What I learned from debating Crypto Skeptics – The sad and pitiful tale of /r/Buttcoin

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First of, I love skeptics.

I love those with opposing points of view.

I love debating my ideas with those with opposing ideas, it challenges my ideas and surfaces new points of view. When I see something that conflicts with my opinion I have to investigate it and either change my point of view (if the point is correct) or understand why that point is incorrect.

I was a Bitcoin skeptic until 2017. I even wrote a blog post about it.

 

This lead me to really engage with Bitcoin skeptics recently, and I spent a lot of time on /r/Buttcoin

My key take away from several hours of debate, over several months, is the following:

 

There are two distinct types of Bitcoin Skeptic

1. Those that have difficulty understanding Bitcoin
2. Those that understood it, passed on it, and now can not back down

Those that have difficulty understanding Bitcoin

This group is where almost all Bitcoin skeptics start.

This is the group I was in.

“How can Bitcoin have a value” – “it’s not backed by anything” – “it can be hacked”

This is a valid and common place to start.

If you don’t think Bitcoin is a scam the first time you hear about it, then you probably lack the critical thinking skills to be successful.

Bitcoin sounds like a scam, it has many external features that make it look like a scam, it has no government protections, regulations, safeguards.

If you don’t think Bitcoin is a scam when you first hear of it, then no matter what you do, you will end up falling for an actual scam at some point later and losing all your money anyway.

This group is well covered in many articles, here is a better deep dive into them than I could write.

But this group are still able to accept they might have got Bitcoin wrong, change their mind, and lean in.

Some do, some don’t.

Those that understood it, passed on it, and now can not back down

However, this is the most pitiful and depressing group of skeptics.

There exist a small number of people that were aware of Bitcoin several years ago, and at the time came out strongly against it decrying it as a scam.

In many cases, they purchased or mined Bitcoin and then decided it was a scam and sold them all.

The first post on buttcoinfoundation.org is from June 2011 ~ BTC Price $16

There are posters on /r/Buttcoin today that admit to having blocked Bitcoins port 8333 on their networks for a decade

Objectively, had they invested $200 – the price of a video games console – at that time instead of blocking the port on their network, they would be millionaires today (and, I assume, no longer working in sysadmin answering tickets).

There are others that admit to having been early into the tech and having sold off all their coins.

These are the hardened crypto skeptics that will never back down, and this leads to some interesting behaviour.

As we can see in the above post, this ends up with a lot of post-facto whitewashing arguments that are entirely unsound:

Argument 1: I could have bought a lottery ticket, or bet on a horse

This conflates investing in an asset class with a game of pure chance.

Games of chance are not the same as investing in asset classes, this is evidenced by the fact that gains from them are not taxed in most G20 countries, where as investment gains are.

This attempts to undermine Bitcoin investment as mere chance – a point that is ironically undermined by their own arguments that Bitcoin is manipulated, and or their attempts to hinder Bitcoin adoption (blocking ports).

Both of which are given evidence that they understand that Bitcoin is not a simple game of chance and it’s success or failure is dependent on those working for or against it.

Argument 2: I could have bought XYZ instead and I also didn’t how is that different.

If you didn’t know about an investment, then you have no opportunity cost lost by not investing in it.

I have no sunk opportunity cost in being a founding investor in Apple, given that it was founded before I was born, and in a country I have never lived in.

Ron Wayne, however, sold his 10% share of Apple for $800.

Those shares would today be worth $242 Billion.

Ron Wayne has an incredibly large missed opportunity cost.

You do not. I do not.

Argument 3: It is manipulated, It’s going to zero, It’s all Tether.

Whilst many of us don’t agree with this idea, it remains an ever decreasing possibility that some existential threat could hit Bitcoin and cause a catastrophic loss in value.

But even if it did, it wouldn’t matter.

Bitcoin traded $35 billion of volume in the last 24 hours.

Even if you exclude all exchanges other than Coinbase and Gemini – both fully regulated to operate in all US states – that’s around $1bn of daily liquidity.

You could cash out your entire portfolio with a market sell order and not move the price.

Bitcoin is never going to zero, I personally can assure you of that. For if Bitcoin were to drop to $0.01 I would personally purchase all of them.

CZ made a similar statement some years ago, with a much higher price.

 

Every single day that Bitcoin continues to trade, this argument loses credibility.

Argument 4: It is negative sum, the only exit is someone else buying from you.

Firstly, this is fundamentally untrue.

I run a lightning node and route payments through my node for people.

This is a service I provide and I am compensated for that service.

That is me taking an asset (Bitcoin) and earning a real world yield on it by using it to provide services to paying customers.

If I own a house and allow someone to live in it, they pay me rent. The same is true here with my Bitcoin.

Aside from that, I can lend out my bitcoin via third parties.

I can use the Bitcoin as collateral to execute Perpetual Futures carry trades.

Secondly, this is true of any commodity, or non-dividend bearing company.

If you buy Amazon stock, your only way of seeing a return on that investment is to sell it to some other clown later for more than you paid for it.

Once you factor in trade commissions, custody fees, internet plan, smartphone/computer used to access your broker, etc. it is also a negative sum investment.

At some point, Amazon will hit its peak valuation and someone will buy Amazon shares for their highest price and will be guaranteed to make a loss on that purchase (this assumes no dividends ever).

Argument 5: It has no underlying assets I can claim, unlike stocks.

This claim on the underlying assets is only tangible in the event of a company collapse.

Companies have assets, but they also have liabilities which would in the first instance be offset against any assets – assets that have been, or are being rapidly marked down in value following a company collapse.

This would lead to a forced liquidation sale of assets for pennies on the dollar, which would then be used to fund multiple things:

A collapse would almost certainly be followed by long and drawn-out litigation, which would be paid from these assets.

This would be followed by liquidators and administrators who get top priority in having their expenses paid from the remaining assets.

Then there are outstanding tax obligations.

Then somewhere down the line, you retail investor get what is left from the pennies on the dollar raised from forced selling of distressed assets.

One Bitcoin Skeptic made the argument that Apple holds $200bn in cash and shareholders have claims on that.

$200bn in cash for a company trading at $2.4T is just over 8% of the value of the company – this is before liabilities are deducted, liquidators and administrators paid, tax obligations cleared.

if the $200b in cash is what you’re pinning your hopes on, your absolute best case scenario is a 92% loss.

Argument 6 I don’t care about the money

As seen in the screenshot above, one of the final cope arguments made is “I don’t need the money.”

Some people genuinely don’t need or want more money.

Those people are not spending hours of their day arguing against Bitcoin on Reddit/Twitter/Blogs.

If the only argument you have left is “I didn’t want the money anyway” but you remain gainfully employed, then you are objectively lying.

The only argument that makes sense.

The only real argument that I have been able to see from all of this is:

I was in early, I wrote it off.
I could have made several million dollars and utterly changed my life.
I was objectively wrong, and I missed a once in a lifetime to make utterly life changing money for me and my family.

But that is too harrowing of an idea for many of these people to entertain.

They simply can not back down now.

Bitcoin has to be a failure, and they need to make sure everyone knows it.

They need to latch on to every news article, rumour, half baked idea that Bitcoin is about to collapse.

They NEED Bitcoin to collapse.

 

Because the alternative is that they lost.

 

They have lost.

They will go to their graves knowing they missed this unprecedented once in a lifetime opportunity.

 

Don’t hate Bitcoin skeptics.

Pity them.

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