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Bitcoin and Everything Else


Just in case you've been living under a rock, and honestly if you have been, I don’t blame you with the current world events. There’s a very interesting trial going on in New York City. Sam Bankman-Fried (SBF), CEO of bankrupt crypto exchange FTX, is on trial. Bankman-Fried burst into our collective consciousness with his crazy hair, as a t-shirt, cargo shorts-wearing wunderkind. Turns out it was all a carefully crafted, giant scam perpetrated by an extreme, narcissist fraudster who would make the boys of Enron and Bernie Madoff blush. Even his hairstyle was meant to manipulate the public:











(Speaking as someone with naturally great hair, I really resent that tactic.)


A lot of us were fooled including VC’s, celebrities, politicians and sadly everyday investors who were just trying to get ahead or at least stay on top of inflation that was eating away at their life’s work. But then, when you have a massive marketing campaign funded by investors' deposits, featuring pro sports heroes and super models, it’s easy to be fooled.


I could dish more about the trial. It's pretty salacious and a great distraction. However, one key piece of testimony came out yesterday at the trial from Caroline Ellison (pictured above), the former CEO of Alameda Research (the secret trading arm of FTX) and sometime SBF girlfriend. (I told you it was salacious.)


This exchange between Ellison and the prosecutor highlights the difference between Bitcoin and every other crypto/blockchain:


Prosecutor: Was Solana a centralized coin?

Ellison: Yes, it was a VC blockchain that we could turn on and off at will. Prosecutor: Did you ever need to turn it off?

Ellison: Yes, to liquidate users who were long.

Prosecutor: Who turned it off?

Ellison: FTX developers.


This exchange gets to the very essence of the difference between Bitcoin and everything else or “crypto.” Every other blockchain has some sort of stakeholder or central authority that can influence or censor other users and thus the game is rigged. Maybe not as egregious as this Solana example, but even the #2 blockchain project by market cap, Ethereum, falls into this category. So it’s “buyer beware” with every crypto, other than Bitcoin.


Bitcoin is a commodity with no central authority or stakeholder; everything else is some sort of private project that has stakeholders who can unduly influence the workings of that blockchain. Even the head of the SEC, Gary Gensler, has reiterated this fact many times, as he ponders the decision to approve the filings of multiple Bitcoin spot ETFs.


What that means is Bitcoin is the only digital commodity. Many compare Bitcoin to gold but there are a couple of key differences that make Bitcoin different. Most notably is the golden rule: “Those who have the gold make the rules.” Bitcoin is different in that even if you have lots of Bitcoin, you still don’t have any kind of influence. It’s immutable: you can’t break it, you can’t hack it, you can’t change the rules.


My other favorite difference between Bitcoin and gold is that you can’t break up a bar of gold into 100,000,000 little pieces and send just one piece (a Satoshi) across the world at the speed of light. With Bitcoin you can. It’s this reason, in my opinion, that Bitcoin is the only digital commodity that will fuel ecommerce and machine-to- machine transactions for the next 100 years.


All the best,


Jim



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