We had a friend staying over, long time no see, two years ago she invested in some crypto air tokens and 'a little in bitcoin'. She didn't sell, nor DCAed, has not educated herself beyond some snakeoil whitepapers, is down more than 70% and frustrated. We sat down for a talk, I listened to her remarks on Bitcoin like I did two years ago and it was just the same old.
Her: People don't understand bitcoin, it's too complicated.
- People don't understand how email works either, yet they use email and the internet it everyday.
Her: But email and the internet is useful to them and you can do many things with it. Bitcoin has no use case.
- Still, people don't know who any of it works. You can use Bitcoin without a deep understanding of how it works technically. Bitcoin has a use case, it allows you to finalize value settlements within minutes, globally and secure and without a central authority involved that can stop your transaction. As long as you provide a valid signature, you can move value. Most of the people in the world don't have and never had access to a bank account which would allow them to engage in sophisticated commerce. Bitcoin allows the people of third world countries, with corrupt government and unstable currencies, to be able to trade with people outside of their community, to bring their store online and to be safe from government overreach. All they need is a phone and basic education on how to use bitcoin.
Her: But how to store your seed phrase? You can always lose it!
- Keeping your seed phrase safe is your responsibility. You can learn your seed phrase, you can write it down and hide it, stamp your seed in steel plates, you can keep your bitcoin on an exchange or with a custodial if you like.
Her: But what if I forget the seed or die, or the note burns, or someone steals the plates or they melt?
- You are responsible for your property, you have complete ownership and you can be as creative as you like about your 12 words. There is always a risk, find for yourself the method that fits your circumstances.
Her: What if I die and my husband doesn't know what to do with the seed or forgets that its exist?
- Talk to him. Explain what to do. Maybe find a trusted third person that will help him.
Her: Bitcoin can shut off and disappear at any time. If something happens on the sun and a solar flare kills all electronics on earth, or nuclear war, there is no more bitcoin. That's why diversification is important, I have some Gold and I own land, I always have that!
- Now we are talking about how to prepare for post-apocalyptic times. If the electronic grid, the internet and global logistics fail permanently, we're looking at billions of people dying from lack of food, clean water, medicine and warmth. The survivors will be busy growing crops, raising cattle, defending their families, and to create communities. The government that gave you the land title doesn't exist anymore, the police that enforces your property rights doesn't exist anymore and nobody cares about your shiny rocks. If you can't defend your land, somebody will take it. But that's unlikely, with billions dead and no governments, there is plenty of land for everyone.
Gold will be irrelevant. There will be a barter trade economy established and it will last for decades until you will be able to travel and establish trade with other communities. We can't know what kind of money will emerge in that scenario. Gold though you can pick up from abandoned jewelery stores and random amounts will be rediscovered all the time which destabilize its value.
Her: Of course, you need survival skills!
- Yes. Invest in yourself. That is always helpful.
Her: But there is also quantum computing and AI and we don't know what will be invented in the future. Isn't that a risk it bitcoin?
- No. Quantum computers today operate with 5 Qubits, to crack the SHA256 algorithm, they need 256 Qubits. If they ever come close, we upgrade the protocol to SHA512 or 1024 or whatever and we're good for another couple of decades.
That, in essence, was the talk. It made her angry. I'm looking forward to talk to her again in 2 years and hear the same generic worries all over again.
