This is one article in a collection of 52 articles published weekly throughout 2023 on the basics of Bitcoin. The series is intended for people unfamiliar with Bitcoin or people wishing to enhance their understanding of the fundamentals that underpin the technology. Please contact us, if you have any questions or comments.
One of the biggest challenges for people entering the crypto space is distinguishing Bitcoin from all of the other cryptocurrencies that have entered the ecosystem since Bitcoin’s creation. The temptation for newcomers is to invest in the “next” Bitcoin. The appeal is frequently being able to accumulate more of the “next” Bitcoin because of the lower price. However, this strategy is bound to fail. Perhaps the simplest way to understand this is by looking at collectible wine.
The three basic ingredients for wine are simple. All that is needed are grapes (or some other fruit-based fermentable sugar), yeast, and water. Anyone in the world can easily access these items. Similarly, the code necessary to create a cryptocurrency is readily available. Bitcoin’s code is open source and the barrier to entry is almost nonexistent. In fact, many of the cryptocurrencies that have come into existence since Bitcoin have piggybacked on Bitcoin’s code with the slightest modification.
A bottle of 1945 Chateau Mouton Rothschild is widely considered one of the, if not the, wines of the century. There are myriad factors that have made the 1945 Chateau Mouton Rothschild impossible to replicate and one of the most sought-after wines ever created. First, the soil conditions in the area are truly one of a kind and a late frost on May 4, 1945 killed the early stages of the vine leading to lower production than usual. Additionally, the vineyard was fortunate enough to have Baron Philippe de Rothschild present to supervise the harvest. Baron was returning from Britain where he had fled after escaping from prison (he was being held as a result of his Jewish heritage). Many vineyards in the proximity which experienced similar favorable weather conditions were not as fortunate to have the workers look after the harvest as a result of World War II which was just concluding. In fact, the label on the bottle has a “V” for victory to mark the conclusion of the war! Finally, only 75,000 bottles were ever made of the legendary wine. Through the years many bottles have been consumed making this collectible wine scarcer. Those who were fortunate enough to hold onto this treasured wine have seen it mature into an almost priceless piece of history.
Similar to a bottle of 1945 Chateau Mouton Rothschild, Bitcoin has become the most collectible cryptocurrency ever created. While there is nothing unique about its code compared to other cryptocurrencies in the space, the success of Bitcoin has been impossible for all other cryptocurrencies to replicate since its creation. Bitcoin benefitted from the unique incubator system in which it was launched where the idea of a decentralized currency was paramount to the profit motives that are pervasive with the new cryptocurrencies being created at an astonishing rate today. In fact, Satoshi has never spent any of the bitcoin, currently valued at over $31.5 billion with today’s price, he mined in the early days of Bitcoin for a profit motive! While new bitcoin continues to be mined approximately every 10 minutes, all of the bitcoin are fungible and can be thought of as new bottles of the collectible wine being released to the public.
While some compare Bitcoin to the AOL of crypto, the more apt comparison is Bitcoin is the 1945 Chateau Mouton Rothschild of the industry. The incredibly rare conditions that existed when Satoshi bottled the 2009 vintage cryptocurrency cannot be replicated again. Just like a wine collector would not go to Trader Joe’s to find the next 1945 Chateau Mouton Rothschild, a person looking for a valuable cryptocurrency to invest should not attempt to discover the next Bitcoin by investing in the latest, greatest cryptocurrency. And, truthfully, that’s probably insulting to Trader Joe’s wine. When it comes to Bitcoin, just as is true with the 1945 Chateau Mouton Rothschild, there are no replacements.
