Note: This is a follow-up to “3 Lies Bitcoin Skeptics Tell Themselves,” which was published earlier this month. I said I would write more on this topic if the first one did well, and nearly 75,000 views later, here I am.
It seemed like last week was the week of the bitcoin skeptic as everyone from Nobel-prize winning economist Paul Krugman to legendary investor George Soros had negative things to say about the world’s first and most well-known cryptoasset.
Although the arguments against bitcoin keep coming, they haven’t evolved much since 2013, when the first major run-up in the price brought out all of the haters. With skepticism abound once again, I thought now would be a good time to cover three more lies bitcoin skeptics tell themselves.
Lie #1: Bitcoin Has No “Intrinsic Value”and Will Crash to Zero
One of the most common arguments against bitcoin is that the price will eventually crash to zero because there is no true, intrinsic value backing the asset.
On the other hand, the skeptics say the U.S. dollar is required for tax payments, and even gold has the underlying utility of industrial use cases. This argument is so common that well-known economist Nouriel Roubini made it in a new articlethat I saw while writing this one.
If the skeptics want to make this argument, then they need to come to grips with the fact that permissionless digital payments could also be construed as the underlying value of bitcoin. Much like you need U.S. dollars to make tax payments in the United States, you also need bitcoin to make permissionless, digital payments in an efficient manner online
Now, you could argue bitcoin is not required because there are so many altcoins that can also be used, but the issue there is that bitcoin is the most reliable, stable, secure, and long-lasting of all the cryptocurrencies, which is why people still prefer it in the face of high on-chain transaction fees (see my full explanation of why the bitcoin price has continued to rise in the face of higher transaction fees).
This point about bitcoin lacking any “intrinsic value” has been used as the reasoning behind many of the nearly 250 times people have said bitcoin is dead.
In addition to the contradiction in terms of a payments use case providing underling utility for U.S. dollars but not bitcoin, this argument sort of misses the fundamental value proposition of bitcoin in the first place — at least in terms of what drives its price. Bitcoin is a seizure-resistant digital asset with a transparent and incorruptible monetary policy, which provides the base, intrinsic (if you want to call it that) value proposition that attracts hodlers (see my full breakdown on hodlers providing a price floor for bitcoin).
Now, this is not to say the bitcoin price could not be in a short-term price bubble; that’s certainly possible. However, a price correction would not indicate that there is no value here at all.
Lie #2: Bitcoin Wastes Energy and Harms the Environment
Another common argument made by bitcoin skeptics is that decentralized transaction processing is a bad idea due to the inefficiencies involved and the headline-grabbing energy costs that go into the mining process. Skeptics often say that this energy is “wasted” and does nothing but harm the planet because, as I’ve already covered, they also think Bitcoin is a useless system anyway.
First of all, bitcoin mining is not wasteful by definition. Miners are incentivized to secure the network via rewards in the form of newly created bitcoin and transaction fees; therefore, miners only mine if people find bitcoin useful as a store of value and/or medium of exchange.