Bitcoin Is Different From Other Cryptocurrencies And What This Means For U.S. Public Policy


US President Joe Biden’s Executive Order on Digital Assets launched an interagency mission to support financial innovation while protecting US consumers and interests. While many industry leaders welcome the constructive tone, some critics hope for a crackdown. We don’t blame them.

Many cryptocurrency projects operate behind a thin veil of decentralization. They are sold openly on the premise of allocating power. Behind the curtain, the leaders pull the strings. In the recent case of Wonderland, a serial scammer and felon has ordered a $1 billion treasury.

Many projects secretly pay out tokens to influencers. price pump. Insider Dump. The naive investor loses money. Sometimes Schiller is a celebrity. And sometimes those celebrities divulge a surprisingly low cost of integrity.

Relevant: Sponsored Year: Celebrities Who Adopted Crypto in 2021

Hundreds of projects are experiencing technical vulnerabilities. Every week, hackers seem to exploit hidden software bugs. The third largest amount disappeared in early February to $326 million. And at the end of March we had another 600 million dollars.

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Many cryptocurrencies are blatant. scam — Some are proudly pyramid-shaped. Market participants engage in exit scams (“rug pulls”) and pyramid-shaped projects (“Ponzis“).

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For most, cryptocurrencies look identical to the tomato on aisle 9. Tasteless, useless, just more. Cynics see the cryptocurrency menu as a proxy’s most wanted list. Neither group is completely wrong.

However, one item on the menu stands out. It is arguably one of the more important technological advances since the Internet itself. Buy it or not, we don’t care. But our three professors Care To get one simple message: Bitcoin (BTC) special. Worth researching and discussing.

Let’s talk about Bitcoin

Bitcoin is truly decentralized. tens of thousands operation Nodes around the world. Running a node is easy. All you need is an internet-connected computer and hundreds of gigabytes of storage space and you can do that in an hour. In 2017, these nodes refusal A controversial change to Bitcoin that would have increased the centralization of the network by making it more difficult for ordinary people to run nodes. In doing so, they outperformed the majority of Bitcoin miners, exchanges, and other powerful legacy players.

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Bitcoin’s decentralization makes it fair. No foundation uses the trademarks or controls monetary policy. This contrasts not only with centralized cryptocurrencies, but also with the Federal Reserve itself. Over the past year, three Federal Reserve officials have resignation After a series of trades, the trades are made at the right time. Bitcoin has not had a single official who has resigned in disgrace. There is no such management. The network automates these tasks.

Bitcoin’s decentralization also makes it secure. Most money is digital and is in the hands of third parties such as banks and payment processors. However, innocent Russian and Canadian citizens are reminded that third parties can freeze and seize these balances, especially under state pressure. Reliance on third parties jeopardizes your funds. Bitcoin participants can hold their own private keys, allowing them to store and send value without a third party. Bitcoin is in a different league from other cryptocurrencies. Bitcoin’s unparalleled level of decentralization in the digital age that much A safe haven from excessive access by countries and businesses.

Relevant: A meaningful transition from bitcoin maximalism to bitcoin realism

And unlike most other cryptocurrencies, Bitcoin has never sold private tokens to venture capitalists or offered initial coins to enrich insiders. Bitcoin is the most widely circulated digital asset. Significantly, there are no insiders, only early adopters.

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A major early adopter, Satoshi Nakamoto, has mined around 1 million BTC (5% of the maximum supply). Satoshi’s assets are fully public, and Satoshi has not spent a single penny. With most other cryptocurrencies, the rich get richer, sometimes in hidden ways, and have more say in the network. Bitcoin doesn’t.

Some projects move fast and break things, while Bitcoin moves slowly but surely. Bugs are rare. Of course, this conservative approach has its pros and cons. Upgrades are as rare as bugs. And Bitcoin lacks the flexibility of other platforms. But in return, countries and businesses feel secure with Bitcoin on their balance sheets.

You may have heard of hacking and Bitcoin theft. In these cases, the weakness of Bitcoin itself is not included. Instead, it shows the pitfalls of relying on insecure keystores or third-party custodians.

Relevant: Satoshi may have needed an alias, but can we say the same?

Finally, Bitcoin is not a scam. it can definitely be used Much like US dollars or other digital assets. However, the Bitcoin network provides final settlement of native assets just as the Federal Reserve provides final settlement in US dollars. People speculate like crazy about the Bitcoin price. This is the way to go for the early stages of innovation. And people around the world need it, as privileged Westerners guess.

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Bitcoin’s design certainly includes trade-offs. Public ledgers make privacy difficult, if not impossible. Energy is required for security. And its fixed supply causes price volatility. But despite all that, Bitcoin has become something of a surprise. A neutral monetary system outside the control of a dictator. The ideology will be hesitant as it pursues a monetary system that is perfect but difficult to fully grasp. In contrast, wise and pragmatic policymakers will want to use Bitcoin to improve the world.

Here’s what it means for public policy:

First, we should not assume that cryptocurrencies share more in common than they actually do. Bitcoin leads everything precisely because nobody leads. that. Policies should start with an understanding of Bitcoin in particular and not cryptocurrencies in general. As indicated by President Biden’s executive order, digital assets remain intact. The general category doesn’t go anywhere because Bitcoin itself is going nowhere. We must pay special attention. Bitcoin as well as Bitcoin come first.

Second, Bitcoin is definitely neutral because the network remains leaderless. As a result, the United States can use and support Bitcoin without “choosing winners and losers”. In fact, Bitcoin has already triumphed as a globally neutral currency network. Fostering the Bitcoin network, using Bitcoin as a reserve asset, or paying via Bitcoin is similar to distributing gold within a monetary system.

I commend President Biden for recognizing that digital assets deserve attention. It takes computer scientists, economists, philosophers, lawyers, political scientists and everyone else to spur innovation and nurture what already exists.

This article is Andrew M. Bailey, Bradley Letler And Craig Womke.

This article does not contain investment advice or recommendations. All investments and trading involve risks and readers should do their own research when making decisions.

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

Andrew M. Bailey, Bradley Letler And Craig Womke He is a fellow of the Bitcoin Policy Institute and the Resistance Money Bitcoin research group, and teaches at Yale-NUS College, University of Wyoming, and Northern Illinois University respectively. Warmke is also the author of Atomic.Finance.

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