MBitcoiner on Nostr: What separates Bitcoin from crypto: For crypto, there's almost always an ICO or ...

What separates Bitcoin from crypto:

For crypto, there's almost always an ICO or premine. There's a startup that handles the initial distribution of the tokens. They heavily influence the technical and economic policy of the token production. These incentives always lead to the founders manipulating the crypto's policy in their favor. The end result is the dumping on retail.

The incentives of crypto trying to be more than just money necessarily lead to centralization as the value is exogenous, which also means that the security of crypto is exogenous and must be managed by the founding startup. So this makes crypto not neutral as the incentives lead to market actors trying to take control of the network to dictate the coin's technical and economic policy. The incentives lead to crypto being not neutral.

Crypto's main advertised 'DeFi' use cases involve rehypothecation and leverage. And this is obvious when you consider that almost all of these cryptos, especially PoS ones, offer some sort of yield. But it's just circular, as the purpose is to stake tokens to receive more yield, to acquire more tokens to further receive yield. And this has a centralizing effect, which goes back to the earlier point about incentives and controlling/influencing the network.

In contrast, Bitcoin's emergence and distribution is fair. There's no startup or premine. There's no leader. Its value and security is endogenous because it's only trying to be money. It's actually decentralized and permissionless. Proof-of-work is fair and cannot be cheated. There's no 'tokenomics' or 'roadmap' to influence. Bitcoin can only be used in a neutral way. It's just an open and neutral protocol for transferring value across space and time.