The Case For and Against Crypto

Why It Matters

You will encounter crypto throughout your financial life. You will have friends who are convinced it is the future of money and friends who are convinced it is a generational fraud. Most of what you read will be written by people who have strong financial or ideological stakes in their position. The skill this lesson tries to build is not a conclusion — it's a method. Learn to distinguish a strong argument from a weak one, on both sides.

The case for crypto is not just 'number go up.' At its most serious, it rests on concerns about monetary debasement, government overreach, financial exclusion, and the genuine technical innovation of programmable money. These are real concerns that serious economists and historians have written about for decades. Bitcoin didn't create those concerns. It offered one possible response to them.

The case against crypto is also not just 'old people don't understand technology.' At its most serious, it rests on the observable absence of a stable unit of account, the dominance of speculation over utility, the concentration of mining and exchange infrastructure, the documented prevalence of fraud, and the fundamental valuation problem of an asset with no cash flows. These are not unreasonable objections. Some of the sharpest financial minds of the last century have made them.

Leaving this lesson, your job is not to pick a side and defend it. Your job is to be able to argue both sides so accurately that a Bitcoin maximalist and a Bitcoin skeptic would each say you've represented their position fairly. That's the standard. It's harder than it sounds.

A Story

The Dorm Room Argument

Kenji and Priya had been assigned to the same dormitory floor freshman year, and by October they had a running argument that neither of them could quite finish. Kenji had bought his first Bitcoin at $8,000 and watched it hit $60,000. Priya had read Nouriel Roubini's Senate testimony and thought she understood the situation completely. They were both wrong about some things.

It started, as it usually did, with a headline. Bitcoin had fallen 15% in a week. Priya set her laptop down loudly and said, 'Okay. I need you to explain to me why you still think this is a store of value when it drops 15% in a week. Gold doesn't do that.'

Kenji was ready for this one. 'Gold is also down 40% from its inflation-adjusted peak in 1980. Over long enough time horizons, both have beaten cash. And Bitcoin is 15 years old. Gold had hundreds of years to develop its monetary premium. You're comparing them at incompatible stages.'

Priya paused. She had not thought about the inflation-adjusted gold chart. 'Fine. But Bitcoin has no cash flows. You can't value it the way you value a stock. The price is just whatever the next buyer will pay.'

'That's true,' Kenji said. 'It's also true of gold. Gold has no cash flows. Its value is entirely what someone will pay for it. The question is whether the underlying properties — scarcity, portability, divisibility, censorship resistance — justify a monetary premium. I think they do. You might disagree. But the no-cash-flows argument applies to gold and you own gold ETFs in your portfolio.'

Priya found this annoying because it was correct. She shifted ground. 'Okay, but use case. Nobody actually uses Bitcoin to buy things. The payment use case is a rounding error. So what is it actually for?'

'Self-custody. Censorship resistance. The Canadian government froze accounts during the trucker protests in 2022 — people who had donated to a legal protest had their bank accounts frozen without a court order. Bitcoin in self-custody can't be frozen. That's not a hypothetical. It happened. I'm not saying I agree with the protest. I'm saying the mechanism matters.'

Priya sat with that for a moment. She believed in civil liberties. She had not fully thought through the payment-system-as-lever-of-control angle. 'I grant that,' she said finally. 'But most people don't self-custody. Most people use Coinbase or Binance. Centralized exchanges. So the censorship resistance argument mostly doesn't apply to most users in practice.'

Now it was Kenji's turn to pause. That was a real point. The gap between Bitcoin's theoretical properties and how people actually used it was large. 'That's fair,' he said. 'The system is more decentralized than the banking system but less decentralized than its advocates claim. Most users' holdings can be seized at the exchange level. The promise and the practice are different.'

They went back and forth for another hour. Priya conceded that the volatility argument was weaker for someone with a ten-year time horizon who was treating it as 5% of a portfolio rather than a savings substitute. Kenji conceded that most of the crypto ecosystem — the altcoins, the DeFi yields, the NFTs — was driven by speculation and had destroyed more retail wealth than it had created.

They didn't reach agreement. Kenji held some Bitcoin and intended to continue doing so. Priya held none and didn't plan to. But the argument had changed both of them slightly. Kenji was more precise about what he was actually claiming, and Priya was more honest about which of her objections were strongest and which were just aesthetic distaste. That, both of them agreed later, was about as good as most arguments get.

Vocabulary

maximalist

A person who believes a particular cryptocurrency — usually Bitcoin — will eventually dominate or replace traditional financial systems. Maximalists typically reject most or all altcoins.

greater-fool theory

The idea that an asset's price is sustained not by intrinsic value but by the expectation that someone else will pay even more for it later. When there are no more buyers at a higher price, the theory collapses.

store of value

A function of money: the ability to hold purchasing power over time. Gold has been considered a store of value for millennia. Bitcoin proponents argue it fulfills this role; critics cite its volatility as disqualifying.

unit of account

A function of money: the ability to serve as a stable common measure for pricing goods and services. Very few things are priced in Bitcoin because its value against the dollar changes too rapidly.

monetary premium

The portion of an asset's value that comes from its role as money or money-like store of value, above and beyond its utility value. Gold's price is mostly monetary premium — its industrial uses would support only a fraction of its market price.

medium of exchange

A function of money: the ability to facilitate transactions. Something is a medium of exchange if people accept it as payment for goods and services. Bitcoin's use as a medium of exchange remains limited outside of specific contexts.

Guided Teaching

Start by separating Bitcoin from 'crypto.' Bitcoin is one specific thing with a specific design and a fifteen-year track record. 'Crypto' is a category that includes Bitcoin, Ethereum, stablecoins, meme coins, NFTs, and thousands of other assets with wildly different properties. Many of the strongest critiques of 'crypto' apply to the category but not necessarily to Bitcoin specifically. This distinction matters for having a precise argument rather than a vague one.

Present the strongest version of the FOR case, without hedging. Governments and central banks have dramatically expanded money supplies since 2008. Global debt levels are at historic highs. For a person who genuinely worries about long-term dollar debasement, a provably scarce asset with a fixed supply cap has theoretical appeal. This is what Michael Saylor of MicroStrategy and Jack Dorsey are actually arguing. Represent it accurately before evaluating it. Ask: What would have to be true about government monetary policy for the debasement hedge argument to be correct?

Present the strongest version of the AGAINST case, without hedging. An asset that routinely drops 50-80% is not functioning as a stable unit of account. Most retail participants in crypto have been speculators, not users. The ecosystem has been hit by hacks, fraud, and rug pulls at a rate that would not be tolerated in regulated markets. Mining concentration in a handful of pools undermines the decentralization narrative. No cash flows means valuation is entirely sentiment-dependent. Warren Buffett and Charlie Munger have been wrong about technology before, but the structural valuation argument is independent of their credibility. Ask: Which of those objections is hardest to dismiss, and why?

Work through the self-custody argument carefully. The 2022 Canadian trucker protest is useful here because it is politically controversial — students may have strong feelings about the protest itself. Separate the protest from the mechanism. The Canadian government used the financial system as a tool of political pressure. People can agree or disagree with that decision and still notice that it was possible, that it was fast, and that it required no court order. Self-custodied Bitcoin cannot be frozen by that mechanism. Ask: Does your answer to whether the Emergencies Act use was justified change your answer to whether financial censorship resistance has value?

Address El Salvador directly. In 2021, El Salvador made Bitcoin legal tender. The stated goal was financial inclusion for the roughly 70% of adults without bank accounts, and cheaper remittances (remittances represent ~24% of El Salvador's GDP). In practice, adoption has been limited — most merchants never meaningfully accepted it, and the government's Chivo wallet was plagued with problems. The IMF conditioned a loan deal partly on El Salvador walking back the Bitcoin mandate. It is a real data point for both sides: real use case, limited execution, complicated results. Ask: What would 'success' have looked like for El Salvador's Bitcoin experiment, and by that standard, has it succeeded?

Discuss the concentration problem honestly. Bitcoin is often described as decentralized, but mining is concentrated in a small number of large pools, most exchanges are centralized companies, most users never hold their own keys, and early adopters hold a disproportionate share of all Bitcoin. These facts don't make Bitcoin worthless, but they do mean 'decentralized' needs to be used carefully. Decentralized compared to what? The protocol is more decentralized than a central bank. The actual ecosystem of custody and exchange is less decentralized than the protocol implies. Ask: Is the meaningful question whether Bitcoin is perfectly decentralized, or whether it is more censorship-resistant than alternatives?

End with the honest middle. The most defensible position is probably something like: Bitcoin is a speculative asset with genuine scarcity properties and a real use case in specific high-censorship or high-inflation contexts, but is probably not going to replace the dollar as a unit of account, is not risk-free, and coexists with an ecosystem full of fraud that has made 'crypto' a dirty word to many people who encountered it through that ecosystem rather than through Bitcoin specifically. It might go to zero. It might be worth more in twenty years. Both are possible. Position sizing should reflect genuine uncertainty, not conviction. Ask: If someone told you they were putting 3% of their savings in Bitcoin, is your reaction different from if they said 30%? Why?

Have students articulate the strongest argument on the side they personally find less convincing. This is the actual goal of the lesson. It is easy to argue for positions you already hold. The discipline of steelmanning — finding the strongest version of an opposing argument — is a transferable intellectual skill that goes far beyond crypto. Ask: After this lesson, can you explain the debasement hedge argument to a skeptic, or the volatility objection to a maximalist, in a way each would recognize as fair?

For Discussion

1. 1.Michael Saylor argues that Bitcoin is the best long-term store of value because it has fixed supply and is not controlled by any government. Warren Buffett argues that Bitcoin is 'rat poison' because it produces nothing. Who is making a stronger argument, and what would each need to prove to convince you?
2. 2.The 2022 Canadian trucker protest is politically controversial. Is the financial censorship mechanism used against protesters worth discussing regardless of whether you agree with the protest? Why or why not?
3. 3.El Salvador adopted Bitcoin as legal tender in 2021. By 2024, mass adoption had not occurred. Does this outcome strengthen or weaken the case for Bitcoin as a tool of financial inclusion?
4. 4.Bitcoin has been declared 'dead' more than 400 times in news headlines since 2010 and continues to exist. Does its survival prove anything about its long-term viability, or is survival alone insufficient evidence of durable value?
5. 5.Most Bitcoin holders use centralized exchanges and never hold their own keys. If the censorship resistance argument requires self-custody, and most users don't self-custody, how much should that argument count in Bitcoin's favor?
6. 6.If you were advising a 30-year-old building a long-term investment portfolio, what percentage in Bitcoin, if any, would you suggest, and what reasoning would you give? Would your answer change if they lived in a country with high inflation or capital controls?
7. 7.Charlie Munger said Bitcoin is 'rat poison' and 'disgusting.' Cathie Wood of ARK Invest predicted Bitcoin would reach $1 million per coin. Both are serious people. What does the range of credible opinions tell you about Bitcoin's fundamental nature as an asset?

Practice

Steelman Both Sides

1. 1.Write a 150-word argument FOR Bitcoin being a legitimate long-term store of value. Do not include any caveats, hedges, or 'on the other hand' statements. Write the strongest version of the case, as a committed proponent would make it. Use at least two specific facts or historical examples.
2. 2.Write a 150-word argument AGAINST Bitcoin having durable long-term value. Same rules — no hedges, strongest version, at least two specific facts or historical examples. Represent the view as a serious skeptic would.
3. 3.Exchange your two arguments with someone else (classmate, parent, sibling). Have them identify which argument they found more convincing and, specifically, which single point in each was strongest and which was weakest.
4. 4.Write one paragraph reflecting on which side you personally found harder to write, and what that difficulty tells you about your own priors on this topic.
5. 5.Find one real quote from a named proponent (Saylor, Dorsey, Wood) and one from a named skeptic (Buffett, Munger, Roubini, Krugman) made in the last three years. For each, identify whether the quote is making an empirical claim or an evaluative claim, and whether you think the claim is well-supported.

Memory Questions

1. 1.Name three arguments FOR Bitcoin as a long-term store of value.
2. 2.Name three arguments AGAINST Bitcoin as durable money.
3. 3.What is the difference between a store of value, a unit of account, and a medium of exchange?
4. 4.What happened in Canada in February 2022 that Bitcoin proponents cite as evidence for censorship resistance?
5. 5.What is the 'greater-fool theory' and why do critics apply it to crypto?
6. 6.What is a maximalist, and what distinguishes their position from someone who merely owns some Bitcoin?