Bitcoin is not the money for all

A few years after its launch on the internet, Bitcoin became the preferred “solution” to poverty in many blog posts, YouTube videos, and other web content. Bitcoin has two main characteristics that give it relevance in today’s world; the first, that it is finite, so it does not lose value over time but quite the opposite, and the second, that it is decentralized, that is, no government or entity controls it directly. The idea of having an asset that does not lose value and which value does not depend on the political or economic interest of the government in power has led some cryptolovers to say that Bitcoin is «Money for the people», a kind of technological panacea that will save us all from poverty. However, three main aspects contradict that statement: Internet access, energy consumption, and distribution. If Bitcoin is for people, we are not talking about all people.

Access to Bitcoin is restricted by Internet access. Transactions are usually carried out online and this is not an unavoidable aspect at all, since around the world 41% of the population does not have access to the internet, not to mention that among the rest there are people without digital literacy. While this may change in the future, it is not a reality now for nearly half of the world who are mostly low-income. This fact points to a deep and almost obvious problem: inequities in the economic system affect people’s access to technologies like Bitcoin. In other words, you can get out of the system that monitors your money only if you have certain material conditions already assured, such as Internet access.

The energy consumption of the Bitcoin network is a general concern, since, with its highest price in history last year, the energy consumption also reached its highest point. Energy consumption is not a problem in itself but an indication of the environmental impact, which can be measured with the carbon footprint of Bitcoin: 68.26 metric tons of CO2 per year, comparable to the carbon footprint of Israel. This led me to think of this question on a Quartz blog: «How much energy use is justifiable for a fledgling industry that benefits only a relatively tiny number of speculators?» I think this is a question that could be applied to many other industries and the answer would be that it doesn’t matter. Bitcoin is embedded in an economic system that is not concerned with limiting consumption but instead encourages it. What is more inequitable than excessive consumption?

A Glassnode post claims that the distribution of bitcoin is not as unequal as has always been thought. The foregoing, based on the fact that, according to his analysis, 23% of the BTC supply is in the hands of retail investors, who are classified as people who have up to 50 BTC. Yes, FIFTY. Of course, it is not possible to put in the same box someone who has saved in BTC, for example, USD 1150 (the value of 0.025 BTC, which is approximately equivalent to 1 monthly minimum wage in the US and 5 in Colombia, the country where I am from) and someone who has USD 2,000,000 (the value of 50 BTC at today’s price, with which you could buy 14 high-class houses in Colombia). Looking at the data carefully, it is clear that the issue of distribution makes the system around Bitcoin unfair: 97% of all BTC holders have at most 17% of the BTC in circulation, the rest is in the hands of accumulators. Bitcoin follows the logic of accumulation and there it fails as a game-changer.

So, what do we do with Bitcoin?

Cryptocurrencies are not going to end, on the contrary, they will probably be mediating our daily lives shortly. If we consider what the philosopher Don Ihde suggest about the ability of technologies to be adopted for different uses and that none of them is a single thing because they are all capable of belonging to multiple contexts, we could think that the application of Bitcoin requires considering the conditions and that we need to think about how and where to use it. An example of the lack of the above is the Bitcoin Law defined in El Salvador. In the El Hilo podcast, they mention that «7 out of 10 Salvadorans rejected the use of Bitcoin as legal currency and 2 out of 10 did not even know what it was.» Without being an expert in politics or the philosophy of technology, isn’t this already an indication of how undemocratic and ethically wrong it can be to legalize and therefore force the use of, a cryptocurrency in a country?

The problem I see here is that many see Bitcoin as a solution to something bigger than itself; the unfair economic conditions under which most people live. While Bitcoin has brought economic advantages to some people, including me, that is far from enough to continue to perpetuate a utopian idea around it as a solution. Bitcoin, like many other technologies, must be approached ethically so that we can find a fair way to live with it and that its operation does not deepen existing social problems.

Analyzing aspects such as Internet access, energy consumption, and distribution allows us to see the limitations of Bitcoin as a currency. However, it is also necessary to have a deeper approach from an ethical and, at the same time, pragmatic perspective towards what its immersion in our environment implies. Whether or not we can have such an approach could make a difference in Bitcoin’s reach to improve or deepen poverty gaps.

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