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 your entire observe of utilizing metaphors or analogies to pique folks’s curiosity in Bitcoin — however having a nasty framework for understanding Bitcoin may cause errors in how we motive about it from there. If folks take the metaphors too actually, they inevitably make errors of their reasoning about Bitcoin.
First, let’s think about this citation on whether or not all metaphors are flawed:
“For it could be an absurd enterprise to banish from the language of financial concept each method of talking that isn’t actually right; it could be sheer pedantry to proscribe each determine of speech, significantly since we couldn’t say the hundredth a part of what we have now to say, if we refused ever to take recourse to a metaphor. One requirement is crucial, that financial concept keep away from the error of complicated a sensible behavior, indulged in for the sake of expediency, with scientific reality.”
–Eugen von Bohm-Bawerk
So, clearly, not all analogies are dangerous. However when striving for accuracy, the metaphor can’t be confused with the true scientific reality.
‘Bitcoin Is Saved Time’
The favored notion that bitcoin can “retailer our time” is an excessively free 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 must 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 think about longer time frames, nevertheless it’s actually not storing time. Because the saying goes, time waits for no man. We communicate in free phrases similar to economizing time or “saving time,” however actually, time itself will not be 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 stands out as the spirit of the analogy, it is very important keep in mind that there aren’t 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 constructing 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 preserving time utilizing blocks as an alternative of seconds and never counting on a centralized time keeper. That is distinct from the wrong metaphor of “bitcoin as storing your time.” So, a extra correct framing could be that bitcoin retains time (utilizing blocks, not seconds), nevertheless it doesn’t retailer your time.
Bitcoin As Vitality/Battery
Some folks communicate of Bitcoin as digital power or as if it’s a battery. However keep in mind, whereas Bitcoin miners use power, Bitcoin nonetheless doesn’t permit anybody to retailer or transport power. There may be not some central counter that we will go take our bitcoin to and redeem it for a set quantity of power. Sure, power could possibly be priced and offered for bitcoin, however that’s not the identical factor. The value of power will fluctuate and bitcoin is not going to even metaphorically retailer the identical quantity of power over time.
What error can this result in? It might mislead folks on the place the worth is coming from. This metaphor leads folks towards a type of price concept of worth, successfully placing the horse earlier than the cart. As an alternative, we must always motive from the subjective concept of worth:
“The worth of an excellent will not be decided by any inherent property of the nice, nor by the quantity of labor required to supply the nice, however as an alternative worth is decided by the significance an performing particular person locations on an excellent for the achievement of their desired ends.”
A associated cousin of that is the notion that bitcoin is “backed by” power. Usually, this comes up when a nocoiner says, “However Bitcoin isn’t backed by something.” So, in some instances, a nicely intentioned however flawed Bitcoiner might say, “No, Bitcoin is backed by power!” However that is flawed.
Usually, when one thing is “backed by” one thing else, it implies that it by some means has the help of another entity, like a authorities. Traditionally, folks 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 folks wish to body Bitcoin as a type of “digital violence” or, extra just lately, body it as a weapon and a part of a “mushy 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. Absolutely that’s nearer to “speech” than a “weapon.” Or, extra precisely, bitcoin may be considered a rivalrous digital commodity (the primary of its sort), working on an open-source financial community.
If the pen is mightier than the sword, would it not be applicable to name a pen a weapon? Probably not. 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 flawed). How is operating a node, adopting bitcoin as a rivalrous digital commodity and taking part within the community a type of “weaponry”? That is simply gross mischaracterisation. Phrases imply issues.
A number of the analogies and metaphors utilized in relation to “bitcoin as mushy 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 operating and verifying transactions with their very own Bitcoin node. So, isn’t it extra related to think about it like nodes safe Bitcoin? The job of miners is vital, 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 folks ask what it’s backed by, this means they haven’t fairly grasped what it’s.
If an analogy helps a brand new particular person get into Bitcoin and begin happening the rabbit gap, that’s nice! However as that particular person 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 publish by Stephan Livera. Opinions expressed are solely their very own and don’t essentially mirror these of BTC Inc or Bitcoin Journal.