E An Objective Look At Bitcoin; What No One Is Giving

As global markets have been caught up in a whirlwind of activity over the past week, Bitcoin (BTC) unsurprisingly proved to be a popular topic of conversation in the midst of it all. During the mayhem, the digital currency saw its price drop as low as $6,000, shredding as much as 70% of its nearly $20,000 valuation from back in December. At the time of writing, its price stands around $9,680 according to emerging cryptocurrency data tracking platform OnChainFX.com.

But a major problem with the general conversation regarding Bitcoin and all that’s associated with it is the lack of agnosticism within the dialogue. Too frequently people choose to play the binary game by either determining the leading cryptocurrency to be the financial messiah and flawless in design or dead on arrival and bereft of even potentially bearing any value to society.

Berkshire Hathaway Vice Chairman Charlie Munger, for example, just yesterday said, “I never considered for one second having anything to do with [bitcoin]. I detested it the minute it had been raised. The more popular it got, the more I hated it…Bitcoin is noxious poison.” A bit extreme, no? Denying consideration is also a great way to not know much about what you’re discussing.

In another instance, Bert Ely of the Hill published a piece called “Bitcoin is a Ponzi scheme, and it will collapse like one”, yet it simply cannot be a Ponzi scheme.

On the flip side, Evander Smart’s CoinTelegraph articleHow Bitcoin Blockchain and Ripple May Help Kill U.S. Dollar” is shortsighted in many ways too. And flip to Twitter, where cybersecurity expert John McAfee is betting big on Bitcoin hitting $1 million and other users are romanticizing about the imminent demise of central banks.

The issue here is that both extremes are typically spoken about as blanket statements with such heavy conviction that it leaves little room to actually dissect the unique and very separate elements of the technological asset which deserve much deeper scrutiny on an individual basis.

It is for this reason that I hope to offer a more objective take on Bitcoin as it stands today. It is not an inherent evil nor the manifestation of financial perfection. It’s a fintech development that took the world by storm, offering the globe fresh perspective on everything from money to data storage to human ideals. Condensing Bitcoin into being either simply “good” or “bad” or destined for “failure” or “success” serves its brief, yet fascinating history little justice. So, let’s explore its strengths and societal contributions, as well as its shortcomings and undesirable traits. By doing so, we paint a much more detailed picture of what Bitcoin is, and where it might be headed in the future.

As a Protocol

Back in November, I wrote about the “dramatic Bitcoin family” that the original Bitcoin protocol (now referred to as Bitcoin Core) and all its forks had collectively constructed. The issues touched on in that piece, namely the lack of consensus within the Bitcoin development team and scalability concerns, have only reinforced themselves since then, highlighted by the vicious Bitcoin Core vs. Bitcoin Cash (BCH) battle that has emerged with ardent supporters on either side and the promise of the Lightning Network’s ability to fix Bitcoin Core’s limitations.

It’s therefore difficult to pinpoint the future trajectory for Bitcoin a protocol because nobody really knows, or agrees on, its true identity. Is Bitcoin Cash as what Satoshi Nakamoto had in mind? Or is Bitcoin Gold (BTG) more in line with the project’s objectives? What about Bitcoin Diamond (BCD) or the recently hyped Bitcoin Private (BTCP)? Each fork is nuanced in its own way, varying in block size, transaction capacity, mining algorithms, and privacy initiatives. As all of these are critical matters for the cryptocurrency aiming to achieve extensive adoption, it’s too soon to say how the dust will settle. Until it does, though, Bitcoin Core is the protocol globally recognized as Bitcoin.

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Harry Goldstein 10 hours ago Member's comment

Was #bitcoin the first ever #cryptocurrency? How many #cryptocurrencies are there now? And what is the difference (if any) between digital currency and cryptocurrency?

Michele Grant 20 hours ago Member's comment

I would take issue with some of the issues in the "DecentralizeToday" article you linked to which states that "absolutely nothing about Bitcoin is a secret." but there is so much about bitcoin we don't know. We don't even know who really created it. Not with certainty.

Dan Jackson 10 hours ago Member's comment

Bitcoins can't be a ponzi scheme. By definition, a ponzi scheme is always supposed to bring in new money to support those in at the earliest. But bitcoin mining was designed to run dry sometime in the next 20 years.

Nathan Feifel 16 hours ago Author's comment

I agree that the referenced article is one-sided and perhaps slightly biased in certain respects.

That being said, I linked the article for the sole purpose of debunking the notion that Bitcoin is a Ponzi scheme, which I firmly believe, and which the article does a really nice job articulating. The author raises very legitimate points, uses fact-driven analysis and breaks down definitions to prove his point. He even highlights the logical backing of the other position on the issue, which is responsible and admirable.

While we certainly don’t know everything about Bitcoin, we certainly know a lot. Besides the anonymous creator aspect, which is causing all of these Bitcoin forks, is there another issue you find noteworthy in this regard?

Michele Grant 10 hours ago Member's comment

I don't think bitcoin is a ponzi scheme necessarily. But I do think it would be the greatest scam of all if the inventor has some backdoor in or knowable way to hack the system. But even if it really was created for altruistic reasons, there are a number of reasons I am against bitcoin:

1. No regulation

2. Uncertain legal future (countries could deem it illegal at any point

3. Exchanges have already been hacked, costing investors billions

4. Exchanged could go under taking bitcoin owner's money with them (as already happened with Mt. Gox)

5. It helps to fund the drugs, the sex trade, child pornography, murder for hire, and all the worst that this planet has to offer - it empowers and emboldends not only cirminals, but every day people to do their worst.

6. No FDIC insurance or any other protection from a hacker or simply losing your "key."

7. It is way too volatile and speculative. I don't think the tulip analagy that is used so frequently is off the mark. But due to the technical nature, too many investors are getting caught up in the fad and jumping in, without understanding the risks.

Cannabis Stock Buyer 9 hours ago Member's comment

I read some "mystery investor" just bought up $400 million bitcoin!

www.talkmarkets.com/.../400-million-bet-on-bitcoin

Azi Feifel 2 days ago Member's comment

Very well stated. Thorough and useful review.

Nathan Feifel 2 days ago Author's comment

Thanks, Azi!