Bitcoin Problems

A friend of mine wrote a post on a private business-group network. It was taken down. Perhaps because the person who runs the group invests in Bitcoin, and one person in the group is a crypto coach. Or maybe because the group is about becoming more wealthy and famous, not about ethics. They only choose people who they believe want to contribute positively to the world. I'm sure they've justified it. He posted:

Question for those particularly interested in Crypto: this highly critical NYT Op-Ed has given me pause in pursuing investing more in Crypto currencies (I’ve only dipped my toe in the water so far). What do YOU think about this writer’s insights? I’m at a crossroads. Please discuss!

NYTimes OPINION: Bitcoin Cosplay Is Getting Real
By Binyamin Appelbaum, a member of the editorial board.

It’s been a good month for Bitcoin believers. The currency of the future — or is it the future of currency? — became legal tender in El Salvador.

Some might dismiss as a publicity stunt the embrace of a digital currency by a country where only a third of the population has internet access. Some Salvadorans took to the streets to protest. But let’s not minimize this moment. Esperanto, the language of the future, never managed to become an official language in any country.

Bitcoin, for the uninitiated, is a technology that purports to solve a host of problems with old-fashioned national currencies. It is designed to safeguard wealth against the depredations of inflation, public authorities and financial intermediaries.

Unfortunately, it doesn’t work. Some products become popular because they’re useful. Bitcoin is popular despite being mostly useless. Its success rests on the simple fact that the value of a Bitcoin has increased dramatically since its introduction in 2009, making some people rich and inspiring others to hope they can ride the rocket, too.

What I think: I think there's a good chance Bitcoin will continue to rise in value for a while. And someday it might plummet. I don't know.

For me, investing in Bitcoin is unethical. Besides the energy cost, it's a pyramid scheme. The value is created through hype, and money is made by selling it to newbies. It's a manipulation of "agreement reality" through marketing. Like any other fad, it's for the benefit of the creators and early adopters.

A currency is meant to facilitate trade, not to be an investment. By making it difficult to create and in limited supply, it was designed to rise in value, not be a currency. Currency should be secure and cheap to make. While it's hard to create counterfeit Bitcoin, that doesn't make it a good currency.

Plus the "safeguard wealth against the depredations of ... public authorities" is anti-social. Yes, taxes can be seen as a bitch. So are inequity and poverty.

The principal behind taxes is that the community invests resources to create a society in which people can survive and prosper. Thus, the society itself is a resource. Those that use it for more than survival should pay the costs. (Currently we also charge those that use it just for survival, and those that make less than subsistence...)

Yes, government, like most undesigned and poorly controlled institutions, isn't perfect. What's needed is to become woke to our limits and mortality. We accept poor, and bureaucratic government and tell ourselves it can't be fixed. We can and should fix it, but that's a different conversation.

 
As humans, we latch ourselves to simplistic philosophies, whether it's that government should be saddled with debt until it's forced to cut services, or one-size-fits-all in our business pricing. We have a ton of these. Some start out as good advice, like "Let the buyer beware," and then are turned into justification for immoral business practices, such as lack of honesty.

We latch ourselves onto rules. I've run into many trying to get support for PeopleCount, the solution I've invented for fixing Democracy. I've had so many conversations with people that insist I must comply with their rules. Some say that they have no responsibility to think about it- it's purely up to me to inspire them. Many philanthropists insist PeopleCount must be a non-profit before they'll even make time to talk. Many wealthy people hide their contact information rather than creating a way to filter contacts. Investors stick to rules that I must have a proven team or already have revenue. Or that to be successful, the site must entice people to spend many hours on it per week, like Facebook.

Guidance about best-practices are great. Substituting rules for thinking is not.

To invest in Bitcoin, you must be convinced that it'll keep rising in value and that either there are no ethical problems, they're not significant, or they don't apply to you. Sometimes we rationalize "I'll just do it for a little while." Or "If I don't do it, someone else will."

Note that admitting ethics violations while profiting is very, very hard to do. Millions of businessmen, corporate executives and board members have failed at it, from the British East India Company (and before) to our oil companies, pharmaceutical companies, health insurance companies, and many, many more. If you realize that investing in Bitcoin is unethical, but invest anyway, I won't say you're in good company, but you're not alone.

My parents didn't talk to me and my brothers much at all. They were bright, wonderful people, but they didn't receive much advice and were humble, so didn't give it unless asked. And we didn't know to ask. Once, as an adolescent, I saw some tax cheating on TV. I asked my dad if he ever cheated on taxes, either personal or in his business. He said no. I asked him why not. He said, "I've been tempted, but it’s not worth it. It’s important for me to be a person that I, myself respect."

I thought back on the times I had, as a little kid, cheated or stolen. I had then been ashamed of what I had done, and stopped. I realized that if I cheated, I wouldn't respect myself. If I pretended it wasn't important, I'd be lying. I wasn't religious, but lying's a sin.

Having seen the ethical problems with Bitcoin, I can’t unsee them. Investing in Bitcoin is wrong.