Is there a second best?

After this lesson you can: answer "why not diversify across coins?".

The question sounds reasonable: even if Bitcoin is best, surely something is second? The answer bitcoiners give is that money is a winner-take-most category, and the things in second place are not competing for the same prize.

Why "second best" fails

• Money converges. Menger's insight from Money 101: markets drift to the single most saleable good. Two monies in one market is a transition, not an equilibrium.
• The alternatives are not trying to be money. Platforms, stablecoins, utility tokens and memecoins are other things. Comparing them with bitcoin is comparing airlines with gold.
• Every alternative has a centre. Which means its supply, rules and history are someone's decision.

"But diversify"

Diversification works when assets carry different risks. Altcoins mostly share one risk, bitcoin's price, and add more: issuer failure, regulatory action against the issuer, token unlocks, rug pulls. In every bear market the top tokens have fallen more than bitcoin and most never recovered their prior highs. Holding ten of them is concentration with extra steps.

The honest position

Bitcoiners can be wrong about specifics. A technology for private payments or asset issuance might emerge that bitcoiners underrate. But it would be a tool, not a money, and the right response would be to build it on or around bitcoin rather than to hold its token as savings. That is, in fact, what Lightning, Fedimint, Cashu and Taproot Assets are.