Bitcoin will replace banks – Episode 4
There was a time we used to pay for text messages and long distance calls, then unlimited data on your phone happened. Remember roaming charges? Now they only occur when crossing a border — that strongly suggests the extra charges are related to regulations and market constraints imposed by the government as opposed to any technical limitation.
Similarly, if one day bitcoin actually becomes a great way to send money across borders, competition from the banks will quickly render it obsolete as fees disappear. Even if there are regulatory hurdles they need to overcome, either the regulations will change or the government will enforce those same constraints on the bitcoin community. Don’t be so naive to believe that isn’t possible.
Also, who wants to store their life savings on a phone? Ultimately, everyone who has a non-trivial amount of bitcoin will need to trust someone somewhere to guard their wealth, re-creating the bank. So much for de-centralization.
Is anonymity desirable?
Bitcoin is not anonymous, but is anonymity even something we want? Laws against child trafficking, drug smuggling, money laundering, tax evasion, and financing terrorism exist for a reason. Do we really want to make those things easier?
Refugees fleeing war zones with coins that need electricity to function being a model use case is a stretch. Even in the often cited Venezuela most bitcoin activity is at a scale that infers ordinary people are not involved in any way.
“Criptolago’s transaction activity suggests the platform may be used primarily by individuals connected to the Maduro regime seeking to launder funds or move them out of Venezuela.” Source
Every transaction is stored on every full node, forever. A public ledger is the dream of every tax collector because once they discover your public key, they can track and trace every transaction you have ever made. So can your neighbor, boss or ex. A public ledger is the opposite of anonymous, it represents the end of freedom. Remember cash? Never forget.
End the Fed
Central banks are easy to hate because anything powerful well-connected people support is immediately suspicious. But, they also exist for a reason. There is much more evidence that fiscal and government policy has been a bigger driver of wealth inequality and crony capitalism than central banking. If anything, the risk of influence by the well-connected affecting outcomes should be an argument for a central bank, not against it.
Bitcoin is an indictment of our education system’s fundamental failure to teach basic economics to engineers and basic engineering to economists.
Is Bitcoin the “Stalin” of financial systems? Trust no one, highly concentrated power and authority, propaganda to bring along the masses, cheat and manipulate as needed to extract maximum selfish benefit, all couched in fake altruistic motivations to advance the common good…
Is Bitcoin modern colonialism? Is it a bunch of people living in countries with well functioning banking systems looking to profit off the destruction of banking systems in less developed countries.
Is Bitcoin neo-white guilt? Is it a bunch of people living in highly developed economies who believe it is their duty to help the poor backwards uneducated helpless underdeveloped peoples of the world to become more like them by lying to everyone about the virtues of being them.
Is Bitcoin yet another in a long parade of “don’t think too hard, just park 1% of your assets here just in case [string of meaningless scary things]” while the salesman gets rich, cons?
A vacuum of rational arguments
Bitcoin inspires highly emotional responses not only because the early adopter community suffers from metastasized arrogance and retail investors are motivated by FOMO, but also because economists who should be defending society against financial snake oil by publicly challenging Bitcoin on its fundamental flaws are so incapable of understanding its opaque technology they would rather avoid any risk of being wrong and neglect their responsibilities by guarding their ego and saying nothing.