Bullshit people say about Bitcoin
When you listen to a guy talking about Bitcoin, there are several things that come up frequently and that are not true. Unfortunately, even popular video on WeUseCoins.org says those things. So lets try to see what’s wrong.
1) “Bitcoin is a currency that is created by computers.”
As I explained in the previous posts, “mining” is absolutely secondary to Bitcoin. The most important thing is a decentralized history of exchanges that people can trust. That’s what makes Bitcoin interesting. You have much more freedom and much more protection to sign a contract with another human being. Without a single corporation, government, police and lawyers. And your contract will have to be acknowledged by everyone else contributing their own contracts. So all participating people are locking each other into mutual agreements in a very clever way, that nobody can escape them without paying for that. The word “currency” is absolutely a second part of the story. Since people normally want many different agreements, Bitcoin provides a numerical value on its contracts. Which makes it possible to trade them and use as a monetary instrument.
So it is not created by computers. It is automated by computers, but it is created and maintained by real people who want to trade with each other peacefully and efficiently.
2) “Bitcoins are sent directly to other people without someone in the middle.”
Of course, Bitcoins go through someone. And this someone is a “miner”, who validates transaction, puts it into the block and spends a lot of electricity to make sure some random person does not attempt to spend money twice or fool everybody around. It is a miner who gets transaction fees and also unlocks bitcoins as a reward for the clearing service.
The difference with a banking system, of course, is that miners do not have guns and thus cannot impose additional arbitrary rules without paying for them themselves. There are many of them, so you always can choose the one you like more. And that choice is already automated and optimized, so you don’t have to worry about it.
3) “There are no prerequisites.”
Of course there are. There is a protocol which is harder than any law in the world. If you don’t play along, nobody will give you a penny. You cannot press or threat people to change the rules. You absolutely have to play by the rules to get a cake. And everybody has to do exactly the same. No man can come in and say “this idea is interesting, but I’d like to adjust certain things in my, sorry, in everybody’s favor” - won’t happen.
4) “The total amount is limited, so the value always grows and you get richer.”
That’s true that supply is limited. But it’s not true that this is a reason why value is growing. Supply could have been linearly growing all the time, and it still could be a good deal (it’s just the fees would be higher). Or maybe not. The only truth here is that “growins value” is nothing but people’s desire to use Bitcoin more than yesterday because it is more efficient/cheaper/cooler/whatever than other alternatives. If one day it’s not the case, then the value will “go down” despite of the limited supply. Remember that nobody would need Bitcoin in the first place if there were no thieves on the streets and in the Central Bank. Everybody can just write their obligations on a piece of paper. So if that day suddenly comes, then Bitcoin will become nothing but a useless numbers.
Also, if suddenly people start saving Bitcoins and not selling them for anything in anticipation of future growth, guess what would happen? Nothing. Until somebody needs to buy something. You are not not buying computer this year because next year it will be more powerful and/or cheaper. At some point you need stuff to be done, so it will be done. And if Bitcoin owners do not do anything useful to each other, there is no point in having them. That’s why speculation is hard and only few cold-headed people are doing it more or less successfully. Others are enjoying building stuff and making themselves and everybody around richer and happier.