Your Criticism of Bitcoin is Valid—and Irrelevant
Written by Mark Helfman
Ponzi, fraud, and rat poison squared.
Those are three terms you may have heard people use when talking about bitcoin.
If you’re in that camp, you have good company. Pretty much everybody hates bitcoin.
Bitcoin will succeed anyway.
Yes, your arguments start with facts, but facts do not always tell the truth. Perspective is important, too.
Read below for some statements that don't matter. Believe them at your own risk.
Bitcoin sucks because . . .
Let’s run down a few reasons people hate bitcoin.
You can’t use it without electricity.
Can’t fool you, smarty pants!
Do you know what else you can’t use without the electricity?
When people tell you about the iPhone 12, that new power drill, or Dyson’s latest creation, you never tell them “yea, but that needs electricity to work.” Your bank doesn’t work without electricity, either. Neither does a cash register.
Did you know you need electricity to use the internet?
Crazy, I know. But it’s true! Just wait until people find that out. They’ll never touch a computer again!
You can’t use it without the internet.
Good point. You can hardly do anything without the internet! Modern life is tough.
(Though technically, you can use satellites and SMS services to send and receive bitcoin, almost nobody would ever do that.)
Nothing backs it.
Who cares? It works!
Try going into a bank and asking to redeem your $20 bill. They’ll give you a ten and two fives and escort you out the door.
It’s just like Venmo.
Yes, kind of . . . but that misses the point, right?
That’s like going back to 1990 and saying “I’m not going to use email, it’s just like a fax machine” or going back to 1960 and saying “a calculator? Nah, that’s just a slow slide rule.”
Those other cryptocurrencies are useless because . . .
Altcoins suffer an even crueler fate. They get bashed by normal people and bitcoiners. What do they say about alts?
We already have something that does that.
Yes, and most likely, it’s overly complicated and needlessly expensive.
Except, until cryptocurrency, nobody realized how complicated and expensive it was because we never had a technology that could replace it.
Nobody thought they needed smart phones until somebody created a smart phone. Likewise, nobody thought they needed a computer until somebody created a computer. Nobody thought they needed a printing press until somebody created a printing press.
At the time, people were OK with flip phones, notepads, and quills.
Yet here we are.
You don’t need a token for that.
Did you know you don’t need a token for anything?
Yep! Start a business, have kids, make charm bracelets—you name it, no token needed.
In fact, you don’t need anything except food, water, and shelter.
Tokens simply incentivize everybody to participate in a network, with a blockchain that ensures people’s actions will always get the results they expect.
Could you use something else? Ditch the token entirely?
Maybe. There’s more than one way to skin a cat. For blockchains, tokens fit the bill nicely.
Bitcoin can do that.
While we wait for bitcoin to solve all its problems, altcoins are giving it a go.
As they grow, some will capture strong network effects and find important uses. As a result, they’ll work alongside bitcoin to serve many different needs. Or, perhaps, migrate to a bitcoin sidechain.
Why do we have to wait for bitcoin to catch up?
There are too many of them.
Of course we don’t need 6,000 cryptocurrencies, but lots of people have lots of ideas about things you can do with crypto. Why not let them experiment with it?
Nobody ever asks “why do we need so many restaurants?” or “why do we need so many websites?”
The stories we tell ourselves . . .
Does this mean there’s a double-standard for bitcoin? One standard for every other financial asset and transaction protocol, another for a peer-to-peer electronic cash network with its own unit of account?
Maybe, maybe not.
Either way, it’s irrelevant. Once bitcoin’s price starts going up long enough for people to believe it will keep going up, lots of people will gladly ignore or rationalize these problems away.
Few have the patience to continue losing money with cash and bonds, making small or no gains with stocks, and sitting on their hands while bitcoin doubles, triples, or quadruples in price.
At that point, they’ll come up with new arguments—e.g., “it’s the way everything’s going,” “it’s different now,” “the banks are doing it,” “you need to protect against inflation,” “put a few shekels in, you never know.”
Sure, those arguments also start from a point of truth, just like yours. And, like yours, they have facts to back them up.
They are also irrelevant.
People will tell themselves whatever they need to tell themselves to justify whatever they want to do.
Once bitcoin’s price goes up, you might do the same.
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