As #bitcoin adoption continues its relentless march, so too does the onslaught of misconceptions, red herrings, and flawed arguments. The result of ignorance, malice, or fear. Here are the most common fallacies to be on the lookout for: (eBook link in the thread)
"Bitcoin is a radical break from the past, so understanding the way traditional money works doesn’t help you understand bitcoin. If anything, it hinders it. The people who understand bitcoin the least are monetary economists. They cannot wrap their heads around it." —@aantonop
There appears to be an endless list of critiques and criticisms when it comes to bitcoin. While many are shallow and easily debunked, it does not stop them from being constantly recycled in the pursuit of clicks, ego inflation, and perceived competitive advantages.
Bitcoin has been called a bubble many times, by many people, over many years. While the price of bitcoin has experienced several severe declines that might warrant the label, the overall trend has been spectacularly up and to the right.
Bitcoin trades 24/7/365 globally. There are no age requirements, public holidays, circuit breakers, or bailouts. It is a truly free market. Any and all volatility is the product of buyers & sellers reaching an agreement in real-time, without government intervention.
Bitcoin doesn’t require the backing of some other scarce thing because it is itself absolutely scarce. As an independently verifiable bearer asset, bitcoin is completely free of counterparty risk.
As Gall’s Law teaches us—when building critical systems, every engineering decision must optimize for survival. Bitcoin is the world’s first indestructible monetary network.
“Bitcoin is a path-dependent, one-time invention; its critical breakthrough is the discovery of absolute scarcity—a monetary property never before (and never again) achievable by mankind.” —@Breedlove22
Bitcoin has now achieved a level of global distribution making it impossible to shut down. It’s dominance continues to grow as the native money (and network) of the digital age.
Bitcoin is globally-accessible sound money, resistant to censorship as a product of its Proof of Work incentive mechanism. It enables those living under authoritarianism to save, send, receive, and transport wealth. Ask yourself—how much energy should such a network consume?
Much of this line of criticism ignores the fact that bitcoin provides an economic incentive to harness energy sources that currently go underutilized or uncaptured.
Bitcoin mining operations are location-agnostic energy buyers. This means that energy resources that were previously uneconomical to develop should be re-assessed under these new assumptions and variables.
The risk of losing access to the internet due to infrastructure failures, natural disasters, or intentional outages is a legitimate concern. Fortunately, bitcoin turned money into pure information, removing its dependency on any single medium or telecommunications network.
"A bitcoin transaction can be transmitted over completely unsecured Wi-Fi. By smoke signal. With carrier pigeons. ..we’ve separated it from the transport medium, so it doesn’t depend on any underlying security." —@aantonop
“It is logically inconsistent to form a view that bitcoin is sufficiently functional to be viable as a currency for criminals, while at the same time deny the implication that such a view would merely establish that bitcoin is functional for everyone.” —@parkeralewis
Calling Bitcoin a pyramid scheme or a ponzi lacks an understanding of both Bitcoin and the definitions of those terms. Bitcoin is permissionless, there's no ‘membership’ element. Additionally, there is no central authority from which any promises can be made.
Confusing bitcoin as a payment processor is at the root of many misguided assessments. The bitcoin network is able to achieve transaction finality of a scarce digital bearer instrument, on a global scale, every ten mins (on avg.). It is a remarkable technological achievement.
Bitcoin is a monetary Schelling Point. Altering the supply cap would ensure that the resulting fork is neither valued nor considered ‘bitcoin’ by network participants. Munger is ironically operating outside his circle of competence.
Bitcoin can be banned. It’s the enforcement of the ban that is a lost cause. A private key is simply a 256-bit random number. Banning bitcoin would mean preventing random numbers from ever being generated. Best of luck in achieving this!
Bitcoin's permissionless and pseudonymous nature means that it's difficult (or in some cases impossible) to be certain who controls a given private key. Any proclamations as to the precise number of individuals controlling a particular amount of bitcoin are conjecture.
The threat of mining pools colluding to disrupt the network, censor transactions, or double-spend bitcoin comes from a lack of understanding of miners' incentives, their level of control over the network, the consensus rules, and the general operations of the blockchain.
Comparing bitcoin’s unit price to other stores of value (e.g. 1 btc:1 oz. gold) falls prey to unit bias. It’s more accurate to compare bitcoin's entire market cap to that of alternative stores of value when assessing relative value. Besides—you can buy a fraction of a bitcoin!
Anil@anilsaidso·Aug 3Fees are determined by auction, with transactions bidding for inclusion in a fixed capacity block. As fees do not scale with tx value, bitcoin is the ideal layer for high-value international settlement. For consumer retail txs, secondary layers can be more suitable.
Savings in simply the difference between what you earn and what you spend: savings = income - spending Rebranding 'savings' as hoarding is quite literally advocating for living paycheque to paycheque. Any investment first requires saving capital to be able to later deploy.
Bitcoin is an open-source protocol for transferring value. Anyone can fork it or attempt to launch an identical version. But you cannot take all of the developers, miners & hash power, users, node operators, or suite of products and services with you.
It’s important to understand the motives of those who decry a piece of open source software, run voluntarily, to provide the individual the ability to preserve wealth already earned and taxed from arbitrary debasement.
It takes little talent to come up with 100 reasons why bitcoin will fail. But it takes genuine curiosity to independently and systematically debunk these reasons, one by one, from first principles. This is how a bitcoiner is forged.
As you continue to navigate fuddy waters, use this tool to decipher the logic behind arguments. After all, every revolutionary innovation from the bicycle to the internet faced similar strategies from threatened incumbents, concerned citizens, and a hyperbolic media
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