What is the point of Bitcoin?

Like actually though

Viren Mohindra

Mar 23, 2020

3-min read

*Pictured: Me, mining my first bitcoin circa 2015. Photo by Ludovic Toinel*

Viren Mohindra @VirenMohindra

2014-24-01, the first time I started mining

if bitcoin can’t go up in this environment then what’s the point?

One of my friends who works in the financial sector posed this question on Twitter and then messaged me privately to comment. I usually don’t engage with cryptocurrency on social media because of a multitude of reasons - the first being the pseudo-intellectual fan following and social pariah crap that comes along with it - but he insisted.

To answer the question, I replied through a series of broken threads. I’m going to use Substack to somewhat organize it.

Quotes are questions, tweets are replies. Shower thoughts are in italics.

The question once more:

if bitcoin can’t go up in this environment then what’s the point?

Viren Mohindra @VirenMohindra

@namz_at_night Unfortunately crypto is still tied to mainstream investment vehicles. And if $BTC goes down, other currencies drop further. Few more reasons off the top of my head: - flash crash by whales selling off their stakes on exchanges - massive flood in the market affecting supply 1/n

Viren Mohindra @VirenMohindra

@namz_at_night - When trading vol is low market is susceptible to manipulation by the big boys - Traditional safe-haven assets / commodities like gold and currency aren’t doing too well either, but crypto always seems to bleed much more. 2/n

Viren Mohindra @VirenMohindra

@namz_at_night - Speculative nature of the risky asset while also the entire world being in market turmoil + virus + oil concerns means there is a lot of FUD and shaky hands. Basically: no bear market, no balls. 3/n

Correction: This was supposed to be no bull market. Really butchered the quip.

Viren Mohindra @VirenMohindra

@namz_at_night Case in point: $BTC longs worth more than half a B were liquidated instantly 4/n

Joseph Young @iamjosephyoung

$665 million bitcoin longs were liquidated just now on BitMEX alone, I repeat, $665 million

that’s the same with everything else mate... jus leverage

Viren Mohindra @VirenMohindra

@namz_at_night So leveraged money in crypto is absolutely retarded and timing the market in something so volatile is akin to some BS like $TQQQ or $SQQQ I prefer to stay away from trading money I do not have

so once again... since it is tied to mainstream investment vehicles... what is the point

Viren Mohindra @VirenMohindra

@namz_at_night the hope was that it wouldn't be tethered to USD or any fiat currency, but unfortunately its somewhat of a chicken and egg problem. How do you get institutionalized investors into a new market without creating a mechanism for investment See CME futures

the usd has gone up in value related to other currencies

Should have been clearer - when I meant bitcoin affecting other currencies I meant cryptocurrencies, not fiat. But I answered the rise in USD FX pairs anyway…

Viren Mohindra @VirenMohindra

@namz_at_night Dollar, funnily enough, has always been the 'gold' standard in currency, which is why these APAC countries are willing to switch everything into something more 'safe'. Crypto has its own equivalent: $USDT

so if it acts like a general market security once again what is the point of bitcoin?

Viren Mohindra @VirenMohindra

@namz_at_night Democratized ownership by the people, one person or a collective group of people don't control the demand/ supply and consequentially the value, but more along the lines of everyone having a little piece and contributing as much as they possibly can. Sadly this is not the case.

but earlier you mentioned whales selling off causing the price to crash that doesn’t sound like democratized ownership/ manipulation

Viren Mohindra @VirenMohindra

@namz_at_night Ya 51% ownership, a miner-centric blockchain, and numerous other problems means that market manipulation is a possibility. Infantile stage right now, its only been ten proper years, I hope to see $ETH in a better place

sure eth may reach a better place but we are discussing bitcoin and delivering on its basic premise

Viren Mohindra @VirenMohindra

@namz_at_night looking at $btc from purely a requirements standpoint: - person (satoshi) was annoyed that there was no fiat currency which was peer to peer, similar to file-sharing/ torrenting - basic premise of bitcoin is "why is there a middle-man"?

Viren Mohindra @VirenMohindra

@namz_at_night middle-man can: - manipulate the money supply - special interest groups, creating inequality - track the transfer - confiscate money from people at will

Viren Mohindra @VirenMohindra

@namz_at_night how do you solve this? - shared (decentralized), ledger (accountability), stored online where everyone can access it, which was immune to human error / manipulation this requires the invention of a new currency, where $btc comes in

ok so to sum up your many paragraphs... simply to remove the middle man

After spending 34 minutes collating my thoughts, I didn’t end up replying to this.

Viren Mohindra @VirenMohindra

@namz_at_night why can't you use pre existing mechanisms like USD/ gold? - already controlled by political elite class - someone would need to hold, transfer, and account for all of this -- why not make computers handle the dirty work?

Viren Mohindra @VirenMohindra

@namz_at_night social benefits: - establishes trust/ accountability - people take control from govt economic benefits: - txns easier and cheaper - abolish artificial inflation (and not inject $4TT in a single month) privacy benefits: - its your money, you do whatever you want with it

pretty sure trust and accountability go into the shitter after losing 40% in a week and about privacy... the ledger is public u can see everything... so how is that private?

I didn’t draft up a reply for this since the thread was anyway so stratified, but ledgers and anonymity are explained everywhere on the internet in depth.

In reply to democratized ownership not being in the case of bitcoin, his thirst for knowledge wasn’t quenched yet: