- "It's a classic bubble".
- "It has no real value".
- "Nothing backs it".
I won't lie: before 2008 I had never given a decent thought to what money was, how it worked or how it was created. I had some money, I used money and I struggled to make money like everyone else.
I can, however, give myself some credit for actually trying to answer some of these questions once they came to mind.
That is why I am surprised by some recurring comments that I hear being repeated over and over by some (I'd say preety smart) people around me and which, in my opinion, give away the cluelessness of most people around the topic of money.
1.- It's a bubble.
This is actually the last of the three I've been hearing lately but it's quickly rising in popularity probably due to the recent spike in price.
I first heard it spoken during a cofee break at work when discussing ransomware led to discussing bitcoin. All of my colleagues know by now that I have been following the topic for some time and turn to me when it comes up.
So this time, like a few times before, an opinion about bitcoin had been spoken and it was followed by a silence and three pairs of eyes staring at me, waiting for some kind of rebuttal.
Standing there, bad coffee steaming in a plastic cup in one hand, I had the sensation that I had been asked a question (which handn't actually happened) and that it was somehow my duty (it wasn't) to defend poor bitcoin's honor (does it need defending?).
A few months back I would have jumped straight into a monologue to explain why I think bitcoin is not just a bubble by going over some of the features that makes it valuable despite its price: secure, trustless, censorship resistant... the whole shebang. Lately though, I've been experimenting with a much more "low maintenance" aproach when replying to this kind of comments:
"A bubble you say? Hummm... I'm not sure I really understand what a bubble is. Please explain to me: What is a bubble?"
Two of my colleagues tried to give it a shot but it turns out, not many can give a good answer.
Everyone seems to have the notion that "a bubble" has something to do with the price of an asset going up, but no one can actually tell me how is the rise in price of gold during certain historic periods or the much more recent rise of apple's stock differ from one of these bubbles.
In short, they don't really know what it means.
2.- It has no real value.
This one is the biggest red flag. Anyone saying that any currency has no real value has clearly not given much thought to the matter. We people seem to have the notion that a paper bill has some intrinsic functionality which grants it its value in commerce.
The "no real value" argument, I'm sad to say, I last read in a newspaper. The author of the article was probably serving some general corporate directive about the papers opinion on "the bitcoins" and was struggling to discredit something he didn't understand with the tools he had.
I scrolled down to the comments section ready to insert a paragraph explaining how the value of an asset was determined by the agreement of participants in commerce blah blah... when I found comment someone had already posted making the same point in a much more efficient manner:
"Can you please explain the 'real value' of gold?"
Though I didn't get to read an answer to that one, I considered that the user who posted it must have developed a similar low maintenance strategy for countering these kind of statements.
3.- There is nothing backing it.
This is perhaps the most widely used statement when trying to scare people away from crypto and it is clearly and unambiguosly true.
When I think of fiat paper money being "backed" by something I can only imagine myself going into a government building with a stack of bills, aproaching some lady behind a counter and exchanging my filthy paper money for the asset that is supposedly "backing it".
I guess that at some point in history that must have been the case: you could deposit your gold coins on a bank and they would give you some kind of IOUs to retrieve them later and, in that way, those paper IOUs were actually backed by your gold coins in the bank's volt. You could then trade those IOUs and, at the end of the day, whoever held them could walk into the bank and retrieve your gold coins. Thats backing.
You go and try that now and please let me know how it goes.
The "bitcoin is not backed by anyone" argument was brought up during a family meeting and of course I had my low maintenance counter ready:
"What is backing paper bills today?"
The response:
"Don't they have gold stored away somewhere?"
So there you have it. Not many people seem to know even the most basic facts about money but when you see some big banker or regulator making some comment to the media and including some of this arguments you can almost imagine them thinking: "I know it's bullcrap, but many people who don't own bitcoin by now will be repeating my words like parrots trying to get some confort".
Perhaps the first move to "unbank the banked" should be to focus the attention on fiat and the current monetary system, not bitcoin.
Just saying.