Note, 18DEC2019: Rob McNealy reached out to me to take issue with me calling TUSC a “scam” since he considers it “libelous.” After a conversation with him about it, I am unable to determine whether his doomed-to-fail ideas are motivated by a willful desire to defraud people or by sheer and disqualifying ignorance of technical and economic details. As such, I have decided to reword some of the following article to not accuse him of trying to deceive people. But I stand by my criticisms of TUSC and his explanations reinforced why I think it’s a bad idea. Finally, if you’re interested in accepting Bitcoin for your business, please reach out to me (email: [email protected] or Twitter @RolloMcFloogle) and I would be happy to help point you to places and people who can help (if I can’t help you myself).

While I am very bullish on the long-term success of Bitcoin, it is frustrating to see so many altcoins popping up based on silly ideas.  Some are due to ignorance, but many others are intended to defraud people.  To help filter out the garbage from the waters of Bitcoin, I’d like to draw attention to Rob McNealy’s latest project: The Universal Settlement Coin (TUSC).

Before diving into TUSC, it’s important to first look at McNealy’s previous work with The Original Crypto Coin (OCC).  It was introduced in its white paper with the following:

OCC is dedicated to developing a platform with new cryptocurrency enthusiasts in mind, focused on education, low barrier to entry and ease of use, and we’re starting out on that path by giving OCC away for FREE! Grab it for yourself or use OCC to help teach your friends and family about cryptocurrency. All you’ll need is a wallet, and some Ether for gas. Don’t worry if you don’t know what that means because our tips and tutorials will walk you through it step by step.

The OCC people made a point to brag about the fact that their coin was not an ICO despite having 100 billion tokens premined and airdropped.  Users could acquire OCC by accessing a free faucet.  Of course, the OCC team gave itself the right to adjust faucet distribution as it saw fit (Section 3.2 of the white paper), which of course leaves the obvious possibility of distributing some to themselves.  And why not?  If they “believed” in their project, they’d want to hold some, and with an all-time high price of $0.00013175, they had an opportunity to grab some of that over $13 million market cap (assuming they timed it well).

Their goal was to create a token and resources that would make cryptocurrency adoption easy for newcomers in the space because apparently Bitcoin is too confusing.  So they created an ERC20 token on Ethereum and require users to not only hold OCC but also some Ether to use as gas.  That makes sense, right?

If the goal is to introduce people to the space, why not put the focus on providing resources on what already exists (i.e. Bitcoin) instead of adding layers of complication?  If you were going to airdrop worthless garbage for people to play around with and didn’t want to integrate Bitcoin, why not create a token that would be routinely destroyed to facilitate a risk-free environment for sandbox activities (like Bitcoin’s testnet)?

That question answers itself.

Fast forward less than a year later and McNealy is implicitly admitting that OCC is a failure since he’s transitioning to The Universal Settlement Coin, or TUSC. OCC holders will be offered the ability to swap their OCC for TUSC.  The stated idea behind TUSC is to provide “retailers in industries that are experiencing challenges with traditional banking systems.” 

There’s an element of truth to that problem.  We have seen issues with de-platforming for people who don’t express views that are acceptable to the mainstream.  Third party payment processors like Stripe and PayPal have been blackballing certain people deemed outside of polite society, making it difficult for them to continue their business as usual.

But even a cursory understanding of the “crypto space” would show that Bitcoin is undoubtedly the most secure, government-hard, and censorship-resistant system ever created.  As such, if you want to help de-platformed people, Bitcoin is where you should focus your efforts.  If you want to exploit the suffering of these people, then create a crapcoin like TUSC and cozy up to them.

McNealy, like the confirmed scammer Roger Ver, advertizes himself as a principled libertarian in order to make his project look appealing to those who won’t look any deeper than the thin veil of scoring points with slogans.  Pounding on the libertarian marketing is Ver’s strategy with Bitcoin Cash, but libertarian platitudes will take a secondary role for McNealy with TUSC.

McNealy is using hashtags such as “#guncrypto” to drum up attention and garner support from his main target, gun owners.  He’s claiming that if traditional payment platforms make it difficult to purchase and presumably manufacture and distribute guns, he’s swooping in with the elixir.

Let’s set aside all the government regulation around guns that exists independent of any money issues and focus on McNealy’s decision to create TUSC instead of using Bitcoin to come up with a solution.  I asked him and he responded:

Simple: Because I have no incentive to. POW sucks for retail payments. It’s centralized in, and heavily controlled by, Chinese interests. The Bitcoin community is temperamental and prone to forking. There is no management team guiding development in a strategic way.

Let’s take this point by point.

Is proof of work good for retail payments?  No, it’s not.  Blocks are mined every ten minutes and it is typically advised to wait for at least six blocks (about an hour assuming your transaction is accepted in the next block) to trust that the payment went through.  But given that Bitcoin can only handle fewer than ten transactions per second, was the first layer of Bitcoin ever suited or intended for retail payments?  It is far superior to use layers on top of this settlement layer for retail and other day-to-day transactions.  The Lightning Network, while still in its infancy, boasts instant, private transactions and is growing at an accelerating pace.  Despite its immaturity at the moment, is it remotely reasonable to expect TUSC to be used in any industry more than Bitcoin and the Lightning Network?  Let’s not forget, the Lightning Network is currently functional and TUSC hasn’t even been deployed yet.  TUSC is already obsolete.

Yes, Bitcoin has a lot of mining operations in China.  Would it be better if Bitcoin had most of its mining in the United States?  I wouldn’t think so.  What would probably be best is for it to be distributed around the world so that a single government couldn’t knock out or influence a significant portion of the hash power.  Calling it centralized is unfair, though, without acknowledging that a good chunk of mining is performed by pools; so while the pool “owner” may be based in China, miners can be based anywhere in the world to contribute.  Furthermore, it’s kind of ridiculous to critique Bitcoin security when your alternative is an unlaunched proof of stake coin that you’ve named yourself the CEO of.

Finally, either McNealy thinks I’m an idiot or he is clueless himself.  Bitcoin is not “prone to forking.”  The current Bitcoin blockchain is backwards compatible to previous versions of node software.  The hard forks that have occurred have been scams that have been unable to compete with Bitcoin and only have relevance because of attention given to the scaling debate.  However, this scaling debate was put to rest when the node operators signaled strongly enough that they would not accept blocks that changed key security or monetary parameters. 

But I supposed we can give McNealy credit for OCC not forking—it’s just getting abandoned and being replaced by another crapcoin created out of thin air.

And how ironic is it that he complains about a lack of a “management team guiding development” when two sentences before that he calls Bitcoin centralized.  For his sake, I can only hope that McNealy is feigning ignorance of not only how well Bitcoin has performed in terms of development but also how open source projects in general work.

McNealy will probably make a little bit of money off TUSC, but not much, so why am I bringing attention to him?  I do it because he claims to be part of the libertarian community, which is a group I care about.  As such, I want to identify and call out the people who smoothly say all of the right things to seek money from members of my group.