Review: BitCon makes the case against bitcoin

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If you’ve ever been at a meeting or cocktail party where bitcoin comes up in the conversation, BitCon is required reading.  After reading Jeffrey Robinson’s book, you’ll be able to join the conversation with an actual understanding of bitcoins, warts and all, rather than relying solely on vapid news articles and tweets.

The book is extremely critical of bitcoin.  But even bitcoin fans owe it to themselves to read the book.  Robinson has done his homework, and can’t be written off as somebody who doesn’t understand bitcoin.  BitCon explains the fundamentals of bitcoin with easily understood terms and comparisons.  In one passage, Robinson sums up how transactions are verified by bitcoin miners:

What the miners do is put each individually identifiable transaction into an unalterable “block”—more computer code—which is then attached to all the other blocks that have come before it, to form a “blockchain.”  That’s a public ledger where every transaction is visible and set in stone.

BitCon builds on these descriptions by explaining what bitcoin is and what it isn’t.  In terms of the classic definition of money, bitcoin doesn’t meet the criteria of being a medium of exchange or a store of value.  Bitcoin is not a reliable store of value because its exchange rates are extremely volatile.  Would you feel confident taking out a mortgage in bitcoin?

It is not a medium of exchange because it is rarely used to buy goods and services (except in the dark web for underground purchases).  Most of the bitcoins in “circulation” aren’t circulated much.  They are held, hoarded, traded, and speculated by individuals hoping that the volatility will swing in their favor.  When bitcoins are used for dollar-denominated purchases, fees are added coming and going.

High-profile stories about merchants such as car dealers or universities accepting bitcoin are exaggerated and misleading.  Typically, those purchases are cases of a consumer with bitcoin who pay an intermediary bitcoin processor to convert the bitcoins to dollars to pay the merchant.  The headlines leave out the bitcoin converters were involved.

Robinson is a delightful curmudgeon.  There are several laugh-out-loud lines, which is rare for a nonfiction book about technology and money.  BitCon compares bitcoin supporters to a religious cult (and provides several quotes from articles and social media that justify the comparison), referring to them as “The Faithful.”  Vocal bitcoin fans on social media are the “Noise Machine.”  Whenever news or a comment by a high-profile entrepreneur could be interpreted as favorable to bitcoin, the Noise Machine circulates the story far and wide without context or nuance.  When somebody speaks unfavorably about bitcoin, the Noise Machine excoriates them as fools.

Although BitCon takes no prisoners against what Robinson calls “the pretend currency,” he suggests that the enduring and useful aspect of Bitcoin technology will be the blockchain.  A decentralized public ledger will have staying power in recordkeeping separate from currency.  However, BitCon doesn’t spend too much time justifying this assertion.  Many experts are quoted touting blockchain, but the practical advantages of the protocol aren’t fleshed out.  That’s the only weakness in an otherwise enjoyable and informative read.

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