First, some basic numbers. The frequency of Google searches for the Bitcoin largely copies the Bitcoin price, although the fluctuations are a bit amplified, and it currently stands at 9% of the maximum reached in December 2017.
Meanwhile, after some no longer relevant wiggles, the Bitcoin price was increasing from zero to $20,000 in December 2017. It fell to the lows around $3,100 in the late 2018 or early 2019 and reached a new, lower high around $14,000 in July 2019 (an echo from the CMB). Now, four months later, it's down to $6,500 – one-third of the all time high and less than one-half of the local maximum in Summer 2019.
For two years, the game has been saturated. Everyone who wants to play is already playing it. One could naively say that it is a zero-sum game because when someone profits, someone else loses. In reality, it's a hugely negative-sum game because the electricity, hardware, and staff (also at the cryptocurrency exchanges and related businesses) has to be paid for. The cheapest mining is done at $3,500 per Bitcoin – only counting the electricity – now. With the hardware included, these Chinese miners may make a tiny profit. Most miners are surely making a loss in the medium term.
All the people have had years to figure out the elementary things – to see that critics like me were totally right – and I think that many (and probably an overwhelming majority of) former Bitcoin cultists have "gotten it" by now. They wouldn't come to TRF to announce that they have appreciated that I was right and they sold all their cryptocurrency holdings. They are not honest enough for that. But they clearly exist. The numbers prove it.
Meanwhile, there are hardcore cryptocurrency cultists who continue to spread the amazing hype. While the real-world Bitcoin price lost over 30% in a week, they offer you wonderful promises of the Bitcoin price at $100k, million dollars, vigintillion dollars, whatever large number you like. And there are still people who are stupid enough not to see that this can't be considered an honest appraisal by a person who impartially seeks the truth. It's what the people who are heavily invested want others to believe because it would be great for their wallet. If someone wants to sell XY (or XBT) and claims that XY (or XBT) is far more valuable than it is, we could say that it is the lamest type of a scam.
Meanwhile, the current PayPal CEO has lots of Bitcoin – oops – and Peter Thiel has thrown away $50 million to some Bitcoin mining in Texas. The waste of the resources looks just amazing. This is real money. Thousands of miners have to work hard for several years to earn that. But the likes of Peter Thiel have earned their money too easily – so they waste them too easily, too.
It makes absolutely no sense. Even if the Bitcoin were important, and it is not, it wouldn't be important where it's mined – otherwise it's not important because the importance of the Bitcoin is supposed to be in the safety. Even if we neglect this fact, Texas couldn't possibly dethrone China's majority in the Bitcoin mining for just $50 million. China's president could easily raise the Bitcoin price by 40% a month ago – all the Bitcoin bunnies instantly celebrated that the great leader could perhaps like the blockchain – and he can eliminate non-Chinese miners or destroy the Bitcoin by saying a very simple sentence, too.
But the whole idea of persistently wasting tens of millions or billions for something so absolutely and self-evidently useless is just amazing. Compare it with coins and banknotes. One U.S. dollar is currently CZK 23 or so. One crown is some 4.5 pennies – it's great because all shops round the prices to the nearest integers and if you pay with cash, it is a perfect balance between practicality and precision. I do think that America should switch to the same rounding to the nearest multiple of 5 U.S. cents (the advantage there is that 5 is odd and you never have to think whether you should round it up or down).
We used to have the smaller coins – CZK 0.01 was called a heller (CZ: haléř). As a kid, I was routinely paying with 5-heller coins but I could still find the 1-heller coin in my grandfather's numismatic collection. After some time, CZK 0.05 was abolished and then 0.10 and 0.20 – unavoidably simultaneously, and then – more recently – CZK 0.50 were also abolished. In the late stages, the production price of the sub-crown coins exceeded the nominal value.
So the CZK 0.20 coin cost CZK 0.23 to be produced or something like that. It is crazy. How big a problem it is when you actually round things to the nearest crown? It is not a problem at all. You gain/lose a random number between CZK –0.50 and +0.50. When you do 250,000 transactions in your life, and it's surely an overestimate, most of the terms cancel and you get the square root of 250,000 times CZK 0.25 or so – some CZK 100 of error per your whole life! Someone is above zero, someone is below zero but everyone can get rid of the hassle of dealing with the sub-crown coins – for his whole life. Isn't it wonderful?
The banknotes cost something between CZK 1 and CZK 3 to be produced – the larger banknotes, starting with our CZK 5,000 (which is over USD 200 – Yankees and Western Europeans aren't rich enough to have 200-dollar or 200-euro banknotes, are they?) are costlier. But the production price is a tiny fraction of the nominal value. That's what makes the printing presses a modest industry that a country can easily afford. It is what makes the fiat money system so effective. The medium that carries the information that someone has the money and someone doesn't has to be cheap and practical.
On the other hand, the Bitcoin needs to be "minted" while the same amount of money is wasted in the electricity and hardware, approximately speaking. It is equivalent to the sub-crown coins. It's crazy! The society really needs to earn its wealth twice – once, it must produce the actual useful things; and then it must mint the coins in which the real wealth is stored. But even in late 2019, you still find lots of people pretending to be smart who say that it is a wonderfully ingenious idea to make the "value" tangible according to the Marxist theory of value in this way: the value of something is measured by how much work has been wasted. Sorry, it's not. You may easily waste years or your life on worthless things – and that's what the Marx-inspired economy was mostly doing at the end.
Similar comments apply to every other defining feature of the Bitcoin, e.g. the fact that every miner preserves the whole ledger of all transactions – the blockchain. The blockchain cultists – who are even more numerous than the Bitcoin cultists – mindlessly repeat that it is a wonderful idea. But none of them has been capable of actually independently thinking whether it is a good idea or a bad idea. Every brain that is working properly must quickly conclude that it is a terrible idea.
There is no usage for a blockchain that stores all the transactions, let alone the list for the whole world and in a huge number of copies that are needed for "decentralization". Consider your receipts. You buy a hamburger, do your shopping in the supermarket, buy a new gaming laptop (they didn't accept cards so I had to postpone the pickup), other things. Do you keep all your receipts? I think you don't. Why you should know that 4,508 days ago, you bought a hamburger for XY? It's stupid waste. There are so many old documents you want to throw away, otherwise you would be drowning in trash soon. Even if you have room to store it, you would need some nontrivial algorithms to be able to find whatever you need to find. Losing irrelevant old receipts is a great idea – and forgetting unimportant things is vitally important for the brains, too.
But the Bitcoin not only wants your hard disk to remember all the transactions – it wants your computer to remember all the transactions that 8 billion other people in the world have done in the past, too. How stupid is that? If you look at btc.com, you see that every 10 minutes, there is a new block. It allows some 3,000 transactions because the size limit is 1 megabyte (sometimes it may be up to 1.5 megabytes due to some recentupdates of the software). Bitcoin only allows a few transactions per second now and it can't be expanded.
Sometimes, the blocks are below 1 MB, around 0.5 MB in average (so 50% of the capacity is unused), sometimes, they are saturated at 1 MB and people are avoiding transactions because they just got a bit expensive. Clearly, Bitcoin as it exists is absolutely unusable as a payment system because you need millions of transactions per second, not several transactions per second. It is unusable even for smaller countries or one of 100 world currencies that would be comparably large.
And you can't fix it just by changing the parameters of the Bitcoin – different frequency or size of blocks etc. You don't really want to fix it because it's utterly stupid to remember hundreds of copies of billions of transactions every day. The fundamental assumptions of the whole blockchain industry are stupid. It's not only stupid for the whole, it's also stupid for the individuals. Their anonymity isn't really safely protected. Maybe the probability is 80% right now that the clever people who want to know (e.g. the FBI) will find out who was the payer in a random Bitcoin transaction. Powerful people have lots of tools to increase the odds. Do you really want someone to exactly know which porn journals you bought when? And many people are doing worse things.
There are lots of crazy things about the blockchain "technology" as a template for some payments or a part of the economy. But maybe something is even more fundamental than the craziness of all these particular aspects of the Bitcoin: what is crazy is the mindlessness with which people buy similar gospels today. People completely lack critical thinking, common sense, skepticism. If someone tells you that he has a new wonderful method for payments that seems to work completely differently than now – everyone remembers everything, the value of the currency is completely unprotected etc. etc. – it is an extraordinary statement and it merits extraordinary evidence.
People no longer demand that evidence. They just believe arbitrary garbage that is being pushed down their throat – especially when it's said to be progressive or disruptive or similar cheesy adjectives of the post-modern era. They don't understand that most of the things in the world have some reason to be the way they are – and if you substantially change some features of something, it will cease to work. When the price of the "money" becomes unprotected against fluctuations, the "money" will be unusable for payments and savings. If you strip the system of the ability to "forget" transactions, the system will be unusable for the transactions that should naturally be forgotten – and it's most of them. Similarly, if the transactions can't possibly be reversed by anybody, that's too bad – you won't be able to reverse obvious fraud and mistakes which is also bad.
When miners have a de jure control over the ledger, it's also potentially catastrophic because they aren't necessarily particularly trustworthy – and particularly independent – entities. But again, I think that most humans were given brains so that they may figure out such things after some time – and perhaps some help from others whose thinking is crisper. The main underlying general problem is that the people have been retrained not to think at all. They have been trained to feel morally superior whenever they just accept whatever progressive junk is being imposed on them. The more mindlessly and moronically they act, the more morally superior they feel!