Bitcoin is not a scam - Refutation of the article "Lang Xianping's advice: The Bitcoin scam is right next to your relatives and friends"

Chapter 0 Introduction

Someone posted an article on Sogou Public Platform today, "Lang Xianping's Advice: The Bitcoin Scam Is Right Next to Your Family and Friends" (hereinafter referred to as the original article), which criticized Bitcoin throughout the article. Let me analyze it paragraph by paragraph.

Chapter 1, original text, paragraphs 1 to 6

The first six paragraphs of the original text mainly describe the principles of Bitcoin.

The first paragraph quotes Lang Xianping:

"Professor Lang Xianping warns: Bitcoin is a complete financial scam. Ordinary people should keep an eye on their wallets, cherish their lives, and stay away from Bitcoin!"

The author used this statement to introduce the topic in order to get Lang Xianping to endorse him. The author tried to appeal to authority, but Professor Lang himself did not have professional knowledge of Bitcoin, and his criticism of Bitcoin was illogical and inconsistent with the facts.

Professor Lang is not an authority in the Bitcoin world. His status as a "financial expert" is full of bad deeds. He supports Pan Asia and has a close relationship with Deer Gold. He is a pure liar. Lang Xianping is famous for writing a book, but it is a bad reputation. Don't say you have read Professor Lang's book in front of others, or they will laugh at you.

In the second paragraph, the author uses the P2P investment bankruptcy wave to attack Bitcoin. Bitcoin is a peer-to-peer (P2P) electronic cash system. However, Bitcoin's P2P and the P2P model in the investment field are completely different things. The author confuses the concepts, which is really amateurish, or even directly bad.

The third paragraph quotes the “Notice on Preventing Bitcoin Risks” issued by the central bank and five ministries on December 5, 2013. This paragraph is all true. Bitcoin is not considered a currency by the central bank and five ministries, but the “Notice” clearly defines Bitcoin as a commodity, as follows:

“Bitcoin trading is a commodity trading activity on the Internet, and ordinary people have the freedom to participate at their own risk.”

This is a very positive recognition of Bitcoin. With the official recognition of commodity status, Bitcoin has completely eliminated political risks in China. Currency is essentially a commodity. With commodity status, what else do you need?

Whether Bitcoin is a currency is not based on government approval. The essence of currency is consensus, and everyone recognizes it as currency.

my country's laws stipulate that the RMB is the only legal unit of account, and the notice issued by the central bank and five other ministries is also based on this legal principle. In my country, gold is not legally recognized as a currency, and the US dollar cannot be used in my country. But this does not affect the value of gold and the US dollar.

As for the author's claim at the end of the second paragraph that the central bank should completely remove Bitcoin from the financial system, it is too stupid. The author completely misinterpreted the meaning of the "Notice" issued by the five ministries. The central bank and the five ministries are not trying to remove Bitcoin from the financial system, and they cannot do it. They want to warn the public about the risks of investing in Bitcoin. This is a politically correct approach, and any official agency is happy to do such a thing. The central bank represented by Zhou Xiaochuan is happy to see the actual use of Bitcoin. Zhou Xiaochuan accepted a large number of media interviews in late 2015 and early 2016, claiming that the central bank is studying Bitcoin and block technology, and broke the news that the central bank will issue its own digital currency.

If the original author misinterpreted the central bank, it is estimated that he only has Lang Xianping in his eyes and does not even pay attention to Zhou Xiaochuan.

The fourth paragraph lists the concepts in Bitcoin, and there is not much to say.

Paragraph 5 describes the Bitcoin issuance mechanism. There is nothing wrong with the original statement.

Paragraph 6 describes the advantages enjoyed by early Bitcoin miners and the polarization of wealth in the Bitcoin world.

Those who participated in Bitcoin early were undoubtedly able to use simpler computing equipment and obtain Bitcoin at a cheaper price. But they must have more knowledge and courage than ordinary people. Early participants often need to understand economics, mathematics, computer science and other knowledge across fields. Having this knowledge certainly has advantages. Don't just see that the early successful people paid less money than the latecomers, but they paid much more energy and knowledge than the latecomers. The latecomers are standing on their shoulders. And in the real world, when any company goes public, the entrepreneurs and the original stock holders make the most money. This is natural. If this is not defined as the original sin of Bitcoin, then we have to reject any listed company.

The polarization of wealth in the Bitcoin world is the same as in our current real world. It conforms to the Pareto Principle, where 80% of the wealth is owned by 20% of the people. This cannot be defined as the original sin of Bitcoin. It is an objective existence, just like the gravity of the earth. It is a fact that we all have to accept. The egalitarian arguments that oppose this polarization of wealth are demons and monsters.

Chapter 2: Original Text and Extension: Eastern Viewpoint

Paragraph 7 is the dividing line.

Paragraph 8 describes Chinese “aunties” entering Bitcoin. This paragraph is pure nonsense.

"The other type is Chinese aunties. They directly spend RMB to buy Bitcoin. Of course, the money ends up in the hands of the people who originally designed and participated in the game."

This statement says that the money that Chinese aunts used to buy Bitcoin was taken away by the people who originally designed and participated in it. This is complete nonsense.

The flow of funds in the Bitcoin trading market is similar to that in the stock market, where new investors buy investment assets from unspecified old investors. Please pay special attention to the word "unspecified". It is impossible for a person to pay the investment funds in the Bitcoin exchange to a specific person. This is the same as in the stock market, when someone loses money, you have no idea who earned it.

Satoshi Nakamoto designed Bitcoin and has more than 1 million Bitcoins, but he has never sold a single one. Moreover, most of the early participants did not sell a large number of Bitcoins. These early participants were enthusiastic enthusiasts. In their eyes, the price of Bitcoin was over one million US dollars, so how could they sell a large number of Bitcoins for only a few hundred US dollars?

In addition, the original author claims:

"Do you know how much money Chinese aunts have spent on these coins since October 2013? According to our estimate, it is 17 billion yuan. The specific figure should be known by the central bank and Taobao."

This is also complete nonsense.

First of all, the market value of Bitcoin was less than 40 billion RMB in October 2013. The main participants are Americans and Europeans. The 17 billion RMB claimed by the author is pure fabrication. In addition, the author claims that "the central bank and Taobao know better", which once again shows that the author does not intend to write the article with a rigorous attitude. The capital flow platform in the Bitcoin market is mainly in the exchange, and the number of transactions with Taobao is extremely small. Taobao cannot estimate the amount of funds flowing into Bitcoin. The central bank is even less capable of estimating, because the exchange has a variety of deposit methods and a large number of third-party payment platforms. These data are out of the control of the central bank.

In paragraph 9, the author asks:

“How did the Chinese aunts get cheated?”

Then answer paragraphs 10, 11, 12 and 13.

The author of these five paragraphs simply did not bother to provide evidence or logic, but simply copied a few slogans from the Internet and then made a definite conclusion. This is extremely irresponsible.

If the author wants to prove that Chinese aunts lost money (in fact, we don’t know whether there are Chinese aunts who invested heavily), then at least they should prove who the scammers are. The only statement the author provides that may be a scammer is “the original designer and the earliest participant” in paragraph 8, but these people did not sell a large number of Bitcoins. Even Satoshi Nakamoto, who invented Bitcoin, did not sell a single coin.

Once again, the direction of capital flow in the Bitcoin market is not specific! There is no such thing as people who lose money now, and the money will definitely flow to the previous participants. In the Bitcoin (or stock) market, early investors do not have a clear advantage over later investors. They all have to rely on their own judgment of price fluctuations to make profits. Although the earlier people invest in Bitcoin, the lower the cost of holding coins, it still cannot guarantee that early investors will definitely make a profit, because they may have sold their coins at a very low price (in fact, there are a lot of such people).

In paragraph 14 the author states:

“Governments around the world will not allow Bitcoin to become a universal currency”

In fact, a large number of governments have recognized Bitcoin as a legal currency.

This chart shows the public attitudes of various governments towards Bitcoin. Green represents the recognition that Bitcoin is legal. Yellow represents a neutral official attitude. Red represents clear legislative opposition, and black represents no official opinion.

From this picture, we can see that the most mainstream countries in the world have clearly defined the legal status of Bitcoin.

The original author claimed: "Therefore, many countries and regions have directly announced that they do not recognize Bitcoin, such as the Eurozone, China, India, Thailand, Indonesia, Malaysia, etc."

It is simply wrong and pure nonsense. The European Court of Justice ruled that Bitcoin is a currency in late 2015, and China, led by the central bank, issued a document in late 2013 recognizing Bitcoin as a legal commodity. The author's statement is completely unverified.

In paragraph 15 the author begins to define what money is.

There are many monetary theories in economics, and the author only borrowed one of them - currency is a general equivalent. And Bitcoin is a general equivalent. I don't know why the author brought up this theory to shoot himself in the foot.

Chapter 3 Forgiveness Quotes More Articles from Eastern Viewpoint

In the 16th paragraph, the author returns to the logic of the first paragraph and appeals to authority, this time bringing up Krugman and Buffett. What the author does not know is that Krugman’s Nobel Prize is a breakthrough in trade theory, and this contribution does not mean that he has an authoritative position in monetary theory. And it is not surprising that Buffett does not invest in Bitcoin. Buffett does not invest in any technology products. This is his investment style.

The author describes paragraphs 17, 18, and 19:

“Why does the United States recognize Bitcoin as a legal financial instrument?”

The author turned white into black, saying that the US legal recognition of Bitcoin was a reluctant move by the government, and that it was legislating to regulate Bitcoin in order to prevent people from being deceived.

The author's fantasy is too serious. The United States has even legislated the dollar! Is it also the government's act against its will as the author says?

In paragraph 20 the author states:

“It turns out that (freely competing currencies) don’t work.”

Facts have proved that currency should be produced by free competition, and gold is the product of free competition. In the Northern Song Dynasty, the paper currency Jiaozi issued by the government was such a great thing, but it failed in the free competition. In the more than 1,000 years after the invention of paper currency, including the Yuan, Ming and Qing dynasties, and even the Republic of China, the official paper currency was not accepted by the market. The most typical example was the late Republic of China. Due to the needs of the war, the government of the Republic of China issued paper currency indiscriminately, and the market and the people directly brought the government down. The Zimbabwe dollar also lost to the US dollar in free competition. If you go to Zimbabwe, the people don’t want the currency issued by the government.

In paragraph 21, the author claims that Bitcoin’s code can be copied.

“If Bitcoin can be the world currency, these other currencies should also be the world currency because they are essentially the same.”

The author understands the "essence" as a simple code. If you follow the author's understanding, then if you copy the Taobao code, you can replace Jack Ma. If you copy the QQ code, you can eliminate Tencent.

The "essential" reason why copying Bitcoin's code cannot threaten Bitcoin's status is because Bitcoin's ecosystem cannot be copied, just like Taobao's code can be copied, but the merchants who open stores and the buyers who buy products cannot copy it.

Finally, in paragraph 22, the author shouted a slogan calling for people not to play the Bitcoin game.

It is easy to shout slogans, but it is difficult to think rationally. Anyone who enters the Bitcoin world needs to think rationally.

End of Chapter 4

Bitcoin has now become the third largest credit after gold and the US dollar. Any theory that doubts its financial status should be judged as untrue.

Author: tan90d (Weibo @LightningHSL WeChat tan90d)
My BTC address: 14mhzjkJ71oMAMkKu3dy98dnUpkyQBHL1r
Source: Babbitt Information