Government-issued currencies have value because they represent human trust and cooperation. There is no wealth and no trade without these two things, so you might as well go all-in and trust people. There are no financial instruments that will protect you from a world where we no longer trust each other.

So, Bitcoin is a protocol invented to solve a money problem that simply does not exist in the rich countries, which is where most of the money is.

Mr. Money Mustache on fiat value.

To understand the Bitcoin delusion you have to understand the fundamental delusion of the libertarian and other miscellaneous conspiracy wingnut types who advocate it. That is, that financial markets and trade exist as some kind of gravity-like natural force in the universe, rather than as a by-product of the monopolization of violence by some sort of central authority, i.e. the state.

Incidentally, I know “monopolization of violence” is not the most PR term in the world, but it basically refers to the idea that, in modern state-based societies, you’re not allowed to hit other people in order to resolve differences. Only the state is allowed to “hit” people, e.g. via policing internally or the military externally, and the conditions under which that allowance is made are part of the primary defining character of that state. For example, when a majority of citizens generally agree on the ways and circumstances in which the state is allowed to hit people, you get a democracy.1 When the state hits its citizens into “agreeing” that it’s allowed to hit them, you get a dictatorship. And so on. This isn’t a new concept; it’s been around in (Western) social sciences for over four hundred years, which is coincidentally about the time (Western) political bodies began dragging themselves out of theocratic feudal anarchy and into the secular, law-and-trade focused entities we’re used to today.

Humans have always traded with each other, but the scale of trade—particularly between unrelated groups—is basically inversely proportional to the availability of non-market-based means of acquiring resources, also known as the “I kill you and take your stuff” method of redistribution. When the state starts making murder, theft, extortion and general banditry illegal—i.e. by actively hitting (jailing) anyone who is caught trying it—people are more likely to resort to trade to get what they want from others, not just because they have to, but because they have more trust that the other party won’t try and cheat them (or will be punished if they do).

Again, this is all very Social and Political Sciences 101 stuff; it’s well-studied, understood, verified, and defined, far beyond my crappy hundred-word summary. The point is that the central delusion of libertarianism and other extreme “free market” ideologies is to reject this notion of the political model of the origins of trade. I have no idea why, but it makes trying to argue with them on any financial or economic issue basically like trying to argue about the flu with someone who doesn’t believe in the germ theory of disease. The foundational premises are all wrong. It’s also one of the main reasons libertarians think Bitcoin is clever,2 despite the fact that, as mentioned above, it “solves” a problem that is essentially made up.

Tl;dr, Bitcoin is digital tiger dust, and most certainly not a financial “investment”.

  1. Note there’s nothing about frequency here; democracies can be peace-loving hippies just as easily as they can be militant bullies. []
  2. As I’ve mention before, the other is dogwhistle antisemitism, so… there’s that, also. []