Bitcoin Will Die

Bitcoin Will Die

This is one of those blog entries that exists because I’ve tired of typing the same things over and over on social media.  If you’re here at all, it’s most likely because in some social media conversation, I sighed and pointed you here.

Bitcoin is solely an investment instrument and cannot possibly succeed as a general, global currency.  All we’ve been seeing since its inception is a highly-volitile price controlled solely by wildly-speculative traders.

I apologize in advance for “pulling rank.”  I do it solely to establish that I know what I’m talking about.  I’m an IT veteran of 39 years, man and boy.  I started in this game in 1978.  I built large chunks of the Internet with my own hands.  I ran all technical aspects of a Chicagoland start-up ISP.

I know precisely what’s-what in the IT world.  When I discuss technical issues, I give you my word that it’s true as far as I understand it.

Life on the Pine Ridge Indian Reservation in South Dakota, US. They've lived behind a wall for more than a century.

Life on the Pine Ridge Indian Reservation in South Dakota, US. They’ve lived behind a wall for more than a century.

Bitcoin requires a blanket global Internet infrastructure for it to work.  The overwhelming majority of nations have no such infrastructure.

Bitcoin is totally inaccessible to a vast number of individuals.  There’s no way to properly estimate, but the number is at least three billion individuals without Internet access.

Indeed, the US doesn’t even have such an infrastructure. Try getting Internet in about 1.21 giga-places in South Dakota, for example. At least all of the Upper Great Plains is in that position.

At best, you might get portions of first-world countries covered.  The third-world countries?  Forget it.  When you’re busy starving in a hell-hole, Internet is the last thing on your mind.  Indeed, it probably never even crosses your mind. Ever.

Bitcoin can only work with a ubiquitous global Internet. We don’t have it. We don’t even have it in the United States.  Three billion people worldwide don’t have it.  Even if they did, they can’t pay for it.

The cognitive dissonance evident in this Facebook screencap is palpable.

The cognitive dissonance evident in this Facebook screencap is palpable.

Additionally, Bitcoin is too complex for even the average first-world user.  The entire concept of blockchain technology is lost on the vast majority — including Bitcoin investors.  None of them really understand the technology they so loudly evangelize.

The most popular Bitcoin mining software is presently pre-version 1.0.  That means that the entire mining infrastructure is based on Beta software.

Beta software can go south in totally unpredictable ways.  That’s why they call it Beta:  developers know there are bugs, some of them as-yet unidentified.

This real. I've actually had to re-wire crap like this.

This is real. I’ve actually had to re-wire crap like this.

Only a totally inexperienced (or inept) IT professional would base anything important on Beta software.  It’s an absolute recipe for disaster.  You have no idea where, how, or why it could go south.

Furthermore, only the insane would keep their Bitcoin wallet on any of their computing devices. Phones are lost, stolen, broken, and you have to remember to move your wallet to a new phone every couple of years. Any other computer is simply prone to unrecoverable failures — something every computer user knows.

Windows 10 Bluescreen

Windows 10 Bluescreen,

If your hard drive crashes, you’ve lost your wallet.

Just do backups!

The average user has never done a backup in their life and wouldn’t know how.  Most don’t even install updates.

The expectation that users will suddenly take a massive step forward isn’t borne out by 39 years of IT experience.  Indeed, the reason desktop support exists in any organization of note is precisely because users are, on average, technologically inept.

The economic reality that makes Bitcoin worthless is simply this:

Bitcoin is backed by nothing. It is worth solely what its investors think it’s worth, and that’s all. There is no copper, silver, gold, platinum, nuclear fissionables, oil, nor the vast cornfields of Iowa.

I’ve had Bitcoin investors feed me technobabble in order to dismiss this very real issue.  Of late, it has been some variation on:

Bitcoin has substantiated a network instance, [insert technobabble here].

Sorry, that’s just technobabble.  It has no more meaning than, “reverse the polarity of the neutron flow.

Other investors tout what they believe to be the important new technological breakthroughs:

Bitcoin is worth something because of the nature of the new [insert technobabble here].

Sorry, that’s still just technobabble.

Technologically, Bitcoin is a milliamp of current over a nanosecond of time. It’s nothing but a tiny amount of electricity.  You can create more current by scuffing your shoes on a carpet and touching a doorknob.

Bitcoin is worth less than static electricity.  Ultimately, that’s the market value to which it will return.

As of this writing, the price of Bitcoin is dropping rapidly.  Its advocates maintain that it will go back up again.  There is absolutely no basis for this.  It might go up, it might go down, the entire infrastructure could fall apart due to Beta mining software.  It is completely unpredictable.

Is this the Big Crash?  I’ve no idea.  However, one day Bitcoin’s investor value will reflect its true value.

But I can pay for goods and services!

I question the validity of this.  In general, I’ve observed people “paying” in Bitcoin by first converting it to Federal Reserve Notes (FRNs or “ferns”).

If you’re not first converting to ferns, that sets you apart from the three-billion-plus people in the world who can’t and never will.

Even if you can pay for goods and services in Bitcoin, how will you know what the price of those goods and services will be from hour-to-hour? One hour a can of spinach would have a price of 0.000000000000267 Bitcoin, and the next it could be 0.000000000009675.

There’s also a psychological factor involved.  At the high price of Bitcoin, the average person can only obtain micro-amounts of Bitcoin.  This feels like they have nothing.  Psychologically, it needs to be counted in whole numbers, not tiny fractions.

Only a fool uses Bitcoin

Don’t.  Just don’t.

Economically, how will you make a monthly budget when you have no idea what goods and services might cost from hour-to-hour?  How will you know how much you earn a year when the value fluctuates hour-to-hour?

No landlord would dare price their rent in Bitcoin because they’d have no idea how to calculate it.  The price would vary hour-to-hour, making monthly calculations impossible.

Similarly homes.  Even in the US, only the fabulously wealthy can afford a new home out-of-pocket. The rest of us take out 30-year-loans.

How can a mortgage company calculate the monthly payments using a currency that fluctuates from hour-to-hour? Additionally the mortgage company would be betting its future on an unproven, wildly-speculative instrument.

What if it really did crash? Any mortgage company that used it would go out of business, pure and simple.  No mortgage company will ever take that kind of risk.

End the State!

End the State!

But you don’t have to pay taxes with Bitcoin!  It will End the State!

I recall precisely the same claims about TOR.  In reality, if there was a significant adoption of Bitcoin, governments would find a way to subvert it.

Bitcoin is technologically impossible and economically worthless. It will ultimately die, either slowly or via a crash.  Given the wildly-speculative nature of the investors, I assume it will be a crash.


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