Analyzing Arguments Against Bitcoin

I happen to think it is extremely valuable to look at the arguments put forward against a particular viewpoint or technology as much as it is worth looking at the arguments for it.

And so should you. It's called "looking at the pros and cons".

It also helps you avoid getting trapped in a hermetic echo chamber of monotonous like-minded people that drags you into a warped partisan view of the world where one day you wake up to find you've lived in a cult compound for the last decade, or worse, a 1980s semi-detached house in Newport Pagnell with a beige interior and one teal-colored feature wall.

But admittedly you shouldn't have to look at those arguments time and time again and again if they're same tired old ones being trotted out, and which have already been thoroughly rebutted. And that clearly have an agenda behind them that probably isn't in your own best interests.

I happen to be pro-Bitcoin. Not in a Bitcoin maximalist-manner; I've had my "nights of the dark soul" moments where I've wondered if I've deluded myself as to the value of it all, but I've come out of each of them with a stronger conviction that, despite all its flaws, Bitcoin or possibly its improved successor, is going to have a significant positive impact on the lot of the average person. For a lot of different reasons.

And I think this is significant because no matter how well I do in life, my grandchildren and their children are probably going to fall in the category of average people. And their children's children certainly will.

But then again, perhaps I'm just odd for caring about the fate of my great-great-grandchildren.

A new argument

A day ago I came across an argument against Bitcoin I'd not seen before:

A good way to think about the WORTHLESSNESS of Bitcoin is asking yourself what you would you be able to do if you owned the entire supply.

Answer: ZERO

So, if owning all the Bitcoin in existence would be economically worthless, why would owning a SHARE of zero be worth MORE than zero?"

Daniel Mauro

Excuse the odd capitalization: Daniel is a bit odd that way. Focus on the argument: does it sound convincing to you at first glance?

Given that 55 people have clicked with some kind of positive response at the point that I'm writing this (I'm excluding the "curious" ones as critics), presumably it has something to it that strikes a chord. And it did indeed give me a few second's pause.

So here we go - let's engage the critical thinking engine.

Counter-argument 1

If I (or Satoshi Nakamoto, which is more feasible) owned the whole supply then it wouldn't be Bitcoin.

One of the conscious design decisions Satoshi made was to have a distribution mechanism, rather than minting the entire supply to him/herself. It's an integral part of the Bitcoin system.

There was no pre-mining or pre-minting in Bitcoin. Anyone had (and still has) the option of mining more, and will until 2140. That is revolutionary. Can you think of any other financial system that allows anyone to participate in that manner? (Without being prosecuted for forgery...)

But back to the first rebuttel: you might as well say, "A good way to think about the WORTHLESSNESS of cars is asking yourself how far you would be able to travel if they had no WHEELS because I have ALL the wheels".

Counter-argument 2

Another thing you might like to consider is a hypothetical world in which all the US dollars (or Russian rubles) are in the hands of one single person.

I think you'll soon conclude that the rest of us would decide the US dollar (or Russian ruble) is no longer worth using as a medium of exchange, because we don't have any to exchange, and it is therefore worthless.

So what Daniel has managed to do is prove that if Bitcoin is worthless under his argument, then so is the US dollar (or the Russian ruble).

In the meantime, both the US dollar and Bitcoin (and the Russian ruble, for now) continue to be valuable. And so does Bitcoin.

Counter-argument 3

Here is a technical rather than a material counter-argument based on the third sentence in Daniel's argument (reminder: it was "So, if owning all the Bitcoin in existence would be economically worthless, why would owning a SHARE of zero be worth MORE than zero?").

If I owned a share of the coins in that one person's possession of all the coins, then they would no longer be solely in that one person's possession. Which therefore invalidates the prior axiom and conclusion.

Furthermore. the prior two counter-arguments I provided would apply, and hence the coins would become valuable - definitely to me, and to the other person. We can now using them as a medium of exchange, a unit of accounting, and a deferred store of value.

Hey, that means we could use them as our own private money system to keep track of how well we are doing in comparison to each other, and to keep track of what debts we owe to each other.

Now what if we could get other people to accept shares in the coins too? That would make them more useful, in direct proportion to the level of adoption. In fact, not just direct proportion, because the network effect would kick in, so it would be in the square of the direct proportion.

Now wouldn't that be something?

Conclusion

So what is my agenda in writing this article? You should have asked yourself that question without prompting, and have come up with a number of hypotheses, but I'll help you out.

It could be a number of things:

• It's a great opportunity for me to show the world how clever I think I am,
• I'm trying to encourage critical thinking and viewing the world from the perspective of others for the betterment of all,
• I want to provide a bit more education on how Bitcoin works and why some of its design turns out to be well thought out and effective, because I appear to have this weird compulsion to teach,
• I'm a Bitcoin maximalist with a huge hoard of coins who wants the Bitcoin price to moon, so that I can live on a luxury yacht and travel the world without a care.

I'll give you a clue - all but one of the above points are true.