- Bad for the environment
- meant for shopping
- doesn't scale
- Controlled by China
- Less than 1% Own All Bitcoin
- Bitcoin Dominance is low
- Gold is better
- Bitcoin vs. Ethereum (& Altcoins)
- Proof-of-Work vs Proof-of-Stake
Not a waste of energy
Bitcoin is not a waste of energy because it has a legitmate usecase; it's solving real world problems. You may not know that people in third world countries are using Bitcoin in various ways to protect themselves. Bitcoin improves one of the most ancient but problematic issues in history: money. It's not a video game token or an altcoin being used for speculation. Bitcoin is unique and not to be mixed up with the other +12000 altcoins.
Bitcoin is holding over $1 trillion USD in value. It moves value in the hundreds of billions each month and it is estimated to have over 100 million users now (2021). It's the fastest asset in history to ever reach a 1 trillion USD market cap by a significant margin. For example, Apple took 42 years to reach $1 trillion and Bitcoin took around 12 years. Evidently, Bitcoin is something that is needed today and will continue to be, most likely forever. This is because there will never be a point in time where a global, universal, neutral, soverign, digital monetary network designed specifically to shield your wealth from any outside force is not needed.
Bitcoin also serves as the secure base for other innovations. Other protocols, networks, apps and tools are being built on-top of Bitcoin which do not require energy usage because they anchor on to Bitcoin's security.
Easy to criticize
Bitcoin's energy criticism will probably never completely go away because Bitcoin is the most transparent system that exists. All the network information is just so easily accessible for anyone to interpret (or misinterpret). Every network statistic under the sun is tracked and recorded on various websites. No games are played on Bitcoin, all statistics are trackable 24/7. No stat can be swept under the rug, but there is such a thing as a bad interpretation of a statistic and let's be honest, most people do little to no research.
Using Energy is not the problem
Energy usage is not the issue. There is an unlimited amount of energy available to this planet in the form of: solar, hydro and wind.
If energy usage was the issue, then there are many more less important things consuming more energy, very high amounts or are much more harmful when compared to Bitcoin. You may of heard of these: video gaming, christmas lights, not used but turned on devices in homes, gold mining, etc.
The real issue is how the energy is being generated. Is it a renewable resource? Or is it a polluting resource like coal? If it's a polluting energy resource then that's more of a country problem rather than a Bitcoin issue. Why is the country generating dirty energy in the first place?
Fortunately, Bitcoin miners are attracted to the cheapest energy source and the cheapest energy just so happens to be renewable energy.
The Bitcoin network consumes miniscule resources when compared to the traditional financial system. Think of all the accumulated energy, physical resources, waste and pollution that bank branches, financial offices, entire skyscrapers, building heating/cooling/lighting, commuting, armored transportation, bank vaults, millions of ATMS, thousands of large central servers, tens of thousands of computers, fiat printing factories, tens of billions of paper/plastic bills and tens of billions of metal coins consume in every country around the planet.
Not to mention, the banking system does not even serve younger ages or the +2 billion that are unbanked.
Transactions don't use energy
Some critics are under the impression that Bitcoin transactions consume energy and when the number of transactions increase, the energy usage increases. This is false.
Bitcoin transactions do not consume energy, that is not how Bitcoin works. Energy use in Bitcoin has nothing to do with the number of transactions happening at any given time. Miners use energy and they use it to add security to the blockchain transactions and to issue new bitcoin into circulation. These new bitcoin are issued at a set average time of 10 minutes and at a pre-determined set amount. Miners do not issue bitcoin faster when more miners come online.
Gold mining destroys the natural habitat of mountains, hillsides, waterways and distrupts communities just for the possibility of finding mere ounces of gold. It's one of the most inefficient, destructive and polluting processes that exist today. Gold also requires physical storage, high physical security, mining machinery, gold factories, a refining process and armored physical transportation. This isn't limited to gold and goes for any other precious metals, diamonds, etc. Bitcoin mining does not dig into our planet, has no toxic refining process and no one has ever died from Bitcoin mining. You can't say the same for the traditional sense of mining.
A bitcoin is digital so it doesn't require physical storage areas, physical security, physical transportation or a physical representation such as coins or bills. Bitcoin travels at the speed of light across the planet using the internet. Physical assest like gold require expensive, slow and polluting physical transportation usually in the form of an armored vehicle. Most of the infrastructure that Bitcoin uses already exists such as the internet, computers and phones. The only additional infrastructure are the miners
Uses renewable / clean energy
A very large percentage of miners around the world use renewable resources such as electricity generated by solar, wind or hydro. Some research concludes that Bitcoin mining uses 70% renewable resources. While this percentage may be on the high side, there is a green initiative to push miners to use more renewable energy and it is in fact growing quickly. Miners want cheap electricity and that just so happens to be renewable energy (and it's also the most abundant).
Did you know many countries / companies generate excess renewable energy and it gets wasted? Many Bitcoin miners take advantage of this and tap into the surplus energy that would be otherwise wasted. Companies may also use Bitcoin miners as a strategic financial decision, for example turning miners on in times of low energy usage or excess power generation..
Flares created by harvesting resources such as natural gas release harmful pollutants into the environment such as methane. Bitcoin miners today are now being used to capture flares and reduce or eliminate methane release into the air. Methane is over 28 times more potent than carbon dioxide to the environment and over 80 times more potent over a long period of time.
Splurging vs. Saving: incentives
Bitcoin itself incentivizes long term thinking over short term thinking. Saving over splurge spending. How is this more green? Well if you think about it, fiat encourages splurge spending since fiat has a limitless supply versus bitcoin's limited supply. This means purchasing more toys and gadgets to replace the rapidly obseleting gadgets. This is wasteful and a large portion ends up in the landfills.
The Only Useable Algorithm
Bitcoin uses an algorithm called proof-of-work and is currently the only proven algorithm to function as intentionally designed. All other algorithms are either experimental and/or heavily flawed. One example of a heavily flawed algorithm is proof-of-stake which heavily promotes centralization and the concentration of power / control among other negative characteristics.
- Noahbjectivity on Bitcoin Mining (Article)
- Bitcoin is Key to an Abundant, Clean Energy Future (Article)
- On Bitcoin, the Gray Lady Embraces Climate Lysenkoism (Article)
- Five Myths About Bitcoin’s Energy Use (Article) ( listen to the article here)
- Bitcoin Does Not Waste Energy (Article) ( listen to the article here)
- @yassineARK (Tweet)
- @BobMcElrath (Tweet)
- @BCoinCornerDanny (Tweet)
- Why Bitcoin’s Energy Use is Not Environmentally Harmful (Article)
- POW is Efficient (Article) ( listen to the article here)
- Bitcoin & an Energy Revolution, A panel at the VOB Conf
- Bitcoin’s energy consumption is a necessity (Article) ( listen to the article here)
- Artifical Money Why Bitcoin is the Greatest Thing to Happen for Alternative Energy (Article) ( listen to the article here)
- Op Ed: Bitcoin’s Energy Consumption Is Neither Frivolous Nor Excessive (Article)
- SLP12 – Bitcoin Mining and Energy, with Hass McCook (Podcast)
- Effects of Gold Mining on the Environment (Article)
- Why Bitcoin’s energy use won’t destroy the planet (Article)
- Bitcoin Doesn't Waste Electricity (Article)
- The Last Word on Bitcoin’s Energy Consumption (Article)
- Study: Over 74% of Bitcoin Mining is Powered by Renewable Energy (Article)
The False Narrative When Bitcoin Began
In the first few years of existence, a handful of vocal (and mostly non-technical) users mistakenly pitched Bitcoin as an instant and virtually free payment system. This was false. It had this persona because it was new and not many people used Bitcoin during this early period. The loudest people were heard the most.
This constant brainwashing of how Bitcoin and blockchain were for virtually free and limitless instant transactions paved the path for many scams that exist even today.
In reality it was just a cute sounding sales pitch. Limitations, trade-offs and use-cases of the "blockchain technology" were not well defined or tested yet because it was so new to many people. A blockchain is ineffecient and cannot scale for instant global coffee payments. It has a limited but very special use-case: digital immutability.
Why This Thinking Was (Partially) Wrong
First of all, using a digital currency for shopping is not new, innovative or special. Such a thing already exists and has been working well for the majority of the planet for a long time. Moving on...
Early proponents of Bitcoin got this wrong because a blockchain isn't designed for everyday coffee transactions. Trying to push that on a blockchain destroys it's unique properties. That said, Bitcoin can be used for everyday coffee transactions through proper scaling and layers built on-top of Bitcoin. This is similar to how the internet scaled but something every altcoin got wrong to date and are just starting to realize this (or continue to ignore this for fraudulent reasons).
So why exactly would everyday coffee payments make a blockchain useless? Because of how a blockchain works. It would instantly centralize the network. This is because permanently recording millions of transactions on a very frequent basis consumes a lot of hard drive space and internet bandwidth. The blockchain would very quickly consume tens or hundreds of terabytes of hard drive space and require very high bandwidth to run a full node. Do you know anyone that has access to these resources? In this case, only a large and expensive central server would be able to run a full node. At that point, the network loses it's decentralized nature, it's no longer immutable and the network is now easily controlled. It loses the sound money properties and it just becomes another PayPal-like system but worse and less secure.
Millions and millions of coffee payments don't need to be permanently recorded every hour because that would be a waste of limited resources. Most can also agree that a centralized system soley for fast and cheap payments isn't new or special.
Blockchains Don't Scale
When a critic says Bitcoin doesn't scale, what they actually mean is that blockchain doesn't scale. All blockchains face the same scaling issue which means all altcoins will have the same scaling problem that Bitcoin faces if ever adopted in a meaningful way. A blockchain is not designed for on-chain everyday coffee transactions; it's designed for digital immutability and dispersing control of the network to the people.
Bitcoin is a settlement layer which is what it is designed to be. Bitcoin intentionally limits the transaction throughput and will intentionally have higher fees in the future. If a blockchain doesn't limit itself, the storage space and bandwidth requirements to run the coin becomes unmanageable to all, excluding big data centers which makes the coin centralized and completely defeats the purpose of a blockchain. This is why we see altcoins such as XRP (+30 TB) and ETH (+7 TB) already require huge amounts of resources to run versus Bitcoin's +250 GB, despite being many years younger than Bitcoin. This caused these top coins to be completely centralized already.
All blockchains by design are inherently slower, less efficient, more expensive and a less scaleable database than existing database structures like MySQL. This is because a blockchain is designed for digital immutability and not infinite, fast or cheap payments.
For a blockchain to scale on-chain for even a fair amount of transaction volume, it must destroy it's decentralized nature as a consequence of how blockchains work. For example, let's say the entire world used Bitcoin on-chain for coffee payments. This would mean to run a full node it would require tens or hundreds of terrabytes (or more) of storage space, an insane amount of bandwidth every 10 minutes from the tens or hundreds of gigabytes (or more) of data that would need to be downloaded (and/or uploaded), expensive enterprise server hardware and setting up a new full node would take months to synch from scratch. Who can afford to run full nodes in this scenario? A few very big and rich companies or governments. What is a full node? They are bitcoin and they define the rules. If only a very select few can run full nodes, those select few control the network. Once the decentralization is compromised, what do you have? A controlled, ineffecient, non-innovative paypal-like system that isn't new or special.
Bitcoin is scaling the proper way, reminiscent of how the internet scaled. Scaling is happening through optimizing the Bitcoin protocol, using best practices and building supplemental protocols, networks and other innovations on top.
Controls Or Banned Bitcoin?
China gets used by critics often. It's an obvious "scary" pick. Ironically, people simulatenously touted that China banned Bitcoin (which they did and un-did many many times) while also saying they control Bitcoin through mining. So which one was it? Did they ban Bitcoin or did they "control" Bitcoin?
Bitcoin Full Nodes Control Bitcoin Not Miners
The most important thing you need to learn about this topic is that Bitcoin miners do not control the Bitcoin network. Bitcoin nodes have the power in the Bitcoin network. Who runs Bitcoin nodes? The people. And where are these people located? These +100,000 people that run nodes are dispersed all over the globe. And where can you run these nodes? On almost any electronic device at almost any location.
Limited In Attacks
Game theory is involved in the event that miners try to misbehave in the very limited, inefficient, ineffective and costly ways that they can be hostile. It can be complicated so I won't go into detail but know that they can't steal your bitcoin and the people have all the power to put miners in their place if need be.
The incentives in the Bitcoin network are just not there for any miner to misbehave. Why get punished to attempt a very costly attack that would ultimately fail? It just makes financial sense for a miner to behave and be profitable.
Miners all over the globe can combine hashing power with others in what we call mining pools to be more profitable. Mining pools can be hosted anywhere in the world, just how miners can be located anywhere. This means miners from China can join a mining pool hosted in the United States and vice versa. Miners can join, leave and congregate to another mining pool with ease and almost instantly. So don't confuse a large mining pool with a large concentration of miners in one spot. Also know that if a mining pool tries to misbehave, miners can leave instantly and another mining pool will gladly take their business.
Even if a country did have high mining power it doesn't mean they are all sitting in one spot - they are dispersed throughout the country and that in itself is a lower level of decentralization. And again, the main point is that miners do not control the Bitcoin network.
Bitcoin had the most fair and organic distribution that will ever exist because it had a period of innocence at the very beginning. Back in the day, no one knew what we do today to game and take advantage of creating an altcoin. Anyone could mine with a cpu and anyone could buy Bitcoin for cheap for many, many years. It's safe to say almost every single altcoin after Bitcoin had a pre-mine.
Genie Is Out Of The Bottle
Everyone knows so much about creating altcoins now. What works, what doesn't, how to game the system, how to be tricky, marketing, etc. That's why you see so many altcoins come and go so often. A fair, organic and honest beginning like Bitcoin's is near impossible. Creators and users just know too much now and this is evident with the 12000+ altcoins that exist today.
Pre-Mines / Pre-Sales
Close to 100% of all altcoins created after Bitcoin had a pre-mine. This includes the top 10 coins and very large pre-mines at that. This means a large percentage of the total supply was pre-mined to be allocated to the creators, developers, team, etc. Ethereum, the distant number 2 crypto based on market cap had a whopping 70% pre-mine. Ripple (XRP) had a 100% pre-mine. Stellar was a 97% pre-mine. Bitcoin did not have a pre-mine, not even for the creator.
Bitcoin Addresses Do Not Equal Users
Many small, medium and large services hold bitcoin for their customers on a small number of Bitcoin addresses. This includes Bitcoin loan websites, custodial cold storage services, exchanges, custodial wallets, etc. A large exchange may have 10M+ users and hold their bitcoin on a few bitcoin addresses. It's a misleading metric to the naked eye.
The Bitcoin dominance metric is based on the percentage of Bitcoin's total market cap compared to the entire "crypto" market cap. This metric is broken and is probably the most mis-leading metric that exists today. It common for a scammer to use this metrick to try and prop up their altcoin. Smart people know this and expect this metric to continue dropping because of the reasons discussed below. However, the real Bitcoin dominance based on liqudity and other actually meaningful metrics is over 97%.
Non-Crypto Things Added
The overall market cap used to calculate Bitcoin's dominance includes things that are not cryptocurrencies like stablecoins.
An Infinite Amount Of Altcoins Are Created
There are over 12000 altcoins and new ones are being added rapidly. This will decrease the Bitcoin dominance metric over time from the sheer volume and their very easily manipulated market caps. The Bitcoin dominance metric will most likely keep dropping unless the scamming dies off.
Fake Market Caps
Altcoin market caps can be gamed easily and their promoters do just that. There are many different ways to attempt propping up the market cap but an obvious one is for example, selling 1 coin at 1 cent for a cryptocurrency that has a token supply in the hundreds of millions and suddenly you have a market cap of 5 million.
Here is an example of a TikTok user explaining how he made an altcoin called: "scamcoin" and after just 1 hour of creation and no promotion, the altcoin gained a marketcap of over $70,000,000 USD. 1 day later, it had a market cap of nearly $1 billion USD. It turns out the liquidity of the market was only $2000. But this just goes to show you how easily and heavily manipulated altcoins are. Now, this altcoin called "scamcoin" will be added to the crypto market cap and decrease Bitcoin's dominance metric even if it's useless or a scam.
Other than a store of value, gold proponents tout two big uses for gold: electronics and jewelry.
Gold use to be money until it failed. In 1933, gold was banned in the U.S. and it no longer backed the U.S. dollar. Ownership of gold was then re-allowed in 1974. It then got adopted as a store of value but this role is also diminishing because of Bitcoin. No one I know personally owns any gold as a store of value and if they do it's almost always a form of paper gold using a website service or a relic passed down.
Gold has been used in jewelry since the ancient times. However, gold isn't the only precious metal used anymore and it's expensive - so it kind of out-priced most people from buying it to wear as fashion. Not to mention if you wear too much, it'll attract attention. There are cheaper, more abundant materials that look just as nice now. Again, no one I know actually wears gold jewelry anymore and definetely not on a regular basis. On top of this, most men don't usually wear jewelry either which is a massive portion of the population. And let's be honest, if you wore a metal or plastic gold colored ring, most people wouldn't even be able to see a difference, some might not even feel a difference. Gold being used for jewelry just isn't a very important or useful.
Yes, gold is used in electronics. But how much? All the gold today can fit in a single swimming pool. Compare that to all the electronics that exist in the world. So one must question, it can't be that much, right? And how important is that tiny amount in electronics?
Some gold uses are more disengenous than others. For example, gold is used in those really expensive HDMI cables to plate the connector where the improvement is 100% negligible. There may also be a very tiny amount used in your other electronics but at what point will much more abundant and cheaper metals be used? Not to mention, if gold prices shot up - it would begin pricing itself out of electronics at a very rapid pace.
Gold is a solid metal and not easily broken down. Even if you did manage to break it down, it's not easy to break down to exact sizes / weights. It would be a slow process too, it's not like you can do it on the spot, instantly.
Gold is a physical metal that takes up space and is very heavy. This means gold must be physically transported with armored vehicles when dealing with valuable quantities. This also means transportation is very slow and expensive.
Bitcoin is digital so it can travel across the planet instantly via the internet, radio or satellite.
Gold can be faked on various levels of believability and it has tricked many people, companies, governments, etc. even in recent times. There is no easy way to authenticate how real a bar of gold is.
Anyone can run a full node or Bitcoin app to indepedently 100% undisputably verify the bitcoin they receive.
Gold has been around for a very long time - thousands of years. The market is pretty much completely saturated. This also means any price upside is very small. There aren't any new generations saying: "oh, I want to buy some gold!"
Bitcoin is still a young teenager, it solves real world issues that nothing else can and has a lot of room to grow in many different areas.
If the price of gold increase, miners will mine gold faster. With Bitcoin, if the price goes up, miners can't mine more faster.
The gold price is clearly heavily manipulated by things like paper gold, even gold proponents will tell you this. Gold's price history is evidence of this.
Bitcoin is limited to just under 21 million bitcoin and no one can't print more. You can't make fake bitcoin that is compatible with the actual Bitcoin network. You can try to make paper Bitcoin, but companies will learn the hard way that it's not a good idea. Implosion would be a real threat and there will be no Bitcoin that someone can just print to bail them out. There are also game theory measures that will leave a company holding a useless token if this did manage to become a control issue in the space.
Negative Environmental Impact
It's not a secret that to get gold, miners must disrupt the environment to find various quantities. In addition, the tools and vehicles use a lot of dirty resources. The process to refine the gold is also very dirty and involves many polluting chemicals that go into the environment.
Please refer to the Environmental section for why Bitcoin is much greener.
Hard To Protect
Gold has had a violent history because of the very fact that it is hard to protect. Someone can kill you and just steal your gold.
With Bitcoin, if they kill you - they aren't getting your bitcoin. They need you for your password. There are also things you can do to trick attackers.
Incompatible With Digital Age
Gold is physical and is not designed for our digital age. It takes space, requires physical storage areas, it's slow, hard to use, costly to move large amounts among many other issues. Gold may have worked over 200 years ago but it just doesn't work for world today.
Gold has been extracted from Earth for thousands of years and they are still finding more gold today. There is also a very excessive amount of gold in space but i'll leave that up to you how relevant that is. But that does not disprove the fact that the gold supply is unknown and in fact very high. Gold also has no method to determine the total circulating supply when someone wants to check how much gold there is.
Bitcoin has a finite supply, limited to 21 million and that can never be changed by any central entity. With a Bitcoin full node, the current total circulating supply of bitcoin can be looked up instantly with one command.