Letter: The world of cryptocurrency is confusing, but don’t dismiss it

It is commendable that the FT found someone reliable to speak out against bitcoin (“Why bitcoin is worse than a Madoff-style Ponzi scheme”, FT Alphaville, FT.com Dec 22). The hype in Bitcoin is so strong that it is important to propagate counter-arguments. Unfortunately, the piece by Robert McCauley is like the musings of a dinosaur examining a large blazing boulder in the sky and wondering what it could have been.

First, bitcoin is a completely new type of asset, so analyzing it as a security is useless. If you need to include it in any traditional category, you’ll have a better time comparing it to a commodity, especially given that it responds to the overall climate in a similar way. Far from “pumping and dumping” (how do you “pump” an asset with a market capitalization better than the $1 trillion?) most bitcoin customers treat it as digital gold – a type of gold that can be sent anywhere in the world in an instant, weighing nothing And you don’t need expensive storage.

While some could treat it as a Ponzi, the majority of bitcoins do the opposite and Hodl (“hold on dear life”) for five years or more, according to the “Hodl Wave” metric. These accounts may not need to sell to realize the value of their investment because they can borrow against their stack using any number of innovative and cheap loans that take digital assets as collateral, including self-paying loans. Google search.

Finally, no piece of bitcoin would be complete without raising the environmental impact. The fact that McCauley resorts to this zombie argument in support of his thesis indicates its fragility. This problem has already been solved with proof-of-stake blockchains like Near, Cardano, and soon ethereum, as bitcoin miners turn to renewables. That’s more than I can say for commodities like oil and gold, which continue to wreak havoc on the environment with few solutions in the pipeline (pun intended).

I realize that the world of digital assets is confusing and confusing. It’s a revolution and these things are chaotic by nature. But they don’t go away either. Better to embrace evolution.

Nathan Thompson
Lead Technical Writer, Bybit, Vientiane, Laos