July 10, 2018
To whom it may concern,
The introduction of this rule change is a very ominous step forward, not only for world finance, but also for the world as a whole. We are actually at a stage where a government body is seriously considering legitimising bits of code as something of value. Safe value (cash: backed by the world governments, or even stocks: backed by entire companies, products, business models and people) and cryptocurrencies are oxymoronic terms when placed side-by-side.
I could wax poetic about the perils of cryptocurrencies for the length of an entire novel, but that is not necessary - it has been done to death. I will preserve brevity - cryptocurrency being adopted would bring into play the biggest transfer, and thus, imbalance, of wealth the world has ever seen or probably will ever see. There are people who have picked up thousands of bitcoins for nickels and cents - if bitcoin ever becomes a serious portion of the world economy, or if it is legitimised by the government - these people will have a disgustingly inordinate amount of power. With the snap of their fingers, or rather, the click of a mouse, they would be able to collapse order books on exchanges, control entire corporations, and if they banded together, they would control the world. Not to mention the non-zero chance that the entity known as Satoshi Nakamoto returns, and demonstrates control of their private key. Now that would be chaos.
If we haven’t hit humanity’s technological progress boundary, and I think we have not, then the next step forward is quantum computing. As you know, consensus updates are possible and the bitcoin network can be made increasingly secure, but the development teams working on bitcoin have been proven to be extremely indecisive, and bad leaders when it comes to bringing in proper, productive change. A perfect example of this was SegWit activation - such an integral, important network update was a topic of controversy and was rather hard to attain due to the 95% consensus limit imposed. Additionally, a small block size increase is both necessary and overdue, but the current Bitcoin Core team refuses to acknowledge the fact that bitcoin will undergo a scaling crisis if significant transaction volume ever returns, like last year. Anyway - it is very likely that when the time comes, the bitcoin network will fail to implement the required updates in time, and this would be utterly horrible when quantum computing comes into play. If a single entity (be it a government, terrorist organization or otherwise) suddenly makes a quantum breakthrough, then the bitcoin network would be ruined completely. Even if there is no sudden breakthrough, and the buildup towards quantum computers is slow, we don’t really know whether the network would be able to implement new security in time. If the public has a significant amount of money “””””””invested”””””” (imagine very heavy and sarcastic air quotes) in cryptocurrencies, the results of this would be absolutely catastrophic. Within minutes, large amounts of money would be destroyed - for ‘early adopters’ or the ‘genius nerd cyberpunks who knew what they were getting into’, it’s not a massive deal. But for that young couple who just began saving for a down payment on their new apartment? For your grandma who saw the bitcoin ETF ticker and decided to put her retirement into it? It is the naive and innocent members of the public who will get royally screwed over.
You do not want to legitimise code. You do not want to create a precedent that value can be created out of thin air, and can have the stamped approval of the government. You do not want to show the public that you have faith in a value system that is corrupt, imbalanced, and can be destroyed completely in mere seconds. Please, please do not put the money of the public in jeopardy - do not be complicit in such a heinous sin.
It is only right for me to add that I have been heavily invested in bitcoin as well as similar cryptocurrencies for many years - but do not mistake this for a tacit endorsement of doing so. Everyone has a varying risk profile, depending on age, knowledge, and the amount they are willing to lose. For the majority of people, it is very unwise for them to put even a dollar into the cryptocurrency market. A good rule of thumb is, if you think you are ‘investing’ money when you buy bitcoin, then don’t buy bitcoin. The day you realise that what you are doing is actually known as gambling, then that would indicate that you have made a little bit of progress. Still - giving the public such an easy medium as well as a seal of approval into cryptocurrency exposure is extremely irresponsible, because that in itself is an implicit endorsement, and it discourages people from doing their own research into what they’re getting into. It’s kind of like if cocaine wasn’t sold by drug dealers and was instead sold in little tins in convenience stores. If the barrier of access to such things is so low… obviously a lot more people are going to get into it, and are going to risk a lot, simply because it is so easy.
Another thing I must add is, I believe in bitcoin’s long-term potential. This has nothing at all to do with the price of bitcoin, rather, it has everything to do with its utility. Every day, I amazed with how fast and useful bitcoin transactions are, and I rest easy knowing that my money is in my control, and is safe from not only seizure but inflation. Unfortunately, what you will find is the number of participants in the cryptocurrency market who are speculating on the price is far greater than the number of people who, as is commonly said, are in it “for the tech”. This deadly speculation results in wild price swings, which the average retail investor not only cannot stomach, but should not be allowed to stomach. If every investor had perfect discretion, then hell, let the public make their free choice - but no. That’s not how the world works. Joe and Judy won’t do their research into what they’re buying, and your grandma is definitely going to lose a few hundred thousand that may have been yours in a few years.
Bitcoin has come a long, long way. One day, it will be ready for an ETF. Not in half a decade… not in a year, and definitely not now. But someday. We all hope that day will come soon. Peace and love. Make the right choice.
- Varun Gaur