Sunday, January 23, 2022

So, what is Bitcoin? Is it like Gold, or a Currency, or a Stock?


I am told that bitcoin is like one of those rare objects, like diamonds or gold, and therefore humans crave for it.  Rarity, or limited supply, is what makes humans covet them.  Bitcoin is rare, therefore humans covet it, is how they reason.

I personally do not think that is the case.  Take Astatine, which is one of the rarest element on the planet Earth.  It is rare, and yet, humans have no craving for it.  Or take Iridium, a rare metal, which is also permanent like Gold, Diamond and Platinum, and yet, it is not a coveted metal.

I think humans like trinkets, baubles, something intricate, beautiful, or shiny, or glittery, something they can wear, something they can show to others, and amongst these intricate, shiny and glittery objects, the rare ones turn out to be most coveted, and therefore expensive.   That's the reason why Art by famous painters is expensive.  They are rare, but they are also considered beautiful. 

Lot of people tend to think of Bitcoin as Gold.  That is not the case.

Bitcoin is more like Astatine or Iridium.  It is rare, yes, but it is NOT a trinket, a bauble, intricate, beautiful, shiny or glittery.  Like how humans showcase glittery ones to people, nobody showcases their Bitcoins.  It cannot be shown. The owner doesn't feel the same way, the way he feels when he showcases his Kohinoor diamond, or Picasso painting, or vintage Ferrari. 

When shit hits the fan, Gold still has value, because humans like to continue to possess it. Because it is shiny.   Nobody cares for Astatine or Iridium, even though it is rarest of rare.  Nobody wants to buy it.   Same with Bitcoin.

Bitcoin has some fundamentals that are wrong, concerning human nature.   Humans covet certain objects across generations, across cultures, almost giving it universal appeal.  Gold has withstood that test of time, and remains coveted across generations, cultures, and probably for a very long time into future.  

However, there are some fads that remain confined to certain times and certain regions, but very soon fall out of fashion.  Bitcoin is more like that fad.  It closely resembles the Dutch Tulip Mania, but still falls short, because Tulips were at least beautiful to look at.  Bitcoin does not.

Bitcoin has nothing that makes it appealing like Gold.  It is not a bauble, a trinket, intricate, or beautiful.  

Therefore, Bitcoin is nothing like Gold.


Yes, a currency may have no intrinsic value.  The paper currency has no value.  However, it is a promissory note.   Its credibility comes from the fact that a sovereign nation has pledged that promise.  Therefore, when shit hits the fan, the hope, or the assumption, but most importantly, the trust, is that this sovereign nation is going to take its promise seriously and will give you something back in return for that currency note. 

A sovereign nation could always do something else to compensate its citizens.  It could give out land, it could dole out food, it could give gold, it could convert their currency into future bonds.  It could provide future employment, future loans, or future prospects.  And that's why people trust in a sovereign nation, and consequently, they trust the promissory note issued by that sovereign nation.

That's why the more stable a sovereign nation, the more valuable or trustworthy its currency is. 

The more likely a sovereign nation is going to default, go bust, or renege, the less valuable or less trustworthy its currency is.

US Dollar is coveted, not because of its intrinsic value, but because of its credibility.  US is seen by the people as a sovereign nation that has stable future, a solid future, a permanency, stability, and most importantly, the credibility, that it will not renege on its promise.  Whether it is indeed the truth or not, is debatable, but the perception is such, and therefore the US Dollar is coveted.

What happens to Bitcoin?  Is it a promissory note? If so, who is going to stand as guarantee? When shit hits the fan, and you want to cash in, which bank do you run to? Who is going to honor the promise? Who do you hold accountable? Who do you make pay for it something in kind, something else in return?

When shits the fan, Bitcoin is going to disappear like thin air. There is nobody standing behind the counter to give something else back to you.  No sovereign nation.  No bank.  And that's why it is NOT a promissory note.

Therefore, Bitcoin is not a currency.


I see Bitcoin ONLY as a stock.  Because people buy a stock hoping its stock price goes up in future.

And in that regard, Bitcoin behaves absolutely like a good stock.  As long as its price goes up, one likes to buy it.

But the essential problem is: Bitcoin doesn't have anything intrinsic.  It is not a commodity, like aluminum or gold, which always have some intrinsic value, and it is NOT a business which shows growth and has future prospects.  It is NOT a currency either.

So, what is it? And that's where it becomes problematic.

Because it is completely thin air, Emperor's New Clothes.

It is an artificial system created for rich enthusiasts, like a game, where one could keep propping the stock price up, by enrolling more and more people into buying thin air.   Some MBA colleges play this game, where they are given artificial money to play with.  Bitcoin is something like that.  A game for rich enthusiasts to play with. 

People who are committed into it or vested into making a profit out of this game, keep propping it up, but otherwise, it is just a game, of people buying thin air.  And like Tulip mania, which went bust, one day, the hype of Bitcoin is just going to end, and it will just fall down, to become almost zero value.  Tulip mania at least created organic trash, which could be used as manure.   In this case, one just has to shut down the computers, and it’s all gone.

And after hundred years, like how we read the Tulip mania, the future generations will read about Bitcoin mania, and they will wonder how foolish our generation was.


I have an ongoing bet with a friend.

I predict that Bitcoin will be less than $5 by 2030.

He predicts that Bitcoin will be nearly a $1M by 2030.

If he wins, I have to buy him the most sophisticated smartphone of that time.

If I win, he as to buy me the most sophisticated digital camera of that time.

Saturday, January 01, 2022

‘If Germany and Japan could do it, why not India?’

In many discussions and debates amongst the urban middle class, the common refrain has been:

‘If Germany could get back to become an economic superpower after being bombed to smithereens in World War II, and if Japan could come back to become a super economy in the aftermath of being atom bombed, why could India not achieve super economy?' 

The above observation is slightly flawed.

As an organization in Japan that can build a Toyota car, even if the entire factory is obliterated, but if you still have 70% of knowhow in the workforce and leadership, you can always create another factory to create a Toyota car within few years.  

But a country like Ethiopia may not be able to do so even if it is given 100 years.

Comparing Japan to Ethiopia is therefore patently wrong. 

Japan, even after extensively bombed, can get back on its feet, because of the knowhow, the ability to tap into capital, create a new factory, based on experience, which Ethiopia thoroughly lacks.

A person who is well-educated, has experience under his belt, could get into entrepreneurship, and for some bad luck, could fall into harsh times, lose everything, all assets, all wealth, all cash reserves, and hit the rock bottom, BUT still could recover within few years, recover from penury, and hit another good idea, pursue new startup, use existing network to raise capital, create teams, and become prosperous and successful.    

However, a Dalit, caught in vicious cycle of poverty, facing discrimination, owing people money for the loans he took, lacking education, lacking access to opportunity, lacking network, lacking capital, even if given a lifetime, may not escape poverty. 

There are two lessons here.  

India cannot be compared to Germany or Japan after World War II, because our experiences have been different prior to World War II.  India had to go through necessary experiences, which is currently going through, to become an economic superpower, and it takes time, takes decades, to be able to acquire the experiences, have access to capital, create talent pool within, so as to become an economic superpower. 

The experiences of privileged class person going through poverty cannot be compared to a Dalit who has always been caught in the vicious cycle of being at the bottom of socioeconomic pyramid.  Sometimes it takes few generations for someone caught deep in caste-based discrimination, poverty, and indenture, to break the shackles and start climbing the ladder of opportunity.

Monday, April 26, 2021

Fights, Causes and Protests: Righteous or Not?

We witness many types of fights and protest across the world and in India.  We see people fighting against Farm Bills, some fighting against CAA+NRC, some people participating in Black Liberation Movement protests, some in Hong Kong Protests, and so on.  We see people protesting for various causes.  When we witness these protests, sometimes we get this vague feeling that not every cause is the same.  Some causes, we believe are really worth fighting for, a righteous one, and some others, we somehow find it not to be righteous.  So, how do we decide what is a righteous fight and what is not?

There are 5 different types of fights.

1. Fight for oneself

These are the fights for one self and one's family. One’s interests, rights and privileges. Example: Someone fighting for water at home, for electricity at home, for one's job, for one's individual rights.

2. Fights for other person

These are the fights for justice to another person.  Example: People fighting for freeing a journalist, for rights of an artist or a painter, for justice for Jessica Lal.

3. Fight for one’s group identity

These are fights for one's group rights, for one's group justice.  A Dalit fighting for Dalit's rights and representations. Telangana people fighting for separate State.  Blacks participating in Civil Rights Movement. Indians fighting for freedom from British. Women fighting for better laws to protect women.  Muslims against CAA+NRC.  Indian Farmers fighting against Farm Bills.

4. Fight for other group identities and universal injustices

There are fights for rights and privileges of other group identities, and sometimes for universal justices, such as fight against death penalty. These are done in support, in solidarity of other group identities, or for achieving universal justice.  Example: Whites fighting for Black rights. Hindus participating in CAA+NRC protests.  Non-farmers protesting with Farmers against Farm Bills. Fight against death penalty.

5. Fights to deny other people of their rights and privileges. 

There are fights which people take up to deny rights and privileges of other group identities.  Example: Whites protesting against integration of Blacks into colleges in US.  Upper Caste protesting against Dalits from drinking water from the village well, or men asking for removal of women's seats in buses.  Samaikyandhra Movement to stop formation of Telangana State.  Anti-reservationists seeking removal of reservations for lower castes.

Amongst all the above the first 4 are righteous protest, in the increasing order of righteousness, from 1 to 4. Fighting for oneself though righteous is still selfish, compared to fighting for another individual.  Fighting for one’s group identity, though righteous is still a bit selfish, compared to fighting for rights of other identities.

Whereas the 5th type is egregious one, the ugly kind, on all counts, because it is a fight to deny others of their rights, their privileges and their opportunities, and it is universally agreed that it not a righteous fight. It is a despicable one.

There is a chance that some of the fights that originate as category 1-4 may spill over into type 5, and that’s when it starts to become problematic.  For example a fight for better climate may lead to coercive mandates on poorer countries where the poor get affected.  And that’s when it won’t be a righteous fight anymore.

Sunday, March 21, 2021

Did Reservations really help the SC and ST in India?

This question is posed by many, with the assumption that Reservations-based-on-caste is merely a tool in the hands of politicians to create vote banks, but that it does not really help the SC and ST populations in India. 

So, let’s a take a look at some of the results. 

The most important objective of the preferential treatment policy of reservations-based-on-caste has been to attain higher representation of the SC and ST (some of the lower castes in India), in education and employment. 

Why education and employment and not other fields, like sports and cinema?

That is because the biggest problem faced by the lower castes in India is that of socio-economic status, their inability to break the caste barrier to improve it.  This can be achieved only through a rigorous improvement in their representation in both education and employment, considered the vital and critical methods to improve one’s socio-economic status.   In this article, let’s focus on one aspect of education, the higher education, and another aspect of education, the overall literacy. 

Representation in Higher Education

In India,

The percentage of SC population is: 16.6% (the reservation for SC is 15%)

The percentage of ST population is 8.6% (the reservations for ST is 7.5%)

Because of reservations-based-on-caste, there has been a steady increase in enrolment of SC and ST to higher education since 1950s.

Percentage of SC representation in higher education in late 1970s was 7%, which increased to 7.8% by late 1990s, and increased from 12.2% in 2012 to 13.9% by 2016.

Percentage of ST representation in higher education in late 1970s was 1.6%, which increased to 2.7% by late 1990s, and increased from 4.5% in 2012 to 4.9% by 2016.

This is one of the greatest achievements of reservations-based-on-caste policy of India, to have increased the enrolment of SC and ST into higher education, slowly but substantially.

Of course, there is more work to be done.  To improve the enrolment of SC and ST population into school education, and to improve the enrolment of SC and ST into Masters and PhD education, and to improve infrastructure of schools, give more facilities and amenities, including books, toilets, awareness programs.

Population Growth of SC/ST

The proportion of SC/ST population in India has been steadily increasing.  This is true of communities or identities which have lower socio-economic status.  On a general note, lower socio-economic status groups have had shown bigger population growths, while the most privileged groups have shown a decrease in population growth.

In India,

SC Population was 14.7% in 1961, but has grown to 16.2% in 2001, and is now approximately 16.6%.

ST population was 6.9% in 1961, but has grown to 8.2% in 2001, and is now approximately 8.6%.

Literacy Rate of SC/ST

The literacy rate of SC and ST population has grown over the last 70 years, and thankfully to the current policies of affirmative action which include many welfare schemes, one of them being reservations-based-on-caste, it has grown faster than the general population, but in absolute numbers it is still below the national average. 

SC Literacy Rate was 10.27% in 1961, but has grown to 45.2% by 2001, and is now approximately 66% (Indian national average is 74%).

ST Literacy Rate was 8.53% in 1961, but has grown to 38.41% by 2001, and is now approximately 67% (Indian national average is 74%).


Reservations-based-on-caste and other welfare schemes have definitely improved the literacy rate of SC and ST population in India, but have also resulted in higher representation in higher education.  Though the proportions still fall short of their share in population, it shows the reservations-based-on-caste and other welfare schemes are yielding results.  All the more reason to make the current mechanisms effective, and not dilute them.