I'm a bit interested in Bitcoin, but I also hear people saying "You should avoid it," so I'm a little worried…
There are some who say things like "Bitcoin seems suspicious" or "It will lose its value eventually."
However, it's premature to criticize Bitcoin or dismiss its existence based on these notions alone.
This article will provide clear counterarguments to the "You should avoid Bitcoin" stance, making it easy to understand for beginners.
Key Points of the Article
- The Bitcoin market is expanding globally, making scenarios where Bitcoin becomes worthless quite unrealistic.
- While scams involving Bitcoin do occur, Bitcoin itself is not a scam.
- The idea that "investing is dangerous because you can lose money" overlooks the current risk of keeping all assets in Japanese yen, which is weakening.
This article was written in Japanese and converted to English using a translation tool.
Date of writing (Japanese version): March 2024
Countering the "You Should Avoid Bitcoin" Argument One by One
I've heard people say you should avoid Bitcoin, but what’s the real story?
I'll address each critical opinion about Bitcoin one by one.
Argument: "You Should Avoid Bitcoin Because It Will Lose Its Value"
I've seen people saying, "Is Bitcoin still around?"
Interest in Bitcoin is still quite low in Japan…
But globally, the market is expanding rapidly, and the scenario where Bitcoin becomes worthless is quite unrealistic.
Bitcoin possesses unique characteristics not found in traditional assets, such as ease of international transfers and high scalability. Some people are so attracted to its scarcity and potential that they prefer to hold Bitcoin over their own country's currency.
Additionally, in 2024, a Bitcoin spot ETF was approved in the US, and it is traded as a "commodity" like gold and oil. The world's largest asset management company, BlackRock, has started handling Bitcoin, suggesting that the market for Bitcoin will continue to expand.
But I've also heard that "Bitcoin is dangerous because it has no intrinsic value."
Regarding the "no intrinsic value" argument, I’d like to start by questioning whether fiat currencies like the yen or dollar have intrinsic value.
For more details, check out the interview with Bitcoin expert Koji Higashi.
You Should Avoid Cryptocurrency Because It's Suspicious" Argument
I feel like there are a lot of people making weird solicitations about cryptocurrency…
It's true that there are people promoting exchanges for affiliate commissions or soliciting the purchase of altcoins (cryptocurrencies other than Bitcoin).
The cryptocurrency business is widespread, and some individuals and companies make suspicious claims in media, blog articles, and on social media.
- Affiliate Promotions for Cryptocurrency Exchanges
"I recommend registering with this exchange!" statements on sites where the author earns a few thousand yen to over ten thousand yen per registration through affiliate links. - Soliciting Altcoins
Promoting altcoins with phrases like "Better than Bitcoin!" to attract investments and earn marketing fees from the altcoin issuer. Many altcoin projects are aimed at benefiting the issuers or related parties.
Bitcoin doesn't have an issuer, so there's no reward for promoting it, unlike altcoins.
Bitcoin is in a class of its own among cryptocurrencies, but in Japan, Bitcoin and altcoins seem to be treated the same, which is a bit unfortunate. In the US, Bitcoin is considered a commodity, but the legal status of altcoins is unclear, and there are debates about whether they might be securities.
It feels quite reasonable to think that cryptocurrencies trying to profit by targeting the general public are suspicious. Perhaps many people and media lump Bitcoin into that category as well.
"You Should Avoid Bitcoin Because It Seems Like a Scam" Argument
I've heard that there have been scams involving Bitcoin…
I want to shout this from the rooftops: Bitcoin itself is not a scam. Just like cash can be used for criminal activities, Bitcoin can be misused for scams, but that doesn't mean Bitcoin itself is suspicious.
Indeed, scams involving Bitcoin occur, but Bitcoin itself is not a fraudulent product.
Examples of Scams Involving Bitcoin
- Phishing emails demanding Bitcoin
- Bitcoin investment scams and Ponzi schemes
- Bitcoin giveaway scams on social media
There are real estate investment scams and refund scams, but real estate and refunds themselves are not scams. Similarly, Bitcoin isn't a scam; it's just that some people misuse it.
I see that well-known companies like Mercari, and Rakuten are involved in Bitcoin-related businesses in Japan. If Bitcoin itself were a scam, major companies wouldn't be getting involved in Bitcoin businesses.
It's not widely known in Japan, but globally, many companies are working on Bitcoin-related businesses, and its use cases are expanding. In countries like El Salvador and the city of Lugano in Switzerland, Bitcoin has been adopted as legal tender.
"You Should Avoid Investing Because It's Risky" Argument
But isn't there a risk of losing money if I invest in Bitcoin? The risk is a bit scary…
It feels like there are quite a few people in Japan who think "investment is bad." But considering the current situation where the yen is getting weaker, I want people to realize that keeping all their savings in yen also carries risks.
Bitcoin has seen significant price increases despite major fluctuations, but it's true that the timing of buying and selling can result in losses. For those not accustomed to investing, focusing solely on short-term price movements makes it difficult to profit, so it's best to think of it as a long-term investment over several years.
In countries with high inflation, such as Turkey and Argentina, many people buy Bitcoin as a hedge against inflation.
Inflation: When the overall prices of goods rise, reducing the value of money.
Bitcoin has a cap of 21 million coins, and some choose it as a scarce and valuable asset for savings.
But can't the cap on Bitcoin issuance be easily changed? Since it's digital, it feels like it could be increased with a simple click…
Changing the issuance cap would require the approval of the majority of nodes on the Bitcoin network, which is highly unrealistic.
*Node: A computer participating in the Bitcoin network. There are over 17,000 nodes worldwide, and anyone can participate as a node.
Those deeply involved in Bitcoin value its issuance cap, so changing such a fundamental aspect is unlikely.
Changing the issuance cap is unrealistic, but some people take the phrase "the cap can theoretically be changed" out of context and claim it as a risk of Bitcoin.
"You Should Avoid Bitcoin Because of Hacking Risks" Argument
I've heard that there have been incidents where Bitcoin was hacked and stolen in large amounts…
There have indeed been incidents where exchanges storing large amounts of cryptocurrency were targeted and hacked. But Bitcoin is an asset you can manage yourself, so let's make sure to manage it properly.
It is true that exchanges with poor management of cryptocurrencies have been attacked, and vulnerabilities in DeFi (decentralized finance) have been exploited, leading to large amounts of funds being stolen. By avoiding platforms prone to attacks and managing Bitcoin correctly on an individual level, the risk of hacking can be reduced.
Some people might worry about managing Bitcoin themselves, but using wallets correctly and developing security awareness isn't that difficult. It's also important to avoid strange altcoins, dubious decentralized platforms, and airdrops.
Many recent hacking incidents have occurred in DeFi. Instead of being tempted by immediate returns or rewards, it seems better to stick with traditional storage methods.
"You Should Avoid Bitcoin Because of Taxes" Argument
But isn't Bitcoin taxed?
Any investment that generates profit requires tax reporting. While Bitcoin's current tax treatment is less favorable compared to stocks, that doesn't mean "Bitcoin investment is bad."
There are claims like "half of Bitcoin is taken by taxes in Japan," but a tax rate of over 50% applies only to those with annual incomes in the tens of millions of yen, which doesn't apply to most people. Additionally, simply buying Bitcoin doesn't incur taxes, so if you don't engage in short-term trading, you won't have to report taxes.
I was unsure about investing because I didn't understand taxes well. But with the yen weakening, I feel like I need to seriously think about investments.
Instead of avoiding Bitcoin just because of taxes, it might be good to use it as an opportunity to learn about taxes and investments.
"You Should Avoid Bitcoin Because of 51% Attacks" Argument
I've heard that Bitcoin can be subject to 51% attacks, but I don't really understand it and it makes me anxious…
In conclusion, a 51% attack on Bitcoin is not realistic.。
A 51% attack occurs when malicious miners control 51% of the hash rate, allowing them to double-spend transactions.
Miner: Participants in the mining process.
Mining: The process of verifying transactions on the network and correctly writing them to the blockchain, earning Bitcoin as a reward.
Hash rate: The computational power per second used in mining.
While there have been instances of 51% attacks on other cryptocurrencies, conducting a 51% attack on Bitcoin for just one hour would cost billions of yen. Additionally, once the attack stops, the network would return to normal, making a 51% attack on Bitcoin technically and economically impractical.
Some self-proclaimed experts seem to mention the "51% attack" to make themselves appear more knowledgeable or to disparage Bitcoin and promote other projects.
Be wary of self-proclaimed experts who tell beginners that "you should avoid Bitcoin because of the 51% attack."
There are many technical terms involved with 51% attacks, so I won't go into detail here. If you're interested in learning more, please check out the following article.
Recommended Articles：What is the 51% Attack on Bitcoin?
Famous Bitcoin Skeptics
In Japan, Hiroyuki is known as a prominent critic of Bitcoin.
Notable Figures Who Have Spoken Against Bitcoin
- Hiroyuki
→ In a 2024 YouTube video, he stated, "With 51% attacks, where we can't identify the attackers, Bitcoin's structure is flawed. I think it might be replaced by another cryptocurrency." - Former Bank of Japan Governor Haruhiko Kuroda
→ In a 2021 interview, he said, "Due to its lack of backing assets, its price fluctuates significantly, and it is hardly used as a means of payment." - Warren Buffett
→ At the 2018 Berkshire Hathaway shareholders meeting, he called Bitcoin "rat poison squared." In 2023, he added, "Bitcoin has no intrinsic value. However, it's understandable that some people want to spin the roulette wheel."
Incidentally, Michael Saylor, CEO of MicroStrategy, a major U.S. company that has purchased a large amount of Bitcoin, was skeptical of Bitcoin in 2013. Some people who initially held negative views have changed their stance as the Bitcoin market has grown.
I often hear people say, "You should avoid Bitcoin." Some people who criticize Bitcoin may want to justify their decision not to buy Bitcoin.
Summary: Countering the Argument "You Should Avoid Bitcoin"
Key Points
- The global Bitcoin market is expanding, making the scenario of Bitcoin becoming worthless highly unrealistic.
- While there have been scams involving Bitcoin, Bitcoin itself is not a scam.
- Although some believe "investing is risky," it's also important to recognize the risks of keeping all assets in Japanese yen given its weakening state.
Some people say that Bitcoin will become worthless, or deny Bitcoin based on false information. I think it is difficult for such people to understand Bitcoin, so please leave Bitcoin alone and do not criticize it.
It's frustrating that while understanding of Bitcoin is gradually spreading overseas, Japan seems to be several years behind. Even if some find it daunting to suddenly buy Bitcoin, I hope they start by seeking accurate information.
Let's start by learning more about Bitcoin with accurate knowledge!
Recommended Articles：What is Bitcoin?
Writer：Sigeru Minami
Creator of "Bitcoin-zukan.com."
Active as a handmade craftsman of Bitcoin goods.