How to critique Bitcoin: a guide
You’re a Nobel prize-winning economist, or a tenured professor at a prestigious university. Maybe you run a deep value hedge fund. Perhaps you write a popular column on markets. You might be a central banker or a finance minister. You feel that your experience and your credentials grant you a thorough understanding of the world.
You wear dark suits (or, on a casual occasions, Patagonia vests), glide through airports with TSA pre, global entry, and lounge access, you wear round tortoiseshell spectacles, and you most likely live in a brownstone in Brooklyn. If you’re technologically-minded, you like the underlying blockchain technology, although you’re not entirely sure what that means. You have no trouble broadcasting your thoughts to the world — in fact, you are considered a trusted source of analysis on pressing issues of the day. You have opinions, and the masses ought — hell, they should be grateful — to hear them.
You’ve heard of Bitcoin. You do not like it. It’s rat poison, a ponzi scheme, and it’s boiling the oceans with its energy usage. It’s run by an uncouth federation of, presumably, alt-right-ers, or at the very least, ideological undesirables of some sort. It relies on curious, antiquated ideas like sound money, peer-to-peer networking, the abolition of seignorage, and censorship-resistance. It is profoundly distasteful.
You want to write a thinkpiece about Bitcoin.
You’re not sure where to start. You hunker down with a decaf soy latte and ponder the approach. Should it be the volatility? Currencies can’t be volatile, surely. Hyperinflation is a problem for the global south, not you. Maybe it should be the hacks. On NPR, you heard about the collapse of some Bitcoin exchange named after a Japanese… mountain? You reflect on the objectionable tone of those Bitcoiners on Twitter. Those trolls can be awfully rude.
Aha! You identify some core hypocrisy associated with the cyber coin. You read in the New Yorker that Bitcoin doesn’t actually support that many transactions. How could the damn thing be a world currency, at all? You vaguely remember some jargon about block sizes and TPS. You toy with the idea of looking up some usage stats. Better not. You have thinkpiecing to do.
Maybe you will target Bitcoin’s use for illegitimate purposes. You’re very comfortable with your financial life on SWIFT, ACH, and Paypal (if you’re feeling edgy). You couldn’t possibly conceive of a case in which you’d to transact outside of this regulated aegis. If you’ve got nothing to hide, why would you need privacy, after all, you muse to yourself. You recall reading a piece in the Guardian about Bitcoin usage in Venezuela due to hyperinflation. You dismiss the thought from your brain. Venezuela wasn’t real socialism, after all. You ask Alexa to pop on Maroon 5 and get back to your draft on google docs.
There’s so much ground to cover. Where to start?
I suggest a method to simplify your punditry. No more wondering about which arguments to fit into your piece. No more fretting over Austrian economics. No more trying to recall what your econ 101 textbook said about deflation. Bitcoin has consumed enough of your mental energy already. You want it to go away, but you don’t want to think about it too hard either.
I humbly propose instead:
The Bitcoin spin device
These dice will make those Sunday afternoons spent toiling over Op-Eds so much easier. Just roll these twelve-sided dice several times and transcribe the answers. Simply regurgitate the talking points. You are essentially a random number generator for Bitcoin critiques, so why not outsource yourself entirely?
Do the 2018 thing. Reduce the task to its essence. Automate your punditry. I’ve carefully included the most popular and sophisticated objections to Bitcoin, completely saving you the trouble. These dice represent the platonic ideal of criticism — anything else is garnish.
I’ve included a handy guide so you can easily parse the various objections to Bitcoin.
- 21m cap: as you know, there will only ever be 21,000,000 Bitcoins minted. You skimmed a recap of some paper and you’re now very concerned about the long term viability of the Bitcoin security model as block rewards shift to a fee-subsidy model after the next halving.
- Deflation: if Bitcoin were to become a dominant global currency, its capped supply might end up having deflationary effects. You know that your benevolent central bankers target two percent inflation to encourage people to spend and consume. You see no problem with that. You like spending and consuming.
- Dev. incentives: ICOs (initial coin offerings) offered software developers the chance to write open source software and get handsomely paid for it, too. Bitcoin is disturbingly meritocratic, and doesn’t pay its developers anything. You don’t understand why anyone would work if they weren’t getting paid. Bitcoin devs wouldn’t just do it out of the goodness of their hearts, would they?
- Energy waste: Bitcoin uses heaps of energy to secure the monetary system and retain the integrity of its ledger in a trust-minimized way. The US-driven fiat money regime relies on aircraft carriers and nuclear arsenals instead. You find the latter much more elegant. Its tangibility is comforting.
- Small blocks: for a while, Bitcoin capped its block size at one megabyte (now it’s effectively 2.3 mb). You think the system should attempt to scale right away, rather than being built in a layered manner — consequences be damned.
- Volatile: as an emerging virtual commodity, Bitcoin is extremely volatile. You think that risk in markets should be abolished, or at least suppressed through endless monetary expansion.
- No Turing (completeness): Bitcoin isn’t capable of supporting arbitrary computation, unlike competitors like Ethereum. That makes Bitcoin more conservative and less expressive at the base layer. You think developers should be free to experiment with billions of stored wealth.
- High fees: due to the capped throughput, Bitcoin has a market for block space. In times of congestion, users can pay a premium for higher-priority transactions. You dislike fees and would prefer immediate, global scaling — again, with no thought to the long term sustainability of the system.
- Selfish mining: you may have heard about this potential edge case in Bitcoin mining, and have decided that the Proof-of-Work consensus system is a write-off, despite ten years of reliable functionality. If you really want to impress your friends, dredge up this exotic line of attack.
- No KYC: Bitcoin is a permissionless system that anyone on earth can use to store or send their wealth. You don’t like the idea of free flow of money or untamperable wealth. You believe in capital controls and the USDA food pyramid. You prefer your steaks well done, and your money under the watchful gaze of the government.
- Toxic fans: style is far more important than substance. Maintaining decorum in an argument matters far more than being right. Bitcoiners like to rudely call out ICO scammers and fiat-gorging central bankers alike. That’s not very nice. And nice makes right.
So there you have it. You are now free to launch somewhat erudite critiques of Bitcoin without learning about the system at all! If you want, you could even devise an encoding scheme for the dice, so you don’t even have to bother typing out the objections in full. Your next NYTimes column could simply read “4–11–5–6” and your readers will nod in understanding — Bitcoin will fail due to the energy waste, the toxic fans, the small blocks, and the volatility!
The dice are real. You can buy them today on Bitcoin’s lightning network at Quinsolo for 0.001 BTC (~$3). Cast those dice with confidence, fiat-inflationists.