I read on average a half dozen or so articles on Bitcoin and cryptocurrencies a day, and in any given day one of them is likely to be a gloom and doom article. Today, it happened to be this one from the Natural News website.
Why do I even bother to read gloom and doom articles about Bitcoin, considering I’m what you might call a Bitcoin believer? I read them for a number of reasons including entertainment value, but that’s not really important.
I’m actually starting to notice a distinct pattern in the wide variety of authors who publish articles knocking Bitcoin, and it’s somewhat illustrative of much of today’s shoddy journalism standards.
The most glaring feature I notice about Bitcoin detractor pieces is the incredible degree of ignorance the author has about Bitcoin and how it works. The author might understand the technical details but he or she lacks both understanding and perspective on the relationship that various components of the Bitcoin world have with each other and with the world at large.
I’m not any kind of expert on the financial world or even the cryptocurrency world, and my perspective isn’t particularly better than that of another member of the Bitcoin community. But I do believe I have a certain amount of credibility to speak authoritatively on this matter because I have by objective criteria successfully navigated this world. In short, I have actually made money and improved my financial position through Bitcoin and other cryptocurrencies. I have also failed and gotten burned in a few Bitcoin-related involvements and learned from the experience.
The biggest problem I see with Bitcoin outsiders, including authors of anti-Bitcoin articles, is that they have a far too narrow view of what Bitcoin is. Related to that, they will seize on a particularly high profile situation, such as Mt. Gox’s troubles or the fact that speculators (including quite ignorant ones) buy Bitcoins in the hopes of selling them at a higher price and instead lose money, and present that as the definitive reason for everyone else to stay as far away from Bitcoin as possible.
Take the Mt. Gox situation, for example. A year ago when I first got involved with Bitcoin, Mt. Gox was the Bitcoin exchange. I was not aware of any other options except for CoinBase, and Mt. Gox claimed to handle eighty percent of all Bitcoin trades. Basically, it was the only game in town. But that changed long before Mt. Gox’s current troubles became newsworthy. Other better trading platforms like BitStamp opened up for business and many customers switched to those better platforms or started using them to begin with. I personally got as far as creating an account on Mt. Gox, but I never made a single trade because when I got to the point where using a trading platform made sense for me, it was clear to me that there were far better options out there. I am sure that was the case for many other customers. People who measure and rate these things even said that Mt. Gox went from being the number one trading platform to being number three sometime in 2013, though I do not know (or much care about) the details.
And yet when Bitcoin detractors would write about how bad Bitcoin was, they acted as if Mt. Gox was still the only game in town. They acted as if the Mt. Gox price (which was significantly lower than market rate) was the standard price for Bitcoin. At one point, the Mt. Gox price for Bitcoin was a low as $135, but there was no way anyone could buy a Bitcoin for less than $490 during that time. I mean, you could technically buy that Bitcoin on Mt. Gox, but it would remain stuck in your account. People who wrote against Bitcoin failed to grasp this simple concept that for all practical purposes, the Mt. Gox price of Bitcoin was meaningless.
The other mistake they would keep making was that they would treat Bitcoin as if it were Mt. Gox. Mt. Gox was clearly falling apart, so therefore Bitcoin was falling apart. There was simply no perspective that Mt. Gox was just one service out of hundreds which dealt in Bitcoin. Many of those hundreds of Bitcoin related service providers operate on sound principles and are doing just fine.
Then there is the issue of defining Bitcoin too narrowly. Bitcoin is not a currency, they claim. Then they cite a number of reasons, all of which are true, such as the fact that if you encrypt your PC wallet and lose your private key you’ve just lost all the Bitcoin in that wallet (just like losing a physical wallet full of cash), or the fact that there is no regulatory oversight, as if money can only be created by central banks. It is true that Bitcoin has unique challenges as a currency, but it is also true that people in the Bitcoin community readily acknowledge those challenges and either make it work despite the challenges or improve on things by developing a new alt coin or even a different approach to using Bitcoin.
Bitcoin is a bad investment, they say, again citing all the ways that Bitcoin does not qualify as a good asset, too volatile, value not based on clear fundamentals, etc., all of which are again true. They continue this line of reasoning by mentioning the fact that people who invest in Bitcoin as an asset can and often are burned.
The problem with this line of reasoning is that Bitcoin isn’t just a currency, and it’s not just an asset, and it’s not just any other label it can be given. Bitcoin is actually something brand new, and it doesn’t really fit into any of the old pigeonholes. Sometimes it functions as money; sometimes it functions as an asset; sometimes it serves as a gambling chip. It really depends on the situation. But most of all, Bitcoin is a game changer, particularly in the way money is viewed and used. If you understand what Bitcoin is and what it isn’t, then you use it accordingly to your benefit. If you don’t understand what it is, and try to use it as something it isn’t, you’re likely to not do so well; this is true for most things. A screwdriver simply doesn’t make a good hammer, but that doesn’t mean it’s useless. But what I see in all these gloom and doom articles is authors saying over and over that because Bitcoin makes a lousy hammer, it has no value, but it never occurs to them that Bitcoin isn’t a hammer.
One of the things the gloom and doom articles I’ve read all mention is the existence of Bitcoin fans and believers, many of whom they claim are extreme in their pro-Bitcoin views and arrogantly refuse to reconsider them even in the face of refuting evidence. I personally do not know too many people in the Bitcoin community who fit that description, so I really can’t speak to this one way or another. I have met people like this in the course of my life and I generally find them annoying so I usually minimize my dealings with them without actually burning bridges.
I can say, though, that such an attitude actually would be detrimental to one’s success with Bitcoin. Because Bitcoin is so new and different, people are constantly making new discoveries about what Bitcoin can do and where it fails miserably. If you have extreme views about Bitcoin, even views that are highly favorable towards Bitcoin, you could easily miss some of its flaws or features and get burned by them. The experience could leave you with an unnecessarily jaded view of Bitcoin unless you are willing to carefully reconsider your earlier view in light of the experience.
My advice to anyone getting involved in Bitcoin for the first time is threefold:
First, approach your involvement as an educational opportunity. Keep an open mind, learn as much as you can, and be slow to form strong opinions. Bitcoin is not a moral or religious issue, so don’t make it one. When you do form opinions, assume you could be wrong and be willing to adjust them as you learn more.
Second, maintain a detached attitude. Do not get involved with Bitcoin or any other cryptocoin hoping it will somehow save you from financial demise. Do not invest your entire 401(k) balance into Bitcoin because you lost a ton of value in 2008 and need your portfolio to triple in value or else. When checking out a new Bitcoin service or opportunity, don’t put all your emotional or financial eggs into that one basket. Do understand that while there are many highly reputable Bitcoin services out there, there are plenty of bad ones. You should expect that at some point you will get burned; it’s just the nature of the business right now. When people tell you to only invest what you can afford to lose, that is not just a legal disclaimer. Decide now that you won’t get too bent out of shape over your losses, but will seek to learn all you can from the experience. In short, do not put any pressure on your journey into the cryptocurrency world to yield a particular outcome.
Third, find the opportunities that work for you and ignore the rest. The cryptocurrency world is chock full of amazing opportunities, and I believe everyone can do quite well financially and otherwise. But it’s important to remember that there is no one-size fits all opportunity. An opportunity which may work very well for one person may not work at all for you. That doesn’t mean it’s a bad opportunity (that you need to warn others about); it just means it’s not the opportunity for you. For example I have learned through a bit of trial and error that day trading alt coins is not the opportunity for me. I lack the interest, dedication, and ability to effectively use trading bots. I am likely to lose big time on day trading. However I recognize that others do quite well with it. I’ve actually done the best with writing opportunities, including the Devtome. However, as some of the Devtome applications I review indicate, writing is not something everyone is going to do well with.
Keep an open mind about all opportunities you encounter, but be willing to say no to most of them, including ones you do try out (I did try day trading for a while, for example). There are enough opportunities in this world that the likelihood of finding the perfect one for you is quite high if you keep looking and don’t bog yourself down in opportunities which do not work as well for you. Related to this, understand that many opportunities within the Bitcoin world aren’t necessarily directly about Bitcoin. During the gold rush, many prospectors hoped to find gold and many did (and quite a few didn’t). However, there were also those who profited from serving the needs of the prospectors, such as selling them tools and clothing. It’s a similar situation with Bitcoin. There are those who seek to gain directly from Bitcoin, and then there are those who provide services which in some way contribute to the Bitcoin community and to their own bottom line. Again, the primary way I profit in the Bitcoin world is that I trade my services as a professional writer for Bitcoin or Devcoin (and I’d be quite willing to be paid in other types of alt coins as well). There are many similar opportunities for people with skills such as coding, computer programming, website design, and more. There are many opportunities for entrepreneurs. Take the time to find the right one for you. And when you do start to amass some Bitcoin, take some profits; either buy something you want directly with them, or cash some out and use the fiat proceeds to in some way improve your life. That way not matter what happens to Bitcoin, including the entire phenomenon disintegrating into virtual dust, you will still have come out ahead.
The most important overarching principle for doing well with Bitcoin and other cryptocoins is to maintain a balanced view. Bitcoin is a complex entity and there is much to learn and navigate within its world. If you have either an oversimplified or extreme view of it, you are likely to miss much of this complexity and opportunity, in which case you are more likely to write or believe a gloom and doom article about it which no one who has navigated successfully within that world will take seriously.