Why Bitcoin isn’t crypto anymore

The decoupling of Bitcoin from the rest of crypto is happening in real time and has been for a while. Jack Dorsey kind of just went and said it out loud.

Let’s start with a hard truth: Bitcoin created crypto. It therefore, inherently is, crypto. So why would Jack say this? Well, I obviously don’t know, but I do agree with his sentiment.

Over time ‘crypto’ has been hijacked, both philosophically and technically. Sometimes accidentally, sometimes intentionally.

Whether ‘crypto’ is willing to accept it or not, it philosophically no longer holds a lot of the original Bitcoin ethos, which is because technically, like boiling frogs, lots of crypto has moved toward tech that looks nothing like it.

Many blockchains have far less decentralised consensus than most would realise… a couple of nodes the projects themselves own and run. In some cases projects set up validator nodes with service providers to pay for services via token emissions, and threaten to shut them down if they stop working.

Sure, obscured, but it’s still person A pays person B for a specific thing. Feels pretty centralised to me. Very not Bitcoin, too.

Decentralised governance? Maybe even worse. The votes that come from these projects to ‘decide what happens’ with ‘community consensus’ are almost entirely theatre now. One or two main holders (often foundations or teams) just deciding on the path they want. A PR stunt, more than actual decentralised mechanic — the premise of a governance token being something people actually laugh about at ‘the water cooler’ now.

To make matters worse, this is all often the wealthy elite holding said tokens, making said decisions. Again, not a full representation of the world at large. Not very Bitcoin.

Add in more of the core values — truly peer-to-peer. Is it that? Not really. Stablecoins get frozen quickly… by, you guessed it, an outside middleman.

What about privacy? Up until recently it had completely left the conversation. Most don’t even care. But it is probably one of the most important things lost over the last few years. As @0xMert_ said: “Crypto without privacy is not actually crypto.”

To top it off, crypto has been used to scam or gamble for the longest time, so much so that its brand is maybe one of the most untrusted in the world — seen by many as a means to make (or lose) money, not as a technology that, dare I say it… can change the world for the better. Bitcoin has found a way to slowly disassociate itself with this.

You see the hard tangible results of this in any search function on social media. I see it myself in my results — nobody wants or clicks on crypto, but they definitely click and search Bitcoin. On TikTok, crypto as a word was even shadow banned, which feels like it might have only stopped recently.

In the end, words are just words, but the word ‘crypto’ now means something different to what it originally did. Many in the industry embarrassed to say that’s what they do for work.

Bitcoin didn’t start or become what it is because people were looking to dump, profit or stand on top of the people around them, but because people saw it as a technology that could change the world — that the world needed — Satoshi being a very pure selfless example of that.

If you want my incredibly cynical, unfortunate take: most of crypto is just a derivative of Bitcoin, most just using the brand name to grift and profit off what it created in whatever means possible. I however say most with emphasis, because really, there are some amazing bright spots.

So what happens now?

Well, instead of ‘Bitcoin decoupling from crypto’, I think ‘crypto is decoupling from Bitcoin’. Bitcoin hasn’t really changed philosophically or technically in a while, but crypto has. This tangibly also shows in price action.

To me, it creates ‘two worlds of crypto’, a divergence, a huge crossroads the technology faces that is becoming more and more apparent.

Real Crypto

The first is projects that are doing similar to what Bitcoin did and is doing. Leaning more into the values that made it work in the first place. Or maybe even projects that have their own values to solve a problem that are just as important, becoming their own thing, that could birth other things — versus being some sort of derivative.

You can see this in something like TAO, it is arguably its own sector entirely, and its price shows it moves fairly independently. This is also the case with some of the tech in the privacy sector right now, like Zcash, Monero and even some new ‘post-blockchain experiments’ like Shift Foundation. Hell, even Jack Dorsey’s new P2P tech.

Most of this tech though, likely doesn’t even exist yet.

Pretend Crypto

The other world I don’t love as much — and I think is maybe a wolf in sheep’s clothing.

A lot of crypto is pretending it holds a lot of the original ethos, when in reality it isn’t true. They are just a regular centralised business dressed in Bitcoin clothing and called the same thing. They have some blockchain tech injected into it, parts of it, at least, but the reasons and mission is completely different.

This is what stablecoins are right now (fiat system with blockchain injected into it), a lot of current blockchains are this, and as mentioned above, the projects with pretend governance tokens are arguably this, too.

A lot of the new chains large institutions and banks soon build will likely also be this. Not Bitcoin… but instead something else, all while still claiming an intrinsic link to Bitcoin and its ethos, what it tried to do for the world, which just isn’t really true.

So…

This big ‘crypto’ crossroads is going to create more conversation about ‘different types of crypto’, what is and what isn’t. There is a very real divergence happening right in front of us. Both of these worlds of the tech will likely have large positive impacts on the world, but many would argue ‘pretend crypto’ is a way to kill ‘real crypto’ in stealth, something that’s been tried many times before. Others would say both existing is great for the industry, and have a place.

I personally think that crypto being adopted by the centralised world is amazing and can do many great things. Though only if the original crypto ethos and tech survives, is also embraced, is not shut down by this same world — by slowly turning the heat up and, like boiling frogs, is cooked alive into non-existence.

I wrote this over a coffee this morning… well, a few coffees. Mostly free thought from someone terminally online in crypto every waking minute. I normally make videos, but heaps of research and ideas die in my notes app as drafts, so thought I’d try a format out so less things died. You can check out some of those videos here.

If you liked it, let me know. If you didn’t, let me know too. My hope is to encourage a wider discussion and thought about the way we approach this tech, what’s happening, why, and its impact on the world.

Happy Monday :) Nev

Originally published on X