2 Common Arguments against Bitcoin Put into Context

Bitcoin criticisms are often a call for clarification.

When discussing the Pros and Cons of Bitcoin, I sometimes get barked at. The following are the two counterarguments I hear most:?Bitcoin has no intrinsic value?and?Bitcoin is crashing. Even more than the good old “Bitcoin is bad for the environment argument”.

As a disclaimer: based on my current knowledge, I don’t see Bitcoin as the solution to all our problems. I see it as a counterweight to centralized and often corrupted financial systems that may benefit small minorities but burden large majorities. 2 prominent examples are inflation and cross-border payments.

Inflation lowers purchasing power for most people. In some countries, inflation is up?more than 100% per year.

In terms of cross-border money transfers Bitcoin offers a huge saving potential. In 2021 non-commercial, international transfers of money summed up to?$589 billion?with an?average cost of 6,4%.

“Bitcoin has no intrinsic value”

Well, what has??Or better yet,?What is intrinsic value?

Isn’t value just something we assign to things?

For example: For some people, a?Tesla Model S?has a high value. For them, it’s a good way to get from A to B. So much that they are willing to pay thousands for it. A person stranded on an empty island may not care at all about a car but would give everything for a glass of drinking water.

And again someone else e.g. in Venezuela, Argentina or Turkey would see the value in an uninflatable, incorruptible, censorship-resistant borderless currency i.e. Bitcoin. And if millions or even billions of people recognize this value but programatically there can only ever be 21 million Bitcoin in total…how would that affect the price?

Now, what intrinsic value does a 100-dollar bill have? Today and in 10 years from now?

“Bitcoin is crashing”

What timeframe is referred to?

Bitcoin started in 2009 at 0. Since then its price rose (with many fluctuations). Based on each year January 1st:

Compared to 2011 Bitcoin is up 7 Million %. Compared to 2013 Bitcoin is up 165000%. Compared to 2015 Bitcoin is up 7000%. Compared to 2017 Bitcoin is up 2200%. Compared to 2019 Bitcoin is up 560%. Compared to 2020 Bitcoin is up 300%. Compared to 2021 Bitcoin is down 25%

So yes, if you bought at an all-time high, you’re now in the red by almost 70%. Looking at historical data, however, the overall direction and price characterisitc become clear. Both, in terms of the long-term trend and short-term fluctuations.?If in doubt, zoom out.

Further, looking closer to the downward development from 2021, we have to admit that the world is facing a crisis: War in Ukraine, energy and food shortages and resulting inflation, recession, and further political and macro-economical concerns. Hence, other assets have crashed, too: The S&P500 went down 16%, Nasdaq100 lost 25% and some single stocks lost more than 50%. For example, Netflix and Etsy trended downward almost 70%, and PayPal and Under Armour lost around 55%.

Summary

It's important to put our arguments in context. Bitcoin is volatile. Its price measured Dollars or Euros has fallen. So have traditional assets in the face of the ongoing crisis. However, this does not change Bitcoin’s value proposition. It’s an uninflatable, censorship-resistant, and secure peer-to-peer payment network empowering people around the world to own their assets and send them anywhere instantly and without costly intermediaries. For many, this is very valuable.