Counter arguments & flaws in Globe & Mail's article on cryptocurrency

The Globe and Mail recently published an article written by Rita Trichur and it is a great attempt at trying to discuss issues of financial inequality when it comes to cryptocurrencies however the article falls flat on facts.

You can read that article here but will dissect all points and leave my comments on them.

First off, the article paints a picture of young rich men, mostly white and that are partying it up like frat boys in Los Angeles in a big mansion. This is of course a great way to get people out the outside of cryptocurrency to start hating the people on the inside as if this is reflective of the people that work in the industry. If she had attended the Blockchain Futurist Conference 18 recently held in Toronto, she would have come away wondering where are these irresponsible party animals. She would have seen a bigger mix of people that I wouldn't in particular call mostly white but I'd agree with her that it was male dominated. That is of course what groups like CryptoChicks are trying to change and help and encourage more women to get involved.

Now we'll do the breakdown paragraph by paragraph

To hear them tell it, cryptocurrencies are the solution to the world's income inequality problem, especially in developing countries.

That's quite a whopper. Far from being the people's currency, cryptocurrencies are actually the least socially progressive currencies on the planet. First, there's the hefty price. Bitcoin, the most popular cryptocurrency by far, was trading at $8,500 (U.S.) in early August, far beyond the reach of the masses, especially in the developing world. Transaction fees have also been high because all transfers of a unit are recorded in an online ledger.

Rita did get one thing right that there are a few thousand people that got insanely rich with cryptocurrency and most probably think this doesn't address the world's problem of wealth inequality. That said she got her facts wrong to prove that there are technologies in place that do help.

Myth #1: You need to be rich to buy Bitcoin

She cites Bitcoin's hefty price of $8,500 USD but what she totally doesn't know is that you can buy or acquire small amounts. Heck if you signup to Coinberry and deposit $100, they'll give you $20 bonus and you can convert that into Bitcoin which at the time of writing this would translate to 0.013 BTC. You can learn more about buying Bitcoin with Coinberry here. In short this demonstrates a severe lack of understanding of how Bitcoin actually works.

Myth #2: transaction fees are too high

Transaction fees are not too high and this also requires and understanding of the various types of cryptocurrencies that exist and their features. The majority of cryptocurrencies have ultra low fees and some I believe have zero fees. So if someone wanted to send money safely and securely to another person in Venezuela or any country in Africa or your next door neighbour, you can do that and it doesn't have to be with Bitcoin. So at the time of writing, sending $1000 USD in Bitcoin (roughly 0.1427 BTC) would cost 51 cents. Sending $1000 USD worth of Ethereum (roughly 3.48 ETH) would cost $0.04. Yes, Bitcoin transaction fees did spike to around $50 back in December but that has been addressed however if fees remained high, you wouldn't use Bitcoin for sending money abroad, you would use another coin for this purpose.

If you want high transaction fees, the old way of doing it would be Western Union which could see their business wiped out by cryptocurrencies. There would be no agents and no high fees including the forex conversions.

Next paragraph:

Then there's the tech-savvy and sophisticated equipment required to trade crypto. Not everyone has a powerful computer, high-speed Internet access or even affordable electricity.

Myth #3: You need a power computer, fast internet and affordable electricity to buy, sell or trade

Already this is frustrated to see this article written on The Globe and Mail as one would expect professional journalism and thorough research on a topic. That isn't the case with this article so let us debunk myth #3.

Let's start with the continent of Africa. 1.2 billion people has really taken the world by surprise with mobile banking usage and we aren't even talking about using smartphones either. Just follow M-Pesa and you'll realize that people are already moving money on non-smartphones that just have the ability to call and text. Smartphones are growing so you don't need a powerful computer to send or receive cryptocurrencies. You can do this with a smartphone and if you really want to take the technology out of the equation you can use a paper wallet. So you can print a paper wallet and send money to it, mail it to someone anywhere in the world and even password protect it so it isn't stolen along the way.

Regarding the myth of affordable electricity needed, this is just not true either and it makes you think this person read an article about Bitcoin requiring a lot of electricity. Yes it does for mining but the end users don't require affordable electricity. The user just needs either a computer or a mobile phone to setup a wallet and receive money. They can then take this to a number of growing cryptocurrency ATMs around the world and get cash in their local currency. If that isn't enough the user could get all of this transferred by paper just get a text message and still achieve the same result.

In reality, the crypto market is a millennial boys' club. Statistics show that most bitcoins are held by educated young males in developed countries. A 2015 survey by the CoinDesk news site found that 90% of bitcoin users are men, and 66% of respondents identified as white. Those numbers are hardly a surprise. The tech sector's sexism problem is well documented, and crypto is no exception. Not only are the vast majority of investors and entrepreneurs men, but many so-called ''crypto bros'' seem to revel in their chauvinism.

Ok this is getting ridiculous. The author cited a 2015 article which is about 3 years old and the cryptocurrency space changes very fast. A recent article from CoinTelegraph paints a different picture. You can find that article here:

https://cointelegraph.com/news/how-many-americans-really-own-crypto-skewed-results-of-polls-and-surveys

That data tells us

  • 92% of the US population has not bought any cryptocurrency
  • 21.82% are male and 4.27% female of the ones that have bought or own
  • 17.21% are Millenials, 8.75% are Generation X

That data seems to come from this source at Finder.com so one only has to question if this is a legitimate source where Cointelegraph is a leader in the blockchain news space. So yes the blockchain space is dominated by men. Who knows if those 2015 stats were true but it is certainly believable and there are a growing number of women entering the blockchain space and groups encouraging women to get involved.

Nobody is going to disagree the space is male dominated or the tech sector doesn't have a problem with sexism but there are definitely more women in the space now than in 2015.

At the Blockchain Futurist Conference 18, the speakers were made up of 25 females to 79 males.

The bros don't have any incentive to create a real sharing economy, either, because the market rewards them for keeping crypto wealth concentrated in a few hands. It's an open secret that a relatively small group of investors, known as crypto whales, have huge holdings.

Let's get one thing clear, there are some people that would like to own a lot of money and not share it however I don't agree with her statement at all that the market rewards the 'bros' for keeping cryptocurrency concentrated in a few hands. If anything, the more people that start owning and using cryptocurrencies, it will possibly drive up the value of it generating more wealth.

Regarding the comments about not creating a real sharing economy, everything that has to do with blockchain technology has the power to push the sharing economy on a level never seen before in humanity. That is my opinion and I'm confident there are many leaders in the blockchain space that strongly believe that too. Blockchain tech has the power to disrupt massive companies like Google and Facebook that make billions off of your personal data, banks make even more with fees and controlling your money and governments; look no further than Venezuela what the government is doing for their people. Blockchain has enabled a decentralization of so many aspects of our world that it is crazy. So in short, yes, lots of bros wanna get rich, lots of women do too but I don't know many people that want to be rich at the expense of others being poor.

Just one example of many blockchain companies looking to disrupt the space is called Shyft where you as a user can have control and ownership of your data instead of a large corporation. In an age of constant theft of personal data, people are getting fed up. I mean Air Canada just had a data breach of 20,000 users, read that article here.

According to Bloomberg Businessweek, about 1,000 users hold roughly 40% of all bitcoin. They often meet online in so-called whale clubs to co-ordinate their buying and selling to maximize profits. As a result, prices of digital currencies are easily manipulated, and sudden market swings often hurt small investors. Despite lofty talk about empowering the poor, cryptocurrencies have only exacerbated income inequality.

Ok first rule of the whale club is not to talk about the whale club! Where is our source of info that these whale clubs exist? Yes there are certainly hundreds of groups out there but cryptocurrencies are not easily manipulated at all. There are many free groups you can join to get started and although our group isn't free, it isn't the most expensive one to join and our goal is to help and educate people to make it worth their time. If Bitcoin was that easy to manipulate, there would be too many people that would be jumping ship and you wouldn't see the explosion of blockchain companies that are in existence today.

No doubt wealth inequality is and has been a world problem for a long time. Blockchain technology does have a chance to change that. It won't happen overnight but there are a lot of people creating new projects and initiatives to address these issues. Not everyone is in the space for money especially if they already have it but don't expect people to give it out either. That's like me asking Rita for a cut of her pay for writing this article.

Yet the industry continues to peddle the promise that cryptocurrencies are a great equalizer. Middle-class people, they say, can do their part by investing in crypto companies that form part of a moral economy. This pitch has become a marketing gimmick for initial coin offerings (ICOs), a fundraising method used by startups. So far, the offerings have been largely exempt from securities laws in many countries.

Ok at least here she touched on ICOs but she didn't really address the problems associated with ICOs. That would actually require research.

Many crypto entrepreneurs admit their own investing strategy is ''hodl"–slang for ''hold on for dear life.'' Basically, they’re hoarding the stuff in an attempt to make speculative gains, rather than trying to create an open, fair and efficient market.

People might say that HODL stands for 'hold on for dear life' but really the most unfair thing is Rita got paid for writing this article without doing proper research. The HODL phenomena all started from a drunk forum post where they wrote "I AM HODLING" and obviously meant to write holding. You can see that post here.

I am sure many people in the blockchain space are cringing as they read this article which no doubt will get a lot of viewers coming from The Globe and Mail. Rita is the financial services manager at the Globe but it is clear from her article that she hasn't done her research properly and she doesn't have a good grasp of how Bitcoin and cryptocurrencies work.

You can see more comments and criticisms of her article in her tweet here

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