The recent extraordinary runup and commensurate volatility in the price of Bitcoin has intensified global attention on the cybercurrency. For good or ill, Bitcoin is now a topic of interest to the mainstream press, as Bitcoin newbies near and far take notice.
Such newbies and reporters alike have nowhere to turn for information on Bitcoin than the established cadre of Bitcoin fans (some would say fanatics) who helped to drive its price to the stratosphere in the first place.
Just one problem: many of these fans are spouting misinformation – and worse, they believe their own nonsense.
For you fanatics (you know who you are) as well as the broader newbie audience suddenly interested in Bitcoin, here are some of the lies Bitcoin fans tell themselves – and how to avoid getting snookered yourself.
Lie #1: Bitcoin is Like Something Else
This fallacy is so prevalent, frankly, because Bitcoin really isn’t much like anything else. There are some similarities between Bitcoin and, say, the US dollar or gold or even tulips, but the differences far outweigh the similarities.
Drawing a false comparison between dissimilar things is an example of the false analogy, false comparison, or false equivalence fallacy, and there’s even a Wikipedia page that explains it.
Here is a common example: when I say that criminals use Bitcoin for illicit transactions, a common response is ‘well, criminals use US currency for illicit transactions as well, so you shouldn’t single out Bitcoin.’ This line of reasoning is fallacious, because Bitcoin and US currency are too dissimilar to draw such a conclusion.
Lie #2: Bitcoin is Secure
Bitcoin is a cryptocurrency and ‘crypto’ means secure, right? Not so fast. Bitcoin has proven appallingly easy to steal, and even easier to lose.
Security, after all, is like a game of whack-a-mole. Hit one vulnerability on the head and another pops up. There are still far too many moles all too happy to stick their heads through holes in the Bitcoin threat surface for my liking.
Lie #3: Bitcoin is Money
Take a $20 bill and put it under your mattress. Wait ten years and retrieve it. What is it worth? $20, of course. Sure, inflation will have likely reduced its value somewhat, but $20 will always be $20. Such is the nature of money.
Not so with Bitcoin. It’s more of a commodity that acts as a speculative vehicle, while exhibiting few of the properties of money.
At this point, Bitcoin fans are likely to point to the handful of merchants around the globe who accept Bitcoin as though it were money. My response: refer to Lie #1. The differences between Bitcoin and money far outweigh the similarities, so any equivalence is a false one…