So, I’ve seen this argument come up in various forms over the years, and I have also likely believed in it myself in the past. There is a trend in the cryptocurrency communities to push people, companies, and organisations to hold all their assets in their one true crypto.

The argument goes something like this; if you hold any other cryptocurrency other than your one true cryptocurrency, then you have misaligned incentives. Another example given is that it is like the CEO of google owning mostly Facebook shares. This is wrong. Wrong, wrong wong.

Part of the reason it is wrong goes to heart of how Bitcoin works, and is beyond the scope of this article. I will go into this in further detail in another article. The main reason for this misunderstanding is that the analogy is poor.

1. There is no equivalent of a CEO of Bitcoin.

CEO of Bitcoin Cash

Any person, company or organisation does not have sole control over the network. At best, an entity might have some influence over how the network is run, but by design responsibilities are spread between various types of participants (developers, miners, exchanges, users, speculators etc.).

You might put all your energy into making Bitcoin the best currency in the world, but if other entities don’t pull their weight, or even worse, they try and sabotage, then your efforts will likely go to waste through no fault of your own. This brings us to the next point.

2. Bitcoin Price is Extremely Volatile

By using Bitcoin as money and your sole asset class, you are subject to it’s massive volatility. BCH suffered over a 90% loss in value from its peak in 2018. This would be like the Google CEO keeping no cash reserves in the company and instead only holding penny stocks to ‘spend’ on outgoings. Google might be able to survive this due to their massive revenue, but any organisation that survives on occasional bouts of donations is going to wiped out extremely quickly, which brings us to the final point.

3. In A Best-case Scenario It Is Still Just A Gamble

The Signal Is Slow To Propagate

Even if an individual organisation manages to single-handedly make a huge impact and cause the price to increase, the likelihood that they will manage to achieve this in the space of months instead of years is close to zero. The time between when the progress has been made with the technology and when adoption occurs would likely be years. The signal takes time to propagate. In this time the organisation will have been subject to massive volatility as describe above, and could easily have been bankupted.

4. Doing This Amplifies Volatility

Snowballing

As the price decreases, people companies and organisations that try to use Bitcoin as money are forced to burn through their reserves more quickly as they spend. As most payments tend to go through a payment processor such as Bitpay, this causes further downward pressure on the price as Bitcoin is converted to fiat. This creates a downward spiral that only amplifies the problem.

In Summary

In all my years as a Bitcoiner, I have not seen a single bit of technological progress in Bitcoin that has directly moved the needle. I have seen plenty of businesses and organisations destroyed, or at least significantly damaged, by keeping all their eggs in one basket. Dogma doesn’t disprove that. The CEO of Google doesn’t run the entire company off of penny shares (or even google shares) because that would not be a sensible financial decision.

By pushing for entities to implement a dogmatic all-or-nothing strategy, we are encouraging them make poor financial decision which will ultimately harm or destroy them financially. Having just a few eggs in your Bitcoin basket is enough to have a good financial incentive to try and increase its value.

Let me know your thoughts in the comments below.