I wish more people knew about Bitcoin’s connection to the bank bailouts. Bitcoin unfortunately does not have the best brand ambassadors. This week is a great opportunity to tell your friends about it, because it matters.
The 2008 bank bailouts were a major motivator behind the creation of Bitcoin. The first block ever mined even contains a reference to it: The Times 03/Jan/2009 Chancellor on brink of second bailout for banks. During the bank bailouts, the government just printed a bunch of money and gave it to the banks, around 700 billion USD. They did this because it was politically expedient, well really because they had to or the whole damned system would collapse. And the 99% ended up paying for the mistakes of the 1%. All of us were made to pay for the mistakes of a very small, incredibly powerful and wealthy segment of society who made reckless investment decisions. People lost their homes, their jobs, their livelyhoods, their savings, and yet not a single one of those bankers went to jail. Instead, they took the bailout money and gave themselves extravagant bonuses. Yet the problem is not new, throughout history, every nation that has ever failed, has had their currency end in hyperinflation. The temptation to print money is too strong. Perhaps it is something that should not be entrusted to politicians or even humans at all.
Satoshi, in his wisdom, created a system by which no new money could ever be printed. No corruptible, tempted authority could use it to turn on the money printer and rob entire generations of their wealth or force them to pay for wars they did not support. He made a currency which cannot be corrupted and cannot be hacked, with 99.9% uptime, with instant transfers across borders. It is neutral technology open to anybody with a phone or a computer and access to the internet. Which is much less than you need to open a bank account. Bitcoin doesn’t care about your credit history, or whether or not you can provide a reliable mailing address. Bitcoin doesn’t close on weekends and will never charge you exorbitant fees to use your own money. You never have to wait days for a payment to clear. Bitcoin puts you in charge of your money and nobody else. And it makes sure nobody can print away its value.
But then a bunch of people came along selling get-rich-quick schemes based on crypto technology, and everybody goes “crypto bad”. Satoshi gave a gift to the world. He didn’t stick around to get rich off it, he didn’t use it for celebrity, he just made Bitcoin and disappeared. Thank you Satoshi for your gift to the world.
You can say it hasn’t been hacked, but many people who have used it have been hacked. It’s not just people who didn’t know how to secure a computer, either. The biggest exchanges have all been hacked at one point or another and lost crypto, some of the most recognizable names in crypto have been hacked. What good is a currency that isn’t safe even in the hands of experts?
Ransomware could not exist without crypto. It cost the world 159 billion in downtime in 2021 alone. This doesn’t account for the amount of ransoms paid and business/personal data lost.
You hand waved away the environmental issues by putting it on the rest of the world to generate cleaner energy, but the whole problem is that there isn’t enough clean energy to meet global needs. If we could stop wasting 127 terrawatts of energy on Bitcoin per year, we would be a little bit closer to that goal. The problem isn’t clean energy, it’s a useless currency that can only exist by a competition of wasting energy, water, and chip manufacturing capacity during a climate crisis.
It has a huge pile of problems and negative externalities and what did it all achieve? Make a bunch of VC and early adopters rich? Enable crimes that didn’t exist before on a mass scale? Enable money laundering? It’s a solution still in search of the problem.
Ransomware could not exist without crypto. It cost the world 159 billion in downtime in 2021 alone. This doesn’t account for the amount of ransoms paid and business/personal data lost.
Actually it very much did, before crypto ransomware authors used pre-paid gift cards and other forms of payment. Scams and theft have existed since humanity had anything worth stealing, and they were all facilitated without crypto. There are scams and grifts in the trillions of dollars all of which have been completed with nothing more than some bad checks or faulty bank wires. Bitcoin is not immune to use and abuse by criminals, just like the regular banking system is not immune or the internet is not immune. When people do crime, you throw them in prison, and that’s about all that can be done about that. You can equally argue that Bitcoin is a boon to criminal investigators due to the transparent nature of blockchain transactions. You could make any of these arguments for or against Bitcoin just like you can PayPal or venmo or cash app or credit cards.
You can say it hasn’t been hacked, but many people who have used it have been hacked
You can safely make the assertion that “the banking system is secure” even though people get their wallets stolen on the train. The banking system isn’t responsible for that.
The biggest exchanges have all been hacked at one point or another and lost crypto, some of the most recognizable names in crypto have been hacked. What good is a currency that isn’t safe even in the hands of experts?
The security of Bitcoin itself has never been hacked. Exchanges get hacked just like regular banks get hacked, it’s not an indictment of the currency underlying those systems. Bitcoin and the ecosystem surround it comes with some features to help mitigate this risk like multi-sig wallets, cold storage, and social key recovery.
that there isn’t enough clean energy to meet global needs
A big part of getting to 100% renewable is needing to design energy generation systems to be over-capacity. Supply and demand must be equalized constantly, on a minute-by-minute basis. The only way you can do this with 100% renewable is to design way over capacity, which is expensive, which makes renewables more expensive. A partial solution to this problem is to use mining and other quick ways of dumping loads of electricity in a way that isn’t a total loss. Otherwise, you just have to send energy literally into the ground or have an under-capacitied grid which uses non-renewable sources to generate more energy during peak loads. As with all environmental problems, there is no one clear answer, it’s “where do you draw the box?”. Sure that shirt is made from recycled cotton but because it couldn’t be made by cheaper, local cotton manufacturers due to the special process it needs for recycling it had to be trucked from 8,000 miles away etc. etc. All I am saying is that Bitcoin can be a part of the solution and part of the problem at the same time. It’s more nuanced than just Bitcoin is a huge energy waste. Again, compare is to the energy usage of just remittance services and all the people and facilities they need to employ to exist.
It has a huge pile of problems and negative externalities and what did it all achieve? Make a bunch of VC and early adopters rich? Enable crimes that didn’t exist before on a mass scale? Enable money laundering? It’s a solution still in search of the problem.
- Created a secure digital currency that can be used by anyone anywhere with the cost of entry of an internet connected device with 15 years of 99.9% uptime 24/7 365.
- Providing banking to the “unbanked” and “underbanked” in ways that the traditional banking system was unable to do. Put the world’s poorest people into the same economic network as the richest and gave them equal access without the barriers of traditional banking systems, particularly those around borders, saving remittance users millions in fees sending money back to their home country. If you have ever done international wire transfers or western union you know they are slow, painful, highway robbery.
- It opened up areas of international commerce and trade which couldn’t exist before, involving more people in the market economy therefore increasing efficiency, output, and economic opportunity. One way it did this is it made everybody party to these transactions trustworthy. I might be skeptical using PayPal to do business with somebody in a country with a reputation for fraud. But if I use Bitcoin, the money is either sent to me or it isn’t, there is no middle ground. They’re not going to do a chargeback after I send the item I’m selling, I don’t have to worry that my account is going to get blacklisted because I sent a paypal to or from the wrong place. There are many types of online international transactions that benefit from more surety. A fraudster can’t have money in two places at once whereas they can with slow settlement layers, chargebacks, “pending” transactions, and other nonsense that comes with traditional finance. I can confidently sell an iPhone to somebody in Romania with BTC, I would never even consider doing that with paypal or cash app or anything, yikes!
- Enabled low fee, nearly instant international money transfers for anybody who wants to access them, moving millions of dollars of value across the globe securely without a single transactional fault or double-spend on a daily basis with insanely quick settlement times compared to banked options. Enabling the recipient of that money to know for sure they actually have it and move more quickly to the next step in the economic chain. High-friction money is bad for the economy, ask any economist. You want goods and services and settlement to be able to move quickly.
- Provided an option for those who didn’t want to see their currency printed and eroded by a government they did or did not elect.___
