capitalists to provide incentive for them to work and build their coins. This chart shows the allocation of coins to many parties before the coins were to be mined by the public.

Satoshi understood that a fair launch is important in money and a natural growth by word of mouth without no marketing team proves that Bitcoin is a discovery of new money, which does not need paid workers to actually get others to buy the coin and prove it has value. Bitcoin is valuable in its characteristics which are similar to gold, only much more secure, faster, and suitable to this digital age.

4. Solving the Byzantine's General Problem

The brilliance of Satoshi and Bitcoin during the time was that it managed to solve a massive problem in a decentralized network, which was the Byzantine's General Problem. This problem was that in a decentralized network, how could one distinguish between a true data in the network and not a threat to destroy the network by a bad actor? The answer was solved by Satoshi through various mechanisms including that a node would reject false data in the network, thus maintaining only the right information conveyed thus never allowing double spending to happen. 

The Byzantine General's problem

The discovery of this solution allowed for new money to be made and therefore create digital scarcity with Bitcoin, but then the Bitcoin code was copied and altered to make other coins such as Dogecoin and litecoin. These coins cannot be equated to the true discovery of Bitcoin as a discovery can only occur once, especially not if these parties already knew about Bitcoin. 

As a conclusion, how Bitcoin was introduced into the world is one of the most important aspects of Bitcoin that truly distinguishes it from all other coins. The immaculate conception of Bitcoin, which can never ever be replicated by other alt coins or cryptos. This is what makes Bitcoin money, and other coins internet tokens.

This is my thesis. If you have disagreements, please share with me as I am still learning and would love to know about others' views on this subject matter.

To end this blog post, I am clearing some things up. I am not saying that investing in altcoins is completely wrong nor am I saying they are all scams. I myself dabble in some altcoins as web 3.0 is a new technology which may or may not allow people to own on the internet. Thus, I categorize altcoins as tech stocks or internet tokens as I have said before. I own some, but most of my allocation, focus and education is on Bitcoin as it is the true magical discovery that should be learnt by everyone.

It is important to differentiate the two as both have very different risk exposures to it. Many alt coins are DINO coins (Decentralized in name only) and have many more points of failure when compared to Bitcoin. 

Thanks for reading!

A summary of my Bitcoin journey