"We All Get Bitcoin at the Price We Deserve" - A Bitcoin Introduction for the Devoted, Curious, and Sceptics
- Chris Colston
- Jan 31, 2024
- 8 min read
In this blog, I want to discuss Bitcoin scepticism, which aligns with a phrase on my Bitcoin page: "We all get Bitcoin at the price we deserve." But what does this mean? Does it suggest that some are more deserving than others?
"We All Get Bitcoin At The Price We Deserve"
"We all get Bitcoin at the price we deserve" is a popular saying within the Bitcoin community, known for its somewhat ruthless and toxic nature. However, the phrase isn't about being more or less deserving than others. It's about recognising that understanding Bitcoin is a learning process.
It requires a complete shift in mindset, and naturally, this takes varying lengths of time for different people to fully grasp. As a result, the price at which you buy Bitcoin throughout its history often indicates your stage in the Bitcoin learning journey. Of course, this isn't always the case.
For example, I would have needed to be well-informed about Bitcoin during my secondary school years to buy it at its early prices. Is it fair to say I didn't deserve Bitcoin at a lower price because I was just a teenager? Probably not. Therefore, this saying should be taken with a grain of salt.
However, the underlying principle holds true. Many people hear about Bitcoin and immediately think it's a Ponzi scheme, a greater fool theory, or believe they've simply missed the boat. These perceptions are what make the saying "you get Bitcoin at the price you deserve" particularly poignant.
A Brief History Of Bitcoin
Bitcoin, created in 2009 by the pseudonymous Satoshi Nakamoto, was introduced in its whitepaper as "peer-to-peer electronic cash." Its primary aim was to enable transactions without intermediaries like banks or credit card companies.
Over the last decade and a half, Bitcoin has experienced a tumultuous journey. Initially, its concept was not widely understood, seen mostly as an easy, fun way to transfer funds. However, as understanding grew, so did the realisation of its decentralised nature, sidestepping traditional banking. This aspect, combined with the burgeoning internet and dark web, made Bitcoin an attractive tool for illicit activities due to its perceived hard traceability.
Yet, it's essential to remember that Bitcoin, in its early stages, lacked widespread understanding. While Bitcoin transactions are challenging to trace, they're permanently recorded on an immutable digital ledger known as the blockchain. This ledger, tracking every transaction on the network, meant that those engaged in illegal activities were inadvertently leaving a digital trail. Consequently, entities like Silk Road and various nefarious individuals were eventually apprehended.
Bitcoin's price has seen explosive growth and significant declines, contributing to its reputation as a volatile entity. This rollercoaster ride often leaves people confused, hesitant, and sceptical, as I was when I first encountered it at university in 2018. To this day, debates and discussions continue, often centred around two main points:
A general lack of education and knowledge about Bitcoin.
The subjective nature of value, leading many to deem it worthless.
It's entirely reasonable for people to harbour doubts about Bitcoin, considering it's still a nascent entity in the vast financial landscape. The total market cap of Bitcoin hovers just under $1 trillion, compared to the global economy's $100+ trillion. This minuscule presence partly explains Bitcoin's volatility.
As an emerging asset aspiring to be digital gold, Bitcoin is navigating its path in a financial world where gold has been a standard for thousands of years. At just 15 years old, Bitcoin is still in its infancy, undergoing the inevitable growing pains associated with any emerging asset.
What Is Money?
Our understanding of money typically starts with the tangible: those green paper notes exchanged for goods and services or, more recently, digital figures we tap from our apps, transferring funds from one account to another. We're also aware of scarce, precious commodities like gold, synonymous with luxury, wealth, and prestige.
Beyond this, the average person's knowledge of money often doesn't extend much further - a situation quite favourable from a governmental perspective, where less public understanding can sometimes be seen as advantageous.
Going deeper into the history of money, a critical element for grasping Bitcoin, reveals that money is essentially a subjective medium of exchange, an IOU in today's money. Paper money, while convenient, is fragile and susceptible to loss or destruction. Its assigned value is based on printed numbers, and its worth is subject to annual inflation, eroding our savings and earning power - a process termed 'purchasing power' decline.
In Western countries, this devaluation can be gradual and less noticeable, but in nations like Argentina or Venezuela, where inflation soars into triple digits, the impact of devaluation can be felt from dawn till dusk, with prices escalating rapidly within a single day.
This situation began unravelling following a pivotal moment in 1971 when President Nixon announced that the U.S. dollar, the world's reserve currency, would no longer be tied to gold. Gold, as sound money, is both indestructible and finite, essential qualities for a stable currency since it can't be conjured from thin air. For millennia, gold served as a reliable exchange medium and value store.
Post-1971, unsurprisingly, gold's value soared while fiat currencies like the pound, dollar, and yen depreciated. Bitcoin, despite its relative youth compared to gold, has outperformed both in value growth, showcasing its potential in the financial landscape.
Bitcoin Requires a Mindset Shift
Bitcoin embodies the essential qualities of sound money, akin to gold. Its supply is finite, capped at 21 million units; it's divisible, portable, and indestructible, with every transaction verified on the blockchain every 10 minutes.
The primary hurdle preventing Bitcoin from being classified as traditional sound money lies in its digital nature. Historically, the definition of sound money was simple: if you threw it and it made a sound, it was considered genuine.
Bitcoin, being digital, inherently lacks this physical aspect, posing a significant mindset shift for many. It exists in a realm that is both omnipresent and intangible, challenging conventional notions of value and tangibility, with each unit currently valued at approximately £30,000.
Bitcoin's resilience against destruction or unauthorised creation is a cornerstone of its design. The code dictates that no more Bitcoin can be created without network consensus, a scenario highly unlikely to transpire given its decentralised structure. This means no single government or authority can arbitrarily inflate its supply, safeguarding users' purchasing power. Such robustness against external manipulation positions Bitcoin as a direct competitor to traditional financial systems, often leading to calls for bans or stringent regulations.
Despite these challenges, Bitcoin continues to thrive. Its network hash rate, a measure of its strength, consistently hits record highs, demonstrating its resilience even in the face of adversity.
Bitcoin's impressive track record over the past decade has spurred competition and fostered game theory in the financial sector. Its recognition as legal tender in El Salvador and the launch of over ten Exchange-Traded Funds (ETFs) in the United States, influenced by Larry Fink of BlackRock, underscore its growing acceptance and influence.
Remarkably, Bitcoin achieves this without a CEO or marketing team, relying instead on its foundational principles and the advocacy of its supporters. This unique nature of Bitcoin, along with its fundamental strengths, continues to draw interest and debate, shaping the future of finance.
Will the Sceptics Come Around?
Throughout each Bitcoin cycle, despite the fluctuations, Bitcoin's adoption has steadily increased. Although sharing many characteristics with gold, many gold enthusiasts remain sceptical of Bitcoin.
Peter Schiff, a prominent gold advocate, is a notable example of such pessimism. He had the opportunity to invest in Bitcoin when it was under $10 but chose not to. Since then, he has consistently argued that Bitcoin is doomed to fail, becoming a quintessential example of the saying, "you get Bitcoin at the price you deserve."
Being wrong is a part of being human, but persisting in error is another matter. Schiff, despite his vast knowledge and accurately predicting the 2008 housing bubble, vehemently opposes Bitcoin. His stance echoes the sentiments of many Bitcoin enthusiasts: fiat money is diminishing our purchasing power, and sound money will triumph. However, his disdain for Bitcoin remains unyielding. At what point, one wonders, will Schiff acknowledge if he was mistaken? He has conceded that Bitcoin might surpass $100,000 before its downfall, but what if it reaches $1 million? Will he admit his error then, or will his stance remain unchanged?
The criticisms of Bitcoin extend beyond mere scepticism about its value or potential regulation. Some argue that Bitcoin is a Ponzi scheme or operates on a 'greater fool' theory, suggesting that each Bitcoin holder is simply waiting for someone else to buy it at a higher price.
However, this overlooks the fact that Bitcoin's 'HODL' rate, the proportion of Bitcoin held long-term, is over 70% of its total supply. In any market, there will always be buyers and sellers, as is the case with gold, stocks, and other assets. The notion that everyone will simultaneously sell Bitcoin if it reaches a certain price, say $1 million, is speculative and counter to the behaviour of those who've been holding it from much lower levels.
Fundamentally, Bitcoin is not a Ponzi scheme. It lacks a central issuer and offers no promises of returns. Satoshi Nakamoto created Bitcoin and then departed, leaving it as an open-source project without pre-sales or early investor benefits. Bitcoin is a commodity, not a financial scheme; you buy it, hold it, or sell it, just as with gold. The miners who secure the Bitcoin network are compensated in Bitcoin, much like gold miners are rewarded with gold.
The environmental impact of Bitcoin is a contentious yet fading debate. Critics often use fear, uncertainty, and doubt (FUD) tactics to spread misinformation about Bitcoin's energy consumption. While it's true that Bitcoin uses significant energy, it's vital to consider the value it provides. Bitcoin is securing the largest network in the world, offering long-term savings and financial inclusion. It particularly benefits millions in high-inflation regions who only need a phone and internet access. This value, akin to the convenience and utility of a washing machine in households, justifies its energy use.
With over 58% of Bitcoin mining using renewable energy sources, the network's environmental impact is comparatively lower than many other energy-intensive industries. Education is key to addressing these criticisms, just as I continue to learn in other areas. Bitcoin's increasing adoption and resilience against these criticisms highlight its growing significance in the financial landscape.
When Will You Get Bitcoin at the Price You Deserve?
To summarise, Bitcoin is essentially a commodity that you can purchase, retain, and sell. Unlike gold, which can be physically worn, Bitcoin serves a different purpose: it safeguards your assets from annual depreciation.
The focus shouldn't solely be on the price at which one enters the Bitcoin market or whether they 'deserve' it. Instead, it's more about when an individual decides to earnestly engage with and understand Bitcoin. I've distributed 'The Bitcoin Standard', a pivotal book for grasping Bitcoin basics, to my friends and family, but it often collects dust. Likewise, the beginner-friendly courses offered on 123Cryptos, a site I co-founded, are seldom utilised.
This is understandable, given people's busy lives, yet it raises the question: when will one take the plunge? If one waits until a bull market surge, they indeed 'get Bitcoin at the price they deserve.'
By choosing to engage, read, and study Bitcoin - as I and many others did - one could have entered the market at a more favourable rate. However, the price is not the sole factor. Unlike many investment opportunities where wealth, status, or corruption can impede access, Bitcoin offers an egalitarian approach. Whether you're a billionaire or an individual from a less affluent background, the only difference is the price point of entry.
This discussion merely skims the surface of Bitcoin, touching upon FUD, scepticism, and other facets. Yet, it serves as an insightful starting point for understanding the adage "we all get Bitcoin at the price we deserve." It's a continuous educational journey, one that I am still navigating.
You have every right to dismiss it, consider it worthless, but labelling it a scam, a Ponzi scheme, or an environmental hazard is a sign of misinformation. Bitcoin represents a shift in mindset, an alternative to the prevailing debt-driven, consumerist culture. It promotes long-term planning and a low-time preference lifestyle. I urge people to at least acquaint themselves with the facts, a goal that Rules No Rulers aims to facilitate.
What is Bitcoin's biggest FUD?
Too much energy usage
It's a scam/ponzi scheme/fraud
It has no value
It will banned/regulated
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