Autor Cointelegraph By Knifefight

NFTs are blamed for everything from tacky art to economic inequality and environmental destruction. But, the arguments by critics don‘t add up, writes Something Interesting‘s Knifefight.“For every minute you are angry, you lose sixty seconds of happiness.”— Ralph Waldo EmersonToward the end of January, one of my favorite content producers on the internet Dan Olson (aka Folding Ideas) published a video titled Line Goes Up — The Problem with NFTs outlining his complaints about nonfungible tokens, or NFTs. At the time of writing, Line Goes Up has accumulated over six million views — almost twice as many views as his next most successful video. That’s an impressive reach for a 2.5 hour documentary with very little marketing behind it.In the film, Olson lays out the following argument:Cryptocurrency is useless except to sell to a greater fool.NFTs, DAOs and play-to-earn games are just ways to find more fools.The fools who buy in become accomplices in marketing the scam.NFTs are ugly, centralized, pointless, exploit artists and damage the environment.To be honest, the movie bums me out. It is not because Olson doesn’t like NFTs — it is perfectly reasonable not to like NFTs. It bums me out because one of my favorite things about the Folding Ideas canon was how much sympathy he brought to previous subjects. Consider how hard Olson worked to humanize flat earthers or 50 Shades of Gray. In contrast, Olson describes NFTs as “incomprehensibly tasteless” and cryptocurrency enthusiasts as “terrible people” with “poor judgment” and “low social literacy.” He calls Ethereum founder Vitalik Buterin a “butthurt warlock.” He summarizes the entire space as “Amway but with ugly ass ape cartoons.”In short, NFTs make Olson angry. He is not alone.super normal discourse pic.twitter.com/ejLsaOmGMH— ??? ??? ??? ??? ??? ??? (@SHL0MS) January 28, 2022To be clear, I agree with a lot of Olson’s criticisms of the space. It attracts gamblers, fraudsters and fools. Motivated reasoning and dishonest marketing are everywhere. I have written extensively about what I think are the fatal flaws of Ethereum, I am very skeptical of DAOs and I don’t think the current generation of P2E games is compelling.Olson describes a lot of examples of shitty behavior and, for the most part, they are accurate descriptions — there are certainly plenty of similar examples that he could have used to make the same points. The history of crypto is littered with failed projects and overt scams.The problem is not that Olson is wrong about the examples he identifies, the problem is that he is wrong about the conclusion he draws. Some people misunderstand cryptocurrency, but that doesn’t make cryptocurrency useless. Some people make bad art with NFTs, but that doesn’t make NFTs bad art. Explaining the value of NFTs by finding the worst possible examples of how they are used is like explaining the value of the internet by making a list of the worst possible websites.Olson sampled the NFT projects he describes by accepting random spam discord invites — roughly like evaluating average website quality by clicking on every spam email link. It’s a foolish way to measure average quality and average quality is a foolish thing to measure in the first place. The quality of the “average” website doesn’t really mean anything and doesn’t matter anyway — what matters is the quality of the websites you choose to interact with. The same is true of NFTs.[embedded content]There is no such thing as NFT artA common complaint about NFTs is that they are ugly. In Line Goes Up, Olson describes them as “fugly,” “garish” and “incredibly cringeworthy.” But, to anyone who understands NFTs, it is immediately obvious that the criticism makes no sense. Not just because art is subjective and no one has the authority to dismiss a genre of art as unworthy, but because NFTs are not a genre of art at all. NFTs don’t look like anything. They can be associated with literally any visuals or with no visuals at all. NFTs aren’t a style of art, they are a tool that artists can use.There are NFTs for portrait photography, generative art, songs, virtual real estate, poems, memes, mood stones, video game items, financial contracts and athletic accomplishments. There is even an NFT that represents a work of 1010×1010 transparent pixels arranged recursively. Anyone who tells you that NFTs are ugly is telling you more about the limits of their imagination than about the limits of NFTs. It is like someone who has only ever watched Marvel films confidently asserting that movies are inherently unrealistic.Take a dog to a Knifefight.Cryptocurrency is useful — that’s why people use itOlson opens Line Goes Up with a description of the 2008 mortgage crisis and how Bitcoin emerged from it. His criticisms of Bitcoin are weak but are mostly not relevant to the argument he is making about NFTs — if you are curious to explore the case for Bitcoin in greater detail, I recommend Letter to a Bitcoin Skeptic. It is interesting, though, to examine the broad strokes of the argument he makes because it is symbolic of how he misunderstands NFTs. According to Olson, Bitcoin does not solve anything. As he puts it:“Crypto does nothing to address 99% of the problems with the banking industry, because those are problems of human behavior. They are incentives, they are social structures, they are modalities. The problem is what people are doing to others — not that the building they are doing it in has the word bank on the outside.”It is true that Bitcoin does not eliminate banks or the excesses of capitalism but, in fairness, I am not aware of any technology that does that. The idea that Bitcoin was meant to eliminate banks is a weirdly ahistorical strawman argument. Satoshi himself talked about how banks would use Bitcoin. The purpose of Bitcoin was never to fix every problem in the economy — it was to make it impossible to debase wealth or censor transactions. Reasonable people can disagree about whether those problems are worth solving, but Bitcoin does solve them.Bitcoin may seem useless to Olson, but it is useful to Alexei Navalny and the political opposition to Putin. It is useful to citizens of countries with struggling local currencies like Nigeria, Venezuela and Turkey and to ordinary people trying to flee Ukraine and Russia. It is useful to feminist protestors in Africa who were debanked by their governments and to women in Afghanistan who are not allowed bank accounts at all. Olson calls Bitcoin “the hobbyhorse of a few hundred thousand gambling addicts,” perhaps because he does not know that Coinbase alone has millions of active users worldwide.NFTs are not bad art. In fact, they‘re not art at all.You don’t have to believe that Bitcoin is good to believe some people find it useful. But, anyone claiming that Bitcoin is useless is ignoring the many ways it is already being used. Line Goes Up keeps returning to variations on this flawed approach: Olson lays out a problem he says NFTs were meant to solve, shows how that problem isn’t solved and then concludes that NFTs are therefore useless — without examining why people are actually using them.NFTs are not pointless, they are pointersOlson argues that NFTs are pointless because they do not work as advertised. The images they reference can be lost or replaced. The same image can be minted into more than one token or into tokens on more than one chain. NFTs don’t prove that the token creator was the artist and they don’t stop anyone else from having access to the image even without the token. Olson (correctly) points out that NFTs are not useful for proving authenticity and then (incorrectly) concludes that they aren’t useful at all.NFTs cannot prove the authenticity of art because authenticity is a subjective assessment by the audience, not a quality of the art itself. Different people can disagree about which version of a work of art is the most authentic or how much authenticity should matter. There is no technology that can prove authenticity because authenticity is not a technical property. That was never the point of NFTs.What NFTs can prove is who made the token, who has held it and who owns it now. Olson explains that isn’t the same as authenticity — but that doesn’t make it worthless. Documenting provenance for fine art is an expensive and valuable service despite its limitations. NFTs can provide the same service with much stronger guarantees.When viewed through that lens, it becomes clear as to why the critiques above are not interesting. Some NFTs have malleable images, some have permanent images and some have no images at all. Whether there are images and whether they can change is not a property of NFTs is the result of choices made by the artists. Concluding that NFTs are useless because the artist might surprise you with their choices is like concluding that paintings are useless because Banksy shredded one at an auction once.There is nothing evil about EtsyOf course, the argument that NFTs are pointless and bad art would be incomplete by itself because there is lots of pointless and bad art in the world — there is nothing wrong with that. Two-thirds of Etsy would qualify as pointless and bad but no one would make (or watch) a two-hour-long documentary about it. Arguing that NFTs are not good is not enough. Olson’s real argument is that NFTs are bad. He argues that NFTs are bad for three reasons:NFTs are harmful to the environmentNFTs are dangerous to usersNFTs exploit artistsLet’s consider them one at a time.The environmental impact of JPEGsThe environmental impact of cryptocurrencies, in general, is a large and complicated topic that we don’t have space to do justice to here. If you are interested, I’ve written in greater detail about the energy impact of Bitcoin mining and why we don’t need to be alarmed by it. But, for the sake of argument, let’s suppose that proof-of-work mining was bad for the environment. What would that mean for NFTs?How much energy miners spend to validate the network is a function of how much money they make mining — the better miners are paid, the more willing they are to mine. Anything that increases miner revenue will increase the network’s energy footprint, and anything that decreases miner revenue will reduce that energy footprint. To reduce the environmental footprint of proof-of-work mining, make mining less profitable.When users trade NFTs back and forth they pay transaction fees to miners, which somewhat increases the revenue for mining. But, those fees are in proportion to how often/urgently NFTs move, not to how valuable they are. For example, the most expensive NFT collection at the moment, Bored Ape Yacht Club, has generated around 200 transactions a day since its launch. For context, Ethereum processes around 1.2 million transactions per day.On the other hand, NFTs are priced in ETH — so anyone buying an NFT is selling ETH. When a lot of NFTs go up in price that means a lot of people are selling ETH, and a lot of people selling ETH pushes the price down. Miners are paid in ETH, so anything that puts pressure on the price of ETH is putting pressure on their revenue. In other words, every time an NFT project goes up in price it is actually bad news for Ethereum miners. Want to discourage people from mining Ethereum? Buy some monkey JPEGs.Of course, the real story is more complex. NFTs get a lot of mainstream attention, which attracts more users to Ethereum. Different NFT projects will have different prices and create different transaction volumes. Even the same project may look different over time as it evolves. Anyone who tells you a simple story about an economic system is oversimplifying. But, NFTs are only one part of a large and complicated ecosystem, and it is far from clear whether they make mining more profitable or less overall.Pixelmon raised $70 million and this is the best one.Don’t confuse tools with the hands that wield themOver the course of Line Goes Up, Olson swings back and forth between contempt for the people who own NFTs and a paternalistic fear of being taken advantage of by scams and fraud. He can’t seem to decide whether he’d rather blame the technology or the user base. Personally, I think we should blame the scammers. Frauds and scams predate NFTs and would be here in a world where NFTs never existed.Overpromising naive investors and pocketing their money is nothing new and didn’t particularly transform when scammers started adopting NFTs. Fyre Festival didn’t need NFTs and neither did WeWork. The (still) unlaunched MMORPG Star Citizen raised more than $400 million since its initial Kickstarter in 2012 before NFTs even existed. There are definitely scammers using NFTs to execute old playbooks in a new market, but NFTs aren’t really enabling anything new or different about the scams. NFTs are just a trend scammers are attaching themselves to.Part of the fear here seems to stem from a technical misunderstanding where Olson claims that NFTs can contain hostile code that will “live in your wallet forever like a landmine” — that is fundamentally not the case at all. NFTs don’t contain code and they don’t exist anywhere. When someone sends you an NFT, what actually happens is that a record is sent to the blockchain that causes the smart contract for that NFT to give your address new permissions.Nothing is “put” anywhere and the NFT itself is just a record written into the blockchain, not a payload of potentially dangerous code. The goal of scammers who send unsolicited NFTs is not to inject code, it is to convince victims to go to an attacker’s website and sign a malicious transaction. An NFT like this is like a spam email that lures victims to a phishing site — it’s not the attack itself. It’s just the bait.Olson (correctly) observes that bad people are using NFTs and then presents that as evidence that NFTs must be bad — but, that is the wrong conclusion. Bad people use lots of tools that good people use, too. Drug dealers use dollars, terrorists have cell phones and Hitler wore pants. When bad people use a technology, all that tells you is that the technology must be useful.Sure, Beeple‘s Everydays may not actually be worth $69 million, but what is?Lots of artists have made money with NFTsThe last major argument that Olson makes against NFTs in Line Goes Up is the idea that NFTs are actually bad for artists. That’s a commonly held belief, but it is also an extraordinary one given that the third-highest paid living artist of all time (Beeple with $69 million) made his money almost exclusively from selling NFTs.Olson’s argument is that the Beeple sale shouldn’t count because a buyer of Beeple, MetaKovan, is also the creator of a fractionalized Beeple token called B20. That’s a funny argument for a couple of reasons. First, regardless of how sincere you think the valuation was, Beeple received $69 million of actual money. This sale was undeniably good for the artist.Second, if you look at the relative valuation of B20 and Beeple’s $69 million-worth Everdays NFT, there is absolutely no way that MetaKovan turned a profit by flipping B20 tokens. There was just never enough volume to make that profitable. So, it is reasonable to think MetaKovan might have been biased, but it was ultimately MetaKovan who paid for the bid.Finally, another bidder was ready to pay that price: Justin Sun of the Tron network posted a video of him trying to outbid the winner but hitting a website error. So, even if you ignore MetaKovan entirely, there was still a buyer ready to pay $69 million to Beeple for the Everydays NFT. $69 million may be a surprising price, but it was real.Olson uses the example of the Beeple/MetaKovan sale to build toward a broader claim that most sales in the NFT space are wash trades, where the seller buys from themselves to fake interest or price in their art. To someone unfamiliar with NFT markets, that might seem like a legitimate concern, but it is pretty naive to anyone who knows the space. A little more investigation into the mechanics of the proposed trades would have made that obvious.OpenSea charges a 2.5% fee per transaction plus miner fees, so wash trading is quite expensive. NFTs are also subject to capital gains taxes, so anyone creating fake profit for themselves is also creating very real tax obligations. It’s also largely pointless — it is much easier and cheaper to fake Discord and Twitter activity for a new project that hasn’t launched yet than market volume for a project that has. There is a lot of shadiness in NFT markets, but there isn’t that much wash trading.That means most of that money is really going to the project creators, which is why so many artists like Beeple have found NFTs to be a lucrative new opportunity. Olson asserts without evidence that most artists have lost money in NFTs, but it is hard to see how. Minting NFTs has always been cheap to do and, more recently, has become possible to do for free. Not everyone finds the NFT market is lucrative for them, but making NFTs that never end up selling is not expensive. If an artist is losing money in NFTs, it’s as a buyer — not as a seller.Stolen NFTs don’t make senseSo, artists who sell their own work are benefiting from NFTs — but what about the artists who haven’t or don’t want to create NFTs? Art theft has been so rampant in NFT markets that DeviantArt had to launch a dedicated tool for detecting stolen art and issuing takedown notices. Doesn’t that mean that NFTs are being used to exploit artists?Art theft is reprehensible but blaming NFTs for stolen art is like blaming RedBubble piracy on the existence of t-shirts. The problem is the theft of art, not the medium stolen art is sold on. NFTs don’t make art any easier to steal and they don’t make stolen art more valuable. In fact, NFTs are actually less useful to thieves: It is impossible to distinguish between a print sold by the artist and one sold by a pirate, but it is possible to know conclusively who created which NFT. Anyone who cares about whether they are buying the authentic version will buy the original and anyone who doesn’t can mint their own version for free. The art thief doesn’t have anything useful to sell.Stolen NFTs make very little sense. They are like buying a certificate of authenticity from someone who has no authority to issue them, like John Cleese’s NFT of the Brooklyn Bridge except less funny:Hello! It is time you meet my alter ego “Unnamed Artist” I’m delighted to offer you the opportunity of a lifetime. I’m selling my 1st NFT. Though bidding starts at 100.00, you can “BUY IT NOW” for 69,346,250.50! https://t.co/Vuyx4trvPE pic.twitter.com/aC4oSVfGHF— John Cleese (@JohnCleese) March 19, 2021More sophisticated scammers don’t focus on selling stolen art so much as using stolen art to sell a broader scam, like pretending it is concept art from an upcoming video game. But, just like more primitive RedBubble pirates, the problem is the art theft and fraud — not the specific thing fraudsters trick their marks into overvaluing. NFTs aren’t critical to the scam at all, they are just a way of getting the attention of a group of wealthy potential targets.No one needs to be angry about NFTsTo be clear, I am not arguing that everyone should understand or value nonfungible tokens. It is entirely reasonable to not care about them and not understand why other people do either. But, I don’t think anyone should be upset about NFTs and I think Line Goes Up is a particularly good example of how that misunderstanding happens.Throughout the movie, Olson blames NFTs for everything from tacky art to economic inequality. The result isn’t a coherent argument against NFTs so much as a long list of things Olson dislikes about the world and personally associates with NFTs. Guilt by association has led him to the wrong conclusions. NFTs don’t cause scams, theft or ecological disaster. They are good for artists and often genuinely loved by collectors. They’re not bad art because they are not a type of art at all. They are a tool artists can use.NFTs are not the final boss of late-stage capitalism. They’re just a file type. If you’ve never been angry about JPEGs, then you don’t need to be angry about JPEGs people can own.

By now you’ve probably heard of Bitcoin. You may have heard that it’s made some people rich. You may also have heard that it’s a new form of digital money, and that it’s the future of commerce; or that it’s a criminal enterprise, and that it’s bad for the planet.The messaging is confused and confusing — which is partly because no one person controls it. Just like Bitcoin, which belongs to… well, all of us.In this short essay I want to help the Bitcoin-curious understand a few facts about the world’s top cryptocurrency. It’s not technical, and it’s not hard to follow. It’s not comprehensive, either, which is why this article is peppered with links so you can find out more.I’m not advocating for Bitcoin as an investment, although I do think it’s worth owning a little. I’m just trying to set the record straight on a few misconceptions, and to help newcomers to the Bitcoin community get up to speed quickly with a few key concepts. Hopefully if you’re reading this with an open mind, you’ll realize quickly that there’s much more to Bitcoin that its price.There are babies in the bathwaterLet’s start by getting a few things out of the way: cryptocurrency is a dangerous and often ugly place. There are countless scams, hacks and exploits. It appeals to degenerate gamblers and criminals and fools. Motivated reasoning and sunk cost fallacy prop up bad ideas long after they should have collapsed. Con artists thrive in the open and ordinary people often lose their money. The crypto space is 95% bullshit by volume, so it’s understandable that some people conclude it must be entirely bullshit.But mostly bullshit is not the same thing as entirely bullshit. Dismissing crypto because it is full of scams is like dismissing Twitter because the average Tweet is terrible. The problem is not that Twitter (or crypto) have nothing to offer. The problem is that it takes time and energy to learn how to dig through the bullshit and find the genuinely interesting ideas.Rejecting cryptocurrency entirely is much easier and seems to offer a lot of moral clarity — but it leaves behind a nagging question: if cryptocurrency is so obviously awful, why doesn’t it just die?Bitcoin vs DotCom and other asset bubbles / https://twitter.com/JamesTodaroMDBitcoin is not going awayAn interesting thing about Bitcoin is that almost no one believes in it right away. Bitcoin’s design is so ugly and counterintuitive that almost everyone rejects it at first as impossible. It was around three years between when I first heard about Bitcoin, and when I finally started to seriously investigate it. I studied game theory and mechanism design in grad school, so I knew exactly why Bitcoin couldn’t work. I just couldn’t figure out why it was still around.In theory I was confident that Bitcoin could not exist… but in practice it did and when theory conflicts with observed reality, it is theory that must change. I became skeptical of my skepticism. I read the whitepaper. I changed my mind.More than anything I can write or say the most compelling evidence that Bitcoin works as advertised is the history of its operation so far. The longer Bitcoin continues to exist, the more seriously you should take it.The academic term for this is the Lindy effect, the idea that the longer something has survived the longer you should expect it to continue. We could all collectively decide tomorrow that gold is no longer valuable and we could decide to keep listening to today’s hit singles forever. But we probably won’t.Gold has been valuable for a long time, so it will probably still be valuable a long time from now. Today’s top songs are mostly new, which suggests tomorrow’s top songs will probably mostly be new as well. The continued existence of something is evidence it will continue existing. That’s the Lindy effect.That’s why governments around the world have stopped ignoring Bitcoin and started to develop formal policies to outlaw, regulate or adopt it. A policy of ignoring Bitcoin and assuming it will go away on its own is no longer realistic. If Bitcoin was going to go away on its own, it already would have.Bitcoin has value because it is usefulA common objection to Bitcoin is that since they aren’t backed by anything they must not be worth anything. Since they don’t have any intrinsic utility they must be a greater fools’ game, where the only goal is to sell your worthless bags at a higher price to an even greater fool than you. It is true that the only use for Bitcoin is to transfer your bitcoin to someone else — but that doesn’t mean Bitcoin is useless. Transferring value is a valuable service. That’s why banking is so lucrative.“As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties: – boring grey in colour – not a good conductor of electricity – not particularly strong, but not ductile or easily malleable either – not useful for any practical or ornamental purpose and one special, magical property: – can be transported over a communications channel If it somehow acquired any value at all for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recipient sell it.” — Satoshi NakamotoMoney is a technology for transporting value through space and time. Bitcoin is a vehicle for value that eliminates physical distance and cannot be diluted, seized or censored. It is the value of that service that “backs” the value of Bitcoin.”I think there’s no capacity to kill bitcoin” says @PatrickMcHenry #btc pic.twitter.com/DY70tx2TvV— Squawk Box (@SquawkCNBC) July 17, 2019Bitcoin will not be stoppedBitcoin does not have a central point of control so the only way to “stop” Bitcoin is to stop every person on the Bitcoin network individually. Even shutting down the entire internet wouldn’t work because you can connect with the Bitcoin network over radio or by satellite. By any realistic measure the network itself cannot be stopped.Governments can of course outlaw cryptocurrency (several have) but making Bitcoin transactions illegal is like making drug use illegal — it doesn’t eliminate it so much as drive it underground. China is a powerful, authoritarian state that has repeatedly banned Bitcoin, but you can’t actually ban Bitcoin from China because Bitcoin has no concept of China. China can only choose to isolate themselves from the network.But what if governments go farther and actually attack the network? They could secretly acquire or seize mining rigs and set them to mining empty blocks, slowing down the network and reducing revenue for honest miners. They could market sell the rewards they earn mining and open short positions to drive down the price of Bitcoin further damaging miner revenue and market confidence. As miners quit defending the network attackers will control more of it, causing a feedback loop / death spiral.Attacks like this are easiest to picture with an abstract, monolithic world government. It is less clear how they would work in the context of actual world governments today. The two most obvious governments in practice that might launch such an attack are the US and China. China has been systematically working to expel all the mining rigs from its borders — so they aren’t exactly gearing up to launch a mining based attack on the network.China’s $1 Trillion mistake, #Bitcoin miners being shipped away. pic.twitter.com/wxoO9BMDUy— Documenting Bitcoin ? (@DocumentingBTC) June 27, 2021America also seems like an unlikely candidate to launch an attack on the network. Seizing private property like mining rigs outside the context of a conventional war would be an unusual and politically explosive precedent. More pragmatically, cryptocurrency has matured into an effective lobbying group. Sitting Congressional representatives in both parties own Bitcoin and have made support for cryptocurrency part of their platform. Some have even made it their signature issue.A Bipartisan group of U.S. Senators just wrote a letter to Treasury Secretary Janet Yellen informing her that she hasn’t done her homework on #Bitcoin. pic.twitter.com/St4KkMMITj— Dennis Porter (@Dennis_Porter_) December 14, 2021A sufficiently powerful, ideologically motivated attack could suppress the Bitcoin network, but it would be expensive to maintain and wouldn’t prevent the network from resuming normal operation after the attack stopped. The game theory of what happens when motivated attackers and defenders clash over a blockchain is complicated and reasonable people can disagree about what it might mean. But the two most powerful governments in the world today are either embracing Bitcoin or systematically disarming themselves.THREAD:Many things set #Bitcoin apart from any altcoin. But keep it simple, no technical metrics needed.Three elements to consider:– Digital scarcity is a one-time phenomenon– Schelling points– Money is the mother of all network effects & tends to one pic.twitter.com/yBcso6Z66p— Croesus ? (@Croesus_BTC) March 29, 2021Bitcoin will not be replacedBitcoin is (by design) a very limited system. You can pretty much only use it to send and receive Bitcoin. It is very difficult to change (also by design) so it adopts new technology very slowly if at all. That can seem primitive and sluggish to outsiders but being resistant to change is the central value proposition of Bitcoin. You can’t make a better Bitcoin by making a Bitcoin that is easier to change.Bitcoin is better understood as a social revolution than a technological one. No new cryptocurrency can achieve the same results as Bitcoin because the social context in which it was created is gone now. For the first year and a half of its existence Bitcoin was essentially free — there was a website called the Bitcoin faucet that gave users 5 BTC just for solving a CAPTCHA. Satoshi disappeared before the project hit major prominence and never collected any kind of special founder’s rewards for his efforts. Even if a new project could somehow recreate these conditions they still couldn’t recreate the history of proven operation since.Other cryptocurrency projects may still prove useful / valuable — but not by outcompeting Bitcoin to be the best money. If they are successful it will be because they optimized to serve a different use case.They won’t replace Bitcoin, they will exist alongside it.In short, Bitcoin works as advertisedBitcoin has operated continuously outside of anyone’s control for more than twelve years now — that fact alone should merit serious attention even from skeptics. It has not been hacked, censored, halted or controlled. It has survived bubbles and crashes, attempts to commandeer it or to outlaw it or to obsolete it. That history of operation is a growing body of circumstantial evidence that Bitcoin really is what it claims to be: a perfectly scarce, sovereign asset.The growing body of evidence that Bitcoin is real means that responsible people need to start planning for that possibility. What does the existence of a universally available, perfectly scarce asset mean for the world?Image: Blockdata.techBitcoin is good for peopleBitcoin is often accused of being principally useful for criminals but that isn’t really true. Criminal activity on Bitcoin peaked at ~2% in 2019 and fell to ~0.34% in 2020. Bitcoin transactions create permanent and public records. Most criminals would rather do business in US dollars. Bitcoin is actually mostly used for saving.Bitcoin is good for the poor because inflation weighs most heavily on the poor. If your net worth is mostly cash and future cash-denominated wages inflation is a drain on your wealth. If your net worth is mostly investments and property inflation just changes the numbers next to your accounts — it doesn’t cost you anything. In countries with runaway inflation Bitcoin is a safe haven for the poor.Bitcoin is also valuable for activists like feminist protestors in Nigeria or dissident politicians like Alexei Navalny in Russia or disenfranchised groups like unbanked women in Afghanistan. Alex Gladstein of the Human Rights Foundation has called it an “essential tool for preserving freedom.”Why Bitcoin matters for human rights, in two minutes. pic.twitter.com/7whCGZKEXi— Alex Gladstein ? ⚡ (@gladstein) June 24, 2020Bitcoin is good for the planetIn spite of the reputation it sometimes has in mainstream media Bitcoin is actually good for the environment. Bitcoin uses a lot of energy, but it is a scavenger that feeds on low-cost waste energy. Energy is much, much easier to produce than it is to store or transport which means a lot of energy is wasted.For example oil mining often produces natural gas as a side effect. When it is convenient oil companies will sell that natural gas — but often oil is mined in remote locations so it is not easy or cheap to bring that gas to market. Instead in practice oil companies simply vent that gas into the air and light it on fire, a practice called flaring. By the estimates of the CBECI enough gas is flared globally to power the Bitcoin network ~6x over. Here is how large flaring is relative to other sources of carbon dioxide emissions:Image: GlobalCarbonProject.orgSeveral companies are building traveling Bitcoin mining rigs that can go to the vents and use that natural gas on site to mine Bitcoin. That causes Bitcoin’s energy use to go up, but it actually has a positive impact on the environment because using natural gas is much better than flaring it. Both flaring and using natural gas produce carbon dioxide but flaring (which is often inefficient and incomplete) can also release methane and NOx into the atmosphere as well. Methane damages the ozone layer and NOx contributes to acid rain. Using the graph of Bitcoin’s energy use as a proxy for its environmental impact is misleading.Bitcoin mining is also really useful for renewable energy because lots of renewable energy is produced at off-peak hours when it is less valuable. The Bitcoin network acts as a “buyer of last resort” for energy producers, which makes renewable power more economically viable. Bitcoin effectively subsidizes the creation of more renewable energy by creating a market for their excess power. That’s why renewable energy companies are starting to add Bitcoin mining to their operations.A lot of anti-Bitcoin critics cite environmentalism as a concern but not as many environmentalists cite Bitcoin as a concern because if you sincerely care about the environment it is fairly obvious that Bitcoin is a footnote.Image: CBECI https://ccaf.io/cbeci/index/comparisonsEnergy use can be surprising. Bitcoin uses more energy than Argentina but less energy than American Christmas lights. Neither comparison is especially useful — a better comparison would be to the energy use of the entire legacy financial system or the environmental cost of the petrodollar. In proper context Bitcoin’s energy use isn’t so much large as it is easy to measure.USD full node pic.twitter.com/4qs2bDVpMp— Gabor Gurbacs (@gaborgurbacs) May 29, 2021Bitcoin is an alternative to warThe history of warfare is a history of the defense and acquisition of wealth. If that wealth has a physical location it will require defending physical territory, which implicitly means violence. As wealth migrates to non-physical systems like Bitcoin, it can be defended by non-violent means (i.e. Bitcoin mining). The more wealth leaves physical goods the less wealth requires physical defense.Few understand…#Bitcoin pic.twitter.com/PEt8M1vRtz— Jason Lowery (@JasonPLowery) November 1, 2021Bitcoin also makes it harder for governments to prolong a losing war by spending their citizens’ wealth by hyperinflating the currency. It is much easier to fund a war with the creation of new money than through direct taxation because people understand the impact of direct taxation more clearly. That’s why most of the countries involved in World War I had to abandon the gold standard. If the people understood how much money war cost them they would put a stop to it sooner.None of which is meant to imply that Bitcoin is the end of war — power plants and population centers will always need to be defended. Governments will always find reasons to quarrel with their neighbors. But to the extent that Bitcoin gains traction it does meaningfully reduce the means and incentives for violent conflict.You should own some Bitcoin either wayIt is entirely possible that even having considered all the arguments above and in the first essay you remain unconvinced about the value of Bitcoin — you should probably still own a little bitcoin either way. That’s because if Bitcoin succeeds in becoming the best possible way to store value it will capture most of the value currently stored in other ways. It’s not just that the price of Bitcoin will go up — it’s also that the value of everything else will go down.That’s why whether you like Bitcoin or not everyone needs to think about how they will protect themselves from the possibility that Bitcoin is real. Owning a small amount of bitcoin is one way to safeguard against that risk — and you probably need less than you think. If everyone in the world wants bitcoin there won’t be very much to go around — owning 0.074 BTC (~$3,400 at time of writing) will likely be enough to put someone in the top 1% of Bitcoin wealth.This estimate is based on current global wealth inequality. I also made a spreadsheet where you can examine/tweak assumptions for yourself.Given that it takes such a small amount of bitcoin to hedge against a Bitcoin future owning no Bitcoin at all is actually an extremely confident stance. Being doubtful about Bitcoin’s chance of success is very reasonable but being 100% certain that it will fail is overconfident. Intelligent skeptics are skeptical of their skepticism.Keep your mind openRegardless of how you feel about Bitcoin I encourage you to stay curious. I’ve been immersed in the space since 2014 and I am still learning new things and changing my mind every day.If you want to read more I’ve curated a reading list of pivotal essays that I think are worth your time. A version of this story first appeared in this newsletter (Something Interesting) — I write ~2-3x a week about cryptocurrency news and topics and I try to answer all reader questions.