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By Peter Slagter in Alpha News —

Smart People Don’t Understand Bitcoin

Tolstoy warned: certainty blinds us to new ideas. Today, while regulators reshape crypto and bitcoin challenges conventional wisdom, are experts stuck in old dogmas? Discover how ancient insight fuels modern disruption in money and technology.

Smart People Don’t Understand Bitcoin

Leo Tolstoy expressed it beautifully: “The most difficult subjects can be explained to the slowest mind, provided that the mind has not yet formed an opinion on them. But even the simplest thing cannot be explained to the smartest man if he is firmly convinced that he already knows it.”

The quote comes from A Calendar of Wisdom, a collection of philosophical insights Tolstoy compiled in his later years. Its message is clear: those who believe they understand something fully close themselves off to new ideas—a mindset that can just as easily hinder the recognition of innovation.

For those unfamiliar with Tolstoy: he was one of the greatest writers of the 19th century, known for works like War and Peace and Anna Karenina. In his later years he turned increasingly to social criticism and philosophy. He renounced material possessions, embraced a simple life, criticized both church and state, and championed nonviolence—a stance that even influenced Gandhi in his struggle for independence.

It might seem far-fetched that a 19th-century Russian aristocrat could have insights relevant to bitcoin in the 21st century. Yet his words resonate with how many view bitcoin today. How many experts, professors, columnists, and central bankers have already dismissed bitcoin as useless, dangerous, outdated, or downright foolish? Not out of ignorance, but precisely because they’re convinced they already understand it.

It is reminiscent of Kodak’s initial reaction to digital photography or Blockbuster’s disregard for the internet. Bitcoin challenges not just an industry but an entire worldview—touching on money, trust, power, and technology. This shift demands considerable mental agility, particularly from those deeply entrenched in the existing system. Economists, accustomed to analyzing interest rates, inflation, and monetary control, often see bitcoin as chaotic. Tech journalists, used to rapid innovations and flashy apps, criticize bitcoin as slow and outdated. Environmental advocates, who view CO₂ emissions as an absolute no-go, sometimes lose interest as soon as they see its energy consumption.

But bitcoin defies conventional categories. It is not a stock, a physical coin, or an app. It is an open network—a form of money without an issuer and a database that no one can control. In doing so, it raises fundamental questions—the same kind of questions Tolstoy wrestled with in his later years. What is the value of knowledge if it closes us off from what we have yet to understand?

The irony is that today’s bitcoin advocates have, in some ways, taken on the role of priests with a one-sided narrative. Where they once challenged the prevailing discourse, their conviction has now hardened into dogma. Michael Saylor is perhaps the most visible example: once the CEO of a publicly traded software firm, he has reinvented himself as a self-proclaimed bitcoin evangelist. His speeches can resemble revival meetings, filled with pronouncements of perfection, inevitability, and eternal truth. His followers hang on every word, with every gesture seemingly interpreted as divine inspiration.

And that is dangerous—not necessarily because Saylor is wrong, but because a movement that began with questioning and curiosity must always leave space for dissent and nuance. Otherwise, the revolution risks morphing into a religion.

That is precisely why here at Bitcoin Alpha we take a different approach. No hype, no blanket rejection, no uncritical glorification. We aim to distinguish signal from noise—not as infallible oracles, but as guides who truly understand the landscape. We speak openly, embrace self-correction, and look beyond today’s frenzy. Bitcoin is not a final destination, but an ongoing process, and anyone convinced they’ve arrived might just miss the next exit.

Tolstoy understood this long ago. True wisdom doesn’t begin with certainty, but with a sense of wonder and curiosity—the courage to admit that you don’t yet know. Whether it’s about bitcoin, philosophy, or something entirely different, that openness to growth is exactly what our times require.

The next time someone confidently tells you what bitcoin is or isn’t, ask yourself: Has this person truly investigated, listened, and questioned? Or are they merely echoing a rigid worldview that has long decided what is true?

The answer often speaks louder than a thousand words.

More Alpha

Are you a Plus Member? Then we proceed with the following topics:

  1. American Regulator: Banks Can Custody and Trade Crypto
  2. Policy Shift vs. No Free Pass for Offenders
  3. Has Ethereum Left Its Low Point Behind?

1️⃣ American Regulator: Banks Can Custody and Trade Crypto

Contribution by Erik

It wasn’t a reluctant surrender, as Rodney Hood, Acting Comptroller of the Currency, explained how crypto may be managed by American banks regulated by the OCC. “It’s not a trend, it’s a transformation.” As an American, would you exchange your dollars for bitcoins or stablecoins? At some American banks, that option will undoubtedly be available soon.

The OCC—the Office of the Comptroller of the Currency—is part of the U.S. Department of the Treasury. In the Netherlands, its supervisory functions are divided between DNB and the Netherlands Authority for the Financial Markets. This authoritative body has now determined that national banks and federal savings banks may offer services related to the custody and trading of crypto assets.

This decision is significant because the OCC’s guidelines enable banks to participate more actively in the rapidly growing crypto market, which now spans over 50 million Americans.

Expansion of the Existing Stance

The new guideline, known as “Interpretive Letter 1184”, builds on the framework established in July 2020. It now offers greater clarity regarding the range of permitted activities:

  • Trade on Behalf of Clients: Banks can buy and sell crypto assets held in custody for clients, acting on their instructions.
  • Outsourcing to Third Parties: Banks may outsource crypto-related activities, such as custody and transaction execution, to third parties, provided they manage the associated risks appropriately.
  • Additional Services: Beyond custody, banks can also offer other services, such as converting between crypto and fiat currencies.

The United States Catching Up

While the above measures are significant—and indeed an important step toward integrating digital assets into the regulated financial system—European banks are already ahead. For example, BBVA Spain announced last week that customers will soon be able to purchase BTC and ETH directly through its own app.

The fact that more than fifty European banks are already offering crypto services is due to proactive regulators and supervisory bodies, with the recently introduced EU regulatory framework (MiCA) serving as the icing on the cake.

In short, the Americans are catching up. Given the rapid pace of these changes—and the fact that the US can enact legislation faster than the EU—it wouldn’t be surprising if the US eventually overtakes Europe.

2️⃣ Policy Shift vs. No Free Pass for Offenders

Contribution by Peter

For a moment, it appeared that the American government had decided to abandon the crypto crackdown.

On April 7, a memo from the Department of Justice—internally known as the Blanche Memo—stated that the US no longer intends to prosecute individuals operating in legal gray areas. In plain language: if it isn’t clear that you’ve done wrong, then you won’t be punished. This marked a striking shift after years of heavy-handed actions against various players in the sector.

This message was music to the ears of companies, developers, and DAO members who had long worried about being caught in regulatory crosshairs. There was even speculation that the case against Roman Storm, co-founder of the mixer Tornado Cash, might be dropped.

But it wasn’t.

Storm’s case is moving forward, as the DOJ recently confirmed. Although part of the indictment has been dropped, the core charges—conspiracy to launder money and evade sanctions—remain intact. The judge had previously rejected a motion to dismiss, noting that Storm did more than simply write code. He was involved in keeping the protocol operational, securing funding, and facilitating transactions for sanctioned parties.

This is not a trivial distinction. The case against Storm isn’t about releasing open-source software—as is sometimes claimed—but about his active role in maintaining a service that was also used by North Korean hackers. Storm denies any intent to facilitate illegal activities, and many legal experts understand his position. Yet one thing is clear: the American government intends to see this case through.

While Storm’s future remains uncertain, another prominent figure received a clear verdict this month: Alex Mashinsky, the former CEO of Celsius, was sentenced to twelve years in prison. He had already admitted to misleading investors and pocketing tens of millions. When the market collapsed in 2022, Mashinsky’s actions revealed a shortfall of more than $1.2 billion.

Mashinsky’s conviction underlines that the Americans remain determined to pursue genuine fraud—and they are effective at it. Although the Blanche Memo sounded like a policy shift, the reality is more nuanced. The rule of law is evolving, but anyone who oversteps boundaries or knowingly skims the edge must still face legal consequences. That free pass some had hoped for simply doesn’t exist.

3️⃣ Has Ethereum Left Its Low Point Behind?

Contribution by Peter

In the crypto arena, a month can sometimes feel like an eternity. Take ether, for example. In early May, hardly anyone was talking about it. Now, just a few weeks later, sentiment has shifted dramatically. In May, ether’s price has risen by 33% so far, while bitcoin managed a “mere” 9% gain. For the first time in a long while, ether is outpacing its older sibling. And as is often the case in crypto, rising prices give rise to more optimistic narratives.

A major catalyst for this change was the successful Pectra upgrade, which went live in early May. This was the largest network overhaul since The Merge in 2022, when Ethereum shifted from Proof-of-Work to Proof-of-Stake. Pectra introduces a host of under-the-hood improvements—from validator optimizations to smarter transaction organization methods. It makes Ethereum more scalable, faster, and more user-friendly. More importantly, it shows that the network is still evolving, driven by an active community and developers committed to continuous improvement.

Last week, the Ethereum Foundation also unveiled a new long-term plan titled Trillion Dollar Security. The message is clear: Ethereum aspires to become the safest and most reliable decentralized network in the world—a foundation on which banks, governments, and companies can confidently build. This isn’t just a vague roadmap; it’s a serious strategy led by top figures in security. It’s an ambitious response to the perennial question: does Ethereum still have a clear direction?

For now, the answer appears to be yes. The upgrade went smoothly, the plan was well received, and the price rebounded. There’s a renewed sense that Ethereum still matters and is regaining its momentum. Yet, as often happens in crypto, this optimism is closely tied to the price. If the price were to fall 20% tomorrow, Pectra might be dismissed as mere technical tinkering and that ‘trillion dollar plan’ seen as nothing more than rhetoric.

For now, though, it seems the worst is behind us—and sometimes, that’s all it takes to begin a new chapter.

🍟 Snacks

To wrap up, here are some brief highlights:

  • Coinbase Joins the S&P 500. Its stock is now 25% higher than it was a week ago. The market sees its inclusion in the index as a strong vote of confidence in the exchange’s success. However, a shadow fell over it the same week—on Friday, it emerged that criminals, via foreign employees, stole customer data. Coinbase has allocated $400 million for restitution and is offering $20 million for the best tip. So far, investors don’t seem overly concerned about the hack.
  • New Companies Follow in MicroStrategy’s Footsteps. From Singapore to Brazil, companies such as Basel Medical Group, DDC Enterprise, Top Win, Méliuz, Addentax and Nakamoto Holdings are planning to add bitcoin to their balance sheets. Some intend to invest tens of millions, while others have even set sights on acquiring 5000 BTC or more. The message is clear: the bitcoin strategy is gaining global traction.
  • Fifth Third Bancorp Explores a Broader Role in the Crypto World. The large American bank, with around $200 billion in assets, has built a modest client portfolio over recent years and is now actively exploring the use of stablecoins for international payments. They are also examining ways to let consumers pay with crypto. “We must harness this technology,” said chief strategy officer Ben Hoffman.
  • American Pension Funds Increase Their Investment in Bitcoin. Analyst Julian Fahrer highlighted their growing exposure through Strategy. In the first quarter of 2025, fourteen US states boosted their stake in the company by a total of $302 million. Their combined exposure now stands at $632 million. Through Strategy, these funds have found a regulated avenue to benefit from bitcoin’s price movements.
  • Ukraine is Working on a Bill to Adopt Bitcoin as a Strategic National Reserve. The central government plans to create a national BTC reserve in collaboration with Binance. The goal? To secure economic stability in times of conflict and currency volatility. If passed, Ukraine would become the first European country to include bitcoin on its balance sheet—a geopolitical first in the making.

Thank you for reading!

To stay informed about the latest market developments and insights, you can follow our team members on X:

  • Bart Mol (@Bart_Mol)
  • Peter Slagter (@pesla)
  • Bert Slagter (@bslagter)
  • Mike Lelieveld (@mlelieveld)

We appreciate your continued support and look forward to bringing you more comprehensive analysis in our next edition.

Until then!

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