Bitcoin Rhodium — A Lesson in Unit Bias

29.04.2018

Jesus - Feeding of the Multitude Miracles - Providing food to thousands by changing supply unit of 7 bread loaves and some fish.

Note: This is a personal opinion piece, not an official rating.

There is a now a need to write this short piece as even well-known Bitcoin advocates are promoting this project with one of the most stupid sales pitches to ever reach the cryptocurrency space. So what it is about? Bitcoin Rhodium is a cryptocurrency modelled after rhodium, a noble metal somewhat similar to platinum. The name is chosen due to the rarity of rhodium in nature, and Bitcoin Rhodium wants to reflect this property digitally. In fact, rhodium is so rare it is more expensive than gold, so one can understand the temptation to launch a similarly ultra-rare cryptocurrency! This however is a fallacy.

On the project web page we find:

Rhodium - extremely rare, precious and harder to find than platinum, palladium, silver, or even gold. There will only ever be 2.1 million BTR.

So total supply has been set to a tenth of that of Bitcoin's. Since rhodium is rare in nature (and probably useful) it does makes sense that an ounce of it fetches a higher price than an ounce of gold. Bitcoin Rhodium however is digital, there is nothing physical at all about it. This means whatever conclusion you draw from the total supply number defined by the source code, is an illusion. There is nothing different between a Bitcoin Rhodium launching with 2 100 000 max supply, and a Bitcoin Rhodium launching with 2 100 000 000 max supply. It is just as rare. What matters is the issuance schedule. If in fact there was a difference between the two scenarios with respect to valuation aspects, then you would have to value one Bitcoin (1 BTC) differently than 1 000 milli-Bitcoin (1000 mBTC), or 100 000 000 satoshis.

What Bitcoin Rhodium is doing is essentially a marketing trick where they portray their tokens as ultra-rare. It makes just as much sense as someone breaking a bread loaf in two, then claiming he holds more total bread than before in his hands. Also, you might ask yourself why the Bitcoin Rhodium project did not go for rhenium instead, as it is even more rare than rhodium. Could it be because rhenium does not fetch as high price per ounce? The answer is obviously yes. The Bitcoin Rhodium guys don't really care about scarcity - they care about price, and to paint the best possible picture in order to get rich.