Jan 22, 2024

Addressing Key Disagreements Between TradFi and Bitcoiners

Samantha LaDuc spread controversy in the Bitcoin Twitter community. We’ll try to address the points she made

Addressing Key Disagreements Between TradFi and Bitcoiners

In a recent Twitter/X post, Samantha LaDuc spread controversy in the Bitcoin Twitter community.

In her articulated long-form post, she wrote that bitcoin does not meet the criteria to be considered a form of money.

In this article, we’ll try to address the points she made.

The Properties of Desirable Money

In “The Nicomachean Ethics,” Aristotle identifies six properties that characterize the ideal form of money: durability, portability, divisibility, recognizability, scarcity and acceptability as a medium of exchange.

The underlying principle is that, in order to serves as a good form of money, a physical currency must be:

  • Easily transferable through time and space (durability and portability),
  • Easily recognizable and distinguished from other materials (counterfeit-resistant), 
  • Scarce, so that it can retain and transfer value over time. Scarcity creates the “soundness” of money, since things that are scarce tend to become objects of rivalry and contention. People will be willing to engage in more and more complex and energy-intensive activities to acquire such objects, and that’s what gives things value.
  • Easily divisible into smaller units to enhance practicality in exchanges, and value estimation. Hard money appreciates over time, and using materials that can be divided into smaller pieces that will represent the same value as time passes is necessary.
  • Accepted as a medium of exchange, and by definition, a desirable form of money. An object can be theoretically perfect to be money but ultimately, humans make the rules.

Throughout history, humans found that gold and silver embodied all of the above mentioned physical properties best and adopted them as a form of money, giving them the last “blessing”; the status of medium of exchange. Bitcoin was designed to embody all these desirable properties, leaving its adoption as a global medium of exchange at the individual’s own discretion.

Being a digital currency, Bitcoin is more transferable, durable and divisible than physical commodities like gold and silver. The Proof-of-Work (PoW) algorithm is fundamental to ensuring its recognizability.

It is fundamental to acknowledge that bitcoin shouldn’t be considered money that needs a mandate by the state to operate (FIAT money), but rather a medium of exchange adopted for its desirable features, in an organic way.

“What bitcoin is representing is the return of money to its original creator, the private sector.” - Javier Milei

LaDuc Points

“Scarcity is Not Equal to Value”

In her post, LaDuc starts from the premise that “value is not assigned just because something is scarce.”

While inherently true (scarcity is not the only property that makes bitcoin desirable money), Bitcoin wouldn’t have so much demand if it didn’t meet all the other criteria of desirable money. 

Moreover, taking bitcoin into self-custody allows users to be sovereign with their wealth in the sense that eliminating the intermediary from the equation means eliminating counterparty risks.

Ultimately, monetary debasement (inflation) and fractional reserve are pretty much everything Bitcoiners want to avoid, and in Bitcoin they found the right tool for the job.

But there’s more, as censorship-resistance is one of the main components of Bitcoin's value proposition. This property is very desirable for individuals living in countries with oppressive regimes. 

And ultimately, the supply schedule and fixed cap of 21 million units ensures that supply won't be debased, be it to stimulate the economy after a global recession due to a pandemic, or to finance wars across the globe.

But besides economic and humanitarian properties, Bitcoin could be a game changer in a future where most of the conflicts between countries will take place in cyberspace.

As the US Space Force officer and astronautical engineer from MIT Jason P. Lowery writes in his book “Softwar,” Bitcoin can be a game changer in the cybersecurity of tomorrow, thanks to its security protocol (PoW), sustained by the most powerful computer network in the world.

Bitcoin’s potential goes way beyond its function of a monetary system. CEO of Blackrock Larry Fink recently stated that the tokenization of real word assets in the Bitcoin blockchain could disrupt the financial industry and generate a paradigm shift in efficiency and security.

“Bitcoin is Not Money”

LaDuc says that “actual money has to be ‘forced’ on us by the Govt [...] THE STATE does not force/enforce bitcoin as a real currency, so it IS NOT money.”

What LaDuc fails to recognize here is that this is the definition of FIAT money, not “actual” money. 

Money was not created by the government to allow the people to exchange goods and services. Money was born from the private sector, as Argentine President Javier Milei stated recently.

There is no such thing as “curso forzoso” in the purest definition of what money is. LaDuc also says “Bitcoin is ROGUE MONEY, which is on the opposite spectrum to sound money.”

That is misleading and fundamentally false. Bitcoin is a digital currency that enables privacy, much like FIAT money, which better qualifies it as true rogue money, in the sense that it’s the preferred solution for illicit global money transfer.

As Elon Musk said some time ago, money “is a database for resource allocation.” Money is a tool to allow the exchange and transfer of resources in a more practical way than barter.

Conclusion

While providing valid points in her criticisms of Bitcoin as a legit form of money, Samantha LaDuc demonstrated a considerable degree of bias in her opinion about the orange coin and what money is.

While Bitcoiners will disagree with pretty much everything she said, we want to conclude this article with a quote from her post, her only words that everyone will agree with until history will takes its course:

“We can survive and thrive together. It’s not all or nothing!!”

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