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.’”[↩]