I’m assuming you’ve never heard of the law of cryptocurrency isomorphism, because I just made that name up. But it’s been around for a long time, since the first decentralized exchanges (DEX) appeared.
When I was selling my books at an event, I tried to get people to pay me in cryptocurrencies. Mainly because it’s an important experience. In other circumstances, I would have even rejected fiat payments as an intolerant minority, but unfortunately there was only one Bitcoin ATM at the event with a very high fixed fee, so I couldn’t reasonably push people to buy crypto and convey the experience of cryptocurrencies to them, because it would have been an expensive experience. And expensive experiences leave a bitter aftertaste.
Soon people started coming in with questions like “can I pay using Ethereum”? I answered “yes” to the question with a smile, showed a “shielding address” of the Incognito wallet (I’ll write about it a bit more in the chapter about DeFi), accepted the Ethereum payment and immediately exchanged it for Bitcoin.
The law of cryptocurrency isomorphism states that all cryptocurrency payments are equivalent, minus transaction costs. Ethereum has relatively high fees, but those are paid by the sender. And if someone has the ability to accept any cryptocurrency, they can use all cryptocurrencies. Thanks to the existence of decentralized, KYC-free exchanges (which you can learn about in my book Cryptocurrencies – Hack your way to a better life), I can accept any cryptocurrency and instantly exchange it for the cryptocurrency I really want. The user of some random cryptocurrency is pleased that I accept his favorite cryptocurrency, I get the cryptocurrency I want, and we are all happy.
Of course, my cryptocurrency wallet can accept Ethereum directly. Why haven’t I done so? Ethereum doesn’t have good enough privacy for that. I am not willing to give someone my Ethereum wallet address, especially when I expect someone else to want to pay with Ethereum (which indeed happened on that event!). For me, in terms of privacy for payments, this cryptocurrency is totally inappropriate. But that’s not a reason to send away an enthusiastic customer. Everyone has a different path to cryptocurrencies. This is also true of various “toxic” cryptocurrencies, forks and the like. If I can sell it on the market without KYC, even pink elephants are fine with me.
A corollary of the law of cryptocurrency isomorphism is the fact that regulators can’t just ban certain cryptocurrencies. Some countries are trying to “compromise” – they will generously allow Bitcoin but ban Monero. Thanks to decentralized exchanges, such a ban is unenforceable. If I can accept Bitcoin, I can immediately exchange it for Monero outside of the state’s control.
Another consequence of the law of cryptocurrency isomorphism (I hope you remember this new law of mine, repetition is the mother of wisdom! 😃) is that I can participate in the entire cryptocurrency economy at ease, without having to pick winners and favorites. I’m saving in what I want to save in (bitcoin), but that doesn’t mean I can’t use all the other cryptocurrencies when it makes sense. If you need increased privacy, you can exchange Bitcoins for Monero. If you need to bet on the prediction market, it’s probably worth dipping your feet into the Ethereum ecosystem for a while.
I talk about what your specific technical options are in the Cryptocurrencies book‘s chapter on decentralized finance. Now you know that if any regulator wants to pass a law against anonymous cryptocurrencies, they are clueless about the law of cryptocurrency isomorphism, which is above both the laws and the constitution – sort of like the law of conservation of energy.
This text is part of my book Cryptocurrencies – Hack your way to a better life. Get color paperback or ebook on my site or opt for fast shipping of black and white paperback or Kindle version on Amazon.