The Altcoin Trap

It’s a natural thought. Bitcoin exists. Therefore there could be a better Bitcoin. Something faster, cheaper, smarter, newer.

This thinking leads a lot of new holders to altcoins — the thousands of other cryptocurrencies that exist alongside Bitcoin.

Some altcoins are legitimate technology projects. Some are outright scams. Most fall somewhere in between — real projects with real teams but fundamentally different risk profiles than Bitcoin.

Here’s the pattern that plays out often enough to be worth mentioning: someone gets excited about Bitcoin, learns a little, discovers altcoins promising higher returns or faster transactions, puts money into those instead, experiences a volatile ride, and eventually comes back to Bitcoin having learned an expensive lesson.

The core issue is that altcoins generally don’t have Bitcoin’s primary property: credible, unchangeable scarcity backed by years of unchanged rules and no controlling entity. Most altcoins have teams that can change the rules. Many have done so. Some have simply stopped existing.

Bitcoin has been running continuously, without a single rule change to its supply cap, since January 2009. No team. No CEO. No single point of failure.

That track record took fifteen years to build. Nothing else has it.

None of this means altcoins are worthless by definition. It means they’re a different thing — with different properties, different risks, and a different history. Worth understanding before treating them as equivalent.

Tomorrow: Bitcoin and taxes — what people generally need to know.

— The Daily Bit