Privacy Coins Are Pumping. That Isn’t Bitcoin’s Story.

This week the leaderboard belonged to the privacy coins. Zcash pushed toward $1,000, up 16 to 20 percent; Dash jumped anywhere from 19 to more than 40 percent depending on the exchange. Bitcoin, meanwhile, slid back under $80,000 after a hot U.S. jobs report revived rate-hike fears. Read quickly, it looks like bitcoin lagging the crypto rally. Read correctly, it is the opposite: the casino and the money are finally easy to tell apart.

Rotations like this are speculative capital doing what speculative capital does — chasing the highest-beta thing on the screen. A token that can move 40 percent in a day is a wonderful trade and a terrible unit of account. That is not a knock on the traders; it is a description of the asset class they are trading.

What bitcoin actually did this week

Look at bitcoin’s week and none of it is a chart. Vietnam moved to fine anyone buying bitcoin outside licensed exchanges that do not yet exist. A Briton recovered 61 coins a failed exchange swallowed 12 years ago, because the ledger kept the record. A miner from bitcoin’s first weeks in 2010 moved coins that have sat untouched since before bitcoin had a price. Those are stories about money that persists, settles, and resists being switched off — not about a number going up faster than the number next to it.

A token that moves 40 percent in a day is a great trade and a terrible unit of account.

The honest counterargument

Privacy technology is legitimate, and censorship resistance is a value bitcoiners of all people should respect; a pump is not proof of a scam. Bitwise’s chief investment officer this week even named bitcoin and Zcash together as assets to own for the decade. Fair enough. But conviction is measured in holding periods, not day-moves, and the money that chased Dash on Friday is not the money securing a remittance corridor or a decade-old custody claim. Those are different jobs done by different buyers.

Bitcoin does not need to top the weekly leaderboard. It needs to still be here, and still be money, when the leaderboard resets — which, on the evidence of the past sixteen years, it always does.

The Take is one opinion, argued from reporting. Tell us where we are wrong.