This opinion editorial is by Stephan Livera. Stephan Livera is the host of the “Stephan Livera podcast” and the managing director of Swan Bitcoin International. While there are many metaphors and analogies about Bitcoin, it is important to understand that a poor framework can lead to mistakes in how we think about it. People who take metaphors too literally will make mistakes in their thinking about Bitcoin. Let’s first consider the following quote on whether all metaphors are incorrect: “For it would absurd undertaking to banish the language of economic theory any manner of speaking which is not literally correct; it wouldn’t be sheer pedantry, especially since we couldn’t say the hundredth portion of what we have, if we refused to ever take recourse to metaphors.” It is crucial that economic theory does not confuse a practical, expedient habit with scientific truth. -Eugen von Bohm-BawerkSo, clearly, not all analogies are harmful. However, when trying to achieve scientific accuracy, the metaphor cannot be confused with the actual scientific truth. The notion that bitcoin can “store time” is a loose and inaccurate metaphor. This is a common misconception that bitcoin can “store our time”. While this is true when Bitcoiners talk about the injustice of fiat currencies, it becomes a problem when the metaphor is too broad to suggest that bitcoin should be used instead. If we look at longer time frames, the “store of value” concept may be applicable to Bitcoin. But it’s not really storing time. Time waits for no one, as the old saying goes. Although we use loose terms like “saving time” or “economizing time”, the truth is that time is not what we economize. It’s how we spend it. The preference is in the doing. Conza, my podcast guest, said it in a conversation with Konrad Graf: “Go ahead, don’t waste any time. Save it for later.” While it may seem like the analogy is equating bitcoin with purchasing power, it is important that you remember that there are no guarantees. Bitcoin’s purchasing power has decreased over a selection of time periods. This is why thinking of bitcoin as a stored time can lead to a person being misled. My friend Gigi has written about the idea of Bitcoin as a building out an arrow time. This concept is very logical and helps to explain why Bitcoin was designed in the way it is. Bitcoin keeps time using blocks and not seconds and does not rely on a central time keeper. This is different from the incorrect metaphor that bitcoin stores your time. This is different from the incorrect metaphor of bitcoin as storing your time. Bitcoin does not allow anyone to store, transport, or store energy. Bitcoin miners use energy. There is no central counter to which we can take our bitcoin and redeem it for a certain amount of energy. Although energy can be sold and priced for bitcoin, it is not the same thing. What error could this cause? It can lead to confusion about where the value is coming. This metaphor can lead people to believe that there is a cost theory of value. It effectively puts the horse before it. Instead, we should think from the subjective theory value: “The value of a product is not determined by its inherent properties nor the labor required to produce it, but rather the value that an individual places on the product for their desired ends.” This is related to the idea that bitcoin is “backed” by energy. This is most often when a nocoiner states, “But Bitcoin doesn’t have any backing.” In some cases, a well-intentioned but incorrect Bitcoiner might say, “No, Bitcoin’s backed by energy!” This is incorrect. It is generally true that when something is “backed” by another entity, it means that it has the support of another entity, such as a government. People used to say that the U.S. Dollar was “backed” by gold. However, Bitcoin is not like that. Perhaps a better question is “What’s gold backing?” Only then can we see the truth: It was subjective valuation all along. Beauty is in the eyes of the beholder. Bitcoin as Violence or a Weapon? Some people want to view Bitcoin as a form of “digital violence” and, more recently, as a weapon as part of a “soft warfare protocol.” This is a gross misrepresentation about what Bitcoin is. Bitcoin is more like cryptographic messages being sent around and validated over a network. That is more like a “speech” rather than a weapon. Bitcoin can be viewed as a rival digital commodity (the first ever of its kind), which operates on an open-source financial network. Would it be appropriate to refer to a pen as a weapon if the pen is more powerful than the sword? It’s not. This argument blurs the line between what’s voluntary and what’s initiating aggression (which is what’s wrong). How is it possible to run a node, use bitcoin as a rival digital commodity, and participate in the network as a form “weaponry?” This is a gross mischaracterization. Words can mean many things. Many metaphors and analogies used in relation to “bitcoin-as-soft war protocol” refer to miners competing for the “chain of custody.” But are they? Or does it seem that Bitcoin nodes are what protect Bitcoin? It is impossible for miners to make invalid transactions appear valid if they are not running and verifying transactions using their own Bitcoin node. Isn’t it better to think of it as nodes securing Bitcoin? While miners are important, their job is more about security than finality. What is the Real Truth? As mentioned, bitcoin can be described as a digital commodity that is competitive in terms of economic value. Bitcoin is the commodity — it’s not a claim to something, it’s the commodity. If people ask what the backing is, it means they don’t understand what it is. A good analogy can help a new person to get into Bitcoin and begin the rabbit hole. As they gain more knowledge about Bitcoin, we all will benefit. Conza, my friend, was the inspiration for this article and provided feedback. Stephan Livera contributed this guest post. These opinions are not necessarily those of BTC Inc.

 

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