I'm trying to understand how to think about alt-coins. I don't own them nor plan to, but I want to understand the issues with these projects compared to bitcoin.
One thing is true: decentralization is binary—you have it, or you don't.
The second no person or group or government can control it, it has become decentralized. And for as long as it can be controlled, even in the slightest, it is centralized.
Bitcoin has actual scarcity through decentralization, and nothing else does.
That said, am I right to think about alt-coins as startup companies?
They are controlled by a group and working towards some market use-case. As a result, they are centralized. So they sound a lot like a startup, right?
The problem Bitcoiners have is the illusion of decentralization that many of these "crypto" projects use to guise the reality that they are controlled and that a small group benefits tremendously from the coin offering (pre-mines, etc.). All while bypassing the securities law in America that regulate these kinds of "investments."
It's as if they are "going public" with no checks and balances (or liability) built in to protect investors.
You could use the libertarian argument of buyer beware, but the problem is the public's perception that these things are regulated when they are not. If they think about these things incorrectly because these projects are using buzzwords stolen from Bitcoin, then I see a problem there.
But I also see the reality of letting the market figure this out on its own. So I get that. I wonder how many people will get turned off by "crypto" due to these alt-coins and then miss the true opportunity right in front of the—bitcoin.
Since alt-coins are centralized, they should be thought of as securities with the same risk that comes from startup investing.
Bitcoin is the only actual decentralized store of value uncontrollable by any single entity or group.
It seems like most of this is an informational and definition problem.