Here we are, it’s 2025 and Bitcoin is surging. Around $100K last time I looked. While its creation spews megatons of carbon into our atmosphere, investors line up to buy it in respectable ETFs, and long-term players like retirement pools and university endowments are looking to get in. Many of us are finding this extremely annoying. But I look at Bitcoin and I think what I’m seeing is Modern Capitalism itself, writ large and in brutally sharp focus.
[Disclosure: In 2017 I made a lot of money selling Bitcoins at around $20K, ones I’d bought in 2013. Then in 2021 I lost money shorting Bitcoin (but I’m still ahead on this regrettable game).]
What is a Bitcoin? · It is verifiable proof that a large amount of computing has been done. Let’s measure it in carbon, and while it’s complicated and I’ve seen a range of answers, they’re all over 100 tonnes of CO2/Btc. That proof is all that a Bitcoin is.
Bitcoin is also a store of value. It doesn’t matter whether you think it should be, empirically it is, because lots of people are exchanging lots of money for Bitcoins on the assumption that they will store the value of that money. Is it a good store of value? Many of us think not, but who cares what we think?
Is Bitcoin useful? · I mean, sure, there are currency applications in gun-running, ransoms, narcotics, and sanctions-dodging. But nope, the blockchain is so expensive and slow that all most people can really do with Bitcoin is refresh their wallets hoping to see number go up.
Bitcoin and late capitalism · The success of Bitcoin teaches the following about capitalism in the 2020s:
Capitalism doesn’t care about aesthetics. Bitcoins in and of themselves in no way offer any pleasure to any human.
Capitalism doesn’t care about negative externalities generally, nor about the future of the planet in particular. As long as the number goes up, the CO2 tonnage is simply invisible. Even as LA burns.
Capitalism can be oblivious to the sunk-cost fallacy as long as people are making money right now.
Capitalism doesn’t care about utility; the fact that you can’t actually use Bitcoins for anything is apparently irrelevant.
And oblivious about crime too. The fact that most actual use of Bitcoins as a currency carries the stench of international crime doesn’t seem to bother anyone.
Capitalism doesn’t care about resiliency or sustainability. Bitcoins are fragile; very easy to lose forever by forgetting a password or failing to back up data just right. Also, on the evidence, easy to steal.
Capitalism can get along with obviously crazy behavior, for example what MicroStrategy is doing: Turning a third-rate software company into a bag of Bitcoins and having an equity valuation that is higher than the value of the bag; see Matt Levine (you have to scroll down a bit, look for “MicroStrategy”).
Capitalism says: “Only money is real. Those other considerations are for amateurs. Also, fuck the future.”
Do I hate capitalism? · Not entirely. As Paul Krugman points out, a market-based economy can in practice deliver reasonably good results for a reasonably high proportion of the population, as America’s did in the decades following 1945. Was that a one-time historical aberration? Maybe.
But as for what capitalism has become in the 21st century? Everything got financialized and Bitcoin isn’t the disease, it’s just a highly visible symptom. Other symptoms: The explosion of homelessness, the destruction of my children’s ecosystem, the gig economy, and the pervasiveness of wage theft. It’s really hard to find a single kind word to say.
Are Bitcoins dangerous? · Not existentially. I mean, smart people are worried, for example Rostin Behnam, chair of the Commodity Futures Trading Commission: “You still have a large swath of the digital asset space unregulated in the US regulatory system and it’s important — given the adoption we’ve seen by some traditional financial institutions, the huge demand for these products by both the retail and institutional investors — that we fill this gap.”
All that granted, the market cap of Bitcoin is around two trillion US dollars as I write this. Yes, that’s a lot of money. But most of them are held by market insiders, so even in the (plausible) case that it plunges close to zero, the damage to the mainstream economy shouldn’t be excessive.
It’s just immensely annoying.
Bitcoin and gold · One of the things Bitcoin teaches us is that there is too much money in the world, more than can be put to work in sensible investments. So the people who have it do things like buy Bitcoins.
Gold is also a store of value, also mostly just because people believe it is. But it has the virtues of beauty and of applications in jewellery and electronics. I dunno, I’m seriously thinking about buying some on the grounds that the people who have too much money are going to keep investing in it. In particular if Bitcoin implodes.
Having fun staying poor · I’ve been snarling at cryptocurrencies since 2018 or so. But, number go up. So I’ll close by linking to HODLers apology.
Question · Is this the best socio-economic system we as a species can build?
Comment feed for ongoing:
From: Gord Wait (Jan 09 2025, at 17:41)
Odd, I've been wondering as well if there can't be a better system than our current version of capitalism.
One that does not require exponential growth.
A sobering website, look up "Do the math".
Biggest TLDR: GDP growth is exponential, and approximately proportional to energy used.
If we keep up at the current rate, the surface of the planet will be hotter than the sun in some few hundreds of years. Obviously it will self limit somehow, but how is the question.
Feels like the plot for Asimov's Foundation series.
[link]
From: robindotis (Jan 09 2025, at 21:43)
I just finished reading "Less is More" by Jason Hickel, which covers the same points about Capitalism as you do in this post about Bitcoin. Except the book needs 300 pages. ;-)
The book does offer some good solutions but does not address how we convince the those in power to essentially give up most of their wealth and redistribute some of it more fairly to others. Even if we could achieve that in the democratically elected part of the world, how do we convince the various dictators running very powerful countries to do so.
[link]