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

The executive order of the United States President Joe Biden on digital assets launched an interagency mission that aims to support financial innovation and protect American consumers’ interests. Many industry leaders appreciate the positive tone but some are calling for a crackdown. We can’t blame them.

Many cryptocurrency projects operate under thin veils that decentralize. They are sold in public on the assumption that they can distribute power. Leaders pull the strings behind closed doors. Wonderland was the latest example of a fraudster and felon who directed $1 billion in treasury funds.

Many projects pay influential people to sell their tokens. The price pumps. Insiders dump. Naive investors lose money. Celebrities are sometimes the shillers. Sometimes, celebrities reveal the shockingly low price of their integrity.

Related: Year of sponsorships – Celebrities who adopted crypto in 2021

Many projects are vulnerable to technical issues. Hackers exploit software vulnerabilities almost every week. With $326 million, the third largest ever was in February. Then, in late March, another $600,000,000 — poof.

Many cryptocurrencies are scams, some proudly pyramid-shaped. These cryptocurrencies are accepted by market participants as fact of life. They are often referred to as exit scams (“rug pulls”) or pyramid-shaped projects (“Ponzis”).

Most people think of cryptocurrency as a bunch of tomatoes in Aisle 9 — only they are tasteless, unusable, and much more common. The cynics see the cryptocurrencies menu as a proxy for their most-wanted items. Both are wrong.

One item stands out on the menu. This is undoubtedly one of the most important technological advancements since the internet. We don’t care if you buy it or not. We do however care that three professors convey one message: Bitcoin (BTC), is unique. It is worth studying and discussing.

Let’s talk Bitcoin

Bitcoin is truly decentralized. There are thousands of nodes running around the globe. It is simple to operate a node. You can do it in less than an hour using an internet-connected computer with a few hundred gigabytes storage. These nodes opposed a controversial Bitcoin change in 2017 that would have made it more difficult for ordinary people to manage a node. They trumped the majority of Bitcoin miners and exchanges, as well as other legacy players.

Bitcoin’s decentralization ensures that it is fair. A foundation does not have a trademark and cannot control its monetary policies. This is in contrast to more central cryptocurrencies and the Federal Reserve. Three Federal Reserve officials resigned in the last year after a series, let’s just say, of well-timed trades. Bitcoin has never seen disgraceful resignations of its officials. These jobs are automated by the network.

Bitcoin’s centralization makes it more secure. The majority of money in digital form is under the control of third parties, such as banks and payment processors. However, innocent Canadian and Russian citizens remind us that these balances can be frozen and taken over by third parties, particularly when they are subject to state pressure. Funds can be at risk if you rely on third parties. Bitcoin users can save and send money without the need for third parties by having their private keys. Bitcoin is a cryptocurrency that stands out from other cryptocurrencies. Bitcoin’s unprecedented level of decentralization in the digital age makes it a safe haven from corporate and state overreach.

Related: A significant shift from Bitcoin maximalism towards Bitcoin realism

Bitcoin, unlike other cryptocurrency, has never been sold to venture capitalists. Bitcoin is the most widely used digital asset. It is the most widely distributed digital asset. There are no insiders, but only early adopters.

Satoshi Nakamoto was the main early adopter. He mined approximately a million Bitcoins (5% of the maximum supply). Satoshi has no known holdings and never spent any money. Most cryptocurrencies make the wealthy richer. Sometimes they do so in secret ways and have greater control over the network. Bitcoin is different.

While some projects move quickly and break things, Bitcoin is slow but steady. Bugs are very rare. This conservative approach comes with its own set of tradeoffs. Upgrades are rarer than bugs. Bitcoin is not as flexible as other platforms. However, in exchange, corporations and countries feel more secure having Bitcoin on their balances.

Hacks and theft of Bitcoin are two examples you may have heard about. These cases are not related to Bitcoin’s weaknesses. These cases illustrate the dangers of insecure key storage and relying upon third-party custodians.

Related: Satoshi may not have had to use an alias. But can we still say the same?

Bitcoin is not a scam. Bitcoin can be used to scam others, just like the U.S. Dollar or other digital assets. The Bitcoin network allows final settlement of its native asset just like the Federal Reserve System does for the U.S. dollars. There is a lot of speculation about the Bitcoin price. This is how innovation begins in its early stages. It is something that people around the world need, even if they are not privileged Westerners.

Bitcoin’s design is a series of tradeoffs. Although privacy is not impossible due to its public ledger, it makes it difficult for people to access it. It needs energy to ensure its security. Its fixed supply causes price volatility. Bitcoin is a unique monetary system that is not controlled by autocrats. As they search for the perfect, but still elusive, monetary system, ideologists will be disappointed. Instead, pragmatic and wise policymakers will seek to use Bitcoin as a way to improve the world.

Let’s see what this means for public policy.

First, it is wrong to assume that cryptocurrency have more in common than they actually do. Bitcoin is the leader of them all, precisely because it doesn’t have a leader. This policy must start from a place where cryptocurrency is understood, not just in general but specifically for Bitcoin. Digital assets will not be going away, as President Biden stated in his executive order. Because Bitcoin itself isn’t going anywhere, the general category won’t be going anywhere. It deserves our special attention. Bitcoin is not the only cryptocurrency, but Bitcoin first.

Second, Bitcoin can be trusted to be neutral because it is not controlled by any leader. The U.S. can support Bitcoin and use it without having to pick winners or losers. Bitcoin is, in fact, winning as a global neutral monetary network. The use of Bitcoin to nurture the Bitcoin network and make payments via Bitcoin would be similar to gold being deployed within the monetary system. However, Bitcoin is more portable, easier to audit, more transparent, and more easily verifiable.

We applaud President Biden for acknowledging the importance of digital assets. To spur innovation and foster what is already there, we’ll need all hands — including computer scientists, economists and philosophers, lawyers and political scientists.

This article was co-authored with Bradley Rettler, Andrew M. Bailey and Craig Warmke

This article is not intended to provide investment advice. Every trade and investment involves risk. Readers should do their research before making any decision.
These views, thoughts, and opinions are solely those of the authors and do not necessarily reflect the views or opinions of Cointelegraph.
Andrew M. BaileyBradley Rettler, Craig Warmke and the Resistance Money Bitcoin research group are fellows of the Bitcoin Policy Institute and Craig Warmke. They teach at Yale-NUS College and Northern Illinois University, respectively. Warmke also writes for Atomic.Finance.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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