The Stance of Bitcoin Supporters
Dr. Saifedean Ammous believes that Bitcoin represents “a new technological solution to the problem of money, born from the digital age, utilizing many technological innovations developed over the past few decades, and benefiting from extensive experiments in producing digital money.”
From the perspective of its supporters, one of Bitcoin’s key advantages is that it resembles physical cash transactions without an intermediary in real time. However, simultaneously, it functions like digital payments between two parties not in the exact location, separated by geographical distance.
Bitcoin’s production and trading method is inherently decentralized, preventing external control. Its fixed supply of 21 million Bitcoins ensures that no additional units can be created, thereby preventing inflation caused by an oversupply and maintaining its value.
Due to its high-level encryption and lack of external oversight, Bitcoin transactions offer privacy and anonymity.
Since it is purely digital and does not rely on intermediaries, Bitcoin transactions are fast and inexpensive. It is in the best interest of network participants for Bitcoin to succeed, as they all benefit from its adoption.
Supporters also argue that money laundering is not exclusive to cryptocurrency transactions but is prevalent in the traditional financial system.
According to an article published on the U.S. State Department’s website, “Money laundering activities have also increased across all sources. The IMF and World Bank estimate that 3% to 5% of the global GDP is laundered annually, amounting to approximately $2.17 to $3.61 trillion.”
This raises a critical question: Has the traditional, centralized global financial system succeeded in preventing money laundering? Or are political, social, and developmental solutions the more effective approach?
Suppose people felt they had access to a dignified life with financial security for themselves and their families. Why would they risk losing it through illegal activities with severe legal consequences?
The Stance of Bitcoin Opponents
Bitcoin faces numerous accusations and warnings from major international institutions, including the International Monetary Fund (IMF), the World Bank, most academic institutions, and central banks worldwide—except for El Salvador, which has adopted Bitcoin in large quantities.
As for why academic institutions warn against cryptocurrencies, economist Lawrence White explains in a research paper published on ResearchGate, titled The Federal Reserve System’s Influence on Research in Monetary Economics (2005), that “The Federal Reserve System is not just a topic of research for American monetary economists; it is also one of the primary sponsors of their research.” He adds, “Slightly over 80% of these researchers had at least one co-author affiliated with the Federal Reserve System (either as a current or former employee of the U.S. Federal Reserve Bank, including appointments as visiting researchers).”
This stance is no different from that of the International Monetary Fund (IMF), which remains sceptical of cryptocurrencies. In an article published on the IMF’s website titled Comprehensive Policies Are Essential to Protect Economies and Investors in the Digital Asset Sector (2023), the authors—Tobias Adrian, Dong He, Aref Ismail, and Marina Moretti—stated that “To prevent the replacement of national currencies with digital assets, strong and trustworthy national institutions must be maintained. A transparent, consistent, and well-coordinated monetary policy framework is essential to address the challenges posed by digital assets.”
To safeguard national sovereignty, the authors argued that “Digital assets should not be granted the status of official currency or legal tender, as doing so could force nations to accept them for tax payments, fines, and debt settlements, potentially leading to financial risks, threats to monetary stability, and even rapid inflation.”
The Reason Behind the Bitcoin Phenomenon
Throughout history, no currency has ever gained value unless a group of people collectively agreed on its scarcity and significance. Imagine a plane making an emergency landing on a small, unknown island in the middle of the Atlantic Ocean. What would the value of the money in the passengers’ pockets be in their eyes? Nothing. Even if they carried millions of dollars.
Any material or immaterial asset derives its worth only when a group acknowledges its rarity and desires to possess it.
This is precisely what happened with Bitcoin—a purely symbolic, intangible entity that had no real value when it first emerged in 2008, yet gradually transformed into something of tangible worth, despite its existence being purely digital, confined to the minds of its believers.
Nathaniel Popper, in his book Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money (2015), writes:
“The most significant moment in Bitcoin’s history was the first day when the tokens on this network transitioned from being economically worthless to holding actual market value… In May 2010, Bitcoin was used for the first time in a real-world purchase when someone paid 10,000 bitcoins for two pizzas worth $25 at a rate of $0.0025 per bitcoin. Over time, more people heard about Bitcoin, became interested in buying it, and its price continued to rise.”
Those 10,000 bitcoins, which were worth $25 and exchanged for two pizzas in 2010, are today—at the time of writing this article—equivalent to nearly one billion dollars, or more precisely $966,942,300, based on the current value of one bitcoin is approximately $97,000.
If people felt economically stable and confident in their national currencies, they would not resort to a virtual currency that rises and falls like a roller coaster in an amusement park.
If people felt economically stable and confident in their national currencies, they would not resort to a virtual currency that rises and falls like a roller coaster in an amusement park.