Bitcoin Skepticism with Greg Thomson

October 9, 2019 Keegan Francis

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Bitcoin Skepticism with Greg Thompson Brad Mills

If we're honest, the cryptoverse is something of an echo chamber. Crypto enthusiasts are known to have strong opinions and beliefs that they will defend quite fiercely if needed. And the movement itself is based on untouchable philosophies like Bitcoin being a sort of panacea to the ills of today's global financial system. That's just one of the many viewpoints in the space that often go unchallenged.

What better way to re-examine one's long-held Bitcoin and crypto beliefs than with a friend? That's what Brad Mills does in this episode: "Bitcoin Skepticism With Greg Thompson" as he teams up with Thompson, a long-time friend, and successful game developer. The two talk with rarely seen candor in the crypto and blockchain space, challenging many of its most steadfast views. They get into everything, including:

The tax dilemma in crypto
Regulation
Whether Bitcoin is really about helping humanity (or are there nuanced motivations?)
Can Bitcoin thrive without Fiat on-ramps?
The US debt crises
Un-sugarcoated truth on investing in Bitcoin, and more

#1. Cryptocurrency and Taxes

Brad and Greg delve into the uncomfortable question of cryptocurrency taxes. Brad notes that Canada classifies Bitcoin as a commodity, and trading crypto for crypto is a taxable event, as is spending crypto for purchases. He describes this as "smothering" and that "there are other countries that are more forward-thinking" with this issue. It's hard not to agree with this when you realize even gifting someone with crypto is also taxable.

Understandably, cryptocurrencies are still a relatively new field, and their decentralized nature can pose a headache for regulators and tax bodies. Even then, it doesn't mean crypto taxes should be almost like punishment for users. Regulators ought to approach this in a way that doesn't stifle innovation or discourage the adoption of new financial technologies.

#2. Is Bitcoin Really About Helping Humanity?

"Bitcoin is a foundational tool for an inclusive, free, and open financial system for the future." This and similar bold declarations nearly always pepper every discourse on Bitcoin and crypto. Indeed, that's the big picture of the movement. Satoshi, who gave us the grand gift of Bitcoin and yet chose to remain anonymous, signifies these ideals in a way that can't be assailed. For the rest of us adopters, would we be involved in the movement if there weren't any incentives?

This is another touchy subject the two wade into. Greg poses:

"Is Bitcoin really about helping humanity?"

That's a worthwhile question that indeed every "every Bitcoiner should ask themselves," as Brad notes. Even then, the overwhelming sentiment would be, indeed, it is - because people can cash in on Bitcoin, benefit from DeFi products that it inspired, and give them access to wealth-making tools.

#3. Bitcoin is More of an Investment Vehicle Rather Than Currency

This wasn't the plan when Satoshi sat down for long months and thought and manifested Bitcoin. But due to its volatility, slow transactions, and admittedly, its veil of complexity, this is where we're at. Bitcoin should have been a "peer-to-peer version electronic cash" that allowed people to transact without third parties in the mix. But due to the above reasons, Bitcoin has morphed into more of an asset than a buy-coffee-by-the-subway currency.

"If it didn't have the word 'coin' in it, it would not even be related to a currency," Greg says.

That's hard to argue against. It's also why we have Bitcoin Cash, which split from Bitcoin and whose proponents wanted to make a 'lighter' Bitcoin that could be used for daily transactions. But even as Brad notes, the vast majority of the community stuck with Bitcoin after the fork. Which suggests that most Bitcoiners are probably quite okay with this state of affairs.

#4. Is Bitcoin a Ponzi Scheme?

Ah, the favorite go-to for Bitcoin skeptics. And who's to blame them? The thing is that some people have taken home a life-changing payday with Bitcoin, while others have been taken straight to the cleaners in similar fashion. Such incidents have given legs to the theory that Bitcoin is a Ponzi scheme. Brad and Greg dive into this, with Greg giving the analogy that most people invest in Bitcoin because they hope someone will pay for it at a higher price. This reminds you of the greater fool theory - because, after all, BTC investors are looking to cash in as more people rush in, pumping the price.

A Ponzi scheme is one where earlier investors are kept sweet with money from the newest rung of investors. It's a deliberate act of extortion - one that eventually collapses under its own weight when it's no longer possible to lure in new investors. Based on that, is Bitcoin a Ponzi scheme? Brad thinks it has 'Ponzi-esque' qualities, even if it's not outrightly one.

Timestamps

0:3:02: Introduction by Brad. The two talk about their experience in the game development industry

00.47:00: Brad and Greg talk about the morality and legality of cryptocurrencies without tax accountability

1:05:03: Discussion on what it takes for Bitcoin to considered a success

1:18:56: Discussion on whether Bitcoin is really about helping humanity

1:26:55: Greg talks about his real-life experience with capital control in China

1:36:00 The concept of Bitcoin as an accessible tech for all, Mt.Gox, Bitmain's unfair control over BTC mining, and the contentious origins of BCH

2:00:10: Would Bitcoin/crypto thrive without Fiat on-ramps? Tax consequences, risks of crypto trading, Blockstream's Bitcoin Satellite Network

2:42:52: Is Bitcoin a Ponzi scheme? Gold and BTC having more logical value than Fiat currency

2:52:54: Discussion on the concept of "localized altcoins," US's debt ceiling, and the flawed housing prices logic

3:24:25: Is it wise to put all your money in Bitcoin?

3:38:00: Facebook's defunct credits system, Facebook's Libra project, and the Lightning Network

4:02:10: BTC mining, China's dominant role, Facebook's potential of exposing the masses pto crypto, and Bitcoin being more an investment vehicle than a currency

4:18:43: Discussion on how BTC could finally "work" as a currency

4:28:11: Where to find Greg on social media