The forgotten principles of internet money

Over the years, Bitcoin’s narrative has been hijacked. Today, it’s no longer the independent, decentralized system it was meant to be. Instead, it’s been swallowed by institutions like BlackRock, utilized by Microstrategy to pump up company valuations, and morphing into a heavily regulated and manipulated asset. Ironically, many in the crypto community are cheering this on, not realizing we’re creating another Wall Street playground. 

Meanwhile, the crypto space has turned into a meme coin casino, with financial nihilism and degeneracy fueling the space. Human greed dominates, and it’s clear that attention—not value or utility—has become the ultimate currency. Those who capture it guide the masses, often in directions that serve their own interests, not ours.

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Noise vs. Signal

It’s hard to watch this unfold without frustration. Maybe I’m too rooted in crypto’s original ethos to appreciate the chaos. Maybe my stubbornness blinds me to the supposed “progress” of institutional Bitcoin pumps and meme coin mania. But to me, it’s all noise that is distracting from the rare and vital signals that remain in this space.

Meanwhile, there is a protocol most new people in crypto have never heard of. A proof-of-work cryptocurrency with a $4 billion market cap, delisted from major exchanges, shunned by the media, and vilified for its use on darknet markets. Yet, quietly and resiliently, it is still living up to everything crypto was supposed to stand for. That protocol is Monero.

I'll be honest, Monero isn’t sexy to most. It doesn’t have celebrity endorsements or pump-worthy marketing campaigns, and the native GUI is robust but not offering some high-end UX. But that doesn't diminish why it’s important. Monero is the closest thing we have to digital cash. A tool that mimics the privacy, fungibility, and freedom of physical money in an electronic form.

While being vilified for serving the majority of darknet markets, Monero isn’t made for darkweb practices. Fun fact, the only crypto that served darknet markets to the extend Monero does currently, is Bitcoin. Once Bitcoin's transparency became a curse, Monero took over. Instead of vilifying, one could look at this through a more critical lens. Darknet markets just recognized their need for digital cash early and the rest of the world hasn’t caught on yet. But as governments and globalists push to phase out physical cash and replace it with CBDCs (Central Bank Digital Currencies), the need for a private, decentralized alternative will become undeniable.

Monero is boring, yes. But so is cash. And just like cash, it’s an essential piece of sovereignty in an increasingly digital and controlled world.

Fundamental pillars of real crypto

I've gone over these fundamental principles countless times. It feels like the world has shifted its focus elsewhere, but I believe that these characteristics stand the test of time. While markets can remain irrational longer than most can stay solvent, privacy is one of those things you don't realize you need until it's too late. For me, the case remains clear and we'll see how this will play out over time.  For old times sake, here are the fundamental pillars of internet money. The foundation of a decentralized, sovereign, financial system. 

1. Scalability

Bitcoin’s throughput is limited to about seven transactions per second. Without additional, less reliable layer-2 solutions, this is far from what’s needed for mass adoption. Compare this to Monero, which offers a dynamic block size that expands during network peaks, allowing for greater transaction scalability while staying decentralized.

Other protocols, like Bitcoin Cash or Kaspa, have attempted to address scalability by increasing block sizes or introducing novel architectures. However, these often come with trade-offs in security or complexity. Monero strikes a balance, ensuring usability without compromising core principles.

2. Privacy

When transacting, we don't want to show everything we own or reveal who we’ve interacted with. But using Bitcoin, you do exactly that. Based on your wallet address, anyone can see how much BTC you hold and who you’ve transacted with. Coinmixers exist to obscure this data, but they often create more problems than they solve. Companies like Chainalysis actively monitor Bitcoin’s blockchain, ensuring that everything on-chain is tracked and analyzed.

Money should be private. What you do with your money is your business. Arguments like Anti-Money Laundering or Anti-Terrorist Financing are often used against privacy, but let’s be real. AML regulations have cost the world hundreds of billions, created terrible user experiences for consumers, and intercepted less than 1% of illicit money flows. That trade-off simply doesn’t add up.

For privacy to work, every transaction on a network must be private. Optional privacy, like ZCash’s model, doesn’t cut it. If only a small percentage of transactions are private, it weakens the privacy of the entire network. My earlier example of coins becoming tainted through coinmixer use highlights this problem. When privacy is optional, the chance of coins being flagged or devalued rises significantly.

Monero solves this by making every transaction private by default. Users don’t need to opt in to privacy but it’s built into the core of the system. You decide who, if anyone, can see your financial data. Privacy as a feature doesn't cut it as it’s essential for true fungibility.

3. Fungibility

Fungibility means that every unit of currency is interchangeable with another, without regard to its history. Bitcoin’s transparency undermines this principle. Coins can be “tainted” if they are associated with illicit activities, making them less valuable or even unusable in certain situations. This problem also impacts individuals who had nothing to do with these illicit transactions but unknowingly acquire these coins. Seth for Privacy has documented numerous examples of Bitcoin’s lack of fungibility causing significant issues, you can find this here.

Monero’s built-in privacy ensures full fungibility. Every Monero coin is equal to another, just like with cash or gold. This design eliminates the risk of tainted coins and upholds the integrity of its value.

4. Decentralization

Bitcoin’s SHA-256 cryptographic hash function makes mining practically impossible without ASIC mining gear. For those unfamiliar, ASIC miners are hyper-specialized machines designed to excel at one task—solving a specific puzzle in Bitcoin mining. The process involves finding a special number (the hash) using the SHA-256 algorithm. Essentially, it’s a massive guessing game where machines compete to find the correct number, with the first to succeed earning the mining reward.

The issue is that ASIC equipment is expensive and has no use beyond mining Bitcoin or other SHA-256-based cryptocurrencies. This creates a significant barrier to entry for regular users, centralizing mining power among those who can afford the gear. As a result, Bitcoin mining is now dominated by large operations, eroding the network’s decentralization.

Monero, on the other hand, uses RandomX, an ASIC-resistant mining algorithm designed to make mining fairer and more accessible. Unlike Bitcoin’s reliance on highly specialized hardware, RandomX optimizes mining for general-purpose CPUs—the kind of processor found in everyday laptops and desktop computers. This levels the playing field, allowing anyone with a basic computer to participate in the network.

RandomX ensures that Monero’s mining process is decentralized and inclusive. By prioritizing accessibility, it strengthens the network’s security and resilience while staying true to the core principles of decentralization.

5. Perpetual Miner Incentivization

Bitcoin’s fixed supply of 21 million coins is often celebrated for its scarcity. “Inflation bad” and all that. But this scarcity creates a significant risk for Bitcoin and other fixed-cap cryptos. Decentralization relies heavily on the number of miners in the network, and miners are incentivized by block rewards. Currently, there are 19.9 million Bitcoin in circulation, with only 1.1 million left to be mined.

Once all Bitcoin is mined, miners will no longer receive block rewards. Their only source of income will be transaction fees, which currently make up about 3.3% of miner compensation. That’s not nearly enough to keep the network secure. Without proper incentives, miners will stop mining, weakening the network.

Monero tackles this issue with a tail emission system. After reaching its main supply cap of 18.4 million coins in May 2022, Monero's tail emission got activated, which basically is a fixed inflation. This means 0.6 XMR is issued per block, roughly every two minutes, indefinitely. The system ensures miners are always rewarded, keeping the network secure without relying solely on transaction fees.

In its first year, Monero’s tail emission rate was around 0.9%. This percentage decreases each year as the overall supply grows, but the block reward remains constant. For perspective, gold has an annual inflation rate of about 1.6%. Monero’s system balances sustainability with security. Also, until 2051, there will be a larger total supply of Bitcoin than of Monero.

Even after 2051 with Monero's inflation, its supply remains scarce. Many coins are lost over time, offsetting the new supply and ensuring long-term scarcity similar to Bitcoin. Monero’s tail emission is a necessity to maintain decentralization and secure the network for the future.

6. Governance

Monero’s biggest missing piece, in my opinion, is an on-chain governance system. Bitcoin also operates without on-chain governance, relying instead on informal community discussions. Monero takes a similar approach but pairs it with a structured funding system.

The project is funded entirely by donations. There are two main ways to contribute:

1. The General Fund: Managed by Monero’s core team, these funds cover key expenses like development, infrastructure, and server costs.
2. The Community Crowdfunding System (CCS): This platform allows anyone to propose ideas to improve the Monero ecosystem. Proposals are reviewed by the community, feedback is provided, and adjustments are made if necessary. Once a proposal gains consensus, it moves to the funding stage.

In the funding stage, contributors donate Monero until the target amount is reached. Once funded, the project moves to “Work in Progress,” where development begins, and the team gets paid from the collected funds.

While this approach works reasonably well for Monero (and Bitcoin), there’s room for improvement. One example that stands out is Decred’s Politeia, a decentralized governance platform that lets stakeholders participate directly in decision-making. Politeia works like an organized and transparent suggestion box where ideas are submitted, voted on, and executed.

Decred itself is a project I consider signal in the noise. It’s a great example of how decentralized governance and innovation can align to create a system that actually works for its community.

We always return to the mean

The crypto space is full of distractions. Meme coins and institutional power plays dominate, making it easy to forget what really matters. Monero, however, remains a quiet but powerful reminder of crypto’s original ethos: privacy, decentralization, and financial sovereignty.

Privacy is massively overlooked. Attention gravitates toward those who capture it, but they rarely lead us in the right direction. Quick money is a strong pull, but in the end, everything balances out. While most are focused on the current mania, privacy is left behind. Yet privacy  has a stronger pull than quick money as it becomes essential when you need it most.

Gradually at first, then all at once.

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