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’ll have heard on podcasts or learn from numerous articles or books — and this isn’t meant to criticize your complete follow of utilizing metaphors or analogies to pique folks’s curiosity in Bitcoin — however having a nasty framework for understanding Bitcoin could 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 contemplate this citation on whether or not all metaphors are improper:
“For it might be an absurd endeavor to banish from the language of financial concept each method of talking that’s not actually appropriate; it might be sheer pedantry to proscribe each determine of speech, notably since we couldn’t say the hundredth a part of what we now have 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 fact.”
–Eugen von Bohm-Bawerk
So, clearly, not all analogies are dangerous. However when striving for accuracy, the metaphor can’t be confused with the actual 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 forex (this half is appropriate), 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 forex.
The “retailer of worth” idea can arguably apply to Bitcoin if we contemplate longer time frames, nevertheless it’s actually not storing time. Because the saying goes, time waits for no man. We communicate in unfastened phrases comparable to economizing time or “saving time,” however actually, time itself just isn’t what we economize, it’s how we spend our time. The choice is within the doing. Or, as my podcast visitor Conza recounted from a dialog with Konrad Graf, “Go forward, strive to not spend a while and reserve it for later as an alternative.”
Even when equivocating bitcoin as buying energy which will 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 pal 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 clarify why Bitcoin is designed the best way it’s — by holding 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), nevertheless it doesn’t retailer your time.
Bitcoin As Power/Battery
Some folks communicate of Bitcoin as digital power or as if it’s a battery. However bear 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 are able to go take our bitcoin to and redeem it for a set quantity of power. Sure, power may very well 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 could mislead folks on the place the worth is coming from. This metaphor leads folks towards a sort of value concept of worth, successfully placing the horse earlier than the cart. As a substitute, we should always motive from the subjective concept of worth:
“The worth of a superb just isn’t decided by any inherent property of the nice, nor by the quantity of labor required to provide the nice, 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” power. Usually, this comes up when a nocoiner says, “However Bitcoin isn’t backed by something.” So, in some circumstances, a effectively intentioned however improper Bitcoiner could say, “No, Bitcoin is backed by power!” However that is improper.
Usually, when one thing is “backed by” one thing else, it implies that it in some way has the assist of another entity, like a authorities. Traditionally, folks say the U.S. greenback was “backed by” gold, and other people might 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 sort of “digital violence” or, extra just lately, body it as a weapon and a part of a “mushy warfare protocol.” However it is 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 may 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, 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 improper). 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.
Among the analogies and metaphors utilized in relation to “bitcoin as mushy warfare 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 necessary, however their job is extra associated to finality of transactions, not safety.
So, What Is The Actual Reality 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 individual get into Bitcoin and begin happening the rabbit gap, that’s nice! However as that individual advances their information about Bitcoin, extra precision about what Bitcoin is will assist us all.
Because of my pal Conza for uplifting this text and offering suggestions.
It is a visitor submit by Stephan Livera. Opinions expressed are totally their very own and don’t essentially mirror these of BTC Inc or Bitcoin Journal.
