That is an opinion editorial by Stephan Livera, host of the “Stephan Livera Podcast” and managing director of Swan Bitcoin Worldwide.
There are metaphors and analogies for Bitcoin that you could have heard on podcasts or learn from numerous articles or books — and this isn’t meant to criticize all the observe of utilizing metaphors or analogies to pique individuals’s curiosity in Bitcoin — however having a nasty framework for understanding Bitcoin could cause errors in how we cause about it from there. If individuals take the metaphors too actually, they inevitably make errors of their reasoning about Bitcoin.
First, let’s contemplate this citation on whether or not all metaphors are incorrect:
“For it might be an absurd enterprise to banish from the language of financial principle each method of talking that isn’t actually right; it might be sheer pedantry to proscribe each determine of speech, significantly since we couldn’t say the hundredth a part of what we’ve to say, if we refused ever to take recourse to a metaphor. One requirement is crucial, that financial principle keep away from the error of complicated a sensible behavior, indulged in for the sake of expediency, with scientific fact.”
So, clearly, not all analogies are dangerous. However when striving for accuracy, the metaphor can’t be confused with the true scientific fact.
‘Bitcoin Is Saved Time’
The favored notion that bitcoin can “retailer our time” is an excessively unfastened and imprecise metaphor. It sometimes comes up when Bitcoiners are speaking in regards to the injustice of fiat foreign money (this half is right), however then it goes awry when the metaphor is stretched too far into suggesting that we should always “retailer our time” in bitcoin as an alternative of fiat foreign money.
The “retailer of worth” idea can arguably apply to Bitcoin if we contemplate longer time frames, but it surely’s actually not storing time. Because the saying goes, time waits for no man. We communicate in unfastened phrases akin to economizing time or “saving time,” however actually, time itself is just not what we economize, it’s how we spend our time. The desire is within the doing. Or, as my podcast visitor Conza recounted from a dialog with Konrad Graf, “Go forward, attempt to not spend a while and reserve it for later as an alternative.”
Even when equivocating bitcoin as buying energy which would be the spirit of the analogy, it is very important keep in mind that there are not any ensures right here. Bitcoin’s buying energy has gone down over chosen time frames, which is the place considering of bitcoin as saved time can actually lead an individual astray if taken too actually.
Now, a shout out to my good friend Gigi, who has written on the idea of Bitcoin as building out an arrow of time. This idea does make sense and it helps to elucidate why Bitcoin is designed the best way it’s — by protecting time utilizing blocks as an alternative of seconds and never counting on a centralized time keeper. That is distinct from the inaccurate metaphor of “bitcoin as storing your time.” So, a extra correct framing could be that bitcoin retains time (utilizing blocks, not seconds), but it surely doesn’t retailer your time.
Bitcoin As Vitality/Battery
Some individuals communicate of Bitcoin as digital vitality or as if it’s a battery. However bear in mind, whereas Bitcoin miners use vitality, Bitcoin nonetheless doesn’t permit anybody to retailer or transport vitality. There’s not some central counter that we will go take our bitcoin to and redeem it for a set quantity of vitality. Sure, vitality could possibly be priced and sold for bitcoin, however that’s not the identical factor. The worth of vitality will fluctuate and bitcoin is not going to even metaphorically retailer the identical quantity of vitality over time.
What error can this result in? It might probably mislead individuals on the place the worth is coming from. This metaphor leads individuals towards a form of price principle of worth, successfully placing the horse earlier than the cart. As a substitute, we should always cause from the subjective theory of value:
“The worth of a superb is just not decided by any inherent property of the great, nor by the quantity of labor required to provide the great, however as an alternative worth is decided by the significance an performing particular person locations on a superb for the achievement of their desired ends.”
A associated cousin of that is the notion that bitcoin is “backed by” vitality. Usually, this comes up when a nocoiner says, “However Bitcoin isn’t backed by something.” So, in some circumstances, a nicely intentioned however incorrect Bitcoiner might say, “No, Bitcoin is backed by vitality!” However that is incorrect.
Usually, when one thing is “backed by” one thing else, it implies that it one way or the other has the help of another entity, like a authorities. Traditionally, individuals say the U.S. greenback was “backed by” gold, and folks may traditionally redeem notes for gold, however no such factor exists with Bitcoin. So, maybe a greater query to ask is, “What’s gold backed by?” Solely then are we attending to the reality of the matter: it was all subjective valuation all alongside. Magnificence is within the eye of the beholder.
Bitcoin As Violence Or A ‘Weapon’
Some individuals wish to body Bitcoin as a form of “digital violence” or, extra just lately, body it as a weapon and a part of a “delicate battle protocol.” However this can be a gross misrepresentation of what Bitcoin is. Bitcoin is extra like cryptographic messages being handed round and validated on a community. Certainly that’s nearer to “speech” than a “weapon.” Or, extra precisely, bitcoin will be regarded as a rivalrous digital commodity (the primary of its type), working on an open-source financial community.
If the pen is mightier than the sword, wouldn’t it be acceptable to name a pen a weapon? Not likely. Additionally, this complete line of argument is clearly blurring a line between what’s voluntary, and what’s initiating aggression (which is the half that’s incorrect). How is working a node, adopting bitcoin as a rivalrous digital commodity and collaborating within the community a type of “weaponry”? That is simply gross mischaracterisation. Phrases imply issues.
Among the analogies and metaphors utilized in relation to “bitcoin as delicate battle protocol” relate to miners competing to safe the “chain of custody.” However do they? Or is it actually extra like Bitcoin nodes are what safe Bitcoin? Miners can’t make invalid transactions seem legitimate to those that are working and verifying transactions with their very own Bitcoin node. So, isn’t it extra related to consider it like nodes safe Bitcoin? The job of miners is necessary, however their job is extra associated to finality of transactions, not safety.
So, What Is The Actual Fact Then?
So, as talked about earlier, economically talking, bitcoin is extra precisely characterised as a rivalrous digital commodity. Bitcoin is the commodity itself — it’s not a declare on one thing, it’s the commodity itself. When individuals ask what it’s backed by, this means they haven’t fairly grasped what it’s.
If an analogy helps a brand new individual get into Bitcoin and begin taking place the rabbit gap, that’s nice! However as that individual advances their data about Bitcoin, further precision about what Bitcoin is will assist us all.
Because of my good friend Conza for uplifting this text and offering suggestions.
It is a visitor put up by Stephan Livera. Opinions expressed are solely their very own and don’t essentially mirror these of BTC Inc or Bitcoin Journal.