Bitcoin Will Break the Internet: A Rebuttal

In possibly one of the most uninformed articles I’ve read about Bitcoin in the last few months, the fear mongers are at it again. Below is the screenshot of the article I found on my newsfeed yesterday morning, and I’ve included the actual article with my rebuttals in red. This article is being posted as FAIR USE with creative commentary. The original, unedited article can be found here:

Use your discernment in wading through the mind-control that this company uses to keep you uninformed.

Don’t bet on bitcoin ever replacing the dollar or other traditional currencies as everyday money.

OK, no one ever said Bitcoin would replace “traditional currencies.” It’s simply an alternative.

That’s one of the messages from a new report by an organization that represents dozens of the world’s central banks.

The group, Switzerland-based Bank for International Settlements (BIS), said the “intense interest” in bitcoin and other cryptocurrencies had prompted it to look “beyond the hype” at what use they could actually contribute to the economy.

The report’s authors were unimpressed, (really they are terrified of losing their jobs) detailing a range of problems with trying to adopt cryptocurrencies as a widely used form of money.

They include the danger that just processing all the payments “could bring the internet to a halt,” said the report, which was published Sunday.

Related: Bitcoin prices have been manipulated, study says

A big part of the appeal of many cryptocurrencies to their supporters is that they are decentralized rather than tied to a central bank like the US Federal Reserve. Records of transactions are kept on a digital ledger.

But because every single transaction is added to the digital ledger, the report said using a cryptocurrency like bitcoin for retail transactions around the world would quickly swell the ledger beyond the capacity of computer servers to store it. (See lightning network) Supercomputers would be needed to keep up with verifying incoming payments, and the huge amounts of data being exchanged between users would bring the internet to its knees. (How does the SWIFT NETWORK operate? Snail mail?) 

What is blockchain?

Experts have warned previously about the vast energy demands that bitcoin could end up making if its use expands significantly. (What about the “vast” energy demands of cars? Of the brick and mortar stores? The server farms that service VISA and MASTERCARD? Bitcoin miner farms are generally finding areas that have low-cost hydro-electricity available to the public.)

The Bank for International Settlements pointed out other concerns about using cryptocurrencies as regular money, including the volatility of their prices. Bitcoin’s price surged to around $19,000 late last year, but has since plunged to below $7,000. (Presumably due to market manipulation downward due to whales and the powers-that-be.)

Every bitcoin transaction also requires users to pay a fee to have it added to the digital ledger (So does VISA and Mastercard, they just charge the merchant instead of the person buying the merchandise.). In times of high demand, the fees go up. During the feverish trading of bitcoin in December, they spiked to around $57 per transaction. (Bitcoin will probably be an asset akin to Gold, in which users will only “move” or “spend” bitcoin in the thousands or tens of thousands of dollars. Thus, even a $57 fee would be acceptable.) 

“Just imagine, if you bought a $2 coffee with bitcoin, you would have had to pay $57 to make that transaction go through,” Hyun Song Shin, the bank’s head of research, said in a video accompanying the report. (Other cryptocurrencies can be utilized for buying coffee. Bitcoin should be viewed as an asset akin to precious metals)

He noted that some people hold bitcoin not as money, but as an investment asset.

Related: Crypto hacks: Is your bitcoin investment safe?

(It’s safe if you store it in a hardware wallet such as Ledger or Trezor) 

The report also questioned the limits of the trust on which cryptocurrencies rely.

“Trust can evaporate at any time because of the fragility of the decentralized consensus through which transactions are recorded,” it said, adding that “means that a cryptocurrency can simply stop functioning, resulting in a complete loss of value.” (Why do you trust that Fiat, which is backed by nothing but the illusion of value, won’t completely lose value as well? It takes ALOT of energy to produce 1 bitcoin. How much does it cost to print a million dollars in cash? The cost of paper. Since 90% of money is ALREADY DIGITAL MONEY,  THIS COSTS EVEN LESS!)

The report wasn’t entirely dismissive.

It said that cryptocurrencies’ “underlying technology could have promise in other applications, such as the simplification of administrative processes in the settlement of financial transactions,” although it added that “this remains to be tested.”