There and Back Again: A Bitcoin Tale

bitcoin cryptocurrency May 09, 2024

I first heard about Bitcoin when the Mt. Gox implosion happened around early 2014.

I saw the Bitcoin price chart and gasped when it went up parabolically to almost $1,200, then collapsed down into the $200s.

At the time, I didn't know anything about sound money, fiat currency, or the Federal Reserve, so the idea of Bitcoin seemed crazy to me, even though I was a software developer who could understand the technology behind it.

From No-coiner to Bitcoiner

Not long after, a friend of mine kept encouraging me to get into cryptocurrency, specifically Ethereum, but intuition told me that Bitcoin was the first one, so I bought a small amount of Bitcoin in 2015. I purchased no Ethereum.

I viewed Bitcoin as a highly speculative investment, but after buying it, I had skin in the game and started watching the price and the news on it.

I had my Bitcoin on an exchange and didn't own a hardware wallet.

Price-wise, Bitcoin wasn't doing anything spectacular, so I slowly lost interest in it, but not completely.

From Bitcoiner to Ethereum

2016 came around, and that same friend kept after me to buy Ether, so I traded some Bitcoin for Ethereum.

Ethereum had gone up significantly already, from a few dollars to ten dollars and then a leap up to $50 per Ether.

I was learning about Ethereum, and I liked how it was a Turing complete virtual machine where programmers like me could write programs (smart contracts) and deploy them to the Ethereum network.

Anyone could issue a token on the Ethereum network, programming that token to have particular properties and behavior.

Bitcoin was also going up in 2016, and I was taking notice, but Ethereum was where I saw the real innovation and future of cryptocurrency.

From Ethereum to the Altcoin Zoo

From Ethereum I started learning about other cryptocurrencies, and as 2017 rolled around I traded Ethereum and Bitcoin for many altcoins, including XRP (Ripple) and many others. Some had their own blockchain or network, others were tokens that used the Ethereum network.

As the bull run continued in 2017, I "diversified" into almost 30 different altcoins (most of which are worthless now).

Several of these were "Initial Coin Offerings" (ICO) tokens where people would launch a token on the Ethereum blockchain and crowdfund their project by taking investment from people like me. These were in effect very early stage software startups, many or most probably run by people who were not qualified to make them successful, and to a one, every single ICO I invested in went down to zero, including one that was an outright rug-pull scam.

Back to Ethereum and Bitcoin

That bull run peaked around the end of 2017, and I sat and watched as my altcoins, Ethereum, and Bitcoin all went down in price by massive percentages throughout 2018 and into 2019.

Most of the altcoins I owned died and never recovered. Ethereum bottomed below $100, and Bitcoin went down almost to $3,000.

I wrote off most of those altcoins and held on to just a few that I thought had a chance to make a comeback during the next bull run (Chainlink, for example), but otherwise I was back to owning Ethereum and Bitcoin primarily.

I still didn't view Ethereum as an altcoin at this time. I thought of Ethereum sitting alongside Bitcoin as one of the two "blue chip" cryptocurrencies, akin to silver and gold in the precious metals space.

The next bull run started and Ethereum and Bitcoin both skyrocketed up, peaking near the end of 2021. I had bought into some newer tokens in the altcoin zoo, not learning my lesson the last time.

When the bear market hit in 2022 and continuing into 2023, those altcoins went down to zero effectively, and I was left with Ethereum and Bitcoin again.

Back to Bitcoin Only

Ethereum switched from Proof-of-Work to Proof-of-Stake during this era, which I was excited about at first, because I could stake my Ether and earn "interest" on it, paid in Ether. (Technically they don't call it interest but that is in effect what it is.)

But Ethereum was starting to not sit right with me.

Critics pointed out, correctly, that a Proof-of-Stake model leads to a plutocracy, since those who own more Ether will stake it and gain even more Ether over time, increasing their influence and control over the network and over the social layer that governs changes to it.

Ethereum, unlike Bitcoin, has substantially changed over the year: its consensus mechanism, its inflation rate, its willingness to hard fork, and everyone knows that it will continue to change in the future: there is a roadmap by the central entities that in practice set the direction for Ethereum, including people like Vitalik Buterin, one of the founders, who have enormous quantities of premined Ether. (Vitalk has regularly sold portions of his premined Ether and made massive sums of money from it.)

Ethereum also was most likely going to be declared a security by the Securities and Exchange Commission (the SEC). And since the Ethereum founders sold Ether to people in America, that would mean that they sold them an unregistered security, something that is not allowed in the U.S.

I personally am of the opinion that, caveat emptor, buyer beware, people should be able to buy a stock or token or equity in a startup company if they want, and if they lose money, then that's their own responsibility, but that is not the way the law and regulations are in our country.

If Ethereum was declared to be an unregistered security, it would likely mean delisting from U.S. crypto exchanges, a massive loss of liquidity and market.

But moreover, the scales fell off my eyes, and I saw Ethereum for what it really was: an altcoin.

That's fine, as far as it goes. In my view, altcoins are just software startups and some could one day solve some interesting problems. But Ethereum was not just trying to solve one problem. They wanted to be the "world computer," and a Decentralized Finance (DeFi) platform, and a token launch platform, and an Non-fungible Token (NFT) platform, and also money.

That last one is important: Ethereum calls itself "ultrasound money" and claims it is better than Bitcoin at being money. It wants to be a currency, a medium of exchange, a store of value, in addition to all the other qualities.

I don't think it can succeed at this, for various reasons beyond the scope of this article.

But the very fact that it is a fork of Bitcoin and intended to compete with Bitcoin as money ("a better Bitcoin" like so many other altcoins claim) reveals its hubris.

Finally, one of Ethereum's other founders, Joe Lubin, founded a company called Consensys that provides key infrastructure and tools for Ethereum. On their website they tout all the benefits of using Ethereum for Central Bank Digital Currencies (CBDCs):

CBDCs are a globalist dream for cementing their tyrannical control of people, and here Ethereum is being put forward as a great platform to use to launch them!

Add to that that one of the alleged benefits of switching Ethereum to Proof-of-Stake was to "help the environment" and promote the green agenda, and Ethereum starts to line up with woke Marxism along multiple axes. No thanks.

There and Back Again: a Bitcoin Tale

So I found myself back to where I started: owning Bitcoin.

I do still hold a little Ether, and one NFT in particular, that's underwater, in hopes that it might go up in value and I can use the Ether to sell the NFT and divest myself of it all.

Solving the problem of sound money is a big enough use case for me. And for Bitcoin, too.

I'm fine with the other cryptocurrencies doing whatever they want. Best of luck to them as software startups, and some may succeed, sooner or later, but having sound money far outshines anything else at this point in time for human society.

The path ahead for Bitcoin is anything but certain or smooth. By itself, it would do fine, but as it has grown in market cap and awareness, it is now reaching the heights where governments are setting their sights on it and looking to control it, regulate it, and ensure that it does not provide an exit from their fiat currency systems.

It will be a titanic battle, but this the reason that Bitcoin was invented, and why its decentralization has been so highly prioritized: so it can withstand the attacks from nation-states against it.

Tick-tock, next block.


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