Why Bitcoin is invaluable

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.

  1. Regarding this con­cern see, for exam­ple, https://mitsloan.mit.edu/ideas-made-to-matter/bitcoin-who-owns-it-who-mines-it-whos-breaking-law[]
  2. 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.’”[]
Share on facebook
Share on twitter
Share on whatsapp
Share on pinterest
Share on vk
Share on linkedin
Share on xing
Share on google
Share on email
Share on print

Leave a comment / join the discussion