Is Bitcoin the Only Blockchain Immune to Political Corruption?

The last few months have given us a masterclass in why the broader “crypto” ecosystem remains a minefield of political entanglement, self-dealing, and outright corruption. It also clarifies, for those of us who understand the technology, why Bitcoin stands apart.

Unlike company-issued crypto tokens, Bitcoin is an open-source, decentralized cryptocurrency with no board of directors or legal entity. It is created and maintained by code running on computers competing to solve the next block. 

There is no individual or company to corrupt to influence the network's state, a distinction that matters as Congress finalizes a major regulatory framework for Bitcoin and its crypto-offspring.

Though Bitcoin itself is a neutral protocol, many policymakers are, often rightfully so, skeptical of some cryptocurrency projects and of their connections to unsavory actors, whether it be foreign adversaries or unscrupulous insiders. They rightfully worry about illicit finance, extortion rackets, and risks of kidnapping.

And when it comes to highly-speculative memecoins or the plethora of centrally controlled and managed cryptocurrencies parading as serious projects (i.e. Terra LUNA), they’re not wrong. The incentive to inflate supply and pay insiders while retail traders deposit hard-earned money for a hope of a slice of the pie is very real.

The consequences of crypto corruption were on full display with FTX, where Sam Bankman-Fried’s politically connected exchange funneled customer funds into political donations and risky bets, culminating in what prosecutors called “one of the biggest financial frauds in American history.”

The pattern surrounding these platforms is always the same and reiterates the same lessons learned from the 2008 financial crisis: centralized and opaque financial systems concentrate power in the hands of insiders who can, and will, game the system.

Bitcoin, by contrast, was born out of the depths of the financial crisis and explicitly designed as an alternative to these systems: no insiders, no middlemen, no gatekeepers.

Bitcoin cannot be gamed. It launched in 2009 with no pre-mine, no insider allocation, and no venture capital backers extracting value before anyone else could participate. Its proof-of-work consensus mechanism means that securing the network requires real energy expenditure to win the rewards of blocks, fees, and bitcoin distribution. Other crypto tokens are printed and distributed at the whim of majority token holders.

The monetary policy of Bitcoin is defined in code: 21 million coins, forever. No committee or shareholder vote can change that path. No executive can mint new tokens to reward allies. Any changes to Bitcoin’s software require consensus from all stakeholders.

This marks Bitcoin as the ultimate neutral monetary asset–in digital form. It does not care who you are, where you live, or which government you serve.

The excesses of the broader crypto ecosystem require rules. Otherwise, memecoins and rug pulls will keep coming. From the Argentine president’s unfortunately-connected pump-and-dump LIBRA token to the parade of celebrity-backed meme tokens designed to be extracted, the incentive structures of most crypto projects reward hype, insider access, and political proximity. Smart Bitcoin policy crafted in Washington should draw a clear line between these experiments and the neutral, open protocol that underpins Bitcoin.

What Americans need is legal clarity that protects the right to develop software, self-custody digital assets, and stops using the failures of politically connected crypto ventures to justify regulating away genuine innovation. That’s what framework bills like the CLARITY Act can achieve if drafted well.

Unlike every altcoin and token scheme available to retail traders, under investigation or due for some suspicion, Bitcoin cannot be corrupted. In a moment when trust in financial systems is collapsing, that distinction is everything.

‍Yaël Ossowski is a fellow at the Bitcoin Policy Institute.