As we shall, over time, establish on these pages in any way and aspect conceivable, every “thing” in this world consists of, or “is”, an inner contradiction. Which is perfectly fine, and should be welcomed rather than watched warily, were it not logically inevitable anyway. And as language is in many ways the existence of logic in our mind, it comes as no surprise that certain expressions we have formed, or which have formed in us, have different meanings that are entirely opposed to one another, often in a way that one is the commonly so-perceived express yet actually a figurative meaning and the other is the implicit – yet actually the literal – meaning. Such is the case with the word “invaluable”, and both of its meanings apply to their respective fullest to what has come to be known as “Bitcoin”.
“Valuable” (“value-able”, “able” to be “value”d) literally means that value can be ascribed to something, “invaluable” means that this is not possible, which literally means something is worthless, while in a figurative sense the term has come to be understood as “infinitely valuable”, so that “zero” and “infinite” actually converge in one semantic expression. As we shall so often see, language is (actual) logic.
As Bitcoin is an “asset” that, unlike stocks or bonds, produces no income, yet, like for example gold (if one intends to invest more than would be suitable to be stored at home) has recurring costs attached to its possession, there has to be some good reason to still want to own it.
The proponents of Bitcoin see it as both a store of value and a means of payment. This story can be cut very short by noting that for something to sustainably function as a store of value, it must be scarce. While it may be true that the Bitcoin software only allows a limited number of tokens ever to be generated, this is irrelevant if other, like tokens can be generated infinitely. Which they obviously can and are.
Store of value
So as one observer had noted a few months back, the one and only, not “million-” but, of course, “trillion dollar question” was whether a continued rise in the price of Bitcoin would be accompanied by a similar rise in the prices of competing “coins”. If not, the unique position, based essentially on selective acceptance by the investing public, and therefore the inherent value of Bitcoin would be proven. In the opposite case, it would have become abundantly clear that Bitcoin is worthless. So seemingly paradoxically, the stronger the rise in the price of Bitcoin, which would increase the “effort” required for the other coins to keep up, the stronger the proof that Bitcoin will not in any sustainable way be able to serve as a store of value.
Not only have competing coins risen in like percentages as Bitcoin in the recent months-long “crypto-craze”, but new specialized coins – need we mention “Shiba Inu”? – have sprung up, and gone up (and also down) in price, sometimes seemingly entirely related to “tweets” by one or the other multi-billionaire who chose to promote it, and then possibly withdraw his – or simply withhold any continued – grace. The keenly awaited verdict is in, thus. What is more, a “store of value” whose price easily drops by over 50 percent in a matter of weeks on a fairly regular basis simply does not lend itself to be a – store of value. Bitcoin is essentially a speculation object, comparable to “works” of “modern art”, and once the speculators leave and the remaining believers are left with an inefficient, energy-intensive network that is gradually losing its “network effect”, Bitcoin will die, later or sooner.
While we would not trade the current psycho-logical setup of Bitcoin against it (yet), being somewhat wary regarding the question of whether Bitcoin represents a real market in the first place, instead of a mere playground for its “whale” founders and initial promoters effectively still controlling all the action,1 we would not be too surprised to see the cup-and-handle formation Bitcoin has formed over recent months, because of the way it has formed, fail and turn against it badly. If it emerges successful from the current battle instead, Bitcoin will have a somewhat longer lifespan, limited though it is likely to prove.
Method of payment
That Bitcoin is not a means of payment that could be considered as being overall superior to competing means of payment, especially those existing prior to it, appears hard to even call into question. As a payment method, it is comparatively slow and expensive, and, as always, we will not go to any length to lay out here what anyone can easily find via his preferred search engine in the fraction of a minute. Referring doubters to things like the “Bitcoin Lightening Network” does not help, as reading “how it works” makes it clear that the mechanism is too cumbersome to lend itself to mass adoption, so that its usefulness will in all likelihood prove limited. While Bitcoin may for now prove to some extent helpful in very poor countries lacking adequate banking infrastructure or universal access to such,2 it is no more than a toy in that regard in the developed world. And since Bitcoin cannot logically function as a store of value and therefore payments received in Bitcoin in poor countries need to be eventually reconverted into local currencies or the US dollar and possibly funnelled back into the banking system, the actual effective advantage may prove limited here as well.
How Bitcoin is invaluable
So while Bitcoin will with all probability prove invaluable to its individual holders that indeed choose to hold onto it for the long term, in the sense that it is not possible to ascribe any value to Bitcoin, which eventually will come to show, the experiment, may it have been well-intentioned by its creators or a perfectly conscious gigantic rip-off, should prove invaluable in the sense of holding infinite value for humanity at large.
That is because the only – at first apperance but at such a strong first appearance that it defines the matter – viable logic of this experiment is to create a network in which wealth can be protected from the greedy hands of national governments, more than rarely in no small part already devolved into regimes, and/or supranational organizations pushing for curbing individual freedom and concentrating control in the hands of a ring of people who believe they understand human nature when in fact they at best understand half of it.
That impetus, too, of course, is illogical, as it is merely a flight to an imagined safety that the very concentration of power which is feared in the first place would sooner or later render illusory; fleeing from opposition increases the maneuvering space for one’s opponent, and greater maneuvering space renders possible oppressive actions that may not have been perceivable before the flight occurred. The craze that has built up around “cryptocurrencies” serves as an invaluable (“infinitely valuable”) wake-up call that leaves no place for doubt that something is fundamentally wrong if people are intent on fleeing governments that are supposed to represent and support them. So the Bitcoin mania tells the world, loud and clear, that the pendulum swinging between individual freedom and some necessary concentration of power has swung decidedly too far towards the latter. That it s logically high time to reverse the flight implied by the Bitcoin phenomenon into a fight for freedom (read: logic) at least in part within existing institutions (just as the movement of 1968 did so successfully for its part), even if after an initial “tactical retreat”, to think of any legitimizable way to take governance back into one’s own hands, be it by engaging in politics, education or information, or in starting new, competing governance models such as the Free Private City. And then to act with determination on the convictions formed._____
- Regarding this concern see, for example, https://mitsloan.mit.edu/ideas-made-to-matter/bitcoin-who-owns-it-who-mines-it-whos-breaking-law[↩]
- https://bitcoinmagazine.com/culture/the-polarity-of-bitcoin-in-el-salvador, where, however, poor people can easily mistake Bitcoin for a store of value, as this quote demonstrates: “Like most Salvadorans — even the ones already in the Bitcoin economy — [the waitress who was just given a 10 dollar tip in Bitcoin]’s still not sure about the new currency, and is still taking her salary in dollars. But she told me that she was saving her tips in bitcoin, and that all things considered, it was ‘worth the risk.’”[↩]