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bitcoin faces plenty of criticism, some justified, some easily refuted. Here we catalog common criticisms of bitcoin, and rebuttals to each.
#1 - Bitcoin Has No Intrinsic Value
Critique: Bitcoin is purely digital backed by nothing, and therefore has no intrinsic value.
Rebuttal: "Intrinsic" value is a faulty concept. It's always the case that humans value something based on its usefulness for a specific purpose. The value is not an inherent property of something but a reflection of people's demand for it. Similarly, something only needs to be "backed" by something else if it is missing the properties that people value. Bitcoin has many attributes that are fundamentally similar to gold (which humanity values at over $10 trillion), and are often superior precisely because of bitcoin's digital nature.
Bitcoin has many attributes that are fundamentally similar to gold (which humanity values at over $10 trillion), and are often superior precisely because of bitcoin's digital nature.
#2 - The Government Will Shut Bitcoin Down
Critique: Governments won't simply allow a non-state money to keep growing. Control over money is too central to a government's survival for them to allow this.
Rebuttal: Bitcoin's decentralized nature makes it impossible for anyone, even governments, to fully kill it. Given that it will always exist, the dynamic becomes one of "jurisdictional arbitrage,"; i.e., if one government makes owning bitcoin fully illegal with harsh penalties, other governments will embrace the opportunity to become home to bitcoin-related businesses, investors, etc.
#3 - Bitcoin is Too Volatile
Critique: Bitcoin is too volatile to be a useful currency or store-of-value.
Rebuttal: It's true that bitcoin historically has very high trading volatility. This is not a surprise for an asset whose market cap has grown to hundreds of billions of dollars, from 0 a decade ago. Furthermore, bitcoin's volatility *is* decreasing as it matures.
#4 - Bitcoin Wastes Energy
Critique: Bitcoin's mining process is extremely energy intensive, and therefore wasteful
Rebuttal: Bitcoin's energy spend is required to do three things: fairly distribute new bitcoin according to bitcoin's monetary policy, allow anyone to participate in the bitcoin network on even footing, and create the strong security assurances around bitcoin's transaction settlement. Any financial system will have certain properties and guarantees, and they never come for free.
#5 - Bitcoin is Used By Criminals
Critique: Bitcoin is used by drug dealers and money launderers; therefore it is bad.
Rebuttal: Bitcoin has received a lot of press about criminal use, largely due to the novel darkweb marketplaces, such as Silk Road (now defunct), which used bitcoin as a key element early on. Yet, the fraction of total bitcoin transactions associated with illicit activity was never very high, and remains below 1% today. In fact, former CIA Acting Director Micheal Morell produced a report analyzing bitcoin's use in illicit activity and found that it's "significantly overstated", and is likely a far smaller share of the bitcoin economy than illicit activity done via the traditional banking system is vs global GDP.
#6 - Bitcoin Can Be Cloned
Critique: Bitcoin is one of many thousands of crypto assets, and anyone can create more whenever they want. Bitcoin therefore is not scarce and can't be valuable.
Rebuttal: Crypto currencies are not scarce, but bitcoins on the bitcoin network are. Anyone can indeed clone the open-source bitcoin codebase at any time, and launch their own coin, but they can't clone the acceptance, name recognition, and security that only the bitcoin network enjoys. People have been cloning bitcoin since 2011, yet no clone has come close to matching bitcoin's marketcap and network effect.
#7 - Bitcoin is a Bubble
Critique: Like tulip-bulbs hundreds of years ago, Bitcoin is a retail mania, and it will collapse.
Rebuttal: Bitcoin has experienced four major cycles of massive 1000%+ appreciation, followed by deep drawdowns of more than 80%. Each cycle has started from a much higher price than the previous one. This is not a characteristic of one-time manias. Bitcoin's price, as well as fundamental adoption numbers, are increasing dramatically over multi-year timeframes.
#8 - Bitcoin Fails As a Currency
Critique: Bitcoin is too volatile to be a day-to-day currency, plus it takes too long for transactions to settle, and sometimes has high transaction fees, so it's a failure as money.
Rebuttal: It's true that bitcoin is not a viable global every-day currency today (though it settles $billions equivalent in transactions every day). And it may never be. But that's ok. Gold would make a much worse day-to-day currency, and yet humanity finds over $10 trillion in value in gold's fundamental properties. Furthermore, bitcoin's digital nature and programmability mean future innovations can be built on top of bitcoin's base layer, potentially enabling direct frictionless instant global payments at scale.
#9 - Bitcoin Can't Scale
Critique: Bitcoin can only support around 7 transactions per second, so it will never be a global currency.
Rebuttal: Bitcoin's base layer today can indeed only support a theoretical throughput of 7-10 transactions per second. This is vastly less than the ~4000 tx/sec that the VISA network can hit at peak times. But bitcoin transactions are not VISA transactions. Bitcoin today settles over $5B in transactions per day across hundreds of thousands of transactions. This simply means a much higher average transaction value (over $5,000) vs retail payment networks (VISA's is around $80). Bitcoin is much more akin to a large value settlement network today, than a retail payments network.
#10 - Bitcoin Gets Hacked
Critique: There are news reports all the time about bitcoin getting hacked. Bitcoin must not be secure.
Rebuttal: Bitcoin is a protocol run by thousands of computers and operators all over the world. The news stories about "bitcoin" getting hacked refer to centralized services that *use* bitcoin getting hacked, not bitcoin itself. Most famously, the notorious early bitcoin exchange, MtGox, got hacked and drained of 650,000 BTC ($362mm worth at the time). This is akin to your bank or stock broker getting hacked. Bitcoin itself has never been hacked, and is perhaps the most scrutinized codebase in the world. Furthermore, because it is decentralized, it is not prone to the usual attack vectors that centralized services (like your bank and MtGox) are exposed to.
#11 - Bitcoin is Being Pumped by Tether
Critique: Tether is a ponzi-scheme; new units are issued out of thin air and used to buy bitcoin, dramatically and artificially inflating the price of BTC.
Rebuttal: There is indeed a lot of uncertainty around various details of tether, but there is no serious evidence of unbacked new issuance artificially inflating the price of bitcoin. This is a detailed topic beyond the scope of this page, so this section will primarily point readers to an array of detailed content addressing the issue.
#12 - China Controls Bitcoin
Critique: More than half of bitcoin mining takes place in China, therefore, China can seize control of the Bitcoin network at any time.
Rebuttal: While it's true that mining pools in China currently generate a large portion of bitcoin blocks, it's important to understand a few factors at play here: 1) mining pools are very dynamic entities that can and do change fast in response to network or political conditions, 2) a 51% attack is not the same thing as 'control of bitcoin', and 3) as the mining market grows and matures, it is shifting more and more to places outside of China.