Jimmy Song was a guest at the WhatBitcoinDid podcast, presented by Peter McCormack. The subject? Shitcoins.
No bitcoin? Shitcoin
Bitcoiners regularly criticize altcoins, they have a pet name for this: shitcoin. This term has become synonymous with anything that is not a bitcoin. From the centralized nature of these projects to pre-mines. Bitcoiners call all altcoins a bad investment, with some going so far as to call everything that is not a bitcoin a scam.
But why can these projects raise millions of dollars in funding and why are investors so divided in their opinions? Are bitcoiners right that blockchain without bitcoin is actually completely useless? Or are they just short-sighted?
Investors with multiple cryptocurrencys are naturally positive about their investments. Are they right that altcoins are going to create a new wave of decentralized technology or are they only positive because they have a big position?
Technically better, but it doesn’t help you
There are almost five thousand cryptocurrencys. Many claim they are superior to bitcoin. Consider larger blocks, faster block times, cheaper transactions, better smart contracts or efficient use of the consense mechanism.
But at what price? The most important argument for using blockchain is decentralization. Bitcoin is miles ahead of any other cryptocurrency when it comes to decentralization.
So if decentralization is crucial, why do altcoins continue to attract investors despite clear risks?
Is it only about marketing? And are all these centralized “foundations”, the builders and companies doomed to fail?
Jimmy Song and Peter McCormack answer all these questions and more. The podcast is a response to the article On Altcoin Valuation by Jimmy Song.
In it he says that altcoins have more in common with fiat money than with bitcoin.
Marketing, marketing, marketing
He mentions Feathercoin, Auroracoin and Steem as examples of coins that are technically supposedly better than bitcoin but have all failed. According to Song, technical innovations from altcoins are not about anything without a market.
That is also his whole argument, successful altcoins only rely on good marketing:
The game that altcoins play is one of effective marketing. The most valuable coins have succeeded in creating demand almost exclusively through marketing. In other words, the question is largely artificial.
The technical efforts can easily be copied, but marketing dollars cannot. This also explains why so many altcoins spend so much money on sponsoring conferences, parties, airdrops, online advertisements and contributions to charities.
The market capitalization of a currency usually reflects the effectiveness of the currency’s marketing efforts.
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