DINOs Will Go The Way Of The Dinosaur

Dinos - Decentralised in name only

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For most of us, the journey into Bitcoin will take several detours; if you are going to learn about how this blockchain “thing” works. There are very few of us who remain Bitcoin purists; you’re going to explore the land of altcoins and shitcoins eventually. It’s okay if you want to try your hand at shitcoining, don’t let anyone tell you differently, I’ve shitcoined and ultimately made my way back to Bitcoin, and many of you will get there too. We all have our path to walk and will fall for snake oil salespeople along the way. 

I am not saying there is no naivety or lies among Bitcoin advocates; there are; what I am saying is the number of lies and overpromising on the shitcoin side is exponentially higher. I would know; I bought those coins, fell for the pitch, and got burned for it.

What I lost in fiat and potential Bitcoin, I gained insights and education, so I don’t count it as a total loss. I probably learned more during my time in Bitcoin and shitcoining than I did in university. 

All coins are not the same.

It sounds simple enough, but you’ll be surprised at how many people lump all coins together with Bitcoin as the same. I’ve spoken to many a no-coiner and pre-coiner, and their main objection or issue is there are so many coins; how do I tell the difference between any of them?

The way I see it is Bitcoin is money; it’s the currency of the digital world and is working towards becoming the world reserve currency of the physical world. Bitcoin is the most liquid, the most distributed among users, the network is the most powerful, most decentralised, and is governed by no single entity. 

Everyone who supports the Bitcoin infrastructure has an economic duty to do so, the miners want to get paid to secure the network, and the node operators like myself want to ensure our investments are secure. Anyone can plug into the network and support or attack it, and those who support it are there to protect it and enforce the blockchain rules. The decentralisation of the network makes it far too expensive to co-opt it and more profitable to support it by mining or holding bitcoin and running a node.

Now add to that solving the double-spend problem and achieving digital scarcity and instant finality of settlement and what you have there is money with superior attributes to anything we have now.

Imitation is the greatest form of flattery.

When you’ve solved such a complex problem, and your product targets the biggest addressable market in the world, namely money, and financial services, there’s ALWAYS going to be competition. Bitcoin competes with fiat money; it competes with bonds; it competes with stocks as a way to store your unused productivity. 

Everyone has a choice on where they want to store their money, be it in traditional assets, precious metals, real estate, and now Bitcoin. What makes Bitcoin unique is in that it has properties we associate with fiat and with precious metals. 

You can spend it and settle small and large transactions by dividing up Bitcoin into smaller units, but that all those units retain value and appreciate as an asset would, it’s a strange concept for those of us who are used to a fiat standard. 

Now that you see what Bitcoin offers you, you can imagine that everyone and their venture capital fund would want to try and copy it. 

Altcoins aren’t money.

Since the Bitcoin code was made open source, we’ve seen an explosion of new projects that reference Bitcoin but made particular trade-off’s to try and “improve” on Bitcoin. Making those trade-offs either makes the chain more centralised or places the enforcement of the rules in the hands of a select few, similar to how the fiat system works. 

There are investors with a pre-allocated stake; there are companies and employees with a stake they have granted themselves with special privilege. To me, altcoins are more like stocks being issued to try and fund a rival Bitcoin project that will eventually fail.  

Tokens will be around forever, they are not going anywhere, protocols and chains will be around, they are not going anywhere, but trying to compete on the grounds of sound money, you will lose to Bitcoin. 

Shitcoins benefit from the money illusion.

Shitcoins are NOT money; however, they benefit from the assumption that they will outcompete Bitcoin to become money, which is why we’ve seen these astronomical valuations for projects that seemingly do nothing. They are valued at a premium of the off-chance that they could rival Bitcoin. 

The way I see it is altcoins and shitcoins are a way to access public market capital without the need for an IPO or a SPAC and going through all that regulation. Launching a coin is pretty simple, and if you can convince enough people to part with their fiat or Bitcoin, you can quickly build up a treasury for you to fund your project. 

The problem is shitcoin investments still adhere to the fiat standard; the whole goal of these VC and angel-funded coins is to make more fiat for their seed investors, which they do, without delivering a product. Shitcoins are what VC’s have been doing for years but more optimised for their exit and for someone else to hold the bag, then rinse and repeat. 

Altcoins are the DINOS of our blockchain.

Altcoins are trickle-up economics on steroids, and they are NOT decentralised. They may be distributed as in a few copies of the ledger are run by different parties, but those parties can all collude, and often, all those parties are tied to the same entity.

These projects are decentralised in name only (DINOs). Altcoins have taken the convenient aspects of blockchain and left out the complex trade-offs needed for true decentralisation; they are decentralised theatre. They pretend to be decentralised, but when they hit a wall, suddenly they can re-work the code, change the monetary policy, change the way consensus is achieved. 

So what is immutable if anything can be changed? Nothing, these chains are fintech companies pretending to be decentralised to avoid specific regulations and access cheap retail capital and rent seek from the general public. They eventually produce nothing or something that is doomed to fail.

Achieving true decentralisation. 

True decentralisation is based on direct user-to-user communication. This way of communication solves the privacy and censorship issues of centralised communication. Implementing true decentralisation may still use a blockchain – not as a central element but as a support element in the implementation.

A successful actual decentralisation project must include the following mandatory elements:

  • minimum decentralised identity
  • a decentralised network of bridges/nodes
  • an immutable set of rules
  • a decentralised method of achieving consensus

To adopt decentralisation means you are adopting the enforcement of a strict set of rules that the community agrees upon. So if a project is promising you the world, it’s because they are centralised, which means they are not censorship-resistant. They can be shut down and either bought out by larger entities or forced to play by regulator rules. 

The next hot blockchain application isn’t going to happen. Blockchain had one application, and that was for sound money. Bitcoin achieved that, and the rest will imitate it until their funding rounds dry up, governments shut them down, or banks acquire them. 

Disclaimer: This article should not be taken as, and is not intended to provide any investment advice. It is for educational and entertainment purposes only. As of the time posting, the writers may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency, as all investments contain risk. All opinions expressed in these articles are my own and are in no way a reflection of the opinions of The Bitcoin Manual

9 Responses

  1. I see what you’re saying, but again I was watching interviews on R.V. Crypto w/ the heads/reps from Cosmos, Thorchain, and Elrond … they are all impressive projects with impressive teams, and trying to find new ways to decentralize, connect, and empower locally … the future will be some kind of plurality and ecosystem, one hopes. ty

    1. I tried watching RV crypto but it’s just so much shilling and placing emphasis on tech that doesn’t solve much, its nifty ideas but they are built on a monetary policy that skews the improvement of their products, so instead of building profitable businesses/protocols they build rent-seeking services that use financial engineering to survive once the VC funding begins to slow down, if they even survive at all.

      Sure you can shitcoin and make short term profits not saying it not but any project worth its time would benefit from being built on top of Bitcoin. It will be a plural ecosystem, one with many chains but if its not tethered to Bitcoin it excludes itself from the biggest user base and will eventually die.

      1. I’m not smart enough to say, but I just think it’s going to be broader than btc, the ecosystem will be too large and serve too many needs. Global, finance, entertainment, gaming, merch, contracts from a-z, , , social tokens, smart wallets … and the whole battle between local/’decentralized’ vs mega-corps and government … seems to me it will take a village of blockchains and independent entities.

        1. I am not saying there won’t be other blockchains, there will, public and private ones and they are going to have certain trade-offs that I am personally not willing to make. Most people don’t give a shit about blockchains they care about the asset living on top of it, and ifs going to come down to the asset the superior monetary policy crushes inferior ones over time.

          Bitcoin has several second layers in progress lightning, liquid, RGB, Statechains and eventually they’ll all be fully interoperable and abstracted away by the user. I was even listening today on how these guys are running lightning via radio towers so no need for an internet connection to send payments.

          BTC is far more than people think, but they’re not marketing it because its all decentralised different companies and people working together, whereas these “packaged” blockchains are just private companies

          1. yes,,, i looked into liquid, rgb and statechains, but seems like the dev there has kinda stalled, or not same security, etc. lighting is cool, but it only has about 2,000 btc so far, if i understood right, seems like small amount. i’m kinda also getting concerned that btc is becoming eaten by oligarchs … large corps, 500,000 in GBTC, jp morgan … but yeah, apparently 4 million are lost, so even scarcer than one imagines … just trying to figure out the larger picture beyond btc, for other locally owned crypto networks, on PoS to be more sustainable long-term, n all the governance n interoperable n scale issues. have good weekend, peace

          2. Yeah, dev has been a little slow, but that’s how Bitcoin works, do you really want to move fast and dev when you’re near a trillion dollars in value in the protocal? As main-chain BTC gains more value so too does it flow into the side chains. Shitcoin dev’ing also is a lot of cosmetic nonsense, the whole reason BTC dev is so slow is because security comes first

            I don’t see why lightning needs to have a lot of Bitcoin in it, it’s a payment settlement layer, as the value of the underlying asset increases it requires less satoshis to pay for things and drives up the velocity of transfers as you need fewer BTC to settle off-chain transactions.

            BTC is proof of work, they can buy as many BItcoin as they want it provides no governance advantage, its not like these shitcoin chains that bake governance into the token, BTC is done by the nodes in combination with the miners.

            Proof of stake is just fiat with a protocol name attached to it, how does it differ from fiat? The largest stakeholders maker the decisions and suck up the most inflation, no thanks that’s something I wanted to get away from and Bitcoin is the only option I see.

  2. I obviously couldn’t agree more and I think when you shitcoin long enough, you start to see through the smoke and mirrors that these projects create of getting rich quick and being lead up the garden path. Bitcoin is money as you say and I feel that other altcoins that try to be money as well will not succeed because that problem has already been solved by Bitcoin! Other applications for blockchain need their own token which will act more as a stock or share in the chain itself but the trade-off is centralisation. The company goes down, bye bye token… and who’s to say that the company behind the token won’t just turn around and say “thanks very much, we’re off now”?

    #whencull?

    1. A lot of these projects either have no product-market fit or they wouldn’t survive in a strict monetary policy, shitcoining is the path of least resistance to make short term gains, its rug pull technology and many people will be poorer for it. The sad thing is these shitcoin projects are smart enough to know that they should store their ill-gotten gains in Bitcoin. Look at Block. One that launched EOS why are they holding 140,000 BTC if they are confident in their shitcoin? hmmmm

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