“Shitcoin” is a popular epithet, usually used to describe digital assets besides Bitcoin. It’s often used to insult, demean, and belittle, and there can be a lot of truth to the insult. Many projects have come in and out of relevancy, with very little traction at any point in their history, and often with stated use cases, and goals that make one scratch their head. We want to encourage users to stay away from anything that doesn’t make sense to them and look at every project with an extremely critical eye.
There is some true shit out there, however, many crypto projects have not only survived, but thrived, and look like they have bright futures with interesting and novel use cases emerging.
Is shitcoin only an insult or is there another side to this shit? We’re going to argue there are indeed many sides to this shit, and that Bitcoin itself was built and inspired by a graveyard of failures or what we could call disparagingly, shitcoins. Chaumian Ecash, Szabo’s Bit gold, Liberty Dollar, and Wei Dai’s Bmoney as well as other attempts that we might not know about are all relevant to the creation of Bitcoin.
And that begs the question, how could Bitcoin work, while building on top of a graveyard of worthless shitcoins? Maybe being a shitcoin isn’t as much of an insult as it appears on the surface of this crypto-bowl and there is actual value to be found in the shitcoins at the bottom.To embrace this shitty metaphor even tighter lets go full circle, be literal, and talk about the literal importance of shit.
Shit, Life, and Civilization
Manure has been crucial to the development of agriculture; and agricultural surplus makes civilization itself possible. Manure directly contributes to the fertility of soil by adding organic matter and nutrients, that are utilized by bacteria, fungi and all other forms of life in the soil. Higher organisms then feed on the fungi and bacteria in an infinitely looping chain of life. Manure and other wastes are essential to the healthy progression of this looping. Shit is even important to our vast oceans, which covers 70% of the Earth. Whale poop feeds algae, which feeds plankton, which feeds fish, which feeds seabirds, and so on up the chain. Shit is fundamental.
Now, let’s not get carried away with the metaphor either. Producing shit or manure isn’t the purpose of life (we hope) and producing shitcoins isn’t the purpose of crypto experimentation; but being able to re-incorporate and salvage whatever value was unused by another organism for the use of other on-going life processes is incredibly powerful. In evolving, self-sustaining ecosystems, nothing goes to waste. Shit is essential.
Bitcoin is produced on top of the lessons from “failed” attempts or incompletions: Bitgold, Chaumian Cash, and Liberty Reserve were all in some way inspirational to the development of Bitcoin, and Wei Dai’s Bmoney and Adam Back’s hashcash are directly sited in the Bitcoin whitepaper. Those prior attempts, while all valiant, were all shit coins or shit projects, in so far as they didn’t make much of a dent in the world. Yet Satoshi, other early Bitcoiners, and cypherpunks found use value or inspiration from them.
So is shitcoin really such an insult? In some ways yes, there is truth that some things do truly stink up everything, but what’s wrong about this miopic view is it’s not a complete picture. Even the shittiest projects might have value that is salvageable: developers, equipment, lessons learned, know how, useful data, innovations, even some good ideas poorly executed, etc.
At the end of the day we’re not so sure shit is such a great metaphor anyway, but we do think it’s a good start because it does indicate that we’re dealing with something organic. A concept many in our community have long promoted and caught onto. They’re not called industrial or mechanical coins, or junk coins, they’re digital, organic shitcoins.
For us, a better metaphor for the crypto-phenomena we’re seeing is more analogous in nature to the development of slime molds or organisms that are members of the early Protist Kingdom. Slime-coins maybe? Crypto-Protists?
Slime-Coins: The Base Layer of Digital Life
The Protist Kingdom is a category of primitive biological forms, which includes slime molds and many other eukaryotic organisms that aren’t animals, plants, or fungi, but might have some similarities with them.
They’re a group of proto-animals, proto-plants, and proto-fungi. They aren’t quite in those categories, but biologists think that the first animals, plants, and fungi emerged out of this kingdom as there are some Protista that are close to animals, some to plants, and some to fungi, but lack the complexity, organization, and key characteristics to be considered any of those categories. Many are a gradation of those higher forms, but not quite those forms.
In some corners of the Bitcoin community, a popular and powerful meme of Bitcoin as a digital fungi or digital mycelium has taken root, and it rings true for us as well. Was Bitcoin the first digital protist to evolve into a higher digital form?
When Bitcoin launched in January 2009, it had no price, at most two entities were using it, Satoshi Nakamoto and Hal Finney, and it was a shell of what we would consider Bitcoin today. Did this proto-fungi evolve into a more complex, higher order digital fungi over the next decade? We believe it did and many other protocols that have at one time and in some corners are still considered “shitcoins” are undergoing this same process.
It’s not perfect, like any metaphor, but we like the analogy of crypto-networks as digital slime molds and digital Protista because it highlights some meaningful similarities between what we are observing in crypto and what biologists observe with the Protist Kingdom.
Researchers have shown that many slime molds from the Protist Kingdom have some form of memory, communicate cell to cell, have no central nervous system, and demonstrate some amount of primitive learning. They learn by exploring the space around them, continuing on successful pathways and then pruning back unsuccessful pathways and devoting more resources to the pathways and environments it can thrive in.
Slime-molds don’t think or use a priori reasoning like a human being might, and they don’t have a central nervous system. But they do explore their environments, store information about them, and transfer that information via a cell to cell network. Through the storage and transfer of information, peers can collectively create a useful mapping or model of their world so they may coordinate and solve problems with no central command center creating this mapping or orchestrating this process. This should sound not so oddly familiar.
This seems to suggest that exploration and communication predates reasoning in biology, and furthermore intelligence and reasoning emerged out of a prior exploration and then collective communication and coordination around that exploration.
What this means for us is that no individual cell, node, person, peer or organization can possibly reason beforehand the depth and magnitude of the possibility space of the first digital life, Bitcoin, and what it enabled. The only way to truly “know”, in a strict sense of the word, the possibility space, is to actually explore it and experiment. Failures, deadends, and overshoots are inherent in evolutionary and scientific exploration; even human beings who can reason, can’t possibly consciously know a new conceptual paradigm beforehand.
Like primitive slime molds, shitcoins, slime coins, alt-coins, whatever we might call them, are exploring the entire space that Bitcoin emerged into, opened up, and cleared out, showing one possible path through. We’ve been living through a tireless and unceasing crypto exploration, discovering new pathways, interconnections, and layering that allow their capabilities and scale to explode.
The more we explore the more we can learn. And because we have so many primitive digital “slime-coin” projects exploring this possibility space, crypto’s learning rate is incredible, enabling its participants to adjust to change and evolve into ever more intricate, complex structures.
Networks like Bitcoin, Ethereum, and others are emergent forms of digital life and should be looked at as complex, organic systems that mimic what we see in nature and in our social systems.
Understanding them through traditional economic and financial lenses yields some useful insights, no doubt, but they also can’t understand the full context of what we’re seeing because of their immense novelty. Many of our older economic/financial models and theories emerged out of a different technological environment, dominated by industrial machines in a pre-computing epoch. Digital technologies force us to update to better software for understanding our new, emerging digital world.
Although primitive in some respects, crypto-networks like Bitcoin, Ethereum, and many others have shown the ability to explore, learn, and evolve like the earliest forms of biological life. These are digital systems that mimic the organic and the living, forming primitive digital supra-organisms composed of people, electricity, hardware, software, and organizations of varying qualities and quantities exploring a new paradigm.
The “failure” rate is high, but every stone will be unturned and the failures will give us more hard empirical evidence on what doesn’t work and what does. Instead of thought experiments, hypotheticals, and endless arguments that go nowhere on college campuses, think tanks, government committees, message boards, and social media apps, socio-economic theories and financial innovation can be developed, tested, shipped, and priced in real time in real markets with real value at loss.
These primitive digital organisms and ecosystems they’re forming, are connecting, overlapping, and layering in ways we can hardly comprehend, and producing emergent phenomena we are just beginning to fully conceptualize.