A recent article titled Fourteen Reasons Not To Invest In BTC is a perfect illustration of how easy it is to write an article that sounds authoritative by misleading readers with irrelevant facts or misinformation. Let me explain individually.
- No Capacity (Utility)
- Irrelevant fact: BTCs throughput is limited to 7 transactions per second.
- The Truth: The base layer of money needs to be slow, resilient and secure. The fiat we use today as money is built on layers (Central Banks, Local Banks, Financial Institutions such as Visa/MasterCard/Venmo etc, then paper money). The fiat money system uses a base system called SWIFT which is simply a messaging system the banks use to communicate transfers. These transfers summarize millions of individual transactions into one movement from bank to bank. The need for everyone to communicate balances on the SWIFT system is not necessary. Your bank summarizes all your transactions and moves the money on your behalf. The majority of humans will never transact with Bitcoin on the main chain, nor do they need to.
- Irrelevant fact: The Lightning Network is a solution to the scaling problem.
- The Truth: It’s too early in the development of the lightning protocol to see it as the way people will use it as money. Lightning is a protocol, not a software; just so that is clear. There are 3 different software implementations available today. As a Lightning Node operator, I see Lightning more as the base protocol for custody solutions, i.e. it will in my opinion be the settlement layer for banks. But today, it represents the fastest way to transfer bitcoin. The lightning network does not have to ONLY be custodial, if you are willing to learn and do the work, you can operate your own lightning node and become the bank for you and your family. You can do that for approximately $20 per month. In summary, we are not at the level of use for everyday transactions. Bitcoin is a technology advancement for money that is being built today. As the technology and development progresses, the usability will increase, and onboarding will be as simple as signing up for email. If you want to see it in action and become a part of the network, review how to build a network or reach out to me for help.
- Irrelevant fact: BTCs throughput is limited to 7 transactions per second.
- No Long-Term Security (Without Utility)
- Irrelevant fact: There were no facts in this section; it was a rant!
- The Truth: Rants are rants and while entertaining to read, they provide no value if the listener isn’t fully educated on the subject. The long-term security issues presented boils down to an imposition of current mining activities onto the future; meaning the author assumes that people who “mine” bitcoin will ONLY do it for a “profit” in perpetuity. The future of bitcoin mining will be home water/air heaters; heaters used to dry food, keep indoor farms warm for growing crops etc. Think about your home, if you could get a 15% kick back for using a specific water heater, would you use it or not? Of course you would, you don’t care how your water is heated, only that its heated and you pay the least amount for that heated water. This is the usecase for mining 20+ years from now. You can research more heating applications that are being developed. The author has no idea how the price, transaction fees and block rewards will play out; that is for the market to sort out. In the meantime, you can read another poorly written article about bitcoin mining and energy use. What you will notice is that its worded in a way that makes mining bitcoin sound bad, but the entire article cites how the bitcoin miners turned off their machines so that households and business avoided a blackout; that’s the use case for bitcoin mining, allow energy companies to build massive electric capacity selling the cheap energy to bitcoin miners and when we get a heatwave or cold snap, these machines can be shut down instantly to divert power for homes. It’s going to become an Intigral part of every electrical grid across the globe over the next few decades. Watch it happen!
- Irrelevant fact: There were no facts in this section; it was a rant!
- No Predictable Supply (Without Security)
- Irrelevant fact: Again, there were no facts in this section; in fact, the entire section was about changing the supply because it is already fixed.
- The Truth: The supply of bitcoin is capped at 21 million. Actually, it’s no greater than 21 million but you can review the code yourself. So, this entire section by the author is how it should be changed to a higher amount, but that doesn’t jive with the title of “no predictable supply”. The supply is currently programmatically predictable, yet the author wants you to change it LOL. We have already debunked the security part in #2 so the other tangent described in this section is a 51% attack. A 51% attack is the idea that someone will be able to spin up 51% of the current amount of hash rate. People say this to sound sophisticated but does the author understand the amount of energy and land and time it would take to amass that amount of hash rate? Nope, they don’t even mention that it’s not feasible nor realistic to acquire that much equipment by one entity. Forget the fact that even if you had 51% of the hash rate, you still control NOTHING, you have to maintain that amount indefinitely and grow it continuously to maintain that rate. You control NOTHING because 49% is still controlled by other miners and when they hit a block, any transactions this adversary was blocking would be added to the block chain anyways.
- 51% attack demystified
- People will throw around this “attack” as if its a possibility. Lets walk through real quick and show how it’s impossible for bitcoin. The hash rate, which represents the amount of computing power running bitcoin, is currently 375 Exa hash. To most that means diddly, to bring it to perspective, the most common bitcoin “miner” which is really just a computer server, operates at 100 tera hash. That means, you need 3.75 million computer servers to make up the current bitcoin workforce. Therefore, today if you wanted to execute a 51% attack, you would need to acquire the equivalent of 2 million NEW bitcoin servers, acquire the land and infrastructure to house them. Then secure the necessary electricity to power all of them. Some believe a government will seize the resources and implement the attack. What government organization is capable of taking over half of the mining network spread out over the entire globe?
- 51% attack demystified
- The Truth: The supply of bitcoin is capped at 21 million. Actually, it’s no greater than 21 million but you can review the code yourself. So, this entire section by the author is how it should be changed to a higher amount, but that doesn’t jive with the title of “no predictable supply”. The supply is currently programmatically predictable, yet the author wants you to change it LOL. We have already debunked the security part in #2 so the other tangent described in this section is a 51% attack. A 51% attack is the idea that someone will be able to spin up 51% of the current amount of hash rate. People say this to sound sophisticated but does the author understand the amount of energy and land and time it would take to amass that amount of hash rate? Nope, they don’t even mention that it’s not feasible nor realistic to acquire that much equipment by one entity. Forget the fact that even if you had 51% of the hash rate, you still control NOTHING, you have to maintain that amount indefinitely and grow it continuously to maintain that rate. You control NOTHING because 49% is still controlled by other miners and when they hit a block, any transactions this adversary was blocking would be added to the block chain anyways.
- Irrelevant fact: Again, there were no facts in this section; in fact, the entire section was about changing the supply because it is already fixed.
- No Value Proposition (Without Security, Utility & A Predictable Supply)
- Irrelevant fact: Double wow and again there were no facts in this section; pure conjecture about what bitcoin is without ever describing what it actually is.
- The Truth: Bitcoin is just software, what the author is stuck on is that bitcoin is something else. What people typically refer to as bitcoin is simply an output of the software. The utility of bitcoin is that its software that anyone can use, implement, build upon and incorporate into their technology stack. i.e. you can incorporate bitcoin into your existing ERP software if you have developers in your company willing to learn. What gives bitcoin its value proposition is that it’s software no one controls. Companies and business owners have to use banks to accept money online. When companies realize they can accept bitcoin without a bank siphoning out 1-3% in transaction fees, they will become incentivized to build their own integrations for accepting bitcoin. They haven’t done that yet because they, like you, are easily distracted by poor journalism like this. Instead, this author perpetuates incorrect ideas because they are incentivized to do so. A simple search reveals the author is the founder of Cyber Capital which invests into cryptocurrencies and companies in the space. It’s easy to make money with centralized money because you can grift off its centralization by taking fees. They sell centralized cryptocurrency in different funds which they most likely charge a management fee for. He doesn’t make any money if you learn bitcoin. If his article dissuades just a few high-net-worth individuals with swag websites selling their funds, he’s done his job; the longer it takes you to understand bitcoin the less you will ever have. This doesn’t insinuate that the author has any bitcoin, many people like the author really do not understand bitcoin nor do they even use it.
- Irrelevant fact: Double wow and again there were no facts in this section; pure conjecture about what bitcoin is without ever describing what it actually is.
- No Turing Completeness (Programmability)
- Misinformation: Implies that not being Turing Complete indicates a weakness and therefore cannot be used as money.
- The Truth: I had to look up what “Turing Completeness” means. The contention here is that bitcoin cannot be used to solve a problem by the software. Basically, it’s not Turing complete because you cannot ask it to execute commands other than moving bitcoin. The author is highlighting that you cannot currently have bitcoin be moved based on a specific programmatically identifiable state. The mental trap the author wants you to fall for is that all transactions need to be on the main chain. The layers that are built on money systems include the ability to increase functionality on higher layers. The smart contracts being referred to here can be built on lightning or newer layers not yet conceived of. If you are a software developer or know anything about programming, you should spend some time learning by downloading bitcoin core and start building something instead of believing someone who wants you to buy their investment fund!
- Misinformation: Implies that not being Turing Complete indicates a weakness and therefore cannot be used as money.
- No DeFi (Without Programmability)
- Misinformation: DeFi is required for bitcoin’s success and that DeFi only refers to the ability to trade and buy.
- The Truth: DeFi is Decentralized Finance which encompasses software that is free and open to download and use that interacts with bitcoin. This exists already, you can download free and open-source software that can be used to store and transact your bitcoin. The author wants you to focus on where you buy your bitcoin. The mere fact that you are “buying” bitcoin means that you are transferring fiat to the exchange to buy bitcoin. Because you are exchanging fiat, you must use a centralized entity. There is no decentralized exchange for fiat. All fiat will be exchanged through a centralized and regulated entity, which is a bank working with the exchange to accept your fiat; unless you have access to an ATM machine that accepts cash.
- Misinformation: DeFi is required for bitcoin’s success and that DeFi only refers to the ability to trade and buy.
- No Privacy (Without Capacity & Programmability)
- Irrelevant fact: Bitcoin is not private.
- The Truth: Bitcoin was invented to be transparent, and auditable by all users of the software. Bitcoin represents a revolution in the accounting profession. Bitcoin ushers in the era of triple entry accounting, where now we can include time with debits and credits. So no, if you disclose your bitcoin public address, everyone who knows about that address can follow your spending habits in perpetuity; but they will never actually know when a transaction is to a new owner. The concept that the author continues to ignore is that bitcoin is a bearer asset, that means if you have the private keys, you own the bitcoin. So, to compare with the current money system, you as a consumer have Zero privacy, since your bank or financial institution has all your spending data stored and are compelled to provide it under court order. If you are not willing to hold your own private keys or operate your own software, you must use a centralized entity. This is the same for dollars today and will be the same for any crypto currency including bitcoin.
- Irrelevant fact: Bitcoin is not private.
- PoW is inefficient & wasteful compared to PoS
- Misinformation: “Proof of Work carries with it a massive cost in arbitrary computation” keyword arbitrary because it is technically correct in the key component of the computation, but the connotation is that it’s not necessary, when in fact it’s the essence of bitcoin.
- The Truth: Why do you go to work? To make money so that you can feed and provide shelter to you and your family. The process of going to work, producing something of value at your work takes energy. The energy is in your body to physically or mentally do the work. Then you take that money and buy food; which is energy for your body. Energy is the base for all valuations of your time and productivity. The amount of energy used to create one bitcoin via mining is the cost of production; this cost of production is used to determine the value of bitcoin. If it costs less to mine than it is to buy it from an exchange, more people will bring machines online to mine. As bitcoin integrates with energy companies looking to expand output, the cost of production will increase. Mining bitcoin creates a positive feedback loop for energy companies and energy consumers. That feedback loop includes decreased electricity costs, and the ability to handle excessive demand incidents when needed. Energy companies are incentivized to increase energy output because they have a dedicated user of any excess. The author continues to mislead readers by proclaiming PoS (Proof of Stake) is superior; he fails to mention that PoS is based on how much currency you own (stake) not based on how much you contribute to the network. Therefore, the more you own, the higher the probability you are to be rewarded with mining a block. The software determines the winner. With bitcoin, your earnings are proportional to the energy you add to the network (hash rate). Why are people so interested in selling you on a technology that is designed to cheat you? I’d prefer to spend my energy on a network that is fair.
- Misinformation: “Proof of Work carries with it a massive cost in arbitrary computation” keyword arbitrary because it is technically correct in the key component of the computation, but the connotation is that it’s not necessary, when in fact it’s the essence of bitcoin.
- PoW is less decentralized compared to PoS
- Misinformation: “PoS is far more decentralized compared to PoW”
- The Truth: Decentralization is a misnomer in my opinion. I see it more of a distributed system of adversaries. The network that makes up bitcoin consists of bitcoin software operators (typically referred to as nodes), bitcoin miners (includes pool operators) and bitcoin core developers. If you are not one of these users, you are a passive participant without any vote. This segregation of duties differs from PoS for the software development. The software developers for PoS crypto work for an organization which enforces all nodes and miners to implement updates. Failure to update means you will remain on the “old” chain. You can read about the transition from PoW to PoS for ethereum. What makes bitcoin so special is that the node runners, individuals who operate the software, individually determine what chain is bitcoin. If you are a casual user, the bitcoin you have in your wallet is based on the software of your wallet provider. This dynamic incentivizes cooperative activities to improve the network rather than adversarial ones as most journalists try to evoke. Fear sells, I guess…
- Misinformation: “PoS is far more decentralized compared to PoW”
- Dysfunctional governance
- Misinformation: Claims a majority of nodes using the same version of the bitcoin core software is an extreme degree of centralization.
- The Truth: Using the same software amongst many individuals is not centralization for bitcoin, rather it is indicative of consensus. If you accept the claim as true, wouldn’t that make every PoS system centralized also? To me the author is hoping that by the time you got to this point of the article you’re just adding more buzz words to your lexicon and perpetuating it to your friends and family.
- Misinformation: Claims a majority of nodes using the same version of the bitcoin core software is an extreme degree of centralization.
- Toxic Culture
- Misinformation: Claims the culture of bitcoin defines how the software operates.
- The Truth: If you are not operating the software as described in #9, then your opinion is irrelevant. You either take the time to learn how the software works your or you don’t. Nobody cares if you like or dislike how bitcoin operates. Same is true for anyone on social media or billionaires on local business news. The author appeals to your fears by passively calling bitcoin a ponzi and referring to actions taken by influencers.
- “While bitcoiners keep selfishly pretending as if BTC still supports its original lofty goals when it clearly does not.” The goal of bitcoin is to destroy central banking. Its 15 years into its journey, it took decades to detach gold from backing money. It will be a few decades before bitcoin attaches itself to money. In the meantime, the only metric you can follow to see which cryptocurrency is doing its job is the price. Explain to me why your shitcoin isn’t $45,000? If you know who the winner is, why would you bother betting on losers?
- The Truth: If you are not operating the software as described in #9, then your opinion is irrelevant. You either take the time to learn how the software works your or you don’t. Nobody cares if you like or dislike how bitcoin operates. Same is true for anyone on social media or billionaires on local business news. The author appeals to your fears by passively calling bitcoin a ponzi and referring to actions taken by influencers.
- Misinformation: Claims the culture of bitcoin defines how the software operates.
- Conflicts of interest
- Misinformation: Author claims corporate financial sponsorship is a conflict of interest.
- The Truth: Consensus on upgrading bitcoin software is achieved by node operators not developers. The code they create and incorporate is based on consensus that has already been achieved. The author is trying to convince you that bitcoin developers have the power to affect a change to bitcoin unilaterally. Regardless of the claims made in this section by the author, anyone can audit the bitcoin software to determine if any malfeasance has made its way into the code. Code being produced by funded developers does not negate the usefulness of the code.
- Misinformation: Author claims corporate financial sponsorship is a conflict of interest.
- Entrenched & complicit leadership
- Misinformation: There are bitcoin leaders that have power over the network and users
- The Truth: Nobody or organization has any authority over bitcoin or its operation. People who create organizations to promote bitcoin are doing so at their own expense. Therefore, if someone is advocating for bitcoin to you then they are most likely doing it to educate. That does not mean their information is accurate nor their motives are honest. Most people on social media are inexperienced users, many just parrot buzz words and proclaim themselves as the authority over bitcoin. They are not, I am not, nobody individually is but everyone collectively is if you operate your own bitcoin node. Do your own research and hold your own private keys. Not your keys, not your coins!
- Misinformation: There are bitcoin leaders that have power over the network and users
- Inability to solve all of these problems
- Misinformation: Bitcoin is unable to change to solve all of the above problems.
- The Truth: Bitcoin will change when the change is either required in 2106 or a necessity to upper layer functionality. The latter changes occur infrequently but they do occur, this is how we have the lightning network.
- Misinformation: Bitcoin is unable to change to solve all of the above problems.
In conclusion, bitcoin is the only crypto currency worth spending your time researching. My main page has a decent rant on why bitcoin. If you have a bitcoin wallet, check out some cat pics or buy a cookie. Learn how to build a website with bitcoin integration like this one instead of basing your bitcoin opinion on silly and intellectually lazy content.
