In case you’ve been living under a rock there is a thing called Bitcoin.
Bitcoin is a digital currency, which many people are very excited about. In this post I hope to explain to you, dear reader, why it is exciting and why it’s actually lame.
The technology behind Bitcoin and especially other cryptocurrencies is seriously cool.
It was a warm summer evening in Tokyo when the legendary genius of Satoshi Nakamoto finally figured out how we can build digital currencies without trusted third parties. This had been an ultimate challenge for a while. We couldn’t figure out how to do it so that no one needs to trust any one and still have transactions and money online. But, Satoshi finally figured it out. What a legend.
Medias script: I may have made up the part that says it was a warm summer evening in Tokyo.
Bitcoin is a store of value
Many BTC proponents say that BTC is a store of value. When I first read that I thought “well, everything is a store of value; EUR, USD, my car, all of them store value”.
That’s not what the BTC people mean, though. They mean store as in permanent store. What’s the point of money if one is not spending them but permanently storing them? Good question.
There is a problem that comes up if one has more than a few months worth of money. Their location. In the bank, of course, someone with less money would say. In their pocket as cash, someone with even less money would say.
That, with which both poor and rich people agree, is: fuck banks.
Banks can decide that they don’t allow you access to your funds just because. Governments can make banks do that. What if we had a way to store money and 100% control it?
Gold is valuable, tradable, and can be 100% owned—I can just store it in my basement. If the banks don’t like me (or if they collapse, or if someone attempts a coup, or if civilisation collapses), one thing is for sure: I own my money and I’m still free and independent to buy stuff.
Now we’re getting somewhere. There is only one problem with gold. It’s heavy to move around. What if we had gold, but digital? Enter Bitcoin.
Bitcoin is virtual gold; it’s supposed to be hard to move around—in a way. For instance, Bitcoin has high fees (currently $20), so if you want to transfer Bitcoin (not matter how much!) you have to pay an extra $20.
Well, that’s stupid, one could say. The universal hate for banks is partly because they make us pay fees, and supposedly high-tech Bitcoin also has fees? So, if I want to eat a burger that costs $10, I’d have to pay $30. Madness.
Indeed it is. But: Bitcoin is for value storage, not transfer. Maybe billionaires don’t care, they can hide around the whole globe. But what about a millionaire, or a thousandaire? They could hide, but they may also be hunted by tax offices. Maybe one day said tax offices will find their hidden funds and eradicate them. It would be nice to actually control them.
Bitcoin will not help people who actually need help
In addition to banks, the rich and the poor might actually agree to “fuck governments”, too.
Let’s imagine a future potential Bitcoin-enabled socioeconomic landscape. The price of Bitcoin is now $2.6 million. Governments ask tax residents to declare all their wallet addresses. Bitcoin mixers are not legal. Power may now mean having access to the illegal ones. There are now two outcomes. Either we give up on taxes, or we find a way to at least monitor (if not control) the Bitcoin network.
In the first case, the concept of the strong state dies. At least I can’t see how it couldn’t. No taxes means no public schools, no free universal healthcare, no furlough when the next pandemic comes, and generally no control of the economy whatsoever. We’ll finally be free!
In the second case, Bitcoin is just another currency, just like USD and EUR. Central banks control it, ministries decide what to do with it, and the market can be as free as the government allows. Essentially the same thing we have now.
Is there a third case? Maybe people decide they want strong states and declare all their income themselves. Or maybe BTC remains a non-mainstream thing. Or maybe something more radical happens, which I cannot predict.
To conclude with the future cases, I mostly see the following. Those who are super rich remain super rich. Those who are generally well off may become super rich. And those who are poor or really poor will remain as such—if not worse.
Bitcoin does not help people who actually need help now
To make the present case of Bitcoin worse: I can’t pay either Amazon or the supermarket with Bitcoin; it’s much slower than the current financial systems; it’s much less secure and does not forgive mistakes; it has laughably high fees; and it contributes significantly to global warming. All that in order to benefit from 100% controlling our money which we can’t spend directly but only store it.
I acknowledge that Bitcoin becoming more expensive is a reason to buy. “Investing” in the idea that more people will be convinced to be bank-independent. But I’m not interested in anything short term, or even long term gains if those are not backed by value in essence. Unless we can figure out how Bitcoin can actually contribute to the world society, I will continue to denounce it.