Altcoins




THE CASE AGAINST ALTCOIN INVESTING (ESP. LONG TERM)



Creating A Useless Coin Is Non-Trivial Now


Bitcoin is open-source which means that anyone can copy and alter the code to create their own coin – enter the altcoins, a.k.a. shitcoins. Altcoins are experiments – there are thousands of them and 99% of them have no utility except for an attempt to make someone a quick buck. Experimentation is great but pre-allocating a ton of the coins to you and your buddies and pumping your bags strictly for profit when your experiment has absolutely no use-case, security, decentralization, network effect, competent developers and is destined to fail is not only disgraceful but rampant in this space now. If it is an experiment, it should be treated like an experiment – the goal is to change the world. If it is something truly remarkable it will sell itself and catch on organically.

Altcoin Proponents – They All Spew The Same Junk


Most altcoin proponents spend their time preaching to others on how their altcoin is the next Bitcoin – “it is faster, cheaper and it can do everything imaginable!” But faster and cheaper just means it is a worse PayPal. Lacking specific characteristics the altcoin is also centralized but in addition; slower, less efficient, insecure, highly experimental and more expensive than existing centralized database solutions. The protocol requires proof-of-work and a decentralized network to be special and there is no altcoin that comes remotely close to Bitcoin in these aspects. All the altcoins build a cookie-cutter website, add some changes to the code, build up a small cult with puppets, spend some money on an advertising team and voila you have the next Bitcoin! In addition, they all have a small central team of developers and a leader of the project. The “next Bitcoin” motto has been around for almost a decade now. Unfortunately, the new people fall for it every time and the loud-mouths/scammers pretend to believe it to pump their bags and can sound very convincing. Once you have been around these altcoin proponents for long enough, you begin to realize they are all the same and it will most likely continue for a while longer (maybe forever but to lesser effect – hopefully). They are feeding off of the uneducated and the greedy. One day you should be able to spot these people/altcoins quite easily.

Different Shitcoin, Different Bull Market


Altcoins have been around in every bull market cycle. Each new bull market cycle has more new shitcoins than the previous bull market and the top 10 (nevermind the top 100) altcoins from the last bull market are no longer the top 10 or top 100 of the next bull market. The last round of altcoins have to compete with the “new and improved” altcoins of tomorrow. We are already seeing this process take place as the 2017 bull market unwinds. Focusing on the top 10 altcoins, they are all flip-flopping and swapping their leading spots in the top 10. Most trend towards $0, over time.

Remember, when Bitcoin’s price corrects after a bull market, you can bet the altcoins are going to crash much harder and are not guaranteed to come back. If Bitcoin goes to $0, everything is going to $0. Most, if not all the altcoins from previous years – you never heard of because they are completely irrelevant now.

Fake Market Caps


As time went by and altcoin after altcoin passed – we have learned that market caps are a very poor method of calculating a coin’s dominance in the overall ecosystem (mostly a sea of other useless 2000+ shitcoins). These coins have hundreds of millions, sometimes billions or more of their tokens to be released over time. Many times, there are pre-mines for the developers, sometimes there are covert pre-mines that break the hard limit cap of the project (the latest example is “private bitcoin”). Some other projects have weird time locks on very large amounts of their tokens or a super cheap pre-sale before the project is released. The project just needs to sell 1 token for $1 and if the altcoin has 10 billion tokens, it now has a market cap of $10 billion dollars. Hardly a sign of market dominance, innovation, organic adoption or a secure and proven protocol.

Bitcoin Is The Next Bitcoin – The End


World class developers, protocol specialists, top cryptographers, cypherpunks and pioneers that aided in the creation of the internet have and continue to think of every aspect of Bitcoin over and over again – attack vectors, trade-offs, scaling, supplemental technologies, stacks, privacy, game theory, fungibility, etc. A passenger of an airplane should not tell the pilot or engineer how to fly or build an airplane. Protocol engineering is no different. Everything that Bitcoin does, it does for a very important technical reason. Bitcoin takes a slow and “do not break things” attitude for protocol changes – the utmost importance for a protocol dealing with tens of billions of dollars.

Having gone through all that – if Bitcoin needs to implement a secure, innovative, thoroughly tested code from an altcoin it can be integrated. Bitcoin is code. It is adaptable. Bitcoin is the next Bitcoin.

So be warned, dabble in altcoins at your own risk.


Additional videos/readings:

(1.) Why Bitcoin is Different than other Cryptocurrencies (Article)
(2.) The Ultimate Bitcoin Argument (Podcast)
(3.) Why Bitcoin is Different (Article)
(4.) Bitcoin’s Immaculate Conception (Podcast)
(5.) Why Altcoins are Doomed (Article)
(6.) The Problem with Altcoins (Article)
(7.) 4 Reasons Why Bitcoin is KING! (Video)
(8.) Why I don’t cover altcoins or the newest ICO (Video)
(9.) Shocking interview! – In the mind of an altcoin developer (Comedic Video)
(10.) Crypto Currencey Expert Loses 80% In Shitcoins (Comedic Video)
(11.) Bcash is garbage compared to Bitcoin says Richard Heart. Rhett Creighton says otherwise (Video)

Reasons to Avoid Investing in Altcoins


(1. ) extremely illiquid
(2. ) Manipulated and fake market cap valuations
(3. ) Highly inflated token amount
(4. ) Centralized network
(5. ) Insecure in more ways than one
(6. ) Has a leader
(7. ) Risk of itself being replaced by the so called “next Bitcoin”
(8. ) High pre-mined allocation
(9. ) Pump and dumps
(10. ) Incompetent developers
(11. ) Little to no developers
(12. ) Disloyal developers
(13. ) Flawed algorithm
(14. ) Buggy code
(15. ) Absolutely no use case
(16. ) They trend toward $0 in the long term
(17. ) Lacks any network effect
(18. ) Impossible to replicate the fair, honest and organic start-up of Bitcoin
(19. ) Developers and pundits misunderstand or choose to ignore the strengths, weaknesses and limitations of a blockchain
(20. ) Resembles a penny stock
(21. ) Represents easy work for Wall Street investors to make money off of uneducated gullible suckers through manipulation due to the illiquid market and their deep pockets.
(22. ) In history, the top 50 altcoins have come and gone and swapped spots in terms of dominance over and over again
(23. ) “The next Bitcoin” motto has been around for nearly a decade
(24. ) History shows we are not going to have hundreds of universal mainstream monies , let alone 5 or 6, or even 2. The world will trend towards 1 internet of money that is sound, store of value, neutral and multi-faceted. It is a winner takes all in the end game – this will take a while to play out. In regards to Bitcoin a #2 does not even exist. The world trends toward 1 dominant universal “thing” for many different subjects where it makes sense. Think: TCP/IP, Gold, internet, Linux, unit of account, measurement system, time (seconds, minutes, hours), dates (Monday, Tuesday, etc.), numeric system, etc.
(25. ) Yesterday’s round of altcoins/shitcoins have to compete with tomorrow’s round of “new and improved” altcoins/shitcoins.
(26. ) A small minority (5% or less) will make money. The remaining bag holders in the altcoin/shitcoin space will lose 90%-100% of their money permanently.
(27. ) Altcoins have a move fast, break things methodology.

“It’s gold for nerds.”
Stephen Colbert – Host of the Colbert Report


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