Bitcoin is not moneyBitcoin is not goldBitcoin is not ESG compliantBitcoin is slow and expensiveBitcoin is not my lover
Thursday, 1 April, 2021
The Digital Investor
Bitcoin is not my lover
Gold 2.0 or tokenised thin air? Critics say it is not money, slow, costly, energy-intensive and for criminals. Believers say bitcoin is the future. Bitcoin polarises view.
Bitcoin is not money
Money is elusive as there is no single definition of what money is. The International Monetary FundInternational Monetary Fundlink1 (IMF) does not define it; it only lists the four essential functions of money:
Bitcoin is not gold
Bitcoin shares many similarities with precious metals. Metals and bitcoin are costly to produce, they have limited supply, they are the liability of no one, they are fungible, they are divisible, they are censorship-resistant, they are not replicable, and they do not provide yields or cash flows. They are also both appreciated for their use case and for their speculative aspects. Precious metals are used in industrial processes, jewellery and kept as bullions or coins for speculative purposes. Bitcoin is used as a settlement platform to transfer value securely and in a permissionless fashion or for speculative purposes.
Bitcoin is not ESG compliant
ESG stands for Environment, Social and Governance. These three letters are getting increasingly important in finance as investors value ethical assets and customers value conscious consumption.
With its energy-intensive consensus mechanism proof-of-work (PoW), Bitcoin is often criticised for using as much energy as some countries. According to DigiconomistDigiconomistlink1, the current electrical energy consumed by this blockchain is equivalent to Finland.
Next to the environment, social issues are growing in importance. According to the CFA institute, in this category, we find customer satisfaction, data protection and privacy, gender and diversity, employee engagement, community relations, human rights, and labour standards.
Still, according to the CFA institute definition, governance summarises the standard for running a company. In the list, we find board composition, audit committee structure, bribery and corruption, executive compensation, lobbying, political contributions and whistleblower schemes.
Bitcoin is slow and expensive
Five transactions per second are ridiculously slow. In blockchain parlance, this slow pace is commonly referred to as the scalability problem. Let's make it clear: the Bitcoin scalability problem is not an issue for two reasons.
Bitcoin is not my lover
Bitcoin and cryptocurrencies are new. They raise enthusiasm, fear and misconceptions. They are challenging to grasp, they somehow look like other assets but are pretty different from them too. They attract and repulse. No one is indifferent. Every head turned with eyes that dreamed of being the one bitcoin billionaire. Be careful of what you do because the lie becomes the truth, and the truth the lie.
“She was more like a beauty queen from a movie scene
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