mutatrum on Nostr: Long post from John W. Ratcliff (jratcliff) on X, shamefully copied here: We. Need. ...
Long post from John W. Ratcliff (jratcliff) on X, shamefully copied here:
We. Need. Better. Critics.
This post is going to be lengthy. I'm going to accurately and publicly criticize some of the problems with bitcoin.
I'm going to give our enemies the ammunition they need to intelligently critique bitcoin.
Because, so far, I'm seeing the exact opposite of intelligence. The stupidity of these criticisms literally takes the air out of your lungs.
* "Bitcoin is backed by the USD because people measure its value in USD." I really can't here. This is just too stupid to even respond to really. Do these people know that Europeans measure the value of bitcoin in Euros? That gold bugs measure the value of bitcoin in ounces of gold? All value is measured relative to the value of something else. Like, seriously. Stop. You are embarrassing yourself.
* "Bitcoin isn't scarce because you can subdivide it." It's hard to say if this one is more stupid than the first, they are kind of both equally moronic. I can't really respond to people who never learned fractions in grade school.
* “If the Internet went down bitcoin would be worthless”. I've got news for people. If the Internet goes down, your ATM isn’t going to work either. The entire world would melt down. In fact, with bitcoin, we at least have the possibility that we could switch to some kind of a mesh network and keep the thing going. While that is unlikely, at least the option exists. It isn’t a legitimate criticism because virtually all of the wealth in world today is *already* digital and electronic.
* "As the price of bitcoin rises, it will use so much energy it will destroy the planet." Now, with this one, you have to cut people some slack because it is a complex topic that actually requires a lot of research to more deeply understand. Bitcoin mining is only profitable with cheap energy; typically energy which is stranded or otherwise wasted. If you dam a river where no one lives, you are utilizing stranded energy. If you mine bitcoin with solar power that there is no other demand for, then you are doing nothing but helping finance clean energy. Most energy is wasted. A hydroelectric dam produces electricity 24 hours a day seven days a week. It produces as much energy as the water flow will provide, whether there is a buyer for it or not. Where do people think that energy goes? Into a battery to be used at a later date? It goes nowhere. Unless you have a bitcoin miner willing to buy it; in which case that waste energy provides a 'buyer of last resort' for the power company which stabilizes the grid and funds more clean energy development.
* "Bitcoin is used only by criminals". I mean, seriously, the USD is used for most crimes, as everyone already knows. Also, if someone invented a money that couldn't also be used for 'illegal' things, could you even call it money? It wouldn't be money since it would lack the basic properties necessary for it to be money. Bitcoin is on a public ledger, it can easily be tracked by legal authorities, and is not particularly favored by criminals for that reason alone.
Ok, now that I have dispensed with the main idiotic criticisms of bitcoin, here are the real ones. Now even though I'm a big bitcoin fan boi, it's not so much that I can't look in the mirror and see that things are not perfect. Some of these issues can be solved or improved over time, but they are still that. Issues. Some are less a critique of the bitcoin network itself and more about events that could horrifically crash the market.
Ok, here are some, but not all, real criticisms of bitcoin.
* Bitcoin mining is too centralized. Sadly, this is a real and very legitimate concern and only getting worse by the day. We are seeing more and more hash power concentrated in a handful of mega-mining companies; most of whom are subject to regulatory capture. Many of them are already censoring transactions and the state can easily go after them. That doesn't mean that hash power wouldn't just move elsewhere (as it has in the past) but it would present challenges.
* The government can just declare bitcoin illegal. This is also a real and legitimate concern. While, yes, the government cannot actually stop the bitcoin network itself, what they can do is shut down all on-ramps and off-ramps and close all bitcoin investment vehicles like the ETFs. None of this would affect the bitcoin network directly itself, as it would continue to function, however, this would devastate the overall market. However, with the launch of the ETFs, bitcoin is so integrated into the mainstream that it appears increasingly unlikely that they could do this. Too many people have skin in the game. Also, every country would have to agree to do this for it to succeed, and that is unlikely Moreover, as value flows into the ETFs (which all have custodial control, full AML/KYC, and tax reporting) this actually greatly benefits the state. As the price of bitcoin increases due to the state’s rampant money printing, they get to keep raking value back out of it over, and over, and over again in the form of taxes. So, at this point, it would actually hurt the state to make it illegal. Better to keep it legal and try to capture it since the bulk of value will be stored in custodial accounts soon enough anyway.
* Bitcoin could have a bug. Yep. It's always possible. It has happened in the past. We could probably fix any bug that came along but, it wouldn't be pretty either. It would definitely greatly disrupt the market.
* Bitcoin keys are too easy to hack. This is also true. Bitcoin is a bearer asset protected only by a password. Surprisingly, securing a password is a lot harder than you might think. People have had their bitcoin stolen many times, often through some very nasty and ingenious scams. If Coinbase were to lose keys for all of the ETF money that they manage, it would be devastating. I know, some would say, ‘nah, bitcoin would work fine, it would just make it even more scarce’. Let’s be real. If something like that happened that would be the end of bitcoin as an investment vehicle.
* Bitcoin is too volatile to be used as a currency. This is 100% true. That doesn't mean that it will *always* be true, but it is certainly true today.
* Bitcoin can't be used for payments. This too is a valid criticism. It can't. Bitcoin, as it exists today, can only be used as a settlement layer. Now, that doesn't mean you can't use bitcoin for payments using other networks. Visa and Mastercard both process payments in nearly every currency on the planet. Should they choose to, they could add support for bitcoin easily. There are many other payment networks to choose from, so the fact that you can't execute payments directly on chain, while a legitimate concern, doesn't mean there aren’t other options; albeit with a different security model.
* Not everyone in the world can self-custody bitcoin. This too is a concern as well. Sadly, only the really wealthy will be able to do on-chain transactions some day in the future. Perhaps we will come up with some kind of side-chain or other secondary layer that, though it has a slightly different security model, is still sufficient for everyone in the world to at least have the option to self-custody
* Bitcoin could fracture. This is a legitimate concern. It has happened before (back during the blocksize wars) and it could definitely happen again. There continue to be debates about what features should or shouldn’t be added to bitcoin. We could easily get into a state where bitcoin splits into multiple versions creating complete market chaos.
Ok, I’ve gone on long enough here. There are more stupid takes on bitcoin than this, as there are more legitimate criticisms. But, we seriously need better, more educated critics, because the sheer stupidity we have seen lately is getting ridiculous.
We. Need. Better. Critics.
This post is going to be lengthy. I'm going to accurately and publicly criticize some of the problems with bitcoin.
I'm going to give our enemies the ammunition they need to intelligently critique bitcoin.
Because, so far, I'm seeing the exact opposite of intelligence. The stupidity of these criticisms literally takes the air out of your lungs.
* "Bitcoin is backed by the USD because people measure its value in USD." I really can't here. This is just too stupid to even respond to really. Do these people know that Europeans measure the value of bitcoin in Euros? That gold bugs measure the value of bitcoin in ounces of gold? All value is measured relative to the value of something else. Like, seriously. Stop. You are embarrassing yourself.
* "Bitcoin isn't scarce because you can subdivide it." It's hard to say if this one is more stupid than the first, they are kind of both equally moronic. I can't really respond to people who never learned fractions in grade school.
* “If the Internet went down bitcoin would be worthless”. I've got news for people. If the Internet goes down, your ATM isn’t going to work either. The entire world would melt down. In fact, with bitcoin, we at least have the possibility that we could switch to some kind of a mesh network and keep the thing going. While that is unlikely, at least the option exists. It isn’t a legitimate criticism because virtually all of the wealth in world today is *already* digital and electronic.
* "As the price of bitcoin rises, it will use so much energy it will destroy the planet." Now, with this one, you have to cut people some slack because it is a complex topic that actually requires a lot of research to more deeply understand. Bitcoin mining is only profitable with cheap energy; typically energy which is stranded or otherwise wasted. If you dam a river where no one lives, you are utilizing stranded energy. If you mine bitcoin with solar power that there is no other demand for, then you are doing nothing but helping finance clean energy. Most energy is wasted. A hydroelectric dam produces electricity 24 hours a day seven days a week. It produces as much energy as the water flow will provide, whether there is a buyer for it or not. Where do people think that energy goes? Into a battery to be used at a later date? It goes nowhere. Unless you have a bitcoin miner willing to buy it; in which case that waste energy provides a 'buyer of last resort' for the power company which stabilizes the grid and funds more clean energy development.
* "Bitcoin is used only by criminals". I mean, seriously, the USD is used for most crimes, as everyone already knows. Also, if someone invented a money that couldn't also be used for 'illegal' things, could you even call it money? It wouldn't be money since it would lack the basic properties necessary for it to be money. Bitcoin is on a public ledger, it can easily be tracked by legal authorities, and is not particularly favored by criminals for that reason alone.
Ok, now that I have dispensed with the main idiotic criticisms of bitcoin, here are the real ones. Now even though I'm a big bitcoin fan boi, it's not so much that I can't look in the mirror and see that things are not perfect. Some of these issues can be solved or improved over time, but they are still that. Issues. Some are less a critique of the bitcoin network itself and more about events that could horrifically crash the market.
Ok, here are some, but not all, real criticisms of bitcoin.
* Bitcoin mining is too centralized. Sadly, this is a real and very legitimate concern and only getting worse by the day. We are seeing more and more hash power concentrated in a handful of mega-mining companies; most of whom are subject to regulatory capture. Many of them are already censoring transactions and the state can easily go after them. That doesn't mean that hash power wouldn't just move elsewhere (as it has in the past) but it would present challenges.
* The government can just declare bitcoin illegal. This is also a real and legitimate concern. While, yes, the government cannot actually stop the bitcoin network itself, what they can do is shut down all on-ramps and off-ramps and close all bitcoin investment vehicles like the ETFs. None of this would affect the bitcoin network directly itself, as it would continue to function, however, this would devastate the overall market. However, with the launch of the ETFs, bitcoin is so integrated into the mainstream that it appears increasingly unlikely that they could do this. Too many people have skin in the game. Also, every country would have to agree to do this for it to succeed, and that is unlikely Moreover, as value flows into the ETFs (which all have custodial control, full AML/KYC, and tax reporting) this actually greatly benefits the state. As the price of bitcoin increases due to the state’s rampant money printing, they get to keep raking value back out of it over, and over, and over again in the form of taxes. So, at this point, it would actually hurt the state to make it illegal. Better to keep it legal and try to capture it since the bulk of value will be stored in custodial accounts soon enough anyway.
* Bitcoin could have a bug. Yep. It's always possible. It has happened in the past. We could probably fix any bug that came along but, it wouldn't be pretty either. It would definitely greatly disrupt the market.
* Bitcoin keys are too easy to hack. This is also true. Bitcoin is a bearer asset protected only by a password. Surprisingly, securing a password is a lot harder than you might think. People have had their bitcoin stolen many times, often through some very nasty and ingenious scams. If Coinbase were to lose keys for all of the ETF money that they manage, it would be devastating. I know, some would say, ‘nah, bitcoin would work fine, it would just make it even more scarce’. Let’s be real. If something like that happened that would be the end of bitcoin as an investment vehicle.
* Bitcoin is too volatile to be used as a currency. This is 100% true. That doesn't mean that it will *always* be true, but it is certainly true today.
* Bitcoin can't be used for payments. This too is a valid criticism. It can't. Bitcoin, as it exists today, can only be used as a settlement layer. Now, that doesn't mean you can't use bitcoin for payments using other networks. Visa and Mastercard both process payments in nearly every currency on the planet. Should they choose to, they could add support for bitcoin easily. There are many other payment networks to choose from, so the fact that you can't execute payments directly on chain, while a legitimate concern, doesn't mean there aren’t other options; albeit with a different security model.
* Not everyone in the world can self-custody bitcoin. This too is a concern as well. Sadly, only the really wealthy will be able to do on-chain transactions some day in the future. Perhaps we will come up with some kind of side-chain or other secondary layer that, though it has a slightly different security model, is still sufficient for everyone in the world to at least have the option to self-custody
* Bitcoin could fracture. This is a legitimate concern. It has happened before (back during the blocksize wars) and it could definitely happen again. There continue to be debates about what features should or shouldn’t be added to bitcoin. We could easily get into a state where bitcoin splits into multiple versions creating complete market chaos.
Ok, I’ve gone on long enough here. There are more stupid takes on bitcoin than this, as there are more legitimate criticisms. But, we seriously need better, more educated critics, because the sheer stupidity we have seen lately is getting ridiculous.