The project that I want to see in the Internet of Money is not about making millions of dollars on some ICO scheme. With fake social media likes, blown up Telegram groups, as well as highly centralized blockchain, full of bugs, with anonymous founders in charge.
The quest master can consult you on the topic of cryptos, so that you would understand what’s this all about.
Decentralization on the Blockchain
Many of the cryptocurrency related projects are not what they seem. How do you distinct a real project from the fake one? There are sites like badbitcoin.org, but in general, scam projects arrive so fast that it can take up to 10 sites to cover the incoming wave. Also, you need a hardcore investigator who has a deep understanding of what could happen. And how to chase the stolen money, for instance.
The press made you unaware. Thousands of articles in the press kept telling that closed blockchains, corporate ledgers and centrally controlled ICO companies with numerous security holes are just what we need to make Bitcoin (and a bunch of other assets) better. People invented coins to do stuff that is already working in Bitcoin or Litecoin, and put investors money in their own pockets.
The Bitcoin’s Roots: Encrypted Anarchy
BTC rose from the crypto-anarchist movement, cipherpunk movement and a bunch of American anti-government movements, like Volyntaryism, Anarchy, Hacking, Weed legalization, etc. It had nothing to do with corporate people working in the shiny offices. All the core principles of Bitcoin philosophically came from cypher-punk movement and other anti-theft and anti-centralization movements of darkest underground.
The same goes to almost any ICO project or spammy tokensale in exchange business. Every day I read news about some new coin that attracted billions of USD to create something that is very similar to Bitcoin, Bitcoin Cash, Litecoin, Zcash or Monero. Basically, hundreds of coins are just clones of the above, and they somehow attract lots of money. How? It is greed and a lack of understanding.
The investors and other people seem to really believe that all the altcoins will repeat Bitcoin’s price accomplishments and security model. Lets find out why this is not the case.
Greedy investors = Stupid investors
Some people won’t even enter the field because they have heard so many stories of losing money on cryptos. Lets give them a few hints?
1 – Who has the most of Proof of Work inside?
First – the coin’s blockchain is more secure if it has a very long chain building history, which in most cases means – more PoW power. Only Bitcoin has such a long chain building history, making its hashrate strong, difficulty high, and fanbase big. So, we even cannot measure it in any ways possible, such a big ecosystem with anonymous roots cannot be fully measured.
Still, lets look at the badass stats: many of the coins that claim they have privacy and security onboard are centrally controlled scam parties. Their Proof of Work typically cannot influence the 2 to 15 people who can change ANYTHING within such blockchain, at any time. Trusting your money with such a system is much worse than trusting a classic hype. for instance. And guess what? Their PoW power, number of transactions, and many other metrics, are usually very low.
Some altcoins have sufficient PoW to look perspective, which means that, if their PoW will continue growing, they will reach some very strong condition in the future. For example, Bitcoin Cash and MFCoin blockchains will gain much more PoW in the next year or two, maybe five, making them competitors to Bitcoin.
We can add Ethereum here, but its ecosystem is too unstable for us to call it perspective. Bitcoin Core developer Luke Dash-jr even calls Ethereum ”a toy project”, think of this definition twice before buying the coins. The key word here is toy, not project. Which leads us to the second important marker…
2 – Who controls the code?
Bitcoin Core developers are the main people who has the access to change the codebase of the main client. This is the case in any given honest bitcoin project, with a bunch of famous coders having control over the main code repo. Users are either adopt or reject any new version of the software. It is available for free.
Bitcoin Core has around 20 main developers, with 5 of them having the “root” access that allows them to propose critical-level changes and one of them having the right to ban the other five. Also, this 20 people circle is surrounded by hundreds or even thousands of peer reviewers worldwide. No other coin has such a big support from the developers, but not all of the pro devs contribute code. Some of them just watch the BIP process and contribute to their own projects, related to cryptocurrencies. Many of the industry participants simultaneously work for 2, 4, or even more projects. Some use the ideology of volyntaryism to work on the projects, and some do it purely for big money.
3 – Is this a convenient service, a tool, or a piece-o-crap?
No matter how, Bitcoin, Bitcoin Cash and some altcoins have built the base for something bigger. It’s a basis for social changes for better, as soon as the society will be ready to accept new tools. Cryptocurrencies are too hard to enter. And we must admit that the UI of most of the websites and wallets is far away from being easy to use and understand, for general public.
When I first see some new application dedicated to cryptocurrencies, I want to start crying. Its either stupid design, or stupid advertsing video on YouTube. But its always something really awful in terms of design. The only crypto wallet that is worth showing to people is Exodus wallet.
Yet, it has a closed source model of development.Also, a very questionable practice of storing the user wallet backup phrases on their servers. With further ability to recover the 12 words phrase by clicking on the link in a letter that they send to the e-mail address. Which one? The one that you specify when setting up your wallet for the first time (another privacy issue). Yes, this is a very convenient wallet and it looks strikingly, but there’s a rule in computer science: the more convenience, the less privacy.
On the other side of the wallet family is Electrum. If Exodus is a fancy sport car, Electrum is a tank laced with high tech. We can see a very broad list of things you can do with it, from double spending Bitcoin to sending coins from any number of addresses that you choose to any number of external addresses.
In most of the wallets, you can send coins to one address per transaction. In Electrum, you can send out some coins to like 10 or 15 different addresses, specify the amount of Bitcoin to be sent on each address, and pay a transaction miner fee like it was a standard transaction. Isn’t this awesome?
In the same time, if you want to invest in a broader range of crypto assets, Exodus can be the right choise. Storing Bitcoin Cash in it is easy and fun, and you can use both legacy and new address formats. Exodus doesn’t add its own ”improvements” to the blockchain assets, like the Copay wallet which tends to use new BCH address format by default. When switching from BTC to BCH, or importing the privkeys, the absence of legacy address format may scary away new crypto users as they could think that the wallet is trying to simply steal the money. Like it was the case with Electrum God wallet.
The cryptocurrency industry is full of copy-paste crap, but there are several ways to distinct a good project. It must have a sustainable amount of PoW support, well known, honest developers and clean, open source code. It also must bring in at least one or two use cases, with help of software features unavailable to other coins.