Calm down and get a hold of yourself!

This post is dedicated to people who don’t like Bitcoin and/or don’t have any yet.

Bitcoin is dead. The bubble has popped, and we can all finally move on from this insanity and accomplish some real work. The cries for Bitcoin adoption are getting desperate, exhausting, and frankly, sad. Look, the thing crashed from $20,000 to $3,200. Nobody I know uses it for purchases. Bitcoiners don’t understand economics. BTC is not money, it’s the mother of all scams, and it can only handle 7 transactions per second. Any of this sound familiar?

All of these arguments don’t matter and this post will explain why.

I imagine this post will make some people upset (particularly part 2 - don’t miss it), especially those that spend time/money/energy on altcoins, blockchain, or DLT, but I’d rather be wrong and make people mad than be right and not have alerted the people I care about to the new truth that the market is telling us. Malinvestments in currencies may ultimately lead to dire outcomes and nobody wants to be responsible for that.

First, we need to list some assumptions that I think everyone can agree with. Let me know in the comments if my assumptions are incorrect.

Money is necessary, but it’s zero-sum and a non-productive asset, meaning as the value of one currency rises, the value (purchasing power) of another currency falls when competing on an open market. It’s non-productive in that having and holding multiple currencies or more of a given currency does not productively grow the economy. Essentially, you want to be holding/using only the best currency and not have to deal with all the other crap currencies around the world. If nothing else, Bitcoin has opened up a new market for people to print proprietary currencies and has allowed all currencies to compete internationally at the individual level (retail investors can now trade currencies). We see this through the printing of thousands of cryptocurrencies and the creation of exchanges that allow them to compete. This didn’t meaningfully exist for retail before Bitcoin. Since money is non-productive, the value of money is ultimately based on the ease in which it can be inflated and its acceptance for goods and services by people (trust, or faith that it will hold value and can be exchanged in the future). Sometimes money’s acceptance is encouraged with guns or with government mandates, but ultimately money relies on the inflation rate and trust network. Money loses value very quickly if people lose faith in it. Money gains value the more faith, measured by capital, is injected into it, as long as inflation isn’t too high.

Can we mostly agree on these assumptions? Good. The following are anti Bitcoin arguments I encounter almost daily, and they are ultimately the last/hardest hurdles to overcome when getting people to try BTC.

Argument 1: I don’t understand Bitcoin, don’t trust it, like it, or care about it, and I refuse to use it. Bitcoiners are annoying. Shut up and go away Phil.

I can relate to this. I feel annoying a lot of times, and I don’t like that my understanding obligates me to rant about this thing. 99.9% of people in the world don’t understand yet that they need Bitcoin, and so it’s really hard for them to care. I rant because I care for you and my community, and this is information that you need to know to protect yourself financially.

At the very least, we agreed earlier that Bitcoin opened up a new market for individuals to print their own currency and see how their currency competes internationally. There is now a completely free market for currencies. The last time this somewhat existed was when Gold became the dominant currency via the free market. You didn’t want to be caught holding beads, rai stones, copper, or silver while Gold was monetizing because holding those softer currencies (easier to inflate) meant that you were usually being enslaved/conquered by those holding harder currencies (harder to inflate). This isn’t theory. It happened.

Now that there is a free and open market for currencies, you must (it’s not optional) pay really close attention to the properties of each currency to protect your wealth because if one currency gets larger over time, it means that the purchasing power of all other currencies decreases. You don’t want to be caught holding paper if enough people in the world move to a stronger currency. By doing nothing and ignoring Bitcoin, you are letting individuals around the world chip away at your purchasing power by injecting faith and capital into a different, harder currency.

Bitcoin is an expanding black hole of global finance. It has no inflation, it refuses to be centralized, and it gets harder and harder to kill with every passing day. Even despite this recent downturn in price, a small but continually growing number of individuals (not governments, not banks, not businesses) around the world are removing faith in legacy currencies and adding faith to Bitcoin. These people are making decisions that impact you, and you cannot stop them.

Argument 2: Phil, You don’t understand economics, what you just said was opinion, and you’re wrong about what money is.

Good point. You should not trust anything I’m telling you because I’m strongly incentivized to tell you these things. That said, the same incentives hold true for everything you read about economics and money. All economists are heavily incentivized by whichever system they’re “educating” you about. Let’s take a look at some objective metrics about Bitcoin.

USD/BTC linear chart… should we even bother with the defibrillator at this point…?

$1 used to buy you 50+ Bitcoins in 2010. Now, $1 buys you .00025 BTC. Strong showing from the dollar over the last decade. Here, let’s adjust and look at this logarithmically:

Logarithmic view of the USD getting the absolute shit kicked out of it by BTC over the last 10 years

Wooooow, look at how much stronger the dollar became since January 2018 measured in BTC. The last 10 years have just been a passing fad, right? I’m using a logarithmic graph to really show how much purchasing value the USD gained (clawed back?) in BTC last year. Does the USD look like a strong buy to you?

In all seriousness, people who have held Bitcoin instead of dollars for longer than 2 years are becoming a new class of global economic elites.

But how do we know if Bitcoin is going to continue to increase in value? Well, nearly nobody in the world owns any amount of Bitcoin (estimated ~.5% of the population), so more users is a very strong indicator that the price will continue increasing long-term.

All of the following graphs are from a single peer-to-peer exchange, so they don’t cover any other BTC exchange transactions happening online. Here’s the source: https://coin.dance/volume/localbitcoins

Ugh, not the Venezuela example again. Bitcoiners always use VZ as an example because the 32 million people surviving Venezuela’s hyperinflation are just looking for any way to escape the Bolivar. Bitcoin just happens to be better than alternatives at the moment, but the people using BTC will probably trust a new government currency after their revolution… right? They’re only spending like $8m per week on BTC while their society is crumbling around them. This looks like any other financial crisis fad. Drop in the bucket.

Look! Russia hasn’t hit an ATH BTC weekly trading volume on this exchange since January 2017. BTC’s value was $900/BTC in January 2017. They spent less than $6,300,000 on BTC per week then and spend roughly $12-18m per week on BTC now. Complete drop in the bucket.

Another bad example. This isn’t even 300 BTC traded per week. They’re only spending like $1,000,000 per week on BTC in Peru right now. It’s a drop in the bucket!

This chart clearly shows that Europeans aren’t demanding Bitcoin. The last ATH volume was in 2015, at a price of $240/BTC. They spent $600,000 on BTC that week and now only spend $2.8m per week on BTC on this exchange. Drop in the fucking bucket.

$1m per week in India. Drip.

$300,000 per week in… Kenya? Drip.

$2m per week in Colombia. Drip.

It doesn’t matter anyways because you’ve heard Bitcoin is old technology and will almost certainly be replaced by something faster with additional functionality (like with any technology). At least you’re pretty sure it’s a tech product. Your software engineering friend in SF works for a crypto DeFi platform built on Ethereum and told you ETH is the future. Web 3.0 baby.

Billions(!) of dollars invested in this thing and yet ETH has been losing value to BTC for almost 2 years (because it’s a softer and more centralized currency)

Well, this is just the chart of Ethereum 1.0 (which hasn’t had an ATH in BTC since the “flippening” in June 2017). Once they move to ETH 2.0, proof of stake, sharding, constantinople, serenity, and Lightning Network, I mean Plasma, they will *finally* decentralize finance with their blockchain-based world computer. Price measured in BTC doesn’t matter anyways because Ethereum has the most developers building on top of it, the most VC funding, the most cryptokitties, it’s decentralized, and Vitalik clearly said ETH isn’t meant to be a currency when he created it, which is why he gave away ETH for another currency after he printed them for himself and his friends, and currently uses it as a currency to invest in projects. It’s a trustless platform, so don’t worry about running a fully validating historical node. Trust us.

The market firmly rejecting inflation

The people marketing BCH call it Satoshi’s true vision as envisioned by the whitepaper, which the market clearly views as horseshit. It was birthed (excreted?) out of consensus from BTC in August 2017 and hasn’t had an ATH since January 2018 when it was added to Coinbase and then instantly obliterated by the market. They can fit more transactions into a block so apparently they think that makes it more valuable than Bitcoin. Bitmain, a large Chinese mining company that gambled heavily on BCH, lost $1.2+ billion on it because it was the market that didn’t understand the whitepaper…

Making a copy of Bitcoin and printing new currencies is now trivial, therefore there is inflatio-

Well, these examples must be cherry-picked. BTCP and BTG were unsafe due to 51% attacks and scammy developers secretly inflating supply. Everyone knows Blockchains are supposed to be immutable, decentralized, trustless, and secure. Wait, how did these get hacked then? Not to worry, healthcare data on the blockchain is going to revolutionize healthcare. All of this doesn’t matter anyways because

As the stable downward sloping price in the above graph indicates, Stablecoins are the future. Nobody wants Bitcoin because its price keeps increasing over the long-run. Checkmate Bitcoin. And didn’t you hear? Mining Bitcoin is destroying the environment.

Call to Action

Good God, don’t be wrong about Bitcoin and let it dissolve your wealth. The problem isn’t about you liking, caring about, or believing in BTC, your problem is what other people around the world believe because you are now competing with them over a fixed supply of 21 million BTC whether you want to or not. Remember, money is zero-sum and Bitcoin opened up the market for all currencies to compete at an individual level internationally. If enough other people believe BTC is money and use it; it’s money even if it doesn’t follow the old rules our nobel prize winning economists have told you. The old rules are being taught a new lesson by the market. The market is reality and your (and especially my!) opinion is just that — opinion.

Protect your wealth from Bitcoin by putting a small amount (1–5% depending on risk tolerance) of whatever other currency you have into BTC and forget about it for 5 years. Done. If Bitcoin dies, you can laugh all you want about the crazies who thought money could work without inflation or the charitable banking industry controlling the global economy. If it doesn’t die, you have likely just avoided poverty.

I am not a financial advisor and this post is terrible financial advice.