The Strange World of Bitcoin

Imagine standing in front of a crowd, holding a handful of ordinary dirt, and trying to sell it for the price of pure gold. If someone actually bought it, how would they defend that choice to their friends? They did something clearly foolish, but people hate admitting they made a mistake, so they look for a philosophy to justify it. A dirt buyer could easily borrow a page from the Bitcoin playbook and use a classic circular argument, claiming that everything only has value because someone agrees it does.

When you criticize Bitcoin, its supporters immediately deploy this linguistic defense. In one way or another, they repeat a mantra where value is agreement and agreement is value. It sounds profound, but it actually says nothing at all. They are just repeating the same empty concept using different words.

The reality is actually worse than the example with the handful of dirt. The buyer would use a circular argument to justify the value, but at least they have a thing to apply the concept of value to. The fundamental problem with the Bitcoin defense is not its circularity, but the total absence of a thing to be circular about. There is literally nothing behind the numbers flashing on the screen.

Because there is no underlying thing, the enthusiasts' next argument is also worse than circular. They pivot to asserting that any currency is simply whatever society agrees is a currency. But you cannot agree on nothingness. Before a society can collectively label something as currency or money, there must first be a concrete thing that the label refers to.

Historically, money was a tangible, physical thing like gold or silver. Today, modern money is a financial claim, an intangible thing whose value is realized when bank debtors provide labour, goods, or services to settle their debts. In both cases, numbers are used to express the amount of a thing that exists in the real world. You cannot claim you have a currency when there is no underlying thing, nothing whose amount you would express with numbers.

In the Bitcoin network, there is no such thing. The entire system is just a software protocol that generates, stores, and displays numbers.

When pushed on this point, the final defense is usually that modern money is also just numbers printed on paper or stored in bank databases. This is yet again the circular logic, a useless statement asserting that numbers are money and money is numbers. You do not even need to understand the complex mechanics of modern banking to see through this. Numbers are purely mathematical abstractions that anyone can create in their own imagination, not concrete things that exist in the real world.

So, an anonymous programmer using the pseudonym Satoshi Nakamoto simply used his imagination, picked the arbitrary number twenty-one million, and built a system to assign and reassign fractions of that number to different addresses. Every such assignment and reassignment is recorded in a database that grows larger every time a new participant gives up a concrete thing to join the game.

Bitcoin supporters believe they have invested in digital gold, but they haven't even gotten digital dirt. They bought literally nothing. They did something foolish, so they are forced to engage in circular logic and philosophy to justify it. That is the strange world of Bitcoin, where the grandest financial revolution in history turns out to be nothing more than an expensive game of mathematical make-believe.