In Plato’s Allegory of the Cave, the story goes that a group of people are chained to a wall inside a cave, where they see shadows projected on a wall in front of them. These shadowy projections are made from objects moving in front of a fire behind the prisoners. Therefore, the shadows are their only connection to reality apart from themselves. When one of the prisoners manages to go free, he/she realizes that there is an entirely new reality outside of the cave, one where the sun casts the light over everything instead of a little fire like back in the cave. However, when this prisoner returns to the cave to lead the other prisoners outside towards the sun, the prisoners reject this, refusing to believe that there is another reality apart from all they have ever known. They’ll even think that the freed prisoner has suffered some form of delirium since they can not make sense of the things he is speaking about that are outside of the cave. Should the freed prisoner continue his efforts to free the others who remain chained and committed to their reality? Or just let them be?
Partly why Bitcoin is in a bearish market is because the projected reality of the current global financial system is more real than the reality that Bitcoin purports to have. Fiat is all we have ever known and therefore it’s the one model that makes the most sense. Government makes the money, supports and backs it, and citizens use it to pay taxes and to pay each other and engage in commerce. Not much thought is required to understand that model and so far, it has worked. To nearly everyone else, from the average Joe on the street to the CEO’s of major banks, Bitcoin is an aberration, an affront to everything they have ever known, an insult to the established models of finance. Because theres no central leadership, no central accountability, no figure-head to appeal to for answers or direction, the rest of the world sees Bitcoin as a collective system of fraud that is bound to die and fail any day now… except it hasn’t and wont. Understanding the reality of Bitcoin requires them to understand (and more frighteningly accept) the projected illusory reality of the fiat model of money. It requires them to ask uncomfortable questions about the quality of the foundations that have kept them financially cushioned and protected, even during and after major financial crisis. If theres one thing that Wall Street hates its uncertainty and lack of confidence. Keeping the projections alight is essential to keep the confidence going. The stronger the projections are, the less ‘real’ real is. In this case, the reality offered by Bitcoin is presented as illusion and must be avoided, keeping the prisoners away from knowing that an alternative exists.
Keeping everyone faithful to the projections on the financial wall means assaulting Bitcoin’s features, painting them as wasteful, inefficient, inconvenient, and ultimately unnecessary. This is done on various fronts:
Bitcoin is a waste of energy
Bitcoin transactions are inefficient compared to fiat
Bitcoin can be stolen
Bitcoin is pure speculation and therefore fraudulent and unnecessary to hold
Others smarter than me can delve into dismembering each of these claims, point by point, but for the purposes of keeping it succinct, here goes concerning the energy argument. Bitcoin’s energy consumption is not a waste because it achieves its purpose with considerably less energy than the current model. Bitcoin makes it own money, and processes transactions. Its fiat equivalent in energy consumption is the total energy consumed by the global banks AND the governments who produce the money. Take the total energy consumed by banks and governments and the result is a massive number in energy costs far surpassing Bitcoin, a system without governments, guns, or greedy banks to keep it afloat.
This is the system we have ever known. The phrase “full faith and credit” of whatever government is all that really gives weight and support to fiat money. Ever since the gold standard was dropped, money is backed by the presumed power and stability of both the political and military arms of governments. One country’s money is better than the others because one country has the most weapons and the most stable political system. When confidence in either of these becomes shaky, the value of that money falls into question. Currently, the projections remain relatively real. Developed nations have military power and their political systems are working but as seen in recent global events (rise of nationalism, trade wars, currency manipulation, government corruption, centralization of personal data, global sovereign debt) the “full faith and credit” is starting to become as real as shadows being forced to be cast upon a wall, a propped up reality that could go bust at any moment.
Bitcoin, and the idea of decentralized networks, represents a new method of accomplishing real results that for centuries required authority figures, who then usually played fast and loose with the rules to make realities that suited them best and first. Hierarchies were the ones making the flames behind humanity, using complex contraptions and systems of governance to make projected shadows of authority and reality for the people to see and abide by. Decentralized models prove that something more real can be made, without the need for hierarchies. This is why Bitcoin receives a lot of hate. As all disrupters do, Bitcoin undermines their need for relevancy and with it their claim to power and authority.
With a well-documented history of hierarchies falling to corruption and mismanagement, it’s a wonder that we as a society still look to them as the arbiters of what is real and what is not concerning our money. This is why it is a responsibility for Bitcoin proponents to educate others about the principles of what makes bitcoin possible and why it is a superior choice over the current model. Bitcoin is NOT about getting rich quick… but those who do have the foresight and vision and act on them soon tend to be rewarded the most in time. As the global financial crisis of 2008 proved, no one is safe when those at the top are allowed to pull the levers of the economy and are free to print as much money as they want. Because no one is safe, everyone needs to be given the chance to transfer the fruits of their labor over to a new system where the consensus rules ensure that everyone plays fair rather than relying on who has the most guns or who has the most stable political system. Sooner rather than later, the shadows will be shown for what they really are.