- A Bitcoin critic loved by anti-Bitcoin mainstream media outlets has illustrated his ignorance with his latest piece
- Pete Howson was discussing El Salvador’s Bitcoin plans but ignored several key aspects
- The prejudiced piece is symptomatic of the mainstream media approach to Bitcoin
An anti-Bitcoin mouthpiece rolled out by mainstream media outlets to criticize the cryptocurrency has demonstrated his ignorance of the Bitcoin ecosystem in a piece slamming the acceptance of Bitcoin by El Salvador. In the piece for The Independent, Pete Howson, a lecturer in International Development at Northumbria University, eschewed research in favor of prejudice over the subject matter, serving only to highlight the level of one-sidedness adopted by mainstream media outlets when it comes to Bitcoin and cryptocurrencies.
Bitcoin Doesn’t Need Paperwork
Howson’s first error is in his claim that Bitcoin cannot help the 49% of El Salvadorans who are unable to open bank accounts due to a lack of documentation or regular income. Of course, opening a traditional bank account isn’t possible without documentation, but that’s the whole point of Bitcoin – you don’t need documentation to use it. Anyone with a mobile phone can send and receive Bitcoin, regardless of what paperwork they have.
As to his second point, where a stable income comes into the argument is unclear, as no Bitcoin wallet requires regular payments to operate.
Lightning Network Completely Ignored
Howson then moves onto the logistics of Bitcoin transactions, which is where things get really messy. Like anyone who hasn’t looked into the story properly (or has spent too much time listening to Craig Wright or reading Coingeek articles), Howson states that El Salvador’s Bitcoin punt can’t work because of Bitcoin’s slow transactional speed. This would be true, if it was what was actually happening.
Howson actually discusses Strike, the platform on which the new infrastructure will be built, but fails to acknowledge one key aspect – it is based on the Lightning Network, the Layer 2 scaling solution that increases the payment speed to “milliseconds to seconds” according to the Lightning Network website. This fact was also glossed over by other anti-Bitcoin individuals and outlets because it messes with their rhetoric.
Howson adds that “for day-to-day use, bitcoin can’t work without a bank of some kind”, which is entirely untrue even if you discount the fact that the Lightning Network allows companies to set up channels with customers to facilitate quick and easy payments. Of course it won’t be as simple as a direct debit from your bank, but then how old are banks and how long did it take banks to come up with direct debits? Bitcoin has only been alive for 13 years.
Crypto Mining Causes Poverty
Howson then tackled President Nayib Bukele’s novel idea of using geothermal energy for Bitcoin mining. Did he approve of this more environmentally friendly way of mining Bitcoin, given that he is vehemently against fossil fuel Bitcoin mining? Of course not! According to Howson, Bitcoin mining of all types comes with “antisocial side effects” and will increase the poverty rate in El Salvador, which famously has already occurred in…oh wait, nowhere.
There is nothing to stop El Salvador applying a tax to the income on Bitcoin mining and using the funds to tackle the poverty issue, but this would represent a positive thought on the subject which Howson clearly could not countenance.
Cryptocurrency “Favoured by Criminals”
Howson’s final jab is to state that Bitcoin is “favoured by criminals”, a lazy barb based on some high-profile cases such as recent ransomware attacks, which of course never occurred before Bitcoin. Obviously this blanket statement is not borne out by reason or facts – for example, SWIFT stated in a 2020 report that “cases of laundering through cryptocurrencies remain relatively small compared to the volumes of cash laundered through traditional methods.”
Plenty of reports since the coronavirus pandemic have stated that drug dealers are ditching physical cash in favour of other avenues, which you would think reading Howson’s piece must mean cryptocurrency. But no, even according to the Bitcoin-hating Guardian, drug barons have “moved from laundering cash through banks to using smaller money service businesses”. But that must include Bitcoin services, yes, given it’s their “favoured” method? Not so, according to Scotland Yard’s head of specialist crime:
They are not doing everything on plastic. And they are not using cryptocurrency. It’s all £10, £20, £50, thank you very much, cash, cash.
Well slap my thighs and call me Nancy, how about that? Howson must have missed that in his thorough research.
To judge from his Twitter feed, Howson is very keen on a Bitcoin ban – keen in a Donald-Trump-retweeting-conspiracy-theories-at 3-am sort of way. However, this hashtag masks a very complex proposition. Bitcoin is not a centralized entity and therefore there is no single person who would be recognized as a formal representative, let alone someone who could press the ‘off’ switch. Yes you could ban every single exchange, on ramp, and off ramp, but you’re not going to be able to police individuals privately sending themselves bitcoin. And thanks to Bernstein v. United States you couldn’t even ban the proliferation of the code relating to Bitcoin wallets or node hosting.
Banning Bitcoin is about as possible as banning air, and trying to do so is only going to lead to it going further underground. Still, cute hashtag.
Time Will Tell
We are not suggesting that Bitcoin is perfect, and unlike Howson we’re not putting our heads in the sand and ignoring the parts we don’t like. Yes, Bitcoin mining is bad for the environment, but the actions taken by governments like China are driving green innovation in the Bitcoin mining sector. We can’t say the same for gold mining, of which 90% of the resulting material is used to decorate wrists and necks.
We’re not even suggesting that Bitcoin is more convenient than the regular monetary system. It’s not – it’s clunky, it puts a lot of onus on the holder, and needs practice to get right – but alternatives to the mainstream rarely are better than the mainstream option. However, this is something that those who find use in a decentralized monetary system are willing to accept, and the process will become more streamlined over time.
Bitcoin will be regulated in time, and it needs to be, partly because doing so will end the argument once and for all – either it dies, which means it was only used by criminals, or it survives, which means it has use cases far outside criminal activity, such as Cyprus in 2013 and Venezuela since 2016. At least then we should see a slow down of such biased and factually distorted opinions.
In the initial version of the piece Howson claimed that the entrance fee to the recent Bitcoin Miami conference wasn’t even payable in bitcoin. This, too, was another falsehood, although at least The Independent had the good grace to correct that one. Still, we wouldn’t expect a rent-a-FUD who writes with such prejudice to do the requisite research, especially if it undermines their argument.