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What Are the Top 3 Worst Things About Bitcoin?
If you ask a bitcoin maximalist to opine on the 3 worst things about Bitcoin, you may not get a straight answer. The tendency is to exalt Bitcoin and speak about it as a simple yet perfect monetary system of controls and balances.
When compared to something like Ethereum, Bitcoin doesn’t do much; no “turing complete smart contracts”, no zkSnarks, no optimistic rollups. Bitcoin is basic and this is what many bitcoiners like about it. It is a blockchain that is unlikely to make drastic changes or upgrades anytime in the near future. Some people believe Bitcoin’s rigidity as a feature, others see it as a bug.
So the question still remains, what are the worst three things about bitcoin?
1. Bitcoin Takes Work to Understand
Like all cryptocurrencies, the concept of an immaterial form of money eludes many people both young and old. Furthermore, Bitcoin takes some level of digital literacy to understand. In my opinion, this is the biggest barrier to Bitcoin’s adoption, as well as the broader adoption of all cryptocurrencies.
Focusing on Bitcoin, there are some aspects of it that are more difficult to wrap your head around than others. For example, the intense amount of energy that Bitcoin uses is often pointed to as one of the things that is terrible about Bitcoin. Even though the network is more than 50% run by renewables and seems to encourage the growth of green energy projects. However, this is a nuanced perspective that requires work to understand. One of the worst things about Bitcoin is not its massive use of energy, but the work that it takes to understand why this is helping the environment, not hurting it.
This is not the only barrier to people’s ability to use Bitcoin. Digital wallets, 12 word phrases, KYC, navigating exchanges, and not falling prey to scams are all aspects of bitcoin that typically need to be learned before one can even procure themselves a little bit of coin. Cash on the other hand is at this point, built into the very fabric of our society and is second nature to almost every human on the planet. The work to understand Bitcoin and overcome the barrier of digital literacy may actually be the biggest hindrance to Bitcoin’s adoption.
2. Bitcoin is Not Widely Accepted
A common question I hear from no-coiners (people who don’t own cryptocurrency) is that “BTC is not money because I cannot buy groceries with it”. While this is not entirely true, it’s true enough for the sake of this conversation. Merchants are not readily accepting BTC at the point of sale. Banks are not allowing people to invest in BTC through them. I can’t deposit BTC into a bank-like institution for long term guaranteed safe keeping. Governments are actively rejecting it and denouncing its legitimacy as a financial instrument. All of this lack-of-acceptance ends up being one of the worst things about Bitcoin.
For bitcoiners like myself, the negative narratives circulating throughout the media create constant uphill battles for dispelling misinformation. The lack of acceptance throughout mainstream society is a major deterrent for many people to even take a cursory glance at Bitcoin. The media has done such a good job at sewing fear, uncertainty, and doubt around Bitcoin that people getting into Bitcoin may even face negative social consequences for showing interest. For example, in Canada, Bitcoin has been politicized and associated with the Conservative party (right-wing). Although good arguments can be made that Bitcoin is nonpartisan and neutral, it is often difficult to take a single step forward in conversations about Bitcoin. No one is politicizing the dollar itself, and I would point to the ubiquity of the dollar as the reason.
3. Bitcoin Crashes Frequently
Although I don’t necessarily think the fact that every 4 years BTC takes a 75%+ dip is a bad thing, I do think it’s one of the worst things about Bitcoin. It would be much easier if BTC just kept climbing steadily upwards forever, but we know this is not a realistic trajectory for a nascent digital currency. The fact that Bitcoin crashes as often as it does impacts people’s risk tolerance and propensity to investigate it further. This may be in part due to “recency bias”. Even though Bitcoin is demonstrating a compelling overall trajectory of “up” over the long term, if it has experienced a meaningful crash “recently”, then people tend to focus on the crash and not its potential to continue its upward climb.
This has a double effect of deterring people with a low risk tolerance, as well as people that think Bitcoin is “dead” because of its most recent downturn. What we end up seeing is a long drawn-out 3 year bear market, reliably punctuated by an aggressive hype and hopium fueled bull market. While these cycles appear to reliably play out over the course of 4 years, I will draw reference to my first point; people need to take the time to zoom out and understand this pattern to take advantage of it.
Counterintuitively, people will refrain from buying Bitcoin while it’s low in a bear market because it is “dead”. The same people will then turn around when Bitcoin is on a rip upwards and declare that “bitcoin is too expensive and overpriced”. The quadrennial boom and bust cycle that Bitcoin finds itself in is one of the worst things about Bitcoin as it plays tricks on human psychology, detracting many people from ever looking twice at Bitcoin.
Final Thoughts: Adoption Takes Time
Each of the three worst things about Bitcoin will take time to resolve. We need to remind ourselves that Bitcoin is a revolutionary technology that will either itself be adopted and reform the global financial system or give rise to another technology that will.
Regardless, if Bitcoin sticks around for as long as we think it will (hundred years or more), digital literacy will go up, slowly more people will accept it, and it will become less volatile as it matures. With any luck, the three worst things about Bitcoin today will be nothing tomorrow.
