Bitcoin has No Utility 🤦

Adversaries of Bitcoin love to say that it “has no utility” 🤦.

Which drives me a lil nuts, because it is simply not true.

A very useful utility: medium of exchange.

Or better put: Bitcoin is a permissionless global value-transfer and settlement network.

More simply: Sending and receiving money 💸
1) Across borders
2) Or within Canada, e-transfers suck!

Note that this applies more broadly to Crypto as a whole, but I only focus on Bitcoin.

1) Across Borders 🇳🇱 🇬🇧 🇯🇵

Have you ever tried to send money to someone in the US? Or anywhere in the world? It’s a royal PITA.

E-transfers do not work, these are Canada only.

There are some decent ways to send money to/from the US, but they all require a middle man.

A bank, or some third party service like PayPal or wise.

*Wise is a new thing I learned about just today, and seems like the cheapest US solution for a lot of cases.

All of these solutions have FEEs, which are often opaque. Especially the FX fees.

All require TRUSTing a middle man.

A bank wire takes multiple days. Oh it's a Saturday? Sorry you’ll have to wait until Monday.

In terms of privacy, you usually need a ridiculous amount of recipient information: full legal name, address, account number, bank/branch address, routing number, etc.

See the image below for a breakdown of fees and speeds.

Whereas BITCOIN, you can send money anywhere in the world directly. No TRUSTing a middle man to do this for you is required.

You can literally VERIFY the transaction yourself.

The fees are extremely small, and are not percentage based. It's basically the same fee to send $10 as it is to send $1,000,000.

A Bitcoin transaction appears on the network almost immediately. Once mined, it gets its first confirmation usually within 10 minutes (1 block). Every subsequent block makes reversal exponentially more difficult, and you can independently verify all of it.

The transaction is then SETTLED. No reversal.

24/7, 365 days a year.

Bitcoin Lightning, a layer 2 solution, further reduces the fees and speeds. Near-instant payments for tiny fees. There are a couple tradeoffs here, but it is awesome for small transactions like paying for a coffee.

2) Within Canada - e-transfers Suck!

Somehow in Canada, “e-transfers” have become the main way to send and receive money.

It’s like a clever front end hack sitting on top of the Canadian banking system.

When you send money, it doesn’t actually travel through email. It uses the interac network between the sender and receiver’s financial institution.

It is NOT real time settlement. Making them susceptible to scams in many different ways.

If you sell something on marketplace, and someone sends you $500 via etransfer.

Is that $500 safely in your account forever?

No.

It could be reverted and you cannot do anything about it. That person cannot simply hit “undo”, but that person could still quite easily be scamming you.

It could be from a compromised bank account, or the legitimate account owner can report it as unauthorized / fraud. Which could lead to reversal.

The most common scam for this today is when someone “accidentally” sends you some money and then asks you to send it back. After you send it back, the amount they you sent originally gets reverted. Disappearing from your account.

Not to mention that e-transfer request e-mail and texts are a great medium for phishing attacks.

There are also limits to transaction size, and it is anchored on sensitive personal information like email address and phone number.

Sending and receiving money to anyone in the world is clearly one Utility of Bitcoin.

There is no sitting around for a week wondering when your wire transfer will go through. Or worse, what if the wire transfer doesn't go through for some reason?

What if the bank decides to hold your money to investigate? What if they flat out reject it? What if they completely freeze your account?

What if…. <insert basically infinite what if’s here>

With Bitcoin, you can send money to anyone in the world using a simple address string. You can independently verify the transaction from point A to point B. All you literally need is the internet to broadcast it. Using a wallet that you have complete control over.

Cheers 🍻

6,674 views

56 Comments

Kyle Garrett

@kgcottawa · 1mo

I enjoyed reading this, and I agree with a lot of it.

I don’t think “Bitcoin has no utility” is a very strong argument against bitcoin, so I’ve listed my top shit-disturbing comments / thoughts on why I personally don’t think BTC is gods gift to humanity. (That title is still held by Led Zeppelin, in my opinion 🎸)

BTC clearly has utility, as it is used daily. Tits on a bull have no utility. Something used daily across the globe is clearly more useful than bull titties.

So I agree, BTC has utility.

My shit disturbing complaints:

1. The barrier to entry is huge. I don’t want to hear some BTC Maxxi talk about how simple it is while they go on to talk about ethereal networking concepts and cite the white paper like a good BTC nerd. The fact is that to safely use and keep custody of Bitcoin, normal people need to understand wallets, seed phrases, private keys, exchanges, fees, addresses, scams, cold storage, backups, etc. That is a lot to ask, especially for boomers, who own the majority of assets and are slow to adopt btc. Without boomer adoption, it’s hetero males >18 and international crime syndicates for the most part.

2. The power thing! 🔌
I know I mentioned this in Toronto, but it’s a good one. Yes, banks and e-Transfers also need power/internet. But Bitcoin is COMPLETELY unusable without BOTH power AND communication networks for BOTH PARTIES of the transaction.

If either power or networking is down, I can still hand you a $20 bill for food, fuel, or a service. Bitcoin cannot do that.
Maybe unlikely, but you and I live in Ottawa and have enjoyed week long power outages in recent memory. This will get worse, and BTC would not have helped buy food or gas.

3. No middleman also means no safety net. If someone steals my Bitcoin, I lose my keys, or I send it to the wrong address, I may be out of luck permanently. Completely fucked.
That is the trade-off of self-custody, sure, but I am not convinced most people actually want to be their own bank. That’s why I’m sitting pretty on all of my CAD bank positions. There’s a reason people outsource labour that is beyond them to skilled outsiders. In Canada, that’s highly regulated.

4. Privacy is more complicated than it sounds. BTC maxis love to preach anonymity in one breath, and then go on and on about live and public transaction verification as if it doesn’t undermine the exact point they just made on how anonymous it is.
Bitcoin is transparent by design. Wallet activity is public, and once an address is connected to you, your transactions can potentially be tracked, and not just by a law enforcement agency with a warrant; any fucking idiot with a little knowledge. That’s Troubleing to me.

It is a different privacy model from banking entirely, but not necessarily a better one.

5. And my favourite and weakest argument point - fiat.
Bitcoin is supposed to be an alternative to fiat, but we still measure its value in fiat.
BTC is worth X CAD. Bitcoin is up X% in USD. My fat BTC wallet iss worth X dollars.
It’s like telling all of your friends you’re over your ex GF, but every time you meet a new person you compare and contrast them to the ex GF. how over her are you, if she’s your yardstick on all other potential partners?

So yes: Bitcoin absolutely has utility.
I’m just not convinced that having utility automatically means it is the superior monetary system. I don’t know why we can’t enjoy both.

I have a lot of money invested in the CAD Financial space, and for me, $BTC is a hedge on that. But so to is my USD accounts, my international positions, etc etc.

Alright- shred me !

CAPS LOCK ON

@theanonymousinvestor · 1moEdited

AS MUCH AS I BELIEVE IN BITCOIN AS AN ASSET, I CAN'T BRING MYSELF TO IMAGINE USING IT TO REPLACE THE DOLLAR. MIND YOU, I'LL NEVER HOLD A RIDICULOUS AMOUNT THAT WOULD BE WORTHWHILE ANYWAYS. BUT TO ME, ITS JUST AN ASSET THAT I HOPE APPRECIATES WITH A PRETTY NICE RETURN.

Kyle Jones

@investwithkyle · 1mo

Gold has no utility either but look how valuable it is

Sarah Giver

@staystronggiver · 1moEdited

I love this write up Michael, I see it as an asset and a storer of value more than a replacement for currency. I found many arguments laid out in The Bitcoin standard compelling (he is extremely libertarian to a point that's not practical. I could do with less modern art commentary). I am fascinated by the block chain technology, and I love the idea of sheltering money from corrupt government regimes etc with family in the global south unable to save in their local currency, giving them sovereignty/ security. I never see governments or large corporations giving up the financial power with the status quo of the stable western currencies and ever depreciating currencies of poorer countries.

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