Bitcoin-related demagogies By "bitcoin" we mean either BTC or BCH in this article. Bitcoin is nothing False. Proof As explained in the What is bitcoin? article, bitcoin is a *book-entry coin*. https://read.cash/@lmecir/what-is-bitcoin-0bb5a7da Complement The demagogy looks as follows: "Bitcoin is not a TV set, bitcoin is not a knife, therefore, bitcoin is nothing." That is just an apt example of a hasty generalization fallacy. Bitcoin is a pyramid scheme False. **Proof** One of the defining characteristics of a pyramid scheme is, that an earlier participant in the scheme is promised to obtain income from several (two or more) later participants of the scheme. Since in case of bitcoin the promises of profits typical for pyramid schemes are lacking, it cannot be assumed that bitcoin is a pyramid scheme. Bitcoin is a Ponzi scheme False. **Proof** One of the defining characteristics of a Ponzi scheme is, that there is a "Mr. Ponzi" running the scheme, collecting investor money and paying purported profits to earlier investors from the money collected from the new investors. Since in case of bitcoin there is no "Mr. Ponzi" running bitcoin and collecting investor money, it cannot be assumed that bitcoin is a Ponzi scheme. Bitcoin is useless False. **Proof** As explained in the What is bitcoin? article, bitcoin is a *book-etry coin*. As such, it has got these nonmonetary uses https://read.cash/@lmecir/what-is-bitcoin-0bb5a7da As a coin, it is collectible. Bitcoin serves as a proof of social status of its owner. It proves that its owner belongs to the group of bitcoin owners bitcoin collectors bitcoin supporters and bitcoin connoiseurs. Bitcoin serves as a subject of study. Bitcoin is exhibited in museums as a new significant item in coinage history. Bitcoin serves as a record of its history and creation. Bitcoin is a working proof that a coin of its kind can exist. Bitcoin inspired various central banks to require banks in their jurisdiction to provide faster money transfers to their customers. Bitcoin also has got monetary uses Bitcoin is the only means used to pay for bitcoin transaction processing. It is documented that bitcoin has been used as a medium of exchange. It is documented that bitcoin has been used as a store of value. Complement The demagogy looks as follows: "Bitcoin cannot be used to make jewelry, bitcoin cannot be used to cut ropes, therefore, bitcoin has no use." That, however, is just an apt example of a hasty generalization fallacy. Bitcoin is not scarce False. **Proof** Everybody wanting to create a new bitcoin must produce a proof of work. Since all bitcoins are produced, everybody wanting to obtain a bitcoin must either produce it or obtain a bitcoin that was produced by somebody else. Complement The arguments of the demagogs look as follows The blockchain is freely copiable. True. Nevertheless: A creation of a new blockchain copy does not influence the number of existing bitcoins. All identical copies of the blockchain have the same validity and the blockchain can be identified as the set of all such identical copies. The software running the bitcoin network is freely copiable. True. Nevertheless: A creation of a new software copy does not influence the number of existing bitcoins. All identical copies of the software work the same way. The software running the bitcoin network is freely modifiable. This allows software engineers to create an unlimited number of bitcoin look-alikes. True and documented by the number of existing bitcoin look-alikes. Nevertheless: Bitcoin is recognizable and it can be easily discerned from the look-alikes. As with all coins, the more look-alikes of it there will be, the more obvious it becomes that: The history of bitcoin differs from the history of its look-alikes. Bitcoin is more interesting than its look-alikes. The look-alikes are created only because bitcoin is interesting. It is possible that the blockchain splits in two, allowing an unlimited number of splits to originate from bitcoin. True. Bitcoin splits can and have occurred. Nevertheless, the situation is similar as with stock splits: A split of a coin does not decrease the total value of the holdings of the owner. The intrinsic value of bitcoin is zero True, but misused by demagogs. **Proof** Per the What is bitcoin? article, bitcoin is a *book entry coin*. https://read.cash/@lmecir/what-is-bitcoin-0bb5a7da Numismatists define the *intrinsic value*, also known as the *melt value* of a coin as the value of the material that can be obtained by melting the coin. As a *book entry coin*, bitcoin cannot be melted to obtain any physical material, so its intrinsic value is zero. Complement Every serious numismatist (and many others) know that the value of a coin is not the same as its *intrinsic value*. Ignoring facts, demagogs try to mislead people that the value of a coin shall be equal to its *intrinsic value*. The fundamental value of bitcoin is zero Unfounded. **Proof** The *fundamental value* is the value calculated using a *fundamental analysis*. A serious *fundamental analysis* of bitcoin would need to take into account that: Bitcoin is a book-entry coin. Bitcoin is a commodity. Bitcoin is scarce. Bitcoin has got the above-listed nonmonetary and monetary uses. The interest in bitcoin. Bitcoin's history. Complement The demagogical *analyses* coming to the conclusion that the "*fundamental value* of bitcoin is zero" use one or more of: The above-debunked demagogical claim that "bitcoin is nothing". The above-debunked demagogical claim that "bitcoin is a Ponzi scheme". The above-debunked demagogical claim that "bitcoin is a pyramid scheme". The above-debunked demagogical claim that "bitcoin has no use". The above-debunked demagogical claim that "bitcoin is not scarce". The false claim that the value of a coin shall be equal to its intrinsic value. A logical fallacy that it suffices to debunk one or more wrong *analyses* claiming the opposite. Bitcoin is a pure speculative bubble Terminology misuse. **Proof** The *speculative bubble* term is defined as a state of the market. Bitcoin is not that. Complement The demagogs commonly perceive it as synonymous to the above-debunked "The fundamental value of bitcoin is zero." Bitcoin is a speculative asset Demagogy. **Proof** Any asset can be bought as a speculative investment, bitcoin being no exception. The demagogy is trying to present this as if it was bitcoin-specific. Complement The demagogs commonly perceive it as synonymous to the above-debunked "The fundamental value of bitcoin is zero." Bitcoin is a greater fool game Vague. The demagogs commonly perceive it as synonymous to the above-debunked "The fundamental value of bitcoin is zero." Bitcon is a volatile asset Terminology misuse. **Proof** Every asset is volatile, bitcoin being no exception. The demagogy is trying to present this as if it was bitcoin-specific. The volatility of bitcoin is high Misused by demagogs. Proof The volatility of BTC is defined as the standard deviation of its logarithmic returns. For the volatility of BTC holds: On 16 August 2012, the annualized four-year volatility of BTC was 153%. On 31 May 2024, the annualized four-year volatility of BTC was 50%. Between the above two dates, the annualized four-year volatility of BTC was steadily decreasing. We have got no reason to expect that the volatility of BTC will not change in the future. Summing up, any claims implying that the volatility of BTC is not changing shall be classified as demagogical. Bitcoin is deflationary Half-true. **Proof** There are two definitions of inflation. Monetary inflation (supply inflation) *Monetary inflation*, also known as *supply inflation* is defined as a sustained increase of the supply. Since there is a sustained increase of bitcoin supply in the foreseeable future, as far as the *monetary inflation* is examined, *bitcoin is inflationary*. Price inflation *Bitcoin price inflation* is defined as a rise in general level of prices of goods expressed in bitcoin. Historically, the general level of prices of goods expressed in bitcoin is decreasing, which is defined as *price deflation*. Bitcoin's difficulty adjustment algorithm and block reward halving decrease the productivity of bitcoin mining, while the productivity of general goods is increasing. In case of bitcoin, this is likely to result in *price deflation* also in the future. A deflationary coin cannot become money Demagogy. **Proof** The argument goes as follows: "Holding deflationary coin, its owners are disincentivized to buy general goods with it." Although not being money yet, evidence shows that bitcoin owners do use bitcoin to buy general goods with it. Bitcoin is a zero-sum game False. **Proof** Economics is not a zero-sum game as we can observe through our own eyes. Note that even such an elementary economic action as a simple exchange of a good X for a good Y economically is not a zero sum game: Materially, an exchange of a good X for a good Y preserves the X + Y total. Economically, the parties performing the exchange are motivated to do it due to their preferences, knowing their needs will be better satisfied after the exchange than before it. Since the preferences of the parties will be better satisfied after the exchange, the subjective valuations of the posessions of both parties increase after the exchange. That way, also the total subjective valuation of the possessions of the parties increases. Note that this is a result the subjective theory of value explains, while the intrinsic theory of value does not. As a supporting argument, note that if the parties were not better off after the exchange, they would not be motivated to perform it. As another supporting argument, note that state administrations force exchanging parties to pay taxes such as the value added tax. If the parties were not better off after the exchange, the taxes would dissuade them to perform any voluntary exchanges. As time passes people produce more general goods with greater efficiency. In contrast to production of general goods, the efficiency of production of bitcoins is decreasing due to block reward halving and difficulty adjustments. Summing up, the relation (proportion) between the general goods and bitcoin is likely to increase in time in favour of bitcoin, allowing people to afford to exchange more general goods for bitcoin. In bitcoin, later investors pay the profits of earlier investors Used to mislead. **Proof** In Ponzi schemes, the scheme runner ("Mr. Ponzi") collects the investor money, paying the purported profits of the earlier investors from the money collected from the later investors. This leads to the situation, when the earlier investors are misinformed to have high profits, while the money collected from the later investors are paid off as profits to the earlier investors. In bitcoin, investors pay for the bitcoin they get from a miner or from an earlier owner. Bitcoin investors realize their profit or loss when they exchange the bitcoin they own for something else. The "later investors pay the profits of the earlier investors" is just an inaccurate citation of one of the Ponzi scheme characteristics, trying to mislead the reader that there is some superficial similarity between bitcoin and a Ponzi scheme. BTC is widely useful as a medium of exchange False. **Proof** BTC is able to work as a medium of exchange for at most about 600 thousands of users wanting to make 1 transaction per day on average. BTC is widely useful as a store of value False. **Proof** BTC is able to work as a store of value for at most about 18 millions of users wanting to make 1 value storing transaction per month on average.