Lukačovič, Vávra and Gladiš are wrong, I can easily refute their arguments about Bitcoin

Recently, the future and viability of Bitcoin in the years to come has often been discussed. In previous weeks I have presented you with rather skeptical opinions and negative views, which will change today and we will look at the other side of the coin and the counter arguments of an avid bitcoiner, which is Jan Kohout.

Can you introduce yourself?

Hi, my name is Jan Kohout. I'm an avid bitcoiner and co-founder of the YouTube showKryptoplebs
, which serves about the education of bitcoin, but also moneyfrom
the perspective of psychology, philosophy and history.

We'll start with generalities first, then get into the statements of famous personalities, where I'll be interested in your counterargument.

How do you perceive Bitcoin? What does it represent to you?

I perceive bitcoin primarily as a tool for personal freedom. For the first time in history, we have a technology that allows anyone to very efficiently move value anytime, anywhere in the world without permission and without trusting a third party. This may seem like a trivial thing, but the opposite is true, especially in less developed countries and autocratic states where people don't have access to the banking system, face double-digit inflation of the national currency, or live in a state that doesn't respect basic human rights.

We have seen several such problems this year, for example, in Canada, where bank funds have been frozen not only to truckers protesting against
government measures, but also directly to the companies that own the trucks, and
not least to the contributors who have raised funds to support these protests
. Another case in point is the war in Ukraine, where people who wanted to flee the war
were unable to access the funds they had in their bank accounts.
The same was true for Russian citizens. I could also see the consequences of this event right
here, when queues formed outside Sberbank. Furthermore, I probably do not need to mention what problems the
Ukrainians
had
with the initial exchange of the hryvnias they managed to bring with them.
And the latest breaking news is the limit cash withdrawals in Nigeria, with the central bank there trying
to

support its new CBDC-based currency.

Bitcoin serves as a global insurance policy against these sudden problems we
think can't happen to us. Of course, I also consider it decentralized, non-state money that no one can counterfeit for you through inflation because bitcoin has a precise monetary policy and there will never be more than 21,000,000 of it. From my perspective, it is a call option on a future, global, monetary system.

Why do investors/experts condemn bitcoin?

Very briefly, because they are comfortable with the current system. As a successful investor, you benefit from the
fact that new money is being created in the system all the time, but it does not enter the economy uniformly, but seeks its own "safe haven" where it will not lose its purchasing power.

This is called the Cantillon effect. In general, we are now talking about
anemic
stocks
. If you own shares, you have an incentive to maintain this system, because the
purchasing power will move into these instruments. The well-known
Buffett
value investing
has long been invalid and asset prices are almost
exclusively driven by

Powell's Fed
pronouncements
and changes in interest rates.

Are you of the opinion that this is a misunderstanding of the asset?

Yes, that is one of the reasons. I am fond of saying that everybody understands finance but nobody understands
money, in hyperbole of course. If we look really deep into
history, for example into the late Paleolithic, we can find out what served as money,
how it worked and, most importantly, what impact it had on the tribes and social systems of the time
. These influences are immutable and the economic laws of money are still valid today.

How best to understand the meaning of Bitcoin?

The Czech bitcoin community has grown quite a bit in recent years, and
our work
has not been left behind
. I refer newcomers to the first 20 videos from the Bitcoin channel on YT, and I
recommend 2 great, short books. The first one is Bitcoin: The Separation of Money and State by Josef
Tětek, which explains in a simple way the different economic aspects and the
history of money from the Middle Ages to the present. The second is The Invention Called Bitcoin by Yan Pritzker, which describes Bitcoin from a technical perspective.

Investors/economists very often do not understand the technical side of bitcoin, Itchkers
may not understand its economic incentives. Therefore, I recommend reading these two books
together. Both can be downloaded freely in PDF form at braiins.com. In general, I would say that if you want to understand bitcoin, you need to figure out why gold became global
money and why gold didn't become global money.

Do you think that condemnation is often associated with the current decline of
the altcoin cause?(Three Arrow Capital, FTX, etc.)
Absolutely yes. However, it is important to note that these crashes have nothing to do with bitcoin at all
. Exchanges and various crypto, web 3.0 and NFT companies have just taken over the
function of today's fin. system and practice fractional holding of their users' funds
, promising them tens of % in interest. This only works until you run out of liquidity
or someone tries to bankrupt you through your mistake, see the FTX case.
This is exactly why the term bitcoin maximalism was coined, which simply states that bitcoin
is not a cryptocurrency and has nothing to do with cryptos. These two terms
need to be separated. Cryptocurrencies come and go, bitcoin remains.

The topic of cryptocurrency regulation - A good idea or is it a definite hindrance to the
cryptocurrency
revival
?

Cryptocurrency regulation is a very broad topic. We know from history that government regulation does not do
any good because of information asymmetry, lack of ability to reduce
transaction costs, deadweight loss and inefficiencies in competition
. This is no different for cryptocurrencies. The regulatory merry-go-round gained momentum
when Mark Zuckerberg decided to create his own currency, the pound, on his soc. Facebook
. Thanks to regulators, this idea didn't go through, but it also gave rise to a newframework of
these regulations that we will face in the coming years. Within Europe, this will be the
so-called MICA (Markets in Crypto-assets), which will be the most comprehensive regulation of crypto-assets in the world. Here we can expect an outflow of operators and acquirers of cryptocurrency-related services. Europe is a bureaucratic hell and is harming itself. However, a special part of this regulation is devoted mainly to stablecoins - (cryptocurrency linked to the price of a national currency - mainly the US dollar), which regulators really like. Stablecoins are especially prevalent in countries in Africa and South America, such as Venezuela, which is in complete economic meltdown, especially due to the brutal printing of the Venezuelan bolivar. You could say that it is already mostly dollarised, so stablecoins are widely used there.

We will now look at the views of well-known personalities, where I would be interested in your perspective:

Daniel Gladish told us in an interview:

The concept of investing in cryptocurrencies is an oxymoron. It's pure speculation in an asset that has no intrinsic value, produces no cash flow, and just relies on someone else coming along later who is willing to pay more for the same thing. This has nothing
to do with sinvestment. Anyone who wants to, feel free to speculate. There is nothing illegal or immoral about speculation in general, but people must not confuse it with investing.

What do you think? Do you think this is the right approach or is there actually no need for cryptocurrencies
to produce cash flow?

Mr. Gladish is wrong on several counts. The first one is really fundamental, and that is the claim that bitcoin has no intrinsic value. Value is always and only subjective, as Carl Menger, the Austrian economist and one of the main representatives of the so-called marginalist revolution, has already made clear. There is no such thing as intrinsic value. He then goes on to conflate bitcoin and cryptocurrencies, where, paradoxically, he is wrong about cryptocurrencies. Within DeFi (Decentralized Finance), it is now possible, for example, to provide liquidity or take out a loan by pledging your cryptocurrencies (collateral). The entire DeFi is based solely on the interest and proceeds from these loans. So the claim that cryptocurrencies do not produce any cashflow is completely false. That these projects are almost always scams and operate on a temporary basis
is of course another matter. And the principle of buy low, sell high applies to
everything, not just bitcoin but also stocks. Bitcoin as money, however, is not supposed to yield any return. The most important function of money is as a store of value, which bitcoin absolutely fulfils in the longer term. That is why bitcoin should be saved regularly and over the long term, not invested in.

People also feel that if a company's stock is traded on an exchange, it cannot be a scam. Here, however, I would like to disabuse the reader of this misconception and refer them to the Enron case (2002), whose shares rose only because the company falsified its accounting (remember also the Wirecard case from 2020?) and collapsed like a house of cards. I would also point to the securities fraud by almost non-existent Chinese companies listed on the US stock market, where investors lost a lot of money. In the largest regulated market! The documentary The China Hustle made this case perfectly clear. Not all gold is glitter.

So Mr. Gladish is absolutely ignorant of the arguments about bitcoin and cryptocurrencies
and continues to play his game in the stock market.

What do you think about this statement by Radovan Vávra, which was made in a recent interview on Bulios?

If I were cynical today and said what BTC can be used for, since we have explained that it is not a payment medium and not a store of value either, then BTC is perfectly suited for money laundering and paying bribes to digital pirates.

Is that really the case? Do you think Bitcoin may have been created specifically for illegal trades
and money laundering?

According to the latest report from Chainalysis for 2022, 0.15% of bitcoin transactions were linked to criminal activity. Bitcoin is not inherently anonymous, but pseudonymous
. Its timechain is public and there are now companies that can link
your identity to your funds, see Chainalysis. This narrative wasvalid
maybe 10 years ago, when bitcoin was used as a means of payment
over thearkweb marketplace Silk Road, founded by Ross Ulbricht. To use bitcoin today
for illegal activities I find totally inappropriate, irresponsible and very stupid
. If one desires anonymity, one can use, for example, the cryptocurrencyMonero
. However, the most widely used payment medium for illegal activities remains, of course, the US
dollar
.
But that probably doesn't bother anyone.

Mr. Vávra also told us about BTC:

It does not deliver what was promised - protection from inflation. After all, what is the premise of BTC? It's limited in number, it has a finite amount - no government, no reserve system will issue more than its finite supply, that's the difference with fiat currencies, because fiat currencies are issued by those banks basically at will, that basically reduces purchasing power and that's where BTC was supposed to protect you - well today we can say it doesn't protect and today we can also say it behaves worse than the riskiest similar assets.

In your opinion, is Bitcoin high risk? Why believe in the future of BTC?

Mr. Vávra did exactly what he shouldn't have and acted like a retail investor. When you buy
bitcoin, you need to know why. Do you just want to get rich on it? That's fine, you just need to be aware of the risks and especially your own behavior because its volatility is not for the weak of stomach.

Mr. Vávra bought his first bitcoin I think sometime in the 2017 bullrun and according to his words he made 4 million in 5 days. He returned to bitcoin again some time later, but this time through a company called Grayscale, where you don't buy bitcoin directly, but just their product (GBTC) tied to the underlying asset, which in this case was bitcoin. However, the prices of this product are volatile, and are based on what the demand is. If there is institutional interest, the purchase price is more expensive relative to the market price of bitcoin and vice versa. Currently, GBTC shares are "at a discount" of 43% to the bitcoin spot price. So not only has Mr. Vávra realized a loss in terms of the decline in the price of bitcoin, but also in terms of the decline in the price of GBTC relative to bitcoin itself. Same mistake twice in a row. The whole problem is that Mr. Vávra did not buy bitcoin but a bitcoin derivative, which turned out to be a bad choice, and also that he bought bitcoin only for profit. Bitcoin is not behaving worse, it's just people behaving wrong. If Mr. Vávra had not sold his first bitcoin purchase, which was also very likely through a fund, I believe he would be speaking differently today. The final nail in the coffin was his association with the XIXOIO fraud project, where he became very discredited among the people. Now he's kicking around like a little kid and hating bitcoin wherever he goes. Personally, I'm quite sorry, Vávra strikes me as someone who has something to pass on to us here in terms of investments and advice for life. I enjoyed listening to his talks and liked the fact that a banker, albeit a former one, supports bitcoin.

Will bitcoin still be around in 30 years?

Why trust BTC in 30 years? It is highly likely that in 30 years bitcoin will be worth more than it is worth today, and it is absolutely certain that in 30 years you will lose the majority of your purchasing power in fiat. The average lifespan of a state currency is about 25 years. God knows if we'll have something like the crown or the euro here in 30 years. In my opinion, it is not risky to own bitcoin, but the opposite. For the reasons written above, you don't know when you will need it and then it may be too late.

The last opinions I would like to discuss are from Ivo Lukacovic, who says
:

Thewhole planet is going down the drain, we are in danger of not eating meat because of emissions
and some bunch of people will create a completely virtual concept that brings no value to humanity
and generates co2 like some small country.For me, this is proof of human greed
.

Thefact that crypto is not regulated in my opinion is only because it is used
to pay for drugs and other illegal things, and the secret services can
track

the
movement of
money better than cash. My opinion.Some big regulation
(like for co2) could come at any time.

Going from millionaires to billionaires I can't help thinking that Mr
Lukačovič
's arguments
are far more nonsensical, very superficial and lacking any
logic, unlike Mr Gladiš and Mr Vávra. The fiat mindset seems to be working as it
should.

Mr Lukačovič suffers from the so-called nocoiner syndrome. He does not own any bitcoin and without any
personal experience he defends it as much as he can. He hides it all behind a saviour complex
to protect ordinary people from this alleged aircraft
. But Mr Lukačovič is a billionaire and is not concerned with the problems of 'ordinary people
' who, for example, are in foreclosure or are saving honestly for their retirement and
are

losing their purchasing power
thanks to inflation
. His financial privilege is almost absolute
and therefore the incentive to change the established system is zero. This crisis
will not affect him in any way and will not change his standard of living. However, the same cannot be said of the so-called middle class, which has savings and is therefore also getting poorer in real terms. That is why they are only concerned with the price and not with the other possibilities of bitcoin, which I wrote about at the beginning of this interview.

Again, we come to the absence of value. I have already explained this with Mr Gladish.
The arguments against bitcoin have been the same for years, and people who do not understand it
have used them over and over again.

The fact that the founder of Seznam does not understand the difference between the terms virtual and digital is now left aside
. As for ecology, bitcoin mining is a very tricky topic
. However, I believe that thanks to the Proof of Work concept, it has not yet revealed all
its possibilities
to us
.

Mining bitcoin is a recurring 10-minute lottery, now with a $104,000 prize thanks to the
use of the cheapest energy source on the planet. These sources include geothermal
, solar, and hydro. At the moment, a large number of miners are moving to Paraguay
, where the second largest hydroelectric plant in the world is located and there are huge
surpluses that are sold to neighbouring countries such

as


Brazil.

Not only does bitcoin incentivise the use of these renewable resources, but it also
shows us new ways of using energy, especially waste energy. I am now talking about
gas flaring, whereby, by mining bitcoin, we can efficiently burn
methane (which, incidentally, is 20 times worse than CO2 as a greenhouse gas), which
oil mining companies just burn because it is economically inefficient
to work with it any further. Bitcoin fundamentally changes this. Not only
can we monetise the waste energy by mining with this gas, but
we can also reduce emissions very effectively, which these companies might like because it will be more ESG compliant. It is a win-win situation for all parties. The entire gas flare in North America could now tighten over half of bitcoin's mining computing power.

Another avenue may also be the so-called OTEC - Ocean Thermal Energy Conversion
,where thermal energy can be harnessed directly from the oceans. The future of bitcoin mining
lies in renewables and the use of waste energy. Thanks to its
potential, we can move towards a Kardashian scale I civilisation, where
we

as humanity will be able to use almost all the energy sources on the planet.

Let us focus on how we can use bitcoin and not look for reasons
to ban it.

Lack of institutional investors - When you invest in something,
you want the big pension funds, banks and other investments to be with you.Do you know why
?Because they don't get screwed on the first dip, giving the asset some stability
.

Can you confirm or deny this argument? What do you think?

If we look at bitcoin as an investment from the investors' point of view, it is the
first asset where institutions came into the market relatively late. The first adopters
were mainly computer geeks, cryptographers and other IT enthusiasts.
As long as they didn't lose their access and passwords, they got fabulously rich.
Institutions only started to take an interest in Obitcoin sometime in 2017, and their interest is only
growing. It's natural. Pension funds very often don't make the returns to keep
up with inflation. This is mainly due to the adherence to a very microconservative
approach to investing, where funds cannot afford to take big risks
. However, this will be a problem in the future due to the ageing population in the context of demographic
change. It is only a matter of time before these funds and other institutions start to
include bitcoin in their portfolios.

In general, I do not see the entry of institutions as negative. Bitcoin is either for everyoneor
for no one.

Again, there is another argument about the drug trade, but it is concluded by the
fact that bitcoin can be traced. This is an oxymoron, and I really don't understand
what the poet was trying to say. Mr Lukačovič is completely at a loss for an argument and
cannot defend it, which he proves by immediately
blocking
anyone with a counter-argument
. Then, of course, there is no room for debate and an echo chamber is created
. I honestly wouldn't be surprised at all by CO2 regulation. It used to be that
all regulation
could
be disguised as terrorism, now it is about ecology.
However, it will not just be about bitcoin, but about Fiat itself. In the future, we can expect
additional taxes on the purchase of meat, or on air travel within the permitted limits
.

If you'd like to learn more about these topics, watch our showKryptoplebs
, where I discuss them in detail with my guests.

Thank you for the opportunity to counter-argue, I hope I haven't left anything out or forgotten anything
.

• I thank you, there are always two sides to every coin, which is one of the reasons I started this series - Skeptics' Opinions x BTC Supporters' Opinions.

Youtube: https://www.youtube.com/@kryptoplebsTW
: @jan_21m

Please note that this is not financial advice. Every investment must go through a thorough analysis.