This is an Op-Ed by Stephan Livera, Host of the “Stephan Livera Podcast” and Managing Director of Swan Bitcoin International.
There are metaphors and analogies for Bitcoin that you may have heard on podcasts or read from various articles or books, and this is not meant to criticize the whole practice of using metaphors or analogies to get people interested in Bitcoin, but to have a bad framework to understand. Bitcoin can cause errors in the way we reason about it from there. If people take metaphors too literally, they inevitably make mistakes in their reasoning about Bitcoin.
First, let’s consider this quote about whether all metaphors are wrong:
“Because it would be an absurd undertaking to banish from the language of economic theory all manner of speaking that is not literally correct; It would be sheer pedantry to outlaw all rhetorical figures, especially since we could not say one hundredth part of what we have to say, if we ever refused to resort to a metaphor. One requirement is essential, that economic theory avoid the mistake of confusing a practical habit, for the sake of convenience, with scientific truth..”
So clearly not all analogies are harmful. But when striving for precision, the metaphor cannot be confused with the actual scientific truth.
‘Bitcoin is stored time’
The popular notion that Bitcoin can “store our time” is too vague and imprecise a metaphor. It usually comes up when Bitcoin users talk about the unfairness of fiat currency (this part is correct), but then takes a turn when the metaphor is stretched too far and suggests we should “store our time” in bitcoin instead of currency. fiduciary
Arguably, the “store of value” concept can be applied to Bitcoin if we consider longer time frames, but it’s not actually storing hour. As the saying goes, time waits for no one. We talk in general terms like saving time or “saving time”, but in reality, time itself is not what we save, it is how we spend our time. The preference is in the doing. Or, as my podcast guest Conza account of a conversation with konrad graff“Go ahead, try not to waste time and save it for later.”
Even when you get bitcoin wrong as purchasing power, which can be the spirit From the analogy, it’s important to remember that there are no guarantees here. Bitcoin’s purchasing power has been reduced in select time periods, which is where thinking of Bitcoin as stored time can really lead a person astray if taken too literally.
Now, thanks to my friend Gigi, who has written about the concept of Bitcoin as the construction of an arrow of time. This concept makes sense and helps explain why Bitcoin is designed the way it is: keeping time using blocks instead of seconds and not relying on a centralized timekeeper. This is different from the incorrect metaphor of “bitcoin as storage of your time”. So a more accurate framework would be that bitcoin maintains time (using blocks, not seconds), but does not store your time.
Bitcoin as power/battery
Some people talk about Bitcoin as digital energy or as if it were a battery. But remember, while Bitcoin miners use power, Bitcoin still doesn’t allow anyone to store or transport power. There is no central meter where we can take our bitcoin and exchange it for a set amount of energy. Yes, the energy could be priced and sold for bitcoin, but that is not the same. The price of energy will fluctuate and Bitcoin will not even metaphorically store the same amount of energy over time.
What error can this lead to? It can mislead people about where the value is coming from. This metaphor leads people towards a kind of cost theory of value, effectively putting the horse before the cart. Instead, we must reason from the subjective theory of value:
“The value of a good is determined not by any inherent property of the good, nor by the amount of labor required to produce the good, but rather the value is determined by the importance an acting individual places on a good in achieving his goal. desired goal. ends.”
A related cousin to this is the notion that bitcoin is “backed by” energy. Usually this comes up when a nocoiner says, “But Bitcoin isn’t backed by anything.” So, in some cases, a well-intentioned but misguided Bitcoiner can say, “No, Bitcoin is backed by power!” But this is wrong.
Generally, when something is “backed by” something else, it implies that it is supported in some way by some other entity, such as a government. Historically, people say that the US dollar was “backed by” gold, and people could historically trade notes for gold, but there is no such thing with Bitcoin. So perhaps a better question to ask is: “What does gold back?” Only then do we get to the truth of the matter: it was all a subjective assessment all along. Beauty is in the eye of the beholder.
Bitcoin as violence or a ‘weapon’
Some people want to frame Bitcoin as some kind of “digital violence” or, more recently, frame it as a weapon and part of a “soft warfare protocol”. But this is a gross misrepresentation of what Bitcoin is. Bitcoin is more like cryptographic messages that are transmitted and validated on a network. Surely that is closer to a “speech” than a “weapon”. Or, more accurately, bitcoin can be thought of as a rival digital commodity (the first of its kind), operating on an open source monetary network.
If the pen is mightier than the sword, would it be appropriate to call the pen a weapon? Not really. Also, this whole line of argument is clearly blurring the line between what is voluntary and what initiates aggression (which is the wrong part). How is running a node, adopting bitcoin as a rival digital commodity, and participating in the network a form of “weaponry”? This is just a huge mischaracterization. Words mean things.
Some of the analogies and metaphors used in relation to “bitcoin as a soft warfare protocol” relate to miners competing to ensure “chain of custody.” But do they? Or is it really more like Bitcoin nodes are the ones that secure Bitcoin? Miners cannot make invalid transactions appear valid to those who execute and verify transactions with their own Bitcoin node. So isn’t it more relevant to think of it as nodes bitcoin safe? The work of the miners is important, but their work is more related to purpose of transactionsnot security.
So what is the real truth then?
So, as mentioned above, economically speaking, bitcoin is more accurately characterized as a rival digital commodity. Bitcoin is the commodity itself is not a right over something, it is the commodity itself. When people ask what is behind it, this indicates that they have not quite grasped what it is.
If an analogy helps a new person get into Bitcoin and start to fall down the rabbit hole, that’s great! But as that person advances in their knowledge of Bitcoin, the additional precision about what Bitcoin is will help us all.
Thanks to my friend Conza for inspiring this article and providing feedback.
This is a guest post by Stephan Livera. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
