Of course, Bitcoin is not a company. But in any case, the promise of Bitcoin is not that “no one came in cheaper than you”, which is an absurd and impossible standard to live up to. The promise of Bitcoin is an open, decentralized, small, robust, programmable monetary system with no rulers. The product does what it says on the tin, and Kelly’s criticism falls flat.
“Secondly, bitcoin is not actually decentralized – not only do miners group together to form ‘mining pools’, but the wealth is also hugely concentrated.”
Kelly does not summarize the relationship between miners and pools correctly. Miners are different entities from pools and they can quickly point their hash rate to another pool. And while there may be relatively a smaller number of pools, individual miners can switch between them as it is a brutally competitive market. See this September 23, 2022 screenshot from Braiins Insights Dashboard, which shows how the pools are headquartered in different countries around the world:
Source
Also current is the latest Poolin news, which saw the company suspend withdrawals. Given this, many miners pointed to hash rate gone from Poolin. Note how Poolin’s global share of bitcoin mining hash rate has gone from 12% previously, down to around 4% at the time of writing.
“On Tuesday, MicroStrategy announced that it had purchased an additional 301 bitcoins, meaning that this company alone now holds nearly 0.7 percent of the entire supply.”
Kelly claims to “steelman the argument” in this article, but unfortunately she does a poor job of steelmaning the issue of bitcoin ownership. If she understood the libertarian and cypherpunk ethos of Bitcoin, she would understand that the point is to create a monetary system without forcing people to do so . So, of course given this, there will be some people who get it before others do. Those who get it will buy, earn or mine coins before others do. The fact that one company owns 0.7% of the circulating supply of bitcoin is not a problem.
So, Bitcoin remains far more decentralized than the “crypto” coins.
“Third, a ‘first-mover advantage’ does not always last.”
That’s true in a general business context, but to understand why Bitcoin is different, we need to understand why and how far it beats alternatives, whether fiat money, gold or altcoins. Generally, to displace another product, you have to come up with something ten times better. But with Bitcoin, it’s doubtful that ten times better is even possible . Here I will quote my friend Gigi his recent Twitter thread :
The design space for money is limited, and a tenfold improvement in the monetary properties of Bitcoin is simply not possible. You can improve one thing marginally, but only by dramatically worsening trade-offs in other ways (verifiability, scalability, robustness, availability).
Kelly then writes again about the incentive of the Maximalists:
“The real reason bitcoin maximalists want to separate bitcoin from the rest of crypto is to create the illusion of scarcity in a world where there is none.”
It’s fair to say that Bitcoin Maximalists have an incentive and want to separate bitcoin from “crypto.” But the real question is: Are they right? Yes they are.
Bitcoin is rightfully different from altcoins, but it just takes a lot of research and reading to understand why. Unfortunately, Kelly has not done the research required and presents only a shallow, surface-level misunderstanding.
This is a guest post by Stephan Livera. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
