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“Bitcoin isn’t Safe” – A Lie Told by Banks and Governments (Here’s Why…)

Yesterday while doing my daily Bitcoin Reddit review I stumbled upon a video by Andreas Antonopoulos. Andreas is a technologist and serial entrepreneur who has become one of the most well-known and well-respected figures in bitcoin. He gave a lecture at a Bitcoin San Fransisco meetup. It’s very short (24 minutes) and is probably one of the best explanations I’ve ever heard about why governments and banks tell us that Bitcoin isn’t safe.

If you want to see the whole video here it is (start at 1:17 after all of the fluff):

However, if you just want the main points I decided to give my personal summary of this super important talk.

Bitcoin is innovative, so innovative that sometimes people have a hard time grasping the concept of what it means to have a decentralized system (and what is it good for). They think that if there is in fact such a system, that can deliver predictable and unalterable results (also known as hard promises), we need to fix it.

They are saying is, if a system can only deliver “hard promises” it’s dangerous to the public since nothing can be altered once it’s written (or sent in the case of Bitcoin). Consumers won’t be protected from cases of fraud or theft since everything is irreversible. They are saying “Bitcoin’s immutability is a bug not a feature“.

However think of Bitcoin transaction as a program and not as payment. Since the concept of an irreversible payment is a bit scary. But a Bitcoin transaction is a program – the program is irreversible, not the payment. The program is executed exactly as written – predictable. It cannot be appealed, reversed or censored.

It’s a program that has a hard promise as a foundation but can be softened by additional programatic features to protect consumers . For example adding multisig, escrow and refund mechanisms..

Now the concept of hard promises becomes less frightening and much more powerful.

But today payment systems aren’t built on hard promises, they’re built on soft promises. Which means that when you go to the bank you’re hoping that the bank will fulfill their promise and allow you to withdraw money. However soft promises are easily broken – By influence, money, connection, violence and political power. And so we encounter situations in which our money is taken from us without our consent. 

Hard promises can’t be broken by anything. They are immutable.

Why do we use soft promises as our payment system?  because up until today there was no other way to conduct payments in a way that will be agreed on by the public. So one has to stop and wonder, now that we can actually move to a hard promise system, why aren’t we? Why are do banks and governments tell us that Bitcoin is dangerous?

One assumption would be that if we remove systems based on soft promises a lot of those who are currently in authority will be redundant. And so in their own self interest they are using a narrative of chaos and violence if authority is removed (as been done throughout history many times before).

We are led to believe that the opposite of authority is anarchy, chaos and violence. However that is not true. The opposite of authority is autonomy, and it doesn’t give us chaos but the highest of order which we have never seen before. Predictable outcomes that can’t be changed by authority.

A good example for an autonomous system is the Internet. The Internet gives us a hard promise of “once something is publish it cannot be removed or censored”. Such a promise is not liked by people of authority. Think about it, who suffers the most from such a hard promise?

Is it the public that understands they need to be a little more careful with what they post online?

or the people in power that can get their secrets exposed on a system that cannot be silenced?

The people in position of authority tell us that they are there to protect us from unlawful use of our funds. However how many times has a payment done without your consent to these authority figures has been reversed or cancelled. One the other hand, how many times a payment you made by your own will to a political cause (e.g. Wikileaks) or some anti institution organization has been declined.

Another assumption of why banks and governments don’t want a system of hard promises to take control could be because it would reduce their control of what gets written, and more importantly – what gets erased. Recourse is mainly used as a mechanism of control. The system of recourse doesn’t protect consumers, it protects authority.

Soft promises feed hierarchy, hard promises feed autonomy.


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3 comments on ““Bitcoin isn’t Safe” – A Lie Told by Banks and Governments (Here’s Why…)”

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  1. Yes, the time showed to the entire planet, that all so-called crypto money worth nothing! Everything is hoax and the precious Bitcoin and the rest of the cool crypto coins are gone and lots of greedy people lost millions! Congrats!

  2. AFAIK due to a little known edict at a G20 summit a few years ago all banks now have first rights over any money deposited with them. This means that your money isn’t actually yours anymore if you keep it in a bank. This was a protectionist move to ensure that a failing bank could use ANY assets it had to prop itself, and the economy, up in a crisis. In the UK we have a limit on the amount the government is prepared to insure people for, against a bank crash. It used to be £80k. Last year it was reduced to £70k. Nobody complained because most people don’t have any spare cash lying around these days!

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