Shitcoin Economy: Part 1 - Category

Shitcoin Economy: Part 1 - Category

By xuanling11 | Crypto Learning | 30 Aug 2021


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Here we go, I am about to write up my Shitcoin economy this week with probably a 5-part series. 

Part 1 - Category: it is about how to categorize cryptocurrency away from other digital currencies

Part 2 - Regulations: it is about why the government wants the regulation but they cannot do so

Part 3 - Environment: it is about how environmental impact on the cryptocurrencies and possible its valuation for the future

Part 4 - Technology: it is about how technology can change the way shitcoin performs and how crypto may evolve to become

Part 5 - Detokenization: it is about speculation that if Bitcoin actually extinct and what may happen

I may change parts depending on my research but here is for you guys to enjoy reading.

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Not all crypto is created equal. Some cryptocurrency is just a virtual currency even they may run on the blockchain. It does not matter how the blockchain runs it whether through Proof of Work or Proof of Stake or other forms. As long as they disguise as virtual currency but not a cryptocurrency, the coin is less likely to survive in the long term.

 

Why crypto can survive?

The only sole reason crypto may survive is censorship resistance. No one can shut down the crypto but people themselves. If only no one will use the crypto, it will die out. 



Why Bitcoin White Paper Got Wrote it the Way

Have you ever felt strange about how Bitcoin white paper was written? Although there are 12 parts on the paper, the white paper was only talking about two significant core ideas: digital signature and how mining works if possible without a full network node.

So Bitcoin is resistant to both double-spending and censorship. 

 

Bitcoin’s ancestors

There are many attempts of Bitcoin-like digital currencies either in theory or in practice but all fail. 

E-gold is one of the examples that was created in 1996 and you can use it as long as you have an email address to register an account.

It was the first successful digital currency system that offered a pseudonymous digital currency that originally backed the services accounts with gold coins stored in a bank safe deposit box in Melbourne, Florida.

In 1999, E-gold introduced support for wireless mobile payments.

In 2000, there were exchange platform provided services to exchange from national currencies to E-gold.

There were more than 2.5 million accounts before shut down by the government in 2008 with four counts of violating money laundering regulations and knowingly allows a transaction to purchase child pornography.

Coincidently, Bitcoin was born in 2009 right after the death of E-gold.

What got E-gold killed has to reasons, its status as virtual currency and it did not have censorship resistance.



Legal tender vs Legal currency

Legal tender means the currency can act as a contract when someone services you and you obligate to pay them with the currency. The idea is very similar to a smart contract when conditions are met, it automatically executes the payment transaction.

Legal currency means the currency is legally to use but one can refuse to accept. Think about spending Canadian dollars in the United States, the store may refuse to accept but Canadian dollars are legal currency.

Therefore, the distinction between legal tender and legal currency is that a legal tender is an enforceable contract but legal currency is not.

Digital currency can be a legal currency as long as people want to accept it but it cannot be a legal tender unless the government makes it be.

In this sense, Ethereum is more resemble of money than Bitcoin does.

 

Virtual currency vs Cryptocurrency

Both virtual currency and cryptocurrency are digital forms of currency that do not have value themselves. 

Both currencies can be centralized or decentralized.

The difference is virtual currency does not store value but cryptocurrency can be a good store of value. 

Virtual currency is issued by the entity that controlled valuation by backed the currency value up with or without the disclosure.

Cryptocurrency only trades on its speculation valuation.

One of the more important factors is that cryptocurrency is censorship-resistant and unhackable.

 

Shitcoin category

I mentioned that every digital currency starts its journey as a shitcoin. Only if it can prove of censorship resistance ( not self claim to be the one) has a potential to be a good store of value. 

Crypto tokens on other hand, are virtual currencies like run on top of the blockchain said Ethereum. They are not good to store value so that their price fluctuates broadly. They are not technically censorship resistance on their own and they are prone to hacking.

Stablecoin is a virtual currency like too. Its value is backed by the real assets but itself is not technically censorship-resistant on its own and it is prone to hacking.

 

To the moon

Shitcoin may likely to the moon once because its valuation cannot be held longer by testing its capabilities. Largely due to the sell-off of the hype and cool off faster than many people can realize.

 

In conclusion

Be able to distinguish between virtual currencies and cryptocurrencies can help you to spot the potential of the shitcoin that may become the next “Bitcoin” or blue gem coin.

 

Stay Tune for part 2!


Photo by FLY:D on Unsplash

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Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose cryptocurrencies are mentioned in this article. This information is only for educational

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xuanling11
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A delusional author who is possibly a nut job without any questions whatsoever about expertise in the subject matters to write with a freestyle.


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