What the experiments disproved

Wonder

1. What specific property of Bitcoin’s design makes it resistant to the failures seen in other chains?
2. How does a market mechanism remove the advantage of speed without sacrificing liquidity?
3. What is the cost of adding general-purpose computation to a monetary base?

Explore

1. Levels VI to VIII examined thousands of alternative coins, Ethereum’s programmability, DeFi protocols, stablecoins, and Solana’s memecoin economy. Each branch revealed distinct mechanisms for value transfer and risk management. Altcoins demonstrated that credible scarcity requires fixed supply and no insider control, while privacy coins like Monero proved the technical feasibility of strong on-chain confidentiality at a cost to verifiability.
2. Ethereum showed that general computation enables tokens and decentralized finance but expands the attack surface through upgradeable contracts and admin keys. The DAO hack in 2016 and subsequent bridge exploits illustrated how retained powers and buggy code lead to theft. DeFi markets operated without intermediaries until oracle manipulation and cascading liquidations exposed the fragility of external price feeds and opaque collateral rules.
3. Stablecoins proved that dollar tokens are the most used product in crypto, yet algorithmic pegs like Terra’s UST collapsed in May 2022 because the peg rested on market confidence rather than reserves. Solana’s speed enabled mass participation via one-click launches but also industrial-scale abuse through snipers and wash trading. These failures highlight a pattern: convenience and velocity often trade off against security and transparency.
4. The other failures repeated in new costumes. Premines and insider allocations moved value from late buyers to early insiders (lesson 8.1.2). Foundations called decentralised turned out to run their chains (lesson 8.1.5). ‘Yield’ on deposits meant lending customers’ coins to the next firm to fail (lesson 8.3.6). Bridges were the largest single target for thieves (lesson 9.1.3). Validators able to halt BNB Chain in 2022 could just as easily freeze it (lesson 8.3.3).
5. The test for any import is whether it maintains fixed supply, no rulers, explicit spends, and broad verifiability. Admin keys, custodial yield, and premines violate these principles by concentrating power or obscuring ownership. Zero-knowledge privacy and transparent market designs align with Bitcoin’s ethos by keeping verification open while protecting specific data points. The ledger of lessons distinguishes between features that enhance decentralization and those that reintroduce counterparty risk.
6. Pick one failure from Levels VIII and IX — the DAO, the BNB Chain halt, Terra, FTX or Wormhole — and write down the retained power or hidden claim that made it possible, with the lesson where it is covered.

Key facts

Exercise nine, six, three, one

Fact check

Dates, figures and claims checked against the published sources listed below.

• Chainalysis, The Crypto Crime Report (2023)
• US v. Bankman-Fried (S.D.N.Y. 2023) and Celsius bankruptcy filings (2022)
• S. Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System (2008)