If you’re new to the Bitcoin space, the last few months have been pretty crazy.

There have been some steep climbs and heart-stopping drops making for a roller coaster of emotion that’s not easily controlled. The price action is both thrilling and at times, painful, so it’s easy to lose sight of what you’re investing in. All the coins seem to be running together, so what’s the difference? How is one coin to be distinguished from another? And more importantly, how is an investor to know what the long term value of a coin will be?

In this article, I’m going to make the case for what makes Bitcoin different, how Bitcoin is a system that, despite all the cloning, has yet to be truly replicated.

Real Innovation

To really understand the value proposition of Bitcoin, it helps to look at a bit of history. It’s tempting to think that the newest ICO or altcoin is the one that will finally “improve” Bitcoin and fix all of its problems and that Bitcoin will be relegated to the dustbin of history due to its lack of some “feature”. Indeed, nearly every altcoin, ICO or hardfork thinks that they’re being innovative in some fundamental way. What’s missed is that the biggest innovation has already happened.

Decentralized digital scarcity is the real innovation and Bitcoin was the first, and, as this article will make clear, continues to be the only such coin. All the other so-called innovations such as faster confirmation times, changing to proof-of-whatever, Turing completeness, different signature algorithm, different transaction ordering method and even privacy, are really tiny variations on the giant innovation that is Bitcoin.

It’s important to remember here that alternatives to Bitcoin have been proposed since 2011 and none of them have even come close to displacing Bitcoin in terms of price, usage or security. IxCoin was a clone of Bitcoin created in 2011 with larger block rewards and a premine (large number of coins sent to the creator). Tenebrix was an altcoin created in 2011 that tried to add GPU resistance and again had a large premine. Solidcoin was another altcoin created in 2011 with faster block times and again, a premine. About the only ones that survived (and not living out a zombie existence) out of that early altcoin era are Namecoin and Litecoin, which distinguished themselves by NOT having a premine.

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Recently, in personal communications and small Telegram groups, I’ve noticed signs of quiet desperation growing as dreams of a quick reversal to new all-time-highs fade.

Meanwhile, Twitter is noisy with technicians, and egos attached to price predictions. Predictions are made with seeming conviction, because if right, egos will claim clairvoyance.

Here’s the truth: no one knows how far we’ll fall.

Certainly, we can make educated guesses based on technical indicators, and even predict points of support based on our early explorations of crypto fundamentals, but these are all educated guesses. Our techniques will mature over time, but reflecting on my career in the equity markets, everything will remain an educated guess. We’re predicting the behavior of humans, after all.

Some concrete numbers. If 2018 truly echoes 2014, then we could very well be in for another ~50% drop from here.

Upset that I said that? Already typing FUD!!!! in the comments? Wait until the end; discussing that reaction is the entire point of this post.

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Hearings on Bitcoin and its derivatives are being held in the USA on a regular basis, and invariably the expert witnesses fail to properly describe the actual processes going on.

If they used the correct language and excluded all analogies, the only possible conclusion would be that America cannot regulate Bitcoin under its current legal system. The Constitution guarantees the inalienable rights of American citizens, and therefore Bitcoin is a protected form of publishing. The only way Bitcoin can be made regulable is if the Constitution is changed; and that does not mean adding a new Amendment, it means removing the First Amendment entirely. Inevitably the anti-Bitcoin protagonists will face a robust and ultimately successful legal challenge that will remove the possibility of any sort of “BitLicense” or interference from the CTFC, FinCEN or any other agency. It will also remove any possibility of interference at the State level. The consequence of adhering to the basic law of the United States will cause America to become the centre of all Bitcoin business for the entire world.

Let me explain why this is the case.

Some say that Bitcoin is money. Others say that it is not money. It doesn’t matter. What does matter are three things; that Bitcoin is, that the Bitcoin network does what it is meant to do completely reliably, and what the true nature of the Bitcoin network and the messages in it are.

Bitcoin is a distributed ledger system, maintained by a network of peers that monitors and regulates which entries are allocated to what Bitcoin addresses. This is done entirely by transmitting messages that are text, between the computers in the network (known as “nodes”), where cryptographic procedures are executed on these messages in text to verify their authenticity and the identity of the sender and recipient of the message and their position in the public ledger. The messages sent between nodes in the Bitcoin network are human readable, and printable. There is no point in any Bitcoin transaction that Bitcoin ceases to be text. It is all text, all the time.

Bitcoin can be printed out onto sheets of paper. This output can take different forms, like machine readable QR Codes, or it can be printed out in the letters A to Z, a to z and 0 to 9. This means they can be read by a human being, just like “Huckleberry Finn”.

At the time of the creation of the United States of America, the Founding Fathers of that new country in their deep wisdom and distaste for tyranny, haunted by the memory of the absence of a free press in the countries from which they escaped, wrote into the basic law of that then young federation of free states, an explicit and unambiguous freedom, the “Freedom of the Press”. This amendment was first because of its central importance to a free society. The First Amendment guarantees that all Americans have the power to exercise their right to publish and distribute anything they like, without restriction or prior restraint.

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

This single line, forever precludes any law that restricts Bitcoin in any way.

Read more: HackerNoon

With the price of a bitcoin surging to new highs in 2017, the bullish case for investors might seem so obvious it does not need stating. Alternatively it may seem foolish to invest in a digital asset that isn’t backed by any commodity or government and whose price rise has prompted some to compare it to the tulip mania or the dot-com bubble. Neither is true; the bullish case for Bitcoin is compelling but far from obvious. There are significant risks to investing in Bitcoin, but, as I will argue, there is still an immense opportunity.

Genesis

Never in the history of the world had it been possible to transfer value between distant peoples without relying on a trusted intermediary, such as a bank or government. In 2008 Satoshi Nakamoto, whose identity is still unknown, published a 9 page solution to a long-standing problem of computer science known as the Byzantine General’s Problem. Nakamoto’s solution and the system he built from it?—?Bitcoin?—?allowed, for the first time ever, value to be quickly transferred, at great distance, in a completely trustless way. The ramifications of the creation of Bitcoin are so profound for both economics and computer science that Nakamoto should rightly be the first person to qualify for both a Nobel prize in Economics and the Turing award.

For an investor the salient fact of the invention of Bitcoin is the creation of a new scarce digital good?—?bitcoins. Bitcoins are transferable digital tokens that are created on the Bitcoin network in a process known as “mining”. Bitcoin mining is roughly analogous to gold mining except that production follows a designed, predictable schedule. By design, only 21 million bitcoins will ever be mined and most of these already have been?—?approximately 16.8 million bitcoins have been mined at the time of writing. Every four years the number of bitcoins produced by mining halves and the production of new bitcoins will end completely by the year 2140.

Read more: Medium