Thursday, March 11, 2021

Why we don't Shitcoin, a post written by Udi Wertheimer - Send this to your Shitcoiner friends.

Altcoins (sometimes known as "shitcoins" among industry experts) are digital coins positioned as alternatives to bitcoin.

A naive examination of them may reveal similarities to bitcoin: altcoins use digital signatures, they have a chain of blocks, there are addresses, etc... just like bitcoin! But faster / smarter / better for dentists / etc

That’s why many of the world’s poor nocoiners see them as an opportunity to gain riches similar to those of ultra-early bitcoiners: if the alts are technically “better”, they are sure to win, right?

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But the truth is, altcoins and bitcoins have almost nothing in common.

When a poor nocoiner first tries bitcoin, they usually don’t see it for what it really is. They get distracted by minor details, like “i can send it to my friends” or “i can hold my own keys” and then see those same properties elsewhere.

But the real value in bitcoin is its immutable monetary policy.

READ THAT AGAIN.

Bitcoin holds long-term value because its monetary policy is immutable.

In other words, it’s predictable. Dependable. Reliable.

All of the other features that Bitcoin has are really just implementation details to make the above possible.

Some poor people will say: “but bitcoin is mutable! You can change the code!”

No.

Bitcoin isn’t defined by software. Software exists to assist humans in verifying the rules they agreed on:

21 million coins.

Decreasing inflation.

No censorship.

If you changed the software, you didn’t change bitcoin. You just made software that no one wants.

Bitcoin allowed us to set the rules once, then move on to create value elsewhere.

We don’t keep “innovating” on the rules of the game. Bitcoin remains stable.

This is how money should work.

Altcoins are the opposite of that.

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Altcoins are completely different.

Instead of a shared monetary system that allows value creation elsewhere, altcoiners seek to extract value by repeatedly changing the rules.

The altcoin issuer gets to learn the new rules before anyone else for their own benefit. They even get to design the rules for their own benefit, to play on their own strengths.

For example, “defi coins”, where new ones are released daily, each with intentionally obscure rules, like having the number of units you own change due to external events, or allowing one smart contract to empty coins in another, and so on.

Obscure rules mean issuers and friends have some time to attract attention and extract value, before others manage to put the pieces together and understand how to extract value as well... at which point the thing usually collapses.

Which is their sign to issue a new coin, and change the rules once more.

So, altcoins are the opposite of bitcoin. Short-term attempts to change the rules to extract value. To evade stability, avoid dependability, and prevent reliability.

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The one thing altcoins do have in common with bitcoin, is that they share the same infrastructure. Mostly for historical reasons, you can find XRP and ETH in the same exchanges and wallets as bitcoin, even though they have nothing in common. This will likely change with time (eg XRP getting delisted).

This does create fluctuation where liquidity moves from bitcoin to altcoins and back.

So yes, it is possible to buy altcoins and make money. Those who tell you that it’s impossible are poor, or losers, or both.

What twitter influencers won’t tell you however, is that you have to understand the dynamics of changing rules and hype cycles to make it. If you understand this and think you can win this short-term game: maybe you can. Go ahead.

But if you’re going into this thinking altcoins are improved bitcoins, you’re going to have a bad time. I hope that later you can at least have fun staying poor.


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