Thread by @perrymetzger

You shouldn't have an opinion on bitcoin unless you truly understand the technical details of how it operates. Why? Because it's one of the rare situations where the technology cannot be treated as a black box and the details matter deeply.

You may believe you can treat bitcoin as an abstraction and not worry about the details and still think about it and invest in it without risk, but you can't. It's not like shares of MSFT or bars of tungsten. The details of how it works are why it's so deeply problematic.

Bitcoin masquerades as an anonymous, low cost, global transaction system. It is none of those things. (Some people who partially understand have taken to saying "it was never that, it was always digital gold" or some such rot. Never mind. Not the point.)

If you don't get the details, if you don't understand why the transaction system requires that people around the world burn insane amounts of electricity, if you don't get how the transactions work, where "coins" come from, etc., you cannot have an informed opinion.

In 1970, you could understand the television industry just fine by just vaguely knowing how to use a television set and knowing people could "broadcast" programming. But in 2020, you cannot understand the bitcoin "industry" without knowing the deep technical details.

The problem is, of course, people are very used to very successfully treating technologies like black boxes, ignoring how they work and just observing their general character. And normally that works. But here, it doesn't. You really can't get the issues without the details.

Sometimes abstractions are "leaky", and bitcoin is a *very* leaky abstraction indeed. Issues like *why* it is so expensive to operate, *why* it is radically non-anonymous, *why* it might have trouble adapting to new developments in cryptography, etc., are all important.

However, most of the people involved in the "bitcoin community", and even most intelligent outside observers, do not get the details, and thus start developing opinions and theories on how things might play out that are dead wrong because they don't know the details.

And the devil is truly in those details. The gap between what people want bitcoin to be (an anonymous, secure forever, cheap, censorship-resistant transaction system) and what it actually is gigantic, but if you don't know the details, you can't really get that.

And without knowing the details, the reason that the bitcoin system is burning billions a year in normal money and that it depends on a huge number of fresh "investors" entering the system just to keep it afloat isn't obvious. Nothing about it is obvious.

I think one big reason the whole thing has functioned for so long (and may continue to operate for quite a while to come) is that most of the participants truly don't get what's going on. They think it's "safe" to treat it as a black box like a car or a mobile phone. It isn't.