Bitcoin Is Not Stored Time, Energy, War – Bitcoin Magazine

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This is an opinion piece by Stephan Livera, host of the “Stephan Livera Podcast” and Managing Director of Swan Bitcoin International.

There are metaphors and analogies for Bitcoin that you may have heard on podcasts or read about in various articles or books – and this is not meant to criticize the whole practice of using metaphors or analogies to pique interest. people for bitcoin – but having the wrong framework for understanding bitcoin can lead to errors in how we reason from there. If people take metaphors too literally, they inevitably make mistakes in their thinking about Bitcoin.

Consider this quote first to see if all metaphors are wrong:

“For it would be an absurd enterprise to banish from the language of economic theory any manner of speaking which is not literally correct; it would be pedantry to proscribe all figure of speech, especially since one would not be able to say the hundredth part of what one has to say if one ever refused to resort to a metaphor. One requirement is essential, that economic theory avoid the error of confusing a practical habit, taken for the sake of expediency, with scientific truth.

–Eugen von Bohm-Bawerk

So clearly not all analogies are harmful. But when seeking accuracy, metaphor cannot be confused with real scientific truth.

“Bitcoin is stored in time”

The popular notion that bitcoin can “store our time” is too vague and imprecise a metaphor. This usually arises when Bitcoiners talk about the injustice of fiat currency (that part is correct), but it goes awry when the metaphor is taken too far by suggesting that we should “store our time” in bitcoin instead of currency fiduciary.

The concept of “store of value” can arguably apply to Bitcoin if we consider longer timeframes, but it really isn’t storage time. As the saying goes, time waits for no one. We talk in vague terms like saving time or “saving time”, but in reality, time itself is not what we save, it is how we spend our time. The preference is in doing. Or, as my podcast guest Conza said in a conversation with Konrad Graf, “Go ahead, try not to waste time and save it for later instead.”

Even equivocating bitcoin as buying power, which may be the spirit of the analogy, it’s important to remember that there are no guarantees here. Bitcoin’s purchasing power has been declining over selected time periods, which is where thinking of bitcoin as stored time can really mislead a person if taken too literally.

Now a shout out to my friend Gigi, who wrote about the concept of Bitcoin as building an arrow of time. This concept makes sense and helps explain why Bitcoin is designed the way it is – keeping time using blocks instead of seconds and not relying on a centralized timer. This is distinct from the incorrect “bitcoin as storage for your time” metaphor. So a more accurate framing would be that bitcoin keeps time (using blocks, not seconds), but it doesn’t store your time.

Bitcoin as energy/battery

Some people refer to Bitcoin as digital energy or as if it were a battery. But remember, while bitcoin miners use energy, bitcoin still does not allow anyone to store or transport energy. There is no central meter where we can go and take our bitcoin and exchange it for a set amount of energy. Yes, energy could be priced and sold for bitcoin, but that’s not the same thing. The price of energy will fluctuate and bitcoin will not even metaphorically store the same amount of energy over time.

What error can this lead to? This can mislead people about where the value is coming from. This metaphor leads people towards a kind of cost-value theory, effectively putting the horse before the cart. Instead, we should reason from the subjective theory of value:

“The value of a good is not determined by an inherent property of the good, nor by the amount of labor required to produce the good, but rather value is determined by the importance that an acting individual places on a good for the fulfillment of his desire. comes to an end.”

A related cousin to this is the notion that bitcoin is “backed by” energy. Typically, this happens when a nocoiner says, “But Bitcoin isn’t backed by anything.” So, in some cases, a well-meaning but misguided Bitcoiner may say, “No, Bitcoin is backed by energy!” But it’s wrong.

Generally, when something is “backed by” something else, it is implied that it has some sort of backing from another entity, such as a government. Historically, people say the US dollar was “backed by” gold, and people could historically exchange notes for gold, but nothing like that exists with Bitcoin. So, maybe a better question to ask is, “What’s backed by gold?” Only then do we get to the truth of the matter: it was all subjective assessment from the start. Beauty is in the eye of the beholder.

Bitcoin as violence or a “weapon”

Some people want to present Bitcoin as a kind of “digital violence” or, more recently, present it as a weapon that is part of a “soft war protocol”. But this is a gross misrepresentation of what Bitcoin is. Bitcoin is more like cryptographic messages transmitted and validated over a network. It is surely closer to the “word” than to a “weapon”. Or, more specifically, bitcoin can be thought of as a rival digital commodity (the first of its kind), running on an open-source monetary network.

If the pen is mightier than the sword, would it be appropriate to call a pen a weapon? Not really. Also, this whole line of arguments clearly blurs the line between what is willful and what triggers the aggression (which is the wrong part). How is running a node, adopting bitcoin as a rival digital commodity, and participating in the network a form of “weapons”? This is just a gross misqualification. Words mean things.

Some of the analogies and metaphors used in relation to “bitcoin as a soft warfare protocol” relate to miners competing to secure the “chain of custody”. But do they? Or is it really more like bitcoin nodes securing bitcoin? Miners cannot make invalid transactions appear valid to those executing and verifying transactions with their own Bitcoin node. So isn’t it more relevant to think of them as secure Bitcoin nodes? The work of minors is important, but their work is more related to the finality of the transactions than to security.

So what is the real truth then?

So, as mentioned earlier, economically speaking bitcoin is more accurately characterized as a rival digital commodity. Bitcoin is the commodity itself – it’s not a claim to anything, it’s the commodity itself. When people ask what it’s backed up on, that indicates they haven’t quite figured out what it’s all about.

If an analogy helps a new person get into Bitcoin and start going down the rabbit hole, great! But as that person deepens their knowledge of bitcoin, further clarification of what bitcoin is will help us all.

Thanks to my friend Conza for inspiring this article and providing feedback.

This is a guest post by Stephan Livera. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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