This is the fourth part of handling objections to Bitcoin, and here we’ll discuss the technology category. As before, feel free to skip ahead to a specific objection if you’re currently handling one.
Bitcoin is too complicated
Let’s get into the first technical objection: that Bitcoin is too complicated. People who make this claim may say something like, “how can I invest in something I don’t understand?”
This statement usually comes from someone who is parroting Warren Buffett, one of the most successful investors of the last 50 years. Buffett famously said that he only invests in companies that he thoroughly researches and understands. Given his success rate, it’s understandable that many follow his advice almost religiously — but in the case of Bitcoin, few have actually spent the time to research it. Most people assume that researching Bitcoin will prove fruitless because they’re non-technical, or don’t have a degree in computer science or economics.
It’s true that understanding every line of Bitcoin’s code is probably out of reach for most people, but like any complex system, there are many layers and levels of abstraction that are accessible regardless of your background or intelligence level. And you don’t really have to understand all of these complexities to use Bitcoin — but that’s not really the objection here. Let me explain.
Take our banking system and fiat currency in the United States, for example. Few people actually understand how banks function, or where dollars come from, or what the Federal Reserve is, but that doesn’t stop anyone from using dollars and banks. We’ve grown up in this system; it seems familiar and convenient, and most of the time it just works. Now, if you’ve actually tried to research these topics, you know just how convoluted and complicated the system really is — and by comparison, Bitcoin almost seems too simple. Not from a technical standpoint, but more from an economics perspective.
I think the real objection here stems from the fact that people place an incredible amount of implicit trust in the current system while holding Bitcoin to a different standard. Bitcoin is relatively new, and it does take time for people to trust new systems, but it’s also overtly technical because of popular labels such as “crypto-currency,” which lead people to believe that they must understand esoteric concepts like cryptography in order to understand Bitcoin. What people don’t realize is that cryptography also underpins the security of the banking system — and really all of our modern communication and financial systems. But again, lack of understanding doesn’t stop anyone from using them, because it’s all based on trust.
Furthermore, I believe the original statement incorrectly frames this entire conversation by categorizing Bitcoin as an investment, as opposed to an alternate monetary system. We agree that you should try to understand any investment you make, and that you should build trust in any monetary system you choose to participate in — but these are two very different things that shouldn’t be conflated. Bitcoin isn’t a company with a CEO, a balance sheet, or cashflows, and trying to research and understand it by these metrics is nonsensical.
Instead, start with the assumption that Bitcoin is digital money that promotes human freedom, and compare it in like-kind to other types of money and markets that you’re more familiar with. And don’t sell yourself short. You don’t need a computer science degree to understand and use Bitcoin, or even to take self-custody — but you also don’t have to start at self-custody either.
As we mentioned in a previous part, we’re in a golden age of high-quality content on Bitcoin, and we’ve done much of the heavy lifting for you by bookmarking some of the best books, videos, and podcasts we’ve encountered over the years. They’re all available in the Resource Library linked below. It links to resources at almost every layer of abstraction, and we’re confident that anyone can understand Bitcoin at a meaningful enough level to develop trust and conviction to participate.
I’ll mention a few of our favorites now. If you’re into books and want to start with a non-technical overview of both the fiat system and Bitcoin, read Broken Money by Lyn Alden or The Bitcoin Standard by Saifedean Ammous. If you prefer shorter-form content, check out Matthew Kratter’s YouTube channel, Bitcoin University. And if you’re really looking for a good technical primer, start with 3Blue1Brown’s video, But how does Bitcoin actually work?
It’s outdated — alt-coins and proof of stake
Let’s move on to the second objection: that Bitcoin is outdated. You may hear this from someone who’s into alt-coins, which is a slang term for other cryptocurrencies besides Bitcoin.
One flavor of this objection is that Bitcoin, being the first widely adopted cryptocurrency, is a great v1 — but Satoshi could not possibly have gotten it perfect on the first try, and so there needs to be continued innovation in the form of alt-coins. This viewpoint comes from a flawed understanding of the history of Bitcoin, which really stretches all the way back to the 1970s, when public-key cryptography was first invented. From there, decades of research and innovation played out, resulting in projects such as DigiCash and Hashcash in the 80s and 90s — both of which can be viewed as early predecessors of Bitcoin.
In this context, Satoshi was actually standing on the shoulders of giants when he launched Bitcoin, after nearly 40 years of research in the space by legends such as Whitfield Diffie, Martin Hellman, and cypherpunks like Adam Back. Bitcoin could’ve proved to be just another project in a long line of failures, and at the time there was really no way to tell that it was special.
But for someone who’s aware of the history, you may encounter a more sophisticated flavor of the objection. For example, you may hear that Bitcoin’s proof-of-work protocol is unnecessary and wasteful compared to proof of stake, or that Bitcoin is too slow, or that Bitcoin doesn’t provide some key feature, like anonymity. In all these cases, the solution offered is the same: you should buy some alt-coin instead of Bitcoin because it’s better and represents a bigger investment opportunity.
We’ve already discussed at length why Bitcoin shouldn’t be viewed as an investment, so for now let’s focus on the technical claims of these arguments. With regard to proof of work, we covered how it isn’t a waste of energy in part 5 — so why do people feel the need to offer proof of stake as a solution to something that isn’t really a problem?
First, let’s define what it is. Proof of stake is a consensus mechanism used by alt-coins, such as Ethereum, where users validate new transactions by “staking” a certain amount of cryptocurrency for the right to do so. The more you stake, the more authority you get in choosing which transactions make it into new blocks. This eliminates the need to run a costly hashing function like SHA-256 in Bitcoin’s protocol, and it helps solve the problem of scaling the network to millions of transactions per day, or even more.
On the surface this seems great, but unfortunately it leads to the centralization of power into the hands of a few who already own the most coins — in other words, the wealthy elite. The proof-of-stake consensus mechanism is essentially a recreation of the power structure found in the traditional financial system, where the largest holders of fiat balances and assets wield the most political power.
And unlike proof of stake, proof of work anchors Bitcoin to reality, because real-world energy use is unforgeable from a physics standpoint — and this is the only decentralized way to prove that something actually happened before something else in a digital system. If you’re interested in more about why this matters, and how Bitcoin should really be thought of as a time-chain instead of a blockchain, watch Jack Mallers’ excellent presentation from Bitcoin Atlantis 2024. This one has a bit of language, so use discretion with where you watch it.
The summary is that, in order to prove that someone can spend money, we need to be sure they haven’t already spent it — and this is known as the double-spend problem in monetary theory. Proof of stake solves this problem by placing the power to decide the order of transactions in the hands of a few, and this makes it vulnerable to centralization, corruption, and censorship. And so we start to see a general principle, described by what blockchain researchers call the blockchain trilemma.
The blockchain trilemma refers to the challenge of achieving three critical aspects of blockchain technology: security, scalability, and decentralization. The trilemma suggests that optimizing one aspect often compromises the others, making it difficult to achieve all three simultaneously. In the case of proof of stake, the idea is to optimize scalability — but it comes at the expense of decentralization.
As many alt-coins come and go, it becomes increasingly obvious that Satoshi was well aware of these trade-offs, and that he carefully architected Bitcoin and chose the consensus parameters to strike a balance between these aspects of the problem. In part 1, we discussed the idea that financial systems operate in layers, and the notion that Bitcoin — or any other cryptocurrency — can or should solve all the use cases of money in a single layer is not practical, as it inevitably leads to unacceptable compromises.
The traditional finance system is a working example of a layer-based approach, and there’s nothing wrong with this type of solution. That isn’t to say Bitcoin is perfect and will never need changes, but the ossification over time is a feature, not a bug. It results in confidence that certain aspects of the protocol, such as the supply cap, will be the same today as they are tomorrow — and even in 100 years. Alt-coins that promote true anonymity, like Monero, can’t make this claim, and as such they’re unsuitable as money because they aren’t provably scarce. The same types of arguments can be used for any other so-called enhancement by alt-coins.
In the end, Bitcoin is the next Bitcoin, and there is no second best. For more details, check out Michael Saylor’s talk, Bitcoin: There Is No Second Best, and watch Bitcoin University’s video, Is Kaspa the Next Bitcoin? For more on proof of work versus proof of stake, read chapter 24 in Broken Money.
It can be lost or stolen
Now let’s look at the third objection: that Bitcoin can be easily lost or stolen. The media loves to publicize stories about early adopters who threw away hard drives with thousands of Bitcoin and now spend their days combing through heaps of trash in landfills. Some estimates even claim that over a million Bitcoin have been lost forever.
It’s undeniable that Bitcoin has been lost, but the question really boils down to this: is it any easier or harder to lose Bitcoin relative to other bearer assets, such as gold? In the most basic case, holding Bitcoin means writing down 12 words, or stamping those words into a fireproof metal plate that can be stored in a safe or safety deposit box, just like gold coins. If you go the metal-plate route, it’s actually nearly impossible to destroy the information without melting it down — so in reality the custody situation is very similar to that of gold or any other monetary metal.
Most of the famous cases of lost Bitcoin come down to the bearer not really understanding the value — or, more likely, the potential future value — of the asset, and so they were careless with it, or they literally forgot about it and threw it away. At this point, with Bitcoin trading around $100k, I think everyone is well aware of the value, and there are plenty of custodial and self-custodial solutions that make losing Bitcoin extremely unlikely.
Theft is actually a far bigger threat. If you take self-custody of your Bitcoin, you may be susceptible to a “$5 wrench attack” — that is, the idea that someone can threaten to kill you with a $5 wrench if you don’t hand over your 12 words. Even this is still very unlikely, but there are rare examples of it happening, so as the price of Bitcoin goes up — and if people know you may have Bitcoin — it’s prudent to take steps to defend against this threat.
If you’re into self-custody, one of the best ways to handle this is using a multi-sig wallet, which just means it requires more than one key, or set of words, to send your Bitcoin. We’ll discuss different custody options in the next part, but for now it’s enough to know that there are options, and that there are plenty of companies that can help you think through — and even do — collaborative custody for you. If you do choose to hold your Bitcoin on an exchange, it’s important to be aware that many people have had their Bitcoin stolen through scams like FTX and Mt. Gox, so please be careful and consider looking into self-custody options.
In the end, Bitcoin is still part of this world, and we still need to heed Jesus’ warning from Matthew 6, which says:
Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal, but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal. For where your treasure is, there your heart will be also.
Matthew 6:19–21
And this brings us to the final flavor of this objection: that quantum computers will break cryptography, and thus allow anyone to easily steal your Bitcoin. As with any human-designed system, it is theoretically possible to break many of the algorithms currently used by Bitcoin, and quantum computers may play a role in this — but this doesn’t necessarily mean the end of Bitcoin.
As ossified as Bitcoin may be, it is still software, and it can be modified to use quantum-resistant algorithms. So the question here is one of timing and incentives. Timing, because it has yet to be seen whether there will be sufficient warning time to implement the necessary changes; and incentives, because even if there is no warning time, the attacker has a financial incentive to steal the Bitcoin in a way that would not undermine the value of the entire network.
Many researchers believe we are decades away from this being a credible threat, and that there will likely be warning signs that provide ample time to finish implementing the quantum-resistant algorithms that Bitcoin core devs are already working on. In this case, most people will be able to move their coins to quantum-safe addresses, meaning that only lost or abandoned coins — such as Satoshi’s stash — will be at risk. And one final comment about all of this: if you’re worried about Bitcoin breaking because of quantum computing, then you should be equally concerned about the traditional finance system, which also heavily relies on cryptography that is not quantum resistant. For more details, check out Bitcoin University’s video, The Quantum Threat to Bitcoin.
It can be copied
Now we come to the fourth objection: that Bitcoin can be easily copied. People who make this claim might point to the many spin-offs of Bitcoin, like Bitcoin Cash, or they may draw an analogy, like Facebook beating MySpace. The analogies typically don’t work, because Bitcoin is a protocol, not a company — which means it’s more than just code or features. It’s also a network and a language that millions of people have adopted to communicate value across the globe.
In computer science, Metcalfe’s law states that the value of a network is proportional to the square of the number of users connected to it. This means that the more users a network has, the more valuable it becomes. In other words, Bitcoin has a giant first-mover advantage because of the number of participants in the network, and this is why all the forks of Bitcoin, such as Bitcoin Cash, have failed. That is, the participants in the network choose to continue communicating with the original set of consensus parameters, not the new ones in the copied, or forked, code.
So yes, anyone can easily copy Bitcoin and change a few parameters — but the resulting network has no value unless people voluntarily choose to adopt it, and there is no financial incentive to do so. For more discussion on why Bitcoin cannot be copied, read chapter 6 in Gradually, Then Suddenly by Parker Lewis.
It can be attacked or shut down
This brings us to the fifth and final technical objection: that Bitcoin can be easily attacked or shut down, or that it only works if you have the internet. It’s true, you can attempt what’s known as a 51% attack on Bitcoin, where a bad actor controls a majority of the hash-rate, or raw power, of the Bitcoin mining network. If a powerful individual, company, or nation-state were able to maintain such a hash-rate, they could theoretically control which transactions are accepted into future blocks on the blockchain — but in reality this opportunity is long gone.
At the time of this recording, the global hash-rate — the total computing power consumed by the Bitcoin network — is more than all of Google’s, Microsoft’s, and Amazon’s servers combined. And this doesn’t even take into account that Bitcoin mining hardware is highly specialized, so all of those servers would be useless for accomplishing a 51% attack for technical reasons. The only practical way to attack Bitcoin would be to shut it down — but because it uses proof of work, which makes it decentralized, this would require a coordinated and exhaustive effort by all the governments of the world to implement such an attack, something we already discussed in part 9.
Bitcoin University has several great videos on these topics if you want to learn more, so check out the ones called How To Stop A 51% Attack Instantly, along with their videos on how Bitcoin cannot be stopped and the hostile node attack.
So what about TEOTWAWKI — the end of the world as we know it? If the grid and the internet go down, where does that leave Bitcoin? The answer is: dormant on people’s hard drives until the power and internet are restored. But assuming civilization never comes back online — yes, this means the end of Bitcoin. To put it another way, Bitcoin does not replace bullets and gold when it comes to satisfying your inner prepper. Instead, Bitcoin is technology to bet on if you are hopeful for a bright future.
As Christians, we know that God is sovereign, and we can’t be sure exactly what the future holds — but we can have hope. Jesus finishes the Great Commission by reassuring the disciples that he will be with us always, in spirit, until the end of the age, when he will come again to reign in person with his people:
And behold, I am with you always, to the end of the age.
Matthew 28:20
Bitcoin may be a bright light in a dark world, but it barely casts a shadow compared to the glory and hope that we have in Jesus.
And with that, we’ve covered the top five technical objections to Bitcoin. Again, this is not an exhaustive list, and as time goes on and new objections arise, you should continue to learn about the risks and take prudent actions to protect yourself. As always, feel free to post a comment or question, or reach out to us directly if you’re having trouble handling a specific objection, and we’ll be happy to help.