Controversial INX token launch triggers derision, fear and introspection
Does Bitcoin have a healthy scepticism or an overactive immune system?
Several prominent figures in the Bitcoin maximalist community, a group which essentially lives by the rules "thou shalt worship no other coins before Bitcoin" and "graven idols of BTC are encouraged for marketing purposes", have popped some monocles by endorsing the INX token sale.
Not an equity offering.
Not yo' mama's ICO.
A guaranteed share of cash flow.https://t.co/dllKboGwT2
— Jameson Lopp (@lopp) August 25, 2020
Not only does this violate the "no other god before Bitcoin" rule, but because the INX token is based on Ethereum – one of the most despised foes of Bitcoin maximalists – endorsing it also qualifies as adultery.
And as long as we're complaining, the phrase "guaranteed share of cash flow" seems a little "bearing false witness-ey", legally speaking.
So far, most commentators have found little reason to covet this token.
The INX token is an exchange token for the INX security token platform. The platform is currently nonexistent, but is eventually meant to serve as a regulated venue for trading digital securities.
The most strongly-touted unique selling point of the INX exchange is that it will be legal and regulated, just like other large, established securities exchanges. But hey, as long as Coinbase doesn't start handling security tokens it could still find a niche.
The token is intended to allow holders discounts on trading fees if they end up using the platform, as well as 40% of the trading fees generated, subject to change by the company board of directors. All governance rights and the other 60% of profits remain with equity holders.
The public token sale price is US$0.90 per token, although according to the INX SEC registration document, advisers including Samson Mow and Jameson Lopp have been given the option of purchasing tokens at US$0.01, for an easy 90x gain if things work out. Meanwhile Monero's Riccardo Spagni and Litecoin's Charlie Lee, who are also investing in this venture, appear to have just gone for the equity rather than the token.
ICO security token offering aims to unleash 130 million tokens on the public. At 90 cents each, that's a US$117 million target. For comparison, the Binance ICO was US$15 million. Judging from what looks like the token sale contract, the INX token sale has found about 200 buyers at the time of writing.
The back-of-napkin maths on this token sale is just a frowny face.
When the Bitcoin community saw what became of its prophets, it was outraged and said "Wastrels! You have turned Satoshi's house of prayer into a den of thieves in a way that doesn't financially benefit us!"
Other disciples worried aloud whether this was a sign of the end times.
"I'm just not sure I can trust them after this," said one Bitcoin fan while anxiously fidgeting with the hem of their "Don't trust, verify" T-shirt.
"I can't believe INX is using Ethereum," another complained. "Everyone knows Ethereum is centralised because its celebrity whales and developers have too much influence."
As the furore grew, the prophets' social media reputations took a beating.
Few seemed more surprised by the outcry than the prophets themselves. Mow pointed out that they'd already atoned when the news first broke last year, while Lopp wondered whether maybe some of that Bitcoin maximalism he'd spent years fomenting might be a little disconnected with reality. Some commentators suggested that this was a bit out of character for him.
While it's tempting to write this whole incident off as just one more popcorn break in the history of Bitcoin, it's probably worth ruminating on what this says about challenges ahead for decentralised governance.
This week we saw the wider Bitcoin community rally together in an effort to expel the unbelievers and maintain the purity of Bitcoin, like an immune system rallying its antibodies. Unfortunately, the normalisation of Bitcoin maximalism seems to have created an overactive immune system which will fight off all perceived invaders, including many potential buyers.
There's a reason many Bitcoin enthusiasts list maximalism as the number one threat to the coin's future.
Bitcoin is a special case though. Over the years schisms like Bitcoin Cash eliminated members who dreamed of Bitcoin being digital currency rather than digital gold, while the ascent of Ethereum and other projects has shaved away anyone who's interested in crypto for reasons other than hoarding digital gold bars.
The end result is a very uniform and dogmatic immune system that may not be able to adapt to the challenges Bitcoin will face in the future, such as discussions of alternative block rewards.
Bitcoin semi-unknowingly spent years honing itself to a maximalist edge. With a whole new slew of governance complications emerging in the DeFi space, it's a perfect time to learn from Bitcoin's mistakes.
Any community which relies heavily on purity tests (i.e faith) is eventually cannibalized as a minority is forced to radicalize over time.
My preferred cultural foundation: truth seeking, open mindedness, empathy, optimism, focus on building v. critiquing (doers > haters)
— Arjun Balaji (@arjunblj) August 26, 2020
Disclosure: The author holds cryptocurrencies including LINK at the time of writing