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If you didn’t catch it, last time I wrote about why Cryptocurrency will win. Take a look if you haven’t yet!
The goal for today is more for those who are, at least ideologically, bought into the idea of cryptocurrency but may not know where to start. But before I do, I want to address some of the common pushback or arguments made against cryptocurrency. If you are more or less bought in already, feel free to skip this part, though you may still find it interesting!
Point: nothing backs cryptocurrencies like Bitcoin while the Dollar is backed by the US Government/military!
Counter: Bitcoin’s decentralization and cryptography makes it virtually impossible to mess with. This tamper-proof setup is stronger backing in the 21st century than “men with guns” can provide. This represents a broader shift: cyber warfare between US, China, and Russia is a far greater threat than any actual invasion.
Point: but the U.S. Government could just shut it down!
Counter: they can’t though. Bitcoin’s core network is decentralized and global – it could feasibly run off of a couple hundred random houses scattered throughout the world. More feasibly, the U.S. government could make owning cryptocurrency illegal or shutdown the “on-ramps” where people transfer US Dollars from banks and into cryptocurrency exchanges. Still though, these are quite unlikely: we now have multiple S&P 500 companies with cryptocurrencies in their reserves. More likely, they’d make it tough for “the little guy” to get dollars into crypto. But even that should be easily circumvented by a VPN and off-shore services (sports gambling in many states works just fine this way, after all!).
Point: but Bitcoin is bad for the environment!
Counter: Bitcoin does consume a lot of raw energy, this is true. But the paradigm that energy consumption == bad for the environment is a) misguided on face and b) overly simplistic. On (a) I’ll write a longer piece around energy maximalism but we can’t be afraid of using energy. Energy use has pulled humans from hunting and gathering into what we are today. To progress further will require more energy. On (b), Bitcoin developer Jimmy Song provides a good summary of how Bitcoin is one of the few profitable uses of excess capacity often produced by green energy sources: hydroelectric, wind, and solar. This energy can’t easily be stored (batteries are expensive and inefficient) and unlike gas/oil the production can’t be “turned down”. By using this energy, Bitcoin provides a profitable use for that energy, thus reducing the payback period and making it more profitable to pursue these kinds of green energy projects.
Point: but Bitcoin doesn’t do anything, it’s just numbers in a computer, it’s not physical like gold!
Let me be clear: there is no such thing as a real physical Bitcoin. If someone tries to sell you one, DO NOT BUY it!
Counter: so many things to say here! One, that is all your US dollars are at this point: numbers moving from bank to bank.
Two, this misunderstands a lot about what Bitcoin is:
Bitcoin is not the first digital thing that we value more than physical goods: trillion dollar companies already exist from making nothing but software. While gold is pretty and sparkly, that will be no match for the practical benefits Bitcoin provides as a store of value and medium of exchange.
Point: the Dollar is easy to use though, there’s no incentive for people to switch.
Counter: two things to mention here. One, holding the dollar opens you up to a large amount of inflation risk due to the unpaid tabs of the U.S. government (and every other government-run currency). Two, the ease of crypto is coming. A lot of it is here now, as we’ll get into, but crypto debit and credit cards are just hitting the market. As with many big paradigm shifts, change will happen slowly… and then quickly.