Bitcoin rant: 7x reasons to avoid


The temptation to make a fortune trading Bitcoin is enticing, I get that. I’m humble enough to admit I may be proved completely wrong in 20 years’ time but read on for all my reasons why you shouldn’t join the Bitcoin bandwagon.

I’ve written about Bitcoin before, here and here. It’s a topic that just isn’t going away so here we go again.

Everything you don’t understand about money combined with everything you don’t understand about computers.

HBO’s Last Week Tonight with John Oliver, 11 March 2018

  1. Emoji

₿ You know things are getting out of hand when Bitcoin has its own emoji.

  1. Investors

When Bitcoin hit $50,000, nearly every client I spoke to that week asked about investing in it. For all the reasons outlined in the rest of this article, I told them not to. All of them agreed with me apart from one who confessed he’d actually put £5,000 into Bitcoin the week before…

❌Bitcoin is a gamble, not an investment

❌Agreed, it has already made some people millionaires, but it will bankrupt a lot more

❌It funds crime

❌It’s terrible for the environment

Here are some questions I asked each of these aforementioned clients:

❓Have you got any betting apps on your phone? If yes…

❓What do you bet on? Why? How much? £15? £50? £500? Per week? Per month? Per year?

❓How much would you bet on say, the Grand National? A Premier League football match?

❓How much do you bet on a game of golf with your mates? £15? £50? £500? Or Michael Jordan style $10,000 a hole?

It doesn’t matter whether you win or lose in answer to these questions. The measure of risk I’m asking you to evaluate is how comfortable you are losing money.

I’m not a gambler and I don’t like losing money… my friends on my annual golfing trip know this (!) and that’s okay, that’s my personality. So no, I don’t have any betting apps on my phone.

If you don’t like losing money, don’t touch Bitcoin. Anything that can increase up to 16% in a day and fall as much as 18% another day is not a sound basis for any investment.

❌If you want excitement in your life, don’t go looking for it in your investment portfolio.

  1. Anti-Establishment

🪧Bitcoin started life as an anti-establishment tool; no central banks, governments, or policymakers to interfere. It was a currency by the people, for the people.

🗳️Yet these are also its weaknesses; no government support if anything goes wrong, no rules and regulations to stop it from being abused, and no stability. Who do you blame if it all goes pear-shaped? If you forget the password to your digital wallet there is no way to reset it. All those Bitcoins are gone, lost forever.

Who created Bitcoin? Satoshi Nakamoto? Nobody knows who he is. He’s the Banksy of crypto.

🔥Be careful what you wish for when stepping beyond rules and regulations. Mt Gox, a Tokyo-based Bitcoin exchange, was once the world’s largest Bitcoin intermediary, handing over 90% of global Bitcoin trades in 2013. It filed for bankruptcy in 2014 announcing that hundreds of thousands of Bitcoins had been lost and likely stolen.

4. Ethics

🦹‍♂️ Bitcoin is the criminals and fraudsters go to payment source. I’ve had a number of phishing emails asking for payment in Bitcoin, I bet most people have.

Action Fraud says that £27m was lost in crypto and forex scams in 2018/19, each victim losing £14,600 on average with the number of scams have tripled from the year before.

The Wall Street Journal claims that $4.3billion was lost to crimes involving Bitcoin in 2019.

  1. 🌴The environment

If you care about the environment, don’t buy Bitcoin.

You might think a string of digital code is better than mining rare metals for coins but Bitcoin “mining” needs powerful supercomputers that use more energy each year than Norway.

The University of Cambridge Centre For Alternative Finance estimates that Bitcoin uses an average of 131 terawatt-hours of electricity each year. In the UK we use around 300 TWh a year and in Norway, it’s 124 TWh. Every single Bitcoin transaction uses the same amount of energy as 100,000 Visa transactions.

Having just read Bill Gates’ book on climate change, surely these supercomputers could be used for something more worthwhile. Nuclear fusion? Zero carbon steel? A cheaper Tesla?

6. Stability

Money is simply a myth that we humans collectively believe in (reference the excellent early chapters of Sapiens by Yuval Noah Harari for an explanation of this) and a well-functioning economy needs a stable form of monetary exchange that is collectively trusted.

Certain sections of society have their suspicions about fiat currencies like Sterling or the US Dollar. Fiat currencies aren’t perfect, just like capitalism isn’t perfect, but until something better comes along, both are very good at the job we want them to perform and fiat currencies are stable forms of money that permit the exchange of goods and services.

Collective trust in fiat currencies is derived from the collective trust in the governments of each particular nation-state and the institutions, such as property rights and the rule of law, within it.

There is no collective trust in Bitcoin. None.

😱Imagine if the value of Sterling went up by 16% one day and down by 18% the next? Imagine trying to buy your shopping from Tesco in Bitcoin… how much would it cost you this week compared to last week? Imagine trying to invoice your customers in Bitcoin… how would you run a business with Bitcoin, let alone an entire economy?

7. How easy is it to buy Bitcoin?

Very. Too easy in fact.

If you have a propensity to gamble, your smartphone makes buying Bitcoin too easy.

To see just how easy buying Bitcoin is, Adrian did an experiment and in 12 minutes he’d downloaded an app, set up an account and bought $100 of Bitcoin. The following day he was very excited to tell me it was worth $106. He hasn’t mentioned it again since the price dropped… I wonder if he’s bought any more or sold it?