Dear David,

Having listened to your recent podcast, ‘Bitcoin is back, why?’ (14 December 2023), we feel compelled to reach out. We do so in good faith, on the record and in the full light of day. Behind the pseudonymous profiles and laser eyes on X are regular Joe Soaps, whose opinions may, in aggregate, be slightly more nuanced than the strawman versions you so eloquently construct. Perhaps the propensity of you and others to describe us as keyboard crypto warriors with a misplaced persecution complex makes the idea of sticking our heads above the Overton parapet somewhat unsavoury. In any event, you will note that those of us penning this letter have opened ourselves to the reputational damage that our conviction in Bitcoin will and should bring if we are ultimately proven wrong, which we may well be. 

You rarely spare our feelings, so we will show you the same frank courtesy. Many of us enjoy listening to your podcasts generally, notwithstanding our disagreements on this topic. While your opinions on Bitcoin don’t particularly bother us, we recognise that the David McWilliams Show has extraordinary reach in Ireland and beyond. Thus, we write for the sake of those who listen to you. We have little doubt that using this language will likely validate your perception of our ‘saviour complex’. All we can say in response is that our strong views on this phenomenon are genuine and not lightly held. We don’t offer investment advice to you or to anybody else, but we do encourage thoughtful investigation of something that is deserving of serious analysis, rather than the hand-waving dismissal encountered all too often.

The intention of this letter isn’t to shout in all caps that you are wrong and we are right. It is to outline what we see as significant flaws in your reasoning when discussing Bitcoin. We don’t expect these paragraphs to change your opinion, but if having read them you are able and willing to present our argument in some form other than straw, we will happily agree to disagree. The podcast episode which elicited this response was premised on the noble ideas of intellectual humility and reexamining your approach when required. While the intention was good, we hope that you can see that you preached, without following through with the practice.

“The only people who think this is money are people who have a profound misunderstanding of what money is.”

Getting to the substance of our disagreement, it is probably accurate to say that we have such fundamental differences in our respective views about the nature and role of money that we will not bridge the entire ideological gap here. Your views are fundamentally Keynsian, ours Austrian. We would however like to respond directly to some of the points you made during the show, and which you have been making quite consistently for some time now. If nothing else, we hope you may acknowledge that these arguments demonstrate a different but no less bona fide view of money, with less than absolute confidence that our misunderstanding is downright profound.  

You often hang your hat on what you deem to be Bitcoin’s catastrophic flaw: its scarcity and inelasticity. Ironically, we consider this to be its greatest strength and most important characteristic. You quite correctly state that Bitcoin has a hard cap of 21 million coins, providing a helpful demonstration that this limit is engrained not only in the code, but just as importantly in the public consciousness. You state that money wants to expand, which is necessary for our economies to grow, and you speak about it animating human endeavour – a beautiful turn of phrase. 

Therein lies the very crux of our disagreement. Money doesn’t want to expand, or in fact do anything – it is merely a messenger. Rather, human beings always seek to expand it, for the simple reason that it is easier in the immediate term to solve problems by conjuring money from thin air, than working diligently to provide value to others in society or take the tough decisions that are sometimes needed to course correct. 

It’s a tale as old as time – there has always been a propensity amongst those holding the reins of power to inflate the money supply to their own ends, whether destructive or indeed noble. It doesn’t require a dastardly conspiracy – how boring – and is often just the result of poorly aligned incentives coupled with imperfect systems. From coin clipping by Nero to quantitative easing by the ECB, the essentials remain unchanged. The impact is a stealth tax on the holders of the money, however obscure the framing. It usually benefits one group or class, to the detriment of another. While you will no doubt protest this gross simplification, the world is waking up to the importance of a fixed supply money like Bitcoin, in which any transfers of wealth are transparent and consensual. 

It is our view that the very idea that a growing economy requires an increasing supply of money is a pernicious fallacy that does not have any first principles justification. Money is, in one sense, an information system, and to believe that this particular data needs distorting to facilitate people coordinating the allocation of labour and capital makes no logical sense. It may admittedly have encapsulated some practical wisdom before the modern concept of money that is digital and therefore easily divisible to reprice the components of a growing economy accordingly. Deflation would not be such a dirty word in economics if the money itself didn’t allow for periodic bailouts of the overleveraged debt of the politically connected. Imagine a world where things got less expensive over time rather than more – oh how terrible that would be.

You conflate Bitcoin’s future prospects with the history of the Gold Standard. Of course Gold was too slow and inflexible to deal with the real world – it is a shiny metal. With the invention of the telegraph, the speed of commerce outstripped the speed at which the value of the bearer instrument (the metal) could be transferred, which was just one of many factors leading to Gold’s eventual centralisation and confiscation. On that latter word, you conveniently speak about the failure of the Gold Standard as if the populace itself abandoned it. It would be unhelpful to your narrative to highlight Executive Order 6102, when in 1933 the private ownership of Gold was criminalised to bail out the US government. 

Gold’s failure doesn’t invalidate the sound money thesis, especially when a superior digital version now exists that is highly divisible, easily verifiable, censorship resistant, and can be zapped across the world at the speed of light. While it remains to be seen how Bitcoin resists centralisation and state capture, any honest first principles analysis suggests a far higher likelihood of success than its inanimate predecessor. As someone releasing a book about the history of money, we know you need no lesson about its past; however, we clearly have a very different idea about its future. If you are willing to send us a Bitcoin receiving address, we will happily send you enough satoshis to buy Lyn Alden’s excellent new book ‘Broken Money’, which delves into all of this in tremendous detail. You might even enjoy receiving money knowing that the transaction didn’t entail the permission or assistance of any of your former colleagues. 

You and John heavily criticise proponents of Bitcoin for ‘hoarding’ it, as if their desire to preserve purchasing power is to be scoffed at. The simple truth is that everybody who has used their time and energy to bank a surplus of societal credit validly seeks to retain it as best as possible. Many of us believe that Bitcoin, as an immutable ledger and the world’s scarcest financial asset, is simply the best way of doing this. Anything with a price can be said to rely on a greater fool coming along; but if Bitcoin does indeed have the potential to better coordinate economic action as we believe, without barriers, distortions or manipulation, it is far from the zero sum game you describe. 

Not only is any moral grandstanding in this regard misplaced, but our method of saving (or ‘speculating’ – a word one could use for anything put to this purpose) comes without any of the negative effects of the inferior alternatives. If you are willing to read some of our other work, there is a very logical case to be made that the housing crisis being faced in Ireland and elsewhere is caused or at least exacerbated by the use of property as a speculative financial asset to store value in the absence of prudent alternatives. Your own writing indicates you likely agree with this. Hoarding Bitcoin doesn’t cause homelessness, or skew the allocation of capital to larger companies through the dynamics of passive index investing. We would prefer to live in a world where normal people don’t have to manage stock portfolios and property on a part time basis to stay above water, but rather just save. The pervasive obsession with cash-flowing assets has itself been birthed by money which loses value like a melting ice cube.

“What would it seem like if it did seem like a global, digital, sound, open source, programmable money was monetizing from absolute zero?”

Perhaps your most adamant insistence is that while Bitcoin may be something, it is not money. We probably cannot do better than to point you to Wittgenstein’s Money by Allen Farrington, which elucidates the sheer impossibility of a new form of digital money which emerges from the ground up meeting David McWilliam’s textbook definition of money from the outset. Such a technology would likely monetise in a very volatile way as information distributes, making it a poor unit of account and medium of exchange until it matures as a store of value. While we understand that you were underwhelmed at the list of Irish businesses currently accepting Bitcoin for payments, for this reason it wasn’t quite the ‘gotcha’ moment you may have thought, and in part reflects our unusual financial privilege and functional if imperfect payment systems in ‘the West’. 

When monies die – think interwar German Mark – they lose their store of value function while clinging on for a period as units of account and media of exchange. Isn’t it at least plausible that the corollary of this is that when money is born, it incubates as a store of value before incorporating those other textbook functions? Understanding what is occurring here requires more than a point in time assessment, but also a use of first principles to extrapolate what this will likely become in the future. To fail in this analysis is analogous to claiming a child can never play basketball because she isn’t currently tall enough. 

There is an obvious paradox at the heart of your criticisms. You speak of the need for money to be abundant, which apparently rules Bitcoin out with its fixed supply. With that logic, shouldn’t the Argentinian Peso and the Lebanese Pound work better than the US Dollar or the Swiss Franc? Why are those currencies not being widely adopted elsewhere? When Gresham’s law approaches its conclusion, eventually people stop accepting the bad money, which is when the better and more trusted money reenters circulation. The end result of the process is that the best money triumphs, and that is what ultimately makes such money ubiquitous – not the softer one with the more rapidly increasing quantity and diminishing value, notwithstanding the fact that premature sampling could demonstrate that trend during the process. While the US Dollar, as the highly liquid incumbent, is a far more attractive prospect at low inflation than currencies hyperinflating; it is relative, and the money that will be ultimately trusted and adopted is logically that which credibly has no inflation at all. 

On the bigger picture, it is for the same essential reason that we disagree with your confident pronouncement that Bitcoin will never be the world’s reserve currency. In fact, as the only credible neutral alternative to politically controlled fiat currencies in an era of increasing geopolitical fragmentation, it appears to be a perfectly natural suitor for the role. One doesn’t need to envisage a ‘Mad Max’ dystopian future as you seem to suggest to contemplate Bitcoin’s success. A geopolitical stage without the Dollar’s exorbitant privilege and its attendant distortions may in fact make for a more peaceful world. It is true that the network effects of the Petro-Dollar won’t be dislodged anytime soon, and it may in fact strengthen as weaker currencies succumb to the ‘Dollar Milkshake’. 

The Dollar and Pound et al. might be some way off having their ‘Argentina moment’, but the direction of travel with mounting debt loads isn’t really up for debate; it simply cannot continue into perpetuity. In the absence of an era of productivity and budgetary surpluses, a sovereign debt spiral is becoming a mathematical likelihood, with imminence being the pertinent question. On the other hand if the current AI revolution does increase productivity dramatically, that only adds deflationary pressure, which by conventional wisdom will require offsetting by Central Banks. Put simply – printing money to protect debtors’ assets under the rhetoric of the ‘greater good’. We choose to opt out of this deeply paradoxical dogma. 

Bitcoin’s ardent critics will always have an explanation (read ‘dismissal’) for the price going up. When interest rates are cut, we hear it is merely a speculative play, notwithstanding its performance over the past year in the face of the higher rates that many predicted would finally pop the ‘bubble’ for good. When regulatory clarity is brought in advance of spot ETF approvals, sceptics allege further mindless degenerative gambling, rather than asking deeper questions such as why does there appear to be such underlying demand for this sort of financial product? We rarely receive a convincing explanation from those in your camp as to why Bitcoin continues to make higher highs and higher lows over time. Perhaps underneath the noise, the trading, the leverage, ‘cryptocurrencies’, NFTs, FTX, and all of the other things which are often inappropriately conflated with Bitcoin, there is simply a growing cohort of people that understand that the money is broken and their lives will be improved by opting into a system less susceptible to the failings of human nature.

We aren’t surprised by cynicism. Money is a controversial topic, and when those pitching an idea stand to gain from it, red flags understandably appear. We are glad you have borne with us this far, but if we could make a final request, it would be to evaluate the idea on its merits, rather than your perception of us, its ‘acolytes’. We cannot help the fact that our conviction overlaps with self-interest, and actually recognise that this is why this particular idea will likely continue to spread: it doesn’t rely on the politics of feigned benevolence. Our insistence coupled with your downright dismissal makes for a vicious cycle of interaction. What is colloquially known as ‘Bitcoin Twitter’ isn’t an accurate representation of the people and communities involved in using this network, many of whom are fighting for something more important than a way to preserve their pensions. These recent insights from a Kildare resident might provide some useful additional perspective.

We acknowledge and welcome your coverage of Bitcoin on the podcast, hoping you will continue to explore it openly. Last year you wrote of Bitcoin’s betrayal of younger generations; however, to us it is clear that the appropriate target is a financial system that makes speculation the rational option, in which investments are made on the basis of what Central Bankers are thinking about thinking about doing. In such a distorted system, the antidote is quite easily confused for the poison. While we won’t hold our collective breath, we remain hopeful that someday you may be at least open to the possibility that Bitcoin actually represents the slow birth of a beautiful idea – a monetary system that is fixed and fair, providing every person with a means of receiving, sending, and storing value across time and space, without permission, while efficiently allocating capital in a way that has never previously existed. 

In any event, a great intellectual aspect of this debate is that we aren’t confined to endless theorising – the world will eventually provide us with an answer, and we look forward to constructive engagement as it is progressively revealed. Feel free to reach out if you ever feel the urge. We would be more than happy to speak to you, and could recommend some guests who would go down a treat on the podcast. 

Wishing you and yours a happy and prosperous holiday season.


Bitcoin Network Ireland