Shitcoins: Why Bitcoin Only

There are thousands of cryptocurrencies. Shouldn't you diversify? Hold a portfolio of different tokens?

Many people in bitcoin believe the answer is no. They focus exclusively on Bitcoin and consider everything else a distraction at best, a scam at worst.

This lesson explains the logic behind that position.

The Monetary Focus

Bitcoin is trying to be one thing: better money. Everything about its design serves that purpose. Fixed supply. Decentralization. Security. Immutability.

Most other cryptocurrencies are trying to be something else:

• Ethereum: programmable applications platform
• Solana: fast transactions
• Cardano: academic research project
• Dogecoin: meme
• Thousands of others: various promises

These might be interesting experiments. But they're not competing to be money in the way Bitcoin is. They have different goals, different tradeoffs, and different risks.

The Lindy Effect

The Lindy Effect says that the longer something has survived, the longer it's likely to continue surviving. Bitcoin has:

• 15+ years of operation
• Survived every attack, crash, and competitor
• Grown in security and adoption continuously
• Never been successfully hacked

Most altcoins are young and unproven. Many that existed in 2017 are dead today. The survival rate is abysmal.

Betting on altcoins is betting against the Lindy Effect. Sometimes that bet wins. Usually, it doesn't.

The Decentralization Problem

Remember what makes Bitcoin valuable: no one controls it. This property is extremely hard to achieve and easy to lose.

Most altcoins have:

• Known founders who hold large percentages
• Foundations that control development
• The ability to change rules (and have done so)
• Pre-mines or venture capital allocations

These aren't decentralized systems. They're startups with tokens. The founders can change the rules, inflate the supply, or abandon the project whenever incentives shift.

Bitcoin's founding conditions—anonymous creator, fair launch, no pre-mine—cannot be replicated. Every altcoin is starting with a compromised foundation.

The Security Gap

Bitcoin's security comes from its hash rate—the computational power protecting the network. Bitcoin's hash rate is orders of magnitude higher than any competitor.

This matters because proof-of-work security is measurable. We can calculate how much it would cost to attack Bitcoin (~billions of dollars). We can calculate the same for altcoins (~much less).

Proof-of-stake systems (Ethereum, Solana, etc.) have different security models that are newer and less battle-tested. They might work. But "might work" isn't what you want for storing wealth.

The "Diversification" Fallacy

Traditional finance teaches diversification: don't put all your eggs in one basket. But this logic doesn't directly apply to cryptocurrency.

Diversification works when:

• Assets are uncorrelated
• All assets have positive expected value
• You can't identify the best asset

In crypto:

• Altcoins are highly correlated with Bitcoin (when BTC drops, alts drop more)
• Most altcoins have negative expected value (they go to zero)
• Bitcoin's properties are identifiably unique

Holding altcoins alongside Bitcoin isn't diversification—it's dilution. You're adding more risk, not less.

The Opportunity Cost

Every dollar in altcoins is a dollar not in Bitcoin.

If Bitcoin succeeds as global money, the upside is enormous. If you believe in that thesis, altcoins are a distraction from the main opportunity.

If Bitcoin fails, altcoins probably fail too (they're built on the same technological foundation and rely on the same adoption curve). There's no hedge here.

The Mental Bandwidth Cost

Following one asset is manageable. Following a portfolio of tokens is a full-time job:

• Different roadmaps and updates
• Different communities and politics
• Different risks and vulnerabilities
• Different tax implications

Most people who try to manage altcoin portfolios underperform simple Bitcoin holdings. The complexity adds friction without adding returns.

When Altcoins "Work"

Yes, some altcoins have outperformed Bitcoin over certain periods. Early Ethereum buyers did very well. So did early Solana buyers.

But consider:

• Survivorship bias: we remember winners, not the thousands that went to zero
• Timing required: you had to buy early AND sell before the crash
• Risk taken: these were high-risk bets that happened to pay off

For every altcoin success story, there are hundreds of failures. The expected value of the overall strategy is negative.

The Bitcoin Maximalist Position

"Bitcoin Maximalism" is the view that Bitcoin will capture most or all of the value in cryptocurrency, and therefore holding anything else is irrational.

The logic:

1. Money has network effects (the more people use it, the better it works)
2. Network effects tend toward monopoly
3. Bitcoin has the strongest network effects
4. Therefore, Bitcoin will likely absorb the value of competitors

You don't have to be a maximalist. But you should understand why many thoughtful people in the space are.

A Reasonable Middle Ground

If you want exposure to altcoins despite the risks:

• Keep it small (5-10% of your crypto portfolio)
• Assume it could go to zero
• Don't let it distract from accumulating Bitcoin
• Understand you're speculating, not investing

Most importantly: don't let altcoin casinos prevent you from accumulating Bitcoin consistently.