What most Bitcoiners are wrong about (written by a Bitcoiner)

From time to time, I take a quick look at Bitcoin twitter, listen to some Bitcoin podcasts and read the comments, and it is shocking to me how clueless most Bitcoiners (even OGs) are.

Sep 16, 2025

brown turtle on brown soil — Photo by Dawn McDonald on Unsplash

From time to time, I take a quick look at Bitcoin twitter, listen to some Bitcoin podcasts and read the comments, and it is shocking to me how clueless most Bitcoiners (even OGs) are.

Most Bitcoiners fail to understand simple concepts and incentives, or at least pretend to not understand them.

So here are just some of the things that most fail to understand:

Executive Summary (TL;DR)

Permissionless tech ≠ permissionless adoption. The perimeter (cloud/app stores/banks/exchanges/tax) steers usage more than the protocol does.
Revealed preferences > rhetoric. States are optimizing for containment (paperized exposure; supervised rails) not mass, sovereign Medium of Exchange (MoE).
“Co-opt the State” is backward. The State is co-opting Bitcoin via wrappers, custody concentration, and pricing venues.
You can’t enforce 21M by delegation. If you don’t self-custody and demand Proof-of-Reserves (PoR), you’re buying digital gold exposure, not base money.
Meta-layer: incentives > ideals; control > fairness; stability > truth. Price behavior reflects that, not sermons.

1) The Perimeter Capture Rule (Permissionless tech ≠ permissionless adoption)

What it is:
Bitcoin’s core is uncensorable; adoption is not. Adoption runs through perimeter chokepoints that are easy to harmonize:

Cloud Acceptable Use Policies (hosting nodes/pools/RPCs)
App stores (wallet distribution; default flags)
Payments (banks/exchanges/fiat rails)
Policy (KYC/AML, travel rule, tax basis, reporting)

How control works (quietly):

Rate-limit (fee/tier caps, API throttles, de-prioritization in app stores/banks)
De-list (off-ramp friction; bank policy lists; OFAC adjuncts)
Default steer (KYC wallets first; self-custody buried behind friction)
Template rules for miners/pools (policy clients, OFAC templates, MEV-like incentives)

Implication:
If 90–95% of people prefer safe + easy defaults, the center (protocol) is effectively a tenant of the perimeter. Tech brilliance can’t overcome human preference at population scale.

Actionable:

Evaluate any “freedom tech” by perimeter elasticity, not whitepapers.
Track: app-store policy diffs, bank Acceptable Use Policy (AUP) bulletins, cloud AUP keywords, exchange listing/off-ramp delays, pool template updates. These are the real “forks”.

2) Revealed Preferences (What systems do is what they are)

Stop quoting promises. Read resource flows:

Fund/staff/codify/enforce = real. Speeches = brand.

Revealed pattern to date:

Yes to ETFs/futures, custody oligopolies, KYC on-ramps, AML travel rule, tax-basis harvest tools.
No/slow to legal clarity for self-custody Medium-of-Exchange, node-runner protection, inheritance frameworks, and miner neutrality guarantees.

Decoded intent:
Contain BTC as Store-of-Value exposure; minimize mass Medium-of-Exchange. Tolerate a niche sovereign cohort; direct the majority into supervised wrappers.

Actionable:
Before believing any bullish policy soundbite, ask: Where are the dollars, jobs, laws, penalties? If they aren’t moving, it’s branding.

3) The “Co-opt the State” fallacy (reversed)

Bitcoiners’ claim: the State will adopt BTC (strategic reserves, payment rails) → number go up.
Reality: the State is domesticating BTC:

Domestication playbook

Financialize exposure: ETFs, futures, structured notes → absorb demand into wrappers.
Starve sovereign usage: AUP friction, licensing pressure on nodes/pools, KYC wallet defaults.
Steer price discovery: supervised venues, basis trades, weekend/liquidity games.
Substitute MoE: stablecoins/tokenized deposits/CBDCs for payments UX, BTC tolerated as sovereign tail hedge.

Where this shows up:

Law/Reg/Supervision: travel rule extensions, broker reporting, exchange custody standards.
Market structure: easier leverage in paper markets than in clean spot; borrow available, self-custody penalized by UX.
Platforms/Defaults: app-store wallet curation; bank policy lists; cloud “acceptable use” revisions.
Tax/Accounting: favorable clarity for ETFs vs murky, burdensome rules for self-custody MoE.

Actionable:
Treat “containment corridors” as base case. Price upside through share gains within wrappers, not mass sovereignty.

4) You can’t enforce 21M by proxy

If you don’t hold keys, you can’t enforce the supply.

ETFs/treasury cos/funds = claims on BTC, not enforcement.
No Proof-of-Reserves = belief, not verification.
Mining/pool template drift + policy clients = soft censorship potential.

I’ve written more about this in my “Why Bitcoin’s 21M cap is not guaranteed” article.

Right mental model:
Most Bitcoiners are buying gold exposure with better on-chain optics. That can still get you rich — but it’s not building a parallel base money system.

Actionable tiers:

Tier 1 (Sovereign): self-custody, run a node, Proof-of-Reserves discipline for any custodian you use, plan inheritance.
Tier 2 (Hybrid): modest ETF sleeve for carry/IRAs + small sovereign stash for regime shocks.

5) Meta-layer (where the alpha sits)

Incentives > ideals. People optimize carrots and frictions, then rationalize.
Control > fairness. Systems pick governability over elegance.
Stability > truth. When truth disrupts stability, stability wins.

Important Add-ons

A) The “Perimeter Indicators” (weekly watchlist)

App stores: new wallet policies, “financial services” category changes.
Banks/exchanges: unified blacklist/advisories; OTC ramp friction.
Cloud: RPC/node hosting terms.
Pools: adoption of “policy templates”, OFAC settings, endpoint jurisdictions.
Tax & reporting: expansions of broker definitions, 1099-style regimes.
Stablecoin/CBDC pilots: incentives (cashback, fee holidays) for compliant wallets.

B) Counter-arguments (steelman) and why they usually fail

“Tech always routes around control.” True for niche cohorts; false at population scale because defaults win.
“Hashrate makes it untouchable.” Security budget defends blocks, not on-/off-ramp governance or app distribution.
“Institutions will adopt BTC as reserves.” A few might; most prefer ETF + balance-sheet optics and Medium-of-Exchange via stablecoins.

C) Falsifiers (what would disprove the containment thesis)

Self-custody > 50% of supply and rising with merchant Medium-of-Exchange growth.
App stores add prominent distribution for non-KYC wallets; banks explicitly support self-custody ramps.
Pools publish neutral templates and resist policy clients at scale.
Treasury/sovereign Proof-of-Reserves with direct holdings (not trusts), meaningful share of reserves.
Tax/AML carve-outs that make everyday BTC payments easier than cards.

If 2–3 of these fire together, I’ll revise my views quick.

D) Concrete heuristics for Bitcoiners

Stop treating convenience as neutral. Convenience is policy.
Don’t outsource conviction. If you believe in 21M, hold your keys.
Demand Proof-of-Reserves or price in basis risk for any wrapper you hold.
Use wrappers tactically (carry/retirement) but don’t confuse them with sovereignty.
Track Bitcoin’s “paperization ratio”. Rising paper share → lower realized vol → monetize carry (calls/covered calls) and keep the sovereign tail.

One-page “definitive list” of what most Bitcoiners get wrong

They conflate protocol freedom with adoption freedom. Adoption is gated by perimeter defaults.
They listen to speeches instead of reading revealed preferences (money, jobs, laws, penalties).
They think BTC will co-opt the State; the State is co-opting BTC via wrappers + rails + venues.
They think buying claims enforces 21M. It doesn’t; keys and Proof-of-Reserves do.
They ignore human psychology. At scale, safety/ease beats sovereignty unless the latter is defaulted into UX.
They misprice the substitute set. Medium-of-Exchange demand flows to stablecoins/CBDCs; BTC’s mainstream path is Store-of-Value exposure unless the falsifiers above trip.
They mistake a tolerated tail-hedge for a future base money. The corridor is containment, not capitulation.

Closing frame

Treat Bitcoin as two assets:
(a) a paperized, supervised risk asset you can trade/carry, and
(b) a sovereign reserve that is especially useful for regime break scenarios.
Treat the world as two rails: supervised programmable money (stablecoins → CBDCs) for most Medium-of-Exchange, and sovereign edges for the few.
Invest in who sets the defaults. Because defaults beat morals, every time.

Other articles I’ve written on Bitcoin & Gold:

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