Over the weekend, Bitrefill CCO John Carvalho was featured on multiple panels at the Understanding Bitcoin conference in Malta. During the first panel on day one of the event, Carvalho discussed the misleading sales pitch altcoin promoters make to people who are new to the Bitcoin space and the problems these altcoins would face if they started to become as popular as Bitcoin.
Bitcoin Faces Reality
Carvalho’s comments on these points came out of a conversation around how Bitcoin’s perceived value proposition has evolved over the years. While many of the startups built in the early days of this technology were focused on payments, there was eventually a pivot towards the store of value and speculation use cases.
Payments are now being pushed onto the Lightning Network, and Bitcoin’s base blockchain is mostly viewed as a settlement layer. This allows bitcoin to get the best of both worlds in terms of the stability of a “digital gold” and the payments infrastructure of a censorship-resistant Venmo or Cash App (see a longer explanation of this point here).
Recently, Carvalho revealed that Bitcoin’s Lightning Network has overtaken all of the altcoins in terms of payment quantity at Bitrefill.
In Carvalho’s view, some early Bitcoiners, such as early Bitcoin angel investor and current Bitcoin Cash proponent Roger Ver, never altered their views in the face of new information around what this new technology can realistically achieve.
“[Ver] never stopped promoting bitcoin the way we all used to by mistake,” said Carvalho.
Here, Carvalho was pointing to how Bitcoin was originally promoted by many people as an anonymous, fast, and cheap payment system.
“Bitcoin is not really any of those things,” Carvalho explained. “It’s pretty much the opposite. And we always thought [it] was those things because we were ignorant and we didn’t understand Bitcoin yet.”
According to Carvalho, some people never let the idea that Bitcoin is useful for those types of use cases die, and they’re trying to recreate that original, incorrect vision of the technology with altcoins like Bitcoin Cash.
Altcoins Mislead the Newcomers
In Carvalho’s view, it’s rather easy for altcoin promoters to essentially scam newcomers into following a simplistic view of how this technology works and why it’s useful.
“New people coming into the space — we were that way when we were new. We believed those stories, so it’s a great story to tell a new person: ‘This bitcoin is faster. This bitcoin is cheaper. This bitcoin is more efficient. This bitcoin is for the people. It’s [digital cash]. It’s peer-to-peer.’ It’s all bullshit, but it’s exactly what you want to hear when you’re new,” explained Carvalho.
“It’s a really great scam,” added Carvalho. “Unfortunately, it’s not Bitcoin.”
The Altcoin Dilemma
In Carvalho’s view, every altcoin is just a lower security and higher risk version of bitcoin. While they may be somewhat useful as a medium of exchange (as long as the recipient sells the altcoin for bitcoin or fiat currency as soon as it is received), these alternatives are not something that would replace bitcoin because no one views them as a store of value.
“The problem with their idea is that the more they get close to being as successful as Bitcoin, the more their model will look like Bitcoin,” said Carvalho. “If everybody started using Bitcoin Cash, the design of Bitcoin Cash would start to resemble more and more like Bitcoin, or it won’t work.”
In other words, the altcoin sales pitch is that it has better features than Bitcoin as a medium of exchange, but the utility of the altcoin as a medium of exchange is limited because no one wants to use it as a store of value. To act as a reliable store of value, the altcoin would need to put more emphasis on decentralization and stability, which is basically Bitcoin’s modus operandi (read more on that here).