Fear, uncertainty and doubt around Bitcoin
History shows it is not possible to insulate yourself from the consequences of others holding money that is harder than yours — Saifedean Ammous.
The 4 most repeated fallacies that nowadays spread FUD around Bitcoin are discussed below:
1) Energy FUD: "Bitcoin consumes a lot of non-renewable energy for something useless"
Bitcoin requires so much computing activity that it eats up more energy than entire countries. One of the easiest and least disruptive things we can do to fight the climate crisis is to crack down on environmentally wasteful cryptocurrencies. — Elizabeth Warren (U.S. Senator) on June 2021.
Bitcoin uses electricity to secure the network through a computing process referred as mining.
Electricity is generally obtained from other forms of energy that can be either renewable or non-renewable.
Bitcoin increases the renewable energy profitability, so it incentivizes its adoption.
Renewable energies like wind or solar are intermittent and tend to have load congestion at peak times.
Besides, they are difficulty distributed if they are in isolated places that are not connected to a large electrical grid infrastructure.
Bitcoin miners are unique energy buyers in that they offer highly flexible interruptible load while being able to locate anywhere, so they have the ability to use excess energy that would otherwise have been wasted.
The easy accessibility that Bitcoin mining offers causes that, in the long run, only surplus energy will be used.
It is true that when price of bitcoin increases drastically, many energy sources become profitable for that purpose, but profitability decreases over time as competition increases.
Bitcoin is a superior form of money that enables financial inclusivity and freedom.
Electricity is the only known way to digitize real world value without a central trusted party — Willy Woo.
Bitcoin technology uses electricity to avoid consuming human resources.
When we can secure a financial network by computer science rather than by accountants, regulators, investigators, police, and lawyers, we go from a system that is manual, local, and of inconsistent security to one that is automated, global, and much more secure. — Nick Szabo.
The use of energy to satisfy necessities and save human time is progress.
Gold historically has also been the subject of fallacious arguments that do not take benefits into account:
If one looks at the catastrophic consequences of the great paper money inflations, one must admit that the expensiveness of gold production is the minor evil. — Ludwig Von Mises.
Gold mining is a waste, but that waste is far less than the utility of having gold available as a money. I think the case will be the same for Bitcoin. Not having Bitcoin would be the net waste. — Satoshi Nakamoto.
2) Ban FUD: "Most governments don’t like it, so they will shut it down or will ban it"
If there were no states wanting to ban Bitcoin, Bitcoin would not be interesting.
Bitcoin isn’t going to embrace the subjective requirements of any person, organization, or government.
A ban on Bitcoin can not be implemented in a practical way.
There has to be regulation. This has to be applied and agreed upon... at a global level because if there is an escape that escape will be used. — Christine Lagarde (European Central Bank president) referring to Bitcoin in January 2021.
Bitcoin is indeed an escape to the lifeboat of financial hope.
Future is not bright for those that oppose innovation.
3) Quantum computing FUD: "Quantum Computing will break Bitcoin"
Quantum Computing is nowhere near capable of breaking Elliptic Curve cryptography, and unclear if it ever will. When that time comes, Bitcoin will softfork to add post-Quantum signatures schemes, and eventually remove Elliptic Curve based outputs when we become too worried about their breaking. — Pieter Wuille.
"With Quantum Computing somebody will be able to access to all coins that are lost"
There is a theoretical and highly hypothetical solution that would consist of invalidating Elliptic Curve-based spending methods (invalidating coins), except when the spending includes a post-Quantum zero-knowledge proof that the key was derived from a known BIP32 seed. Such approach would likely keep most coins movable, while removing the risk for theft by Quantum Computing.
The obvious path to solving this is:
1.Research post-Quantum cryptography.
2. When that is done, propose an improvement to Bitcoin that enables post-Quantum Computing outputs.
3. People start moving their coins over time to these post-Quantum Computing outputs.
4. Decades later, when the threat for a sufficiently powerful Quantum Computing becomes real, disable spending from old Elliptic Curve-based outputs. — Pieter Wuille.
4) Bitcoin Copies: "Bitcoin can’t be scarce because its software can copied"
It is trivial to copy open source code, But, getting people to appreciate a copy is the tricky part.
It is not possible to replicate the Bitcoin scarcity that comes from its immaculate conception, from being the original cryptocurrency, the one with longest established history and highest reputation.
Bitcoin attracts the best cryptographers.
Gifted people tend to want to work with other top people and work on something that matters, that they believe in. Motivation matters. Protocol design and coding is partly an artistic, aesthetic endeavour; people do their best work on a mission: uncensorable global internet money. — Adam Back.
Hodlers defend it with passion:
Arguing that Bitcoin can not be scarce because its code can be copied is like arguing that a Van Gogh can not be valuable because it can be copied.
Elvis Presley is unique despite others copy him
The code of a Bitcoin copy is probably structurally unsound, poorly reviewed built by a few inexperienced developers.
If Bitcoin is imagined like world’s gold being stored in the ultra secure Fort Knox under heavy armed guard, then forking Bitcoin is like painting some rocks on a gold color and storing them in recently built, small poorly engineered shack called Fort Knox Lite that is secured with someone disguised as a policeman.
Different mediums of exchange may coexist, specially when the soundest money lacks some monetary property. However, money has a strong network effect when acting as a medium of exchange because an increasing social adoption implies the improving of saleability, which is a monetary property.
For example, due to its high density of value, gold lacks divisibility for small amounts. Instead, silver and copper were more convenient for small transactions; so gold, silver and copper coexisted as monetary metals.
But in the 19th century, the superior divisibility of silver and copper became irrelevant as paper receipts of stored metals gained adoption as medium of exchange. Gold then became the only money backing those claims.
Because Bitcoin is the meeting point for cryptocurrency enthusiasts, the rest of cryptocurrencies are usually called “alts”.
There are plenty of insecure alternative “cryptocurrencies” that sacrifice permanent security in order to temporarily gain some functionality.
If the designers of your blockchain talk about “saving the planet”, “increasing throughput”, “compliance”, “governance”, “democracy”, or any other topic more than they both talk & actually care about securing your financial property, run! do not walk away from that chain. — Nick Szabo.
It has been said that Centralized Digital Currencies (CDC) & Central Bank Digital Currencies (CBDC) could adopt the form of cryptocurrencies by adopting blockchain technology, but they are cryptocurrencies in the same way that a doll is a baby. They lack the predominant source of value that distinguishes cryptocurrencies from fiat money: the reduction in vulnerability to third parties behaviour, for which governance minimization via decentralization is required.
Examples would be Facebook's Libra or a hypothetical "Digital Euro".
Despite of all the fallacious narratives and attack attempts against Bitcoin, the network stays working like a clock: “Tik tok, new block.” In fact, Bitcoin seems to be anti-fragile.
What doesn’t kill you makes you stronger
Anti-fragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the anti-fragile gets better, it gains from disorder, thriving and growing when exposed to stressors.
The anti-fragile loves adventures: “smooth seas do not make good sailors”.
In complex systems, anti-fragility works through layers.
Layers provide Bitcoin with extra functionalities while preserving the Protocol Network robustness.
Most Bitcoin transactions will occur between banks, to settle net transfers. Bitcoin transactions by private individuals will be as rare as...well, as Bitcoin based purchases are today. — Hal Finney, on December 2010.