This is an opinion editorial by Julian Liniger, the co-founder and CEO of Relai.
Bitcoin exists for two reasons: As money that can be used by anyone, anywhere, and as a currency that is well-guaranteed not to melt or lose value by a central bank. But it’s also a piece of software that deliberately takes power away from insiders – even if those insiders are big miners or bitcoin whales.
What we have seen in the larger cryptocurrency space over the past few years has been a distortion of ideas and principles. The fact that the US Securities And Exchange Commission (SEC) is (finally) waking up to this nonsense is something to be expected.
When profit is thwarted by Common Sense
Seeking exponential profits with very little investment of time, brain power or capital just didn’t help crypto-token Ponzi schemes. This allows rent seekers like FTX, BlockFi, Luna, Celsius, Three Arrows Capital and countless “Web3” projects to be considered “innovations” instead of pure cash grabs.
While it is the job of a venture capitalist (VC’s) to place bets on what he believes will make money and shape the future of technology, the sheer audacity with which crypto-Ponzi industry insiders push their agendas is in the bag -oh those years are unbelievable. We read the stories of a former manager of Coinbase who was sentenced to two years in prison for running in front of its users, and we know that Andreessen Horowitz (a16z), one of the largest companies in VC in the space, preventing Ponzi schemes like Helium.
The marketing approach a16z has for its projects is summarized by Cory Klippsten:
“Most Bitcoiners promoting Bitcoin are just buying and holding as much as possible – and the people who like it the most are the people who never sell. This is kind of the exact opposite of what you see with the likes of a16z:bug -os frontal attack, selling all their channels, implementing big bombs after they buy a bunch of cheap Solana from the centralized group that controls it in the spring of 2021 They ⏤ and all their VC friend ⏤ is trading at a high in late 2021, while claiming to the world that they are HODLing.”
‘Crypto’ Is Always A Cash Grab Disguised As Tech Innovation
Everyone who learns more about Bitcoin will soon realize that it is not perfect. The block size debate is, luckily, behind us, but full mempools and new things like the Ordinals protocol show that scalability is still something to be fully aware of. I believe that the Lightning Network, as well as similar solutions, offer a viable path to secure, fast and cheap transactions, but we are not quite there yet.
Trying to improve the Bitcoin network is a noble cause, and if you feel it’s possible, trying it yourself is a legitimate thing to do. But the Bitcoin spinoffs we’ve seen over the years have all failed, in terms of adoption, brand value and price. We know that ICOs in 2017 were mostly cash grabs by retail investors, with little or no real innovation or market proof so far. Hollow buzzwords like “blockchain” soon disappeared, only to be replaced by a vague concept of “Web3” after the COVID19 pandemic.
Play Stupid Games, Win Stupid Prizes
Today, there are thousands of crypto tokens out there, with a large number of them created from the ground up as obvious Ponzi schemes without any long-term vision other than to exploit a small group of insiders. In fact, I prefer to let the market decide their fate, and not the regulators. But the truth is that the US is now stopping them after the SEC failed miserably when it came to stopping people like former FTX CEO Sam Bankman-Fried.
SEC chief Gary Gensler recently clarified that bitcoin is a commodity and, therefore, does not fall under the domain of his agency. And now, in the SEC’s lawsuit against Binance, the largest crypto exchange in the world, Gensler appears to be preparing to combat crypto Ponzis, as it includes serious accusations against the company itself and says also that a variety of crypto projects should be explained. as securities. That includes big names, like Solana (SOL), Cardano (ADA) and Polygon (MATIC).
I don’t want to cheer for the SEC or any other regulator, because we all know that in the US, we barely get away with the 30% energy tax on Bitcoin mining. And powerful people who don’t want Bitcoin to win will find other angles to attack it. But at the same time, Bitcoiners warned about FTX, Terra Luna and other shady crypto projects from day one. I am sorry for every person who burned their fingers and lost money by trusting criminals, but it is also understandable that Bitcoiners have the right to celebrate this “told you so” moment.
Crypto-Securities Discussion Comes To Europe Too
Love it or hate it, the Market In Crypto-Assets (MiCA) regulation is the first comprehensive regulatory framework for cryptocurrencies in a major economic zone. Unless you think the free market should take care of scams and bad actors (which is a fair point), you might see MiCA as a step in the right direction. At least it’s a different approach than the “burn everything” vibes we get from the Democratic Party, the SEC and other US actors
But MiCA is the starting point rather than the end when it comes to trying to tame the “crypto Wild West” in Europe. A few days after MiCA was signed into law in May 2023, a study published by the European Parliament concluded that MiCA needs to take more steps to really work. In fact, the study reached the same conclusion as we have already seen unfolding in the US: It advises that policymakers should take a closer look at things like DeFi, staking and NFTs. And, most importantly: All crypto assets should be considered securities by default.
I think that, regardless of what happens in terms of regulation, it is important to remember what makes Bitcoin unique and why we are here in the first place: It is an asset that you can own, live in a network that no one can close or control. This is it. As Adam Back says, Bitcoin is “antifragile” to regulatory pressures. And we can see that this is the key difference between random crypto projects and Bitcoin.
Bitcoin Only And Not Custodial Is The Way To Progress
Again: I’m not cheering for more regulation. I believe in the free market, and I think that with or without laws, bad actors will eventually disappear. On the other hand, I feel like everyone has been scammed and lost money in shameless crypto scams. So, I also understand why some guardrails are needed, especially when bad faith actors disguise themselves as “tech innovators.”
Companies that focus on Bitcoin and offer real, non-custodial BTC will thrive. Players who offer countless, shady Ponzi tokens to their (newbie) users will not only face regulatory scrutiny, but will also lose the trust of their customers if the tokens that were previously promoted as “the next big things” will start towards zero amid more severe regulation.
Today, more than a decade after Satoshi Nakamoto invented true digital scarcity, the Bitcoin network is stronger than ever as a true cryptocurrency. An asset is illiquid, illiquid and doesn’t have a small group of founding insiders dictating the rules. I don’t know what the future holds for Bitcoin, but I do know that there are many things that Bitcoiners like me repeat over and over again about “crypto” and why Bitcoin rings are different now than ever.
This is a guest post by Julian Liniger. The opinions expressed are their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.