11:45Bitcoin is Snowed Under With Critique
The global perception of Bitcoin is dynamic, dividing opinion between those who understand it and those who don’t. Blockchain technology is not easy to understand and, given its complexities, that leads to “achieving no single point of failure.” Affordances of Bitcoin and other cryptocurrencies are foreshadowed by dissimilarities with existing technological innovations.
Bitcoin’s media exposure is increasing exponentially as the price of the currency rises. Opinions on Bitcoin are heavily focused on its price and its disruptive nature, with the likes of Warren Buffet reemphasizing Bitcoin’s flawed nature. While besmirching Bitocin started as early as 2015 when Bitcoin piqued the interest of many economists, to this day it still divides opinions.
Bitcoin Can’t Catch a Break
Bitcoin criticism is funneled towards financial, social, and environmental issues, with the first and latter taking center stage. Charlie Munger, the vice president of Warren Buffett’s Berkshire Hathaway (NYSE:BRKa) conglomerate, reiterated Warren Buffett’s opinion of Bitcoin, calling it “disgusting and contrary to the interest of civilization.”
Charlie and Warren’s rant on Bitcoin is becoming more of a series as they regularly take a swing at cryptocurrencies. At the 2018 annual meeting of Berkshire Hathaway conglomerate, Buffet called Bitcoin “rat-poisoning squared,” while Charlie Munger compared trading Bitcoin to trading “turd”. The billionaire investors belief that Bitcoin is a ‘fad’ is fueled by Bitcoin’s inability to perform underlying currency functions, which, according to the two billionaires, is “too volatile.”
In contrast, Bitcoin is perceived as a store of value, and the heightened volatility – which, according to JP Morgan, decreases along with the increased scarcity, displays a store of value according to research. Bitcoin holds value as long as investors give it value. It’s speculative in nature based on how much people believe in blockchain. Possibly, the two perceptions of Bitcoin are skewed because of the lack of understanding of blockchain technology.
On the Flipside
Bitcoin has already entered mainstream attention and is being adopted by corporate entities.
Comedian Bill Maher covered Bitcoin and cryptocurrencies in his latest show. He didn’t hold back from slamming cryptocurrencies like Doge or BTC, labelling them as “fake”. Despite the comedic tone, his views on crypto are revealed through comedy and still hold some truth.
Additionally, Bill Maher touched upon a highly covered concern about Bitcoin, namely, its carbon footprint. He stated, “Bitcoin uses more electricity per transaction than any other method known to mankind,” and his concern is well-founded. Reports indicated Bitcoin’s annual electricity usage is more than Argentina’s. Bitcoin is not the only cryptocurrency on the market, and while, in truth, it does consume an exorbitant amount of energy, it doesn’t account for all energy usage.
Alex de Vries emphasized that Bitcoin’s high energy consumption is linked to an increase in adoption. However, a research paper by Square and ARK Invest argues that Bitcoin’s prevalence will incentivize the adoption of alternative energy sources. What’s more, Bitcoin miners are dependent on renewable energy as it decreases costs and increases the profit margin.
Arguments against Bitcoin’s energy consumption are well-founded, yet, those stating critical assertions towards mining only define their own opinion. Yet, Green Bitcoin mining is occurring in places such as Iceland, Norway, or Sweden; thus, attempts to undermine Bitcoin by highlighting its high carbon imprint need further support.
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