One of the biggest mistakes many people make when dipping their toes into the cryptocurrency waters is underestimating Bitcoin's noble mission. They are dazzled by “the possibilities of the technology,” and either don't fall for it, or are slow to realize how important it is to separate money from the state. Bitcoin seems too simple to them, so they covet more.
This doesn't just affect users. It affects developers too. Vitalik Buterin is the best example of this.
A little-known anecdote in the cryptocurrency industry is that Ethereum was born out of the resistance Vitalik faced when he wanted to make Bitcoin more complex beyond its monetary use. It was 2012, and the then-co-founder of Bitcoin Magazine came across an idea from Yoni Assia, founder of the eToro exchange.
The idea, dubbed Colored Coins, involved "colorizing" certain Bitcoin transactions, adding metadata that would allow them to represent assets like stocks, property, or art. It was like painting banknotes so that each one represented something unique, but in the digital world. It was the first tokenization proposal in Bitcoin, something that has been proposed multiple times on other platforms.
The proposal encountered many obstacles, both technical and human. Bitcoin's scripting language didn't easily allow for all of Vitalik's dreams, and most community members at the time were focused on Bitcoin as money, so there was no interest in introducing changes that would make the protocol more complex.
It was for this reason that Buterin created Ethereum, with the promise of turning it into the world's computer, capable of decentralizing all the world's applications and running all possible and composable programs.
However, today Ethereum, and most altcoins really, are slipping into irrelevance due to a harsh reality that everyone will eventually understand: so-called blockchains are only useful in adversarial environments. When Coinprism, the longest-running colored coin platform, shut down, its CEO Flavien Charlon justified it this way:
“In 99% of the use cases we see, blockchain technology is unfortunately a suboptimal choice. It has numerous drawbacks in terms of speed, scalability, cost, and user experience. Unless censorship resistance is a fundamental requirement (which is rarely the case, especially in the enterprise blockchain space where all participants know each other), blockchain is rarely the right technology choice. The much-vaunted transparency, privacy, and cryptographic security of blockchain can be achieved “fairly easily” with a traditional system. In the end, it came down to intellectual honesty. I didn’t like having to support projects that tried to use blockchain for the sake of using blockchain, when I knew a more boring, centralized architecture would work better.”
Flavien Charlon – CEO of Coinprism
For years, people have bought into the blockchain innovation scam. Every cycle brings a new fad that fuels insiders to make millions with tokens they'll then dump on the most naive. ICOs, NFTs, Play2Earn. We are bored of naming them. Often, the potential utility of these innovations, as in the case of DeFi, has been overshadowed by the sheer volume of money swindled. Interestingly, each of these narratives has emerged from Ethereum, driving its price higher for several market cycles.
But in this cycle, no new narrative has gained traction. Memecoins had a momentum that they lost relatively quickly, but they serve as the epitome of empty narratives because they don't even try to hide it: they are a complete mockery.
In this cycle, all eyes are on Bitcoin. Since spot ETFs were approved and BlackRock entered the game, every institutional investor wants to buy Bitcoin. Since Trump announced that the United States would create a Strategic Reserve, everyone has been talking about Bitcoin.
Bitcoin is the narrative of this cycle, and it seems Vitalik wants to capitalize on this as well, as a way to rescue Ethereum from indifference. After struggling to make it more complex, thirteen years later Vitalik promises that Ethereum “will be almost as simple as Bitcoin.”
Since 2017, ETH has steadily lost value against BTC. Source: CoinGecko.
Something we've realized over our years in this industry is that altcoins, with their respective CEOs, are really cryptocurrency companies, so it makes strategic sense that Ethereum's CEO is now looking to align his company with the dominant narrative.
The problem is that this is impossible. And we're not saying this because of technical or protocol difficulties. Nor will we delve into Bitcoin's neutrality, a topic we've addressed repeatedly. Although it's related to the latter, here we'll emphasize the concept of predictability.
In an increasingly uncertain world, where Artificial Intelligences can make super-realistic videos of Donald Trump and Xi Jinping’s secret romances and it would take a while to confirm whether it is true or false, maintaining a respective share of doubt, Bitcoin is certainty. There is an army of notaries who distrust each other validating that each new transaction written on the ledger is legitimate, and each block that is added deepens the irrefutable truth.
In a world where politicians issue trillions of dollars at will under the guise of manufactured crises, Bitcoin has an army of watchdogs ensuring that the supply limit is respected and that the issuance schedule is kept firm.
In a world where cryptocurrency companies are constantly tweaking their monetary policies, changing their monetary policies through forced upgrades (hard forks) that require you to comply with the will of the leaders if you want your money to continue having value, Bitcoin offers complete backwards compatibility and, if you want, you can run the same software that Satoshi ran in 2009.
No social artifact in the world offers the degree of predictability and certainty that Bitcoin offers. The fact that one can mathematically know when each coin will be issued, when the issue will be reduced, and when the last unit will be mined is unprecedented in the history of money. Not even gold, of which new deposits are occasionally discovered, offers that level of certainty.
No matter how many changes CEO Vitalik makes, Ethereum will never resemble Bitcoin. If there's one thing that has defined Ethereum, it's change.
Initially, it was believed that ether had no value as money, that it was only used to pay for the gas required to compute complex transactions, so there was no emission limit. After ether became in demand as money, various monetary policy changes began.
The history of Ethereum, in contrast to that of Bitcoin, seems like a history of improvisation. The problem with all these changes, besides the risks introduced by complexity, is that they were hard forks; you're either with us or against us; you either row or you drown. In short, that's how things work in business; you have to follow the leader.
All of this makes it impossible for any other cryptocurrency to resemble Bitcoin. While it seems like Bitcoin is the new trend in this cycle and the new narrative, it's not something Ethereum can achieve with any changes. The KISS (Keep It Simple) design principle implies starting with simplicity. In Ethereum's case, complexity is already built in.
