Bitcoin stands apart from other crypto, and what that means for US public policy

U.S. President Joe Biden’s executive order on digital assets has launched an interagency mission to support financial innovation while protecting U.S. consumers and interests. While many industry leaders salute the constructive tone, some critics expect repression. We don’t blame them.

Many cryptocurrency projects operate behind thin veils of decentralization. In public, they are sold under the premise that they distribute power. Behind the curtains, the leaders pull on the ropes. In the recent Wonderland case, a serial and criminal scammer ran a $ 1 billion treasury.

Many projects secretly pay influencers to allocate their tokens. Price bombs. Insider spill. Naive investors lose money. Sometimes shillers are famous. And sometimes those celebrities filter out the surprisingly low cost of their integrity.

Related: Year of sponsorships: celebrities who adopted cryptography in 2021

Hundreds of projects suffer from technical vulnerabilities. Apparently, every week, hackers exploit hidden software bugs. The third largest occurred in early February, with $ 326 million. And then, at the end of March, another $ 600 million.

Many cryptocurrencies are blatant scams, some proudly pyramid-shaped. Market participants treat us as facts of life, with terms often used for exit scams (“rug pulls”) and pyramid-shaped projects (“Ponzis”).

For the most part, cryptocurrencies look the same, like tomatoes stuck in aisle 9: just tasteless, useless, and more numerous. Cynics see the cryptocurrency menu as a list of the most searched proxies. Neither group is completely wrong.

However, one menu item stands out. It is without a doubt one of the most important technological advances from the internet itself. Buy it or not, we don’t care. But we three teachers worry about bringing a simple message: Bitcoin (BTC). special. It deserves study and discussion.

Let’s talk about Bitcoin

Bitcoin is really decentralized. Tens of thousands run nodes around the world. Operating a node is easy; you could do it in an hour with a computer connected to the internet and a few hundred gigabytes of storage. In 2017, these nodes vetoed a controversial change to Bitcoin that would increase network centralization by making it easier for ordinary people to run a node. In doing so, they outperformed most miners, exchanges, and other powerful Bitcoin legacy players.

Bitcoin decentralization makes it fair. No foundation enjoys a trademark or governs its monetary policy. This contrasts not only with the more centralized cryptocurrencies but with the Federal Reserve itself. Last year, three Federal Reserve officials resigned after a series of, say, timely operations. Bitcoin has never had to fire any disgraced officials; it has no such officials. The network automates these jobs.

Bitcoin decentralization also makes it safe. Most of the money is digital and is under the control of third parties such as banks and payment processors. But innocent Russian and Canadian citizens remind us that third parties can freeze and seize those balances, especially when they are under state pressure. Dependence on third parties jeopardizes funds. Bitcoin participants can have their own private keys and thus save and send value without third parties. Bitcoin is in a different league than other cryptocurrencies. In the digital age, the unparalleled level of decentralization of Bitcoin does o safe haven from state and corporate reach.

Related: The significant shift from Bitcoin maximalism to Bitcoin realism

And unlike most other cryptocurrencies, Bitcoin has never had a sale of private tokens to venture capitalists or an initial supply of currencies to enrich experts. Bitcoin is the most widely distributed digital asset. In an important sense, it has no initiates, only the first adopters.

The main initial adopter, Satoshi Nakamoto, extracted about one million Bitcoin (5% of the maximum bid). Satoshi’s possessions are fully visible, and Satoshi never spent a penny. With most other cryptocurrencies, the rich get richer, sometimes covertly, and have more voice on the net. Not so with Bitcoin.

While some projects move fast and break things, Bitcoin moves slowly but surely. Mistakes are rare. Of course, this conservative approach has trade-offs. Updates are as rare as bugs. And Bitcoin lacks the flexibility of other platforms. But in return, countries and corporations feel safe with Bitcoin on their balance sheets.

You may have heard of hacking and stealing Bitcoin. These cases do not imply weaknesses in Bitcoin itself. Instead, they illustrate the disadvantages of insecure key storage or relying on third-party custodians.

Related: Maybe Satoshi needed an alias, but can we say the same thing?

Finally, Bitcoin is not a scam. It certainly can be used for scams, such as the US dollar or other digital assets. But the Bitcoin network offers the final settlement of its native assets, just as the Federal Reserve System offers the final settlement of the US dollar. People speculate wildly about the price of Bitcoin. This is the path to the early stages of innovation. And people all over the world need it even though the privileged Westerners speculate.

The design of Bitcoin involves compensations, no doubt. Its public registration makes privacy difficult, though not impossible. It requires energy for your safety. And its fixed supply generates price volatility. But for all that, Bitcoin has become something remarkable: a neutral monetary system out of the control of the autocrats. Ideologists will resist as they look for that perfect but perfectly elusive monetary system. Wise and pragmatic policymakers, on the other hand, will seek to use Bitcoin to make the world a better place.

This is what it means for public policy

First, we should not assume that cryptocurrencies share more in common than they actually do. Bitcoin takes them all precisely because no one leads that. Politics should start here from a place of understanding, not cryptocurrency in general, but Bitcoin in particular. As President Biden’s executive order indicates, digital assets are here to stay. The general category is not going anywhere precisely because Bitcoin, in itself, is not going anywhere. We owe special attention to it. Not just Bitcoin, but Bitcoin first.

Second, Bitcoin is credibly neutral as the network remains without leaders. Consequently, the US can use and support Bitcoin without “choosing winners and losers”. Bitcoin, in fact, has already won as a globally neutral money network. Fostering the Bitcoin network, using Bitcoin as a reserve asset, or making payments through Bitcoin would be analogous to deploying gold within the monetary system: digital only, more portable, more divisible, and easier to audit and verify.

We commend President Biden for acknowledging that digital assets deserve attention. We will need all hands on the platform (of computer scientists, economists, philosophers, lawyers, political scientists, and more) to stimulate innovation and nurture what is already here.

This article was co-written by Andrew M. Bailey, Bradley Rettler e Craig Warmke.

This article does not contain any investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts, and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Andrew M. Bailey, Bradley Rettler e Craig Warmke they are fellows of the Bitcoin Policy Institute and the Resistance Money Bitcoin research collective and teach at Yale-NUS College, the University of Wyoming and Northern Illinois University, respectively. Warmke is also a writer for Atomic.Finance.

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