Few have followed cryptocurrency as long as I – in a space so novel, technical, and rapidly evolving, having even a cursory knowledge is itself a great feat. In other words, the technical complexity involved in coding cryptographic assets is so extreme, essentially no investors have the slightest clue what they are buying.
Yes, the same can be said for tech stocks, of course. However, stocks are heavily regulated and marketed by established financial entities, whilst the underlying companies are subject to strict disclosure and accounting requirements.
So, when you’re talking about a brand new, highly technical asset class; marketed largely by anonymous (or non-existent) entities; in a completely unregulated environment engaged in nearly unprecedented speculative fervor; scamming unwitting investors looking for “the next Bitcoin” has become a multi-hundred billion dollar business…which could easily reach trillions by the time it peaks out.
I was a well-known Bitcoin advocate going back to early 2016; who temporarily dabbled in altcoins from late 2018 to early 2020 during the Bitcoin bear market - when I believed, briefly, that a small group (no more than a few percent) of altcoins could indeed have viable, sustainable use cases.
However, by late 2019 I fully understood that indeed, 99% of altcoins are useless – and the vast majority, comically transparent pump and dump schemes. Which is why, for the rest of my life, I will be a Bitcoin Maximalist.
Unquestionably, there are many altcoins whose aims are noble, including the two I worked with intimately in 2018-20. In those cases, they sought to be alternative stores of value to Bitcoin – along the lines of the once believed, but now decidedly disproven, theory that a coin could be “silver to Bitcoin’s gold.” However, now that all store of value “competitors” have been destroyed – like BCH and BSV, which had pump and dump AND scam dynamics – the game is mostly played in “platform” space that Bitcoin has no interest in dominating.
It started with Ethereum, which had noble intentions at its start – but in time, was commandeered by founders, with hefty pre-mines in hand, to create the façade of the world’s best “utility plus store of value” token…which, in reality, has few monetary properties, and massively uncompetitive utility.
Not to mention, in an “industry” (NFT’s, “DeFi,” etc) that has been callously, irresponsibly deemed the economy of the future – when in reality, it is simply the most egregious speculative mania ever, fostered by the most egregious monetary policy in financial market history.
Buzzwords and catch phrases work well on the uneducated – and when it comes to altcoins, those building the scams designed to get your Bitcoin are the best in the business. This is why so many pop up out of nowhere; trading immediately at the world’s largest exchanges; and surge to the CMC Top 20 in record time. As quite obviously, the business model for creating crypto pump and dumps couldn’t be easier to execute.
Quite simply, there’s no way to convince the masses of the fallacy of unit bias – or, that a “mature” asset like Bitcoin, which has already risen so much, could possibly rise much further. Heck, I’d bet 90% of those invested in “cryptocurrencies” don’t even understand inflation…and in NFT’s and DeFi, by far the most UN-supply constrained assets ever, 99%.
The altcoin whales know this, and prey on these human flaws by promising the next great thing – which, given how untouchable Bitcoin has become in the store-of-value space, is Ethereum. First, by spreading the belief that “everything” will be tokenized, yielding “limitless” platform demand; and next, that simply tweaking Ethereum’s code to make a new coin “faster,” or “better,” it will unquestionably garner a massive, sustainable network that will last, unchallenged, for decades.
With these easy steps in mind, a handful of well-heeled, market savvy VC’s and exchanges collude; with the help of well paid coders and marketers; to create the next great thing – which in reality, are just cheap copies of Ethereum, now that cheap copies of Bitcoin no longer work. To that end, I have absolutely no knowledge of the dynamics behind the creation of Solana, Polkadot, Cardano, Avalanche, and those like them – but have no doubt they have the fingerprints of the same VC’s and exchanges…including, of course, the massive premines that make those who “create” such coins rich.
Additionally, there is another major “investing theme” in the altcoin space – which undoubtedly, emanates from the same cancerous financial genetics (and unprecedented monetary inflation) that have caused online betting, one of the best ways to lose money, as ubiquitous as fast food.
Which is, that “gaming” tokens will become as commonplace as fiat currencies, to spend in all manner of “metaverse” activities. Damn the fact that first one needs to find communities large and sustainable enough to require such tokens – of which, none yet exist; or that by definition, ALL are centralized pump and dump scams with limitless inflation.
Lastly, there are the two most overpriced, moronic “memes” in financial market history…Dogecoin, which the unwashed buy simply because Elon likes it (or trolls it, depending on your point of view); and Shiba Inu, which Elon DOESN’T like, but is marketed as “DOGE’s store of value plus ETH’s smart contracts,” despite having zero store of value characteristics (a supply “cap” of 549 TRILLION coins) and even less chance of ever being utilized for a smart contract.
In today’s hideous, grotesquely manipulated and hyperinflated financial market environment, such scams are taking over the “second tier” investment world – preying on those not wealthy enough to participate in “first tier” investments like Bitcoin, real estate, and the S&P 500…in a manner as ruthless and unforgiving as Charles Ponzi, or the Vancouver mining stock promoters of the past three decades. So much so, they are sucking massive amounts of capital from the one asset guaranteed to generate wealth over time, Bitcoin.
To that end, it is absolutely incredible that I am STILL the only Bitcoiner who recognizes that ETH completely controls BTC price movement, despite the fact it is vastly smaller and less useful…and not to mention, under heavy competitive pressure by the aforementioned platform tokens – which in my view, cumulatively (along with numerous others not yet invented) will make it painfully clear to the “ETH community” that platform tokens are as commoditized as any financial asset ever.
What’s the conclusion to this rant, you ask? Simple. That HODLing Bitcoin has been the best investment theme of our lifetimes, and at this (still very early) point in its life, possesses the best reward/risk profile I have ever seen. And conversely, that the current altcoin mania, though it may last MUCH longer than anyone expects, will ultimately shift, dramatically so, to Bitcoin. Being a long-term Bitcoiner has served me and my clients well – whilst being a short-term altcoiner (which ALL altcoiners are), has been, and will continue to be, one of the riskiest reward/risk propositions ever.