Why Bitcoin is not a socialist’s ally
yanisvaroufakis.eu
yanisvaroufakis.eu
There are huge swaths of the world where this isn't true. Short of making computing devices and internet connectivity human rights, these assumptions compound existing inequalities.
Connectivity and devices are not that big of a leap forward from there and seeing how hungry western and Asian businesses are to open new markets in underserved areas, it’s unlikely lack of connectivity itself will further inequalities. Not for long anyways.
The need for powerful computing gear could, maybe, if there is any advantage to being part of the mining network...
First is a one-time hardware private key, with physical protection of it (i.e. you need to break the device psychically to extract bitcoins), and ability to verify address by plugin-in into USB.
Second is a USB power from 9-volt battery. So you can check that the OpenDime is active.
The only hard part is verifying the balance you need an access to blockchain network. Not necessary to do that through internet, because you can receive it though satellite now [3], but you still need a computer, that's the fact.
1. https://opendime.com/ 2. https://usbcoldpower.com/ 3. https://blockstream.com/satellite/
But didn't the creation of private money happen because gold was so expensive to hold and transport? Assuming Layer 2 solutions like Lightning get off the ground, Bitcoin won't have this problem, right?
The gold/silver standard refers to the monetary system where paper cash is backed by precious metals, for which it can be exchanged any time.
It does not refer to literally buying things with gold.
So yes, Bitcoin has all the same issues as a gold-backed currency (a gold standard).
Private forms of money were created in order to help alleviate the extreme inelasticity of gold-backed currencies, which the US abandoned in 1971. So Bitcoin would have all the issues of the dollar from 1944 to 1971.
Which is when it began it's World Reserve Status, and was the reason why Capital Markets functioned and helped rebuild the West, and Japan, as well as led to the highest increase in Social Mobility the World had ever seen at that point and led to the emergence of the World's sole Super Power.
I'm an Anarchist and I want to do away with the notions of Nation-states entirely, but even I cannot help but take issue with your framing of what the US Treasury did by identifying those desirable qualities and attributes as 'issues.' The issues emerge when reckless abandon is applied to what was semi-sound monetary policy and you get the perversion of Modern Money and the corruption of Markets that lead to its continual inflationary based asset bubbles and crashes because of cheap/hot money.
Monetary stability is what should be desired, and for that you need a system incapable of the whims from Human Corruption.
Also, I disagree, if Bitcoin lives up to its potential it remains the only really Multi-planetary monetary system in existence. Nothing else even comes close, if you want to try this experiment just try sending money during non-business hours, on a weekend to a person not in your network.
So, BTC is hardly constrained to your confines.
Aside: is there a term for this style of capitalisation? I see it in 19th century texts...does it have Latin roots?
I often read philosophy texts from that era that did the same, never really understanding or knowing its convention but using it none-the-less.
For example, I would have capitalized 'century' in your response, as you did for Latin for the same reasons.
This makes sense. This isn't intended to be hurtful, but for a general audience, I'd suggest avoiding it. My first association was with Flat Earther and other nutter forums, where I think it's used as a misplaced appeal to authority, to look like Enlightenment-era texts.
Interesting claim.
How do you secure it, back it up, and bequeath it to people on your passing?
Don't those things cost time and actual money?
Keep the private key, mnemonic, seed phrase, etc. only in your brain and perhaps your will, potentially split into pieces that are kept in the physical control of independent trusted entities.
> Don't those things cost time and actual money?
Time: yes. Actual money: perhaps, but that is not fundamentally required. For example, oral traditions are a time-honored means of transferring information to heirs.
Keep in mind we're talking about just 256 bits of information. You can scratch it on a rock and bury it in your back yard if you want.
Do you think a carved rock is safe and secure?
Any time someone has "backups" that are all on one property, I think of large floods, fires, or tornadoes that can eradicate everything, or displace it all.
It is passed on by passing on that private key.
I don't see how that process could be made to be "less expensive"
https://en.wikipedia.org/wiki/2011_Joplin_tornado
If you choose to write it down electronically, then you have to back up that system, and secure it. Neither of which is free.
Is it greater than zero?
Then I win the point.
If we can't even start by correcting it, "Holding Bitcoin is inexpensive," then how can we have any kind of technical conversation about it?
I think in technical conversations, we should avoid hyperbole, and try to be literal. Call it pedantic if you want to, but I don't know how to build logical arguments out of pleasant sounding falsehoods.
It's up to you whom you talk to, people who exaggerate, or people who ask for simple concessions for correctness.
And please note, I was responding to the sarcastic, "If only you could store things in multiple locations." If you enjoy talking to people who are sarcastic, that's also your choice.
I suspect securing it will have more than zero cost, which was my only point.
That is correct. I am pointing out suggested practices for a good backup system for general knowledge. (i.e. I am writing to everyone who is reading this, not just you.) I am not going to cover security, as I have no opinions on best practices.
Back it up on a second piece of paper in a second locked box, kept in a second location.
Put both locked boxes in your will.
In response to the tornado link you've been spamming: obviously there are limitations to any security system. None of your proposed security systems particularly secure you against government agents beating you with a rubber hose until you hand over your wallet password, but I think we can agree that a reasonable level of security doesn't have to worry about that or two simultaneous tornadoes at different locations.
And I don't need to go to government agents, I'm just talking about simple robbers. Say for instance family members who figure out you have Bitcoin and want to take it from you.
Well, I live in a home, already have the boxes for all my papers (Social Security Card, Passports, Birth Cert, etc.) and I have at least one person I trust who lives in a separate home, so nothing.
> And I don't need to go to government agents, I'm just talking about simple robbers. Say for instance family members who figure out you have Bitcoin and want to take it from you.
...which my system protects against just fine.
It's clear you're more interested in winning an argument here than in discussing real-world security, so I won't be responding further.
On-chain? No, that may have been true in the early days (pre 2013?) but a tx fee has to be included unless you want your money held in the mempool. You may get lucky if it has high days destroyed, but that's not really a risk you want to take unless you care about the funds and want to eventually have to resort to a CPFP tx. I did a 18 satoshi/byte tx and it took a few hours to confirm, which for my purposes was entirely fine as it was a low sum. But as we get more people onboard On-chain should only really be used for important, secure, and therefore commanding a higher fee, transactions than would/could be done as a LN tx.
And actually LN has everything to do with how bitcoin is transported, note the lower-case here, LN makes it instant and near no cost tx fees.
Holding, as you said, can be done for free. Many old schoolers never really opted for hardware wallets, as the paper-wallet method can be just as secure, despite it requiring far more planning and contingencies.
I liked Yanis when he was lambasting the Merkle/Rumpy governed EU and telling them they'd prefer to default and exit the EU and take Cyprus and the PIIGS with them. However, ever since the party he helped create (Syriza) failed to do anything different in Greece than the Trokia before it I completely tuned out to him and his tired rhetoric has lost any of its appeal.
And he is right, Bitcoin is completely agnostic to Political Ideology or its proposed factions, in fact I'd say if you understand what it really is: that is entirely the point!
I'm not going to read his article, but if that is his only contention, then he is right. Socialists need not apply, and if the Petro is any indication of what happens when Socialists create their own cryptocurrency (only to see it fail, in value or utility and then have to accept Bitcoin anyway for their services) it doesn't really matter, and proves the above.
> On-chain?
Nope.
> I'm not going to read his article
Which makes you willfully unqualified to hold an opinion on his article.
That may be, but I bet I have better understanding of what his character is better than you as I was in Europe in that time helping understand what was occurring with the Euro crises, and if that is his premise for why Bitcoin shouldn't be used by Socialists, he is right and should stop exploring it as an avenue. I'll just point at Maduro's failed plan to show why it doesn't matter anyway.
> > Transporting Bitcoin can also be free, depending on what you mean by transporting.
> On-chain?
> Nope.
I'll indulge you, go on explain...
It's surprising you know so much about Varoufakis, but what's even more surprising is that you know so much about me!
I'm not disagreeing with you here incidentally--you haven't made any actual argument that I even could disagree with. You've just claimed that some events proved your point without explaining how or why. You may be right, but you haven't said anything that would convince me you are. Given so far my experience of you is you refuse to read something and yet feel qualified to comment on it because you know the author's character, I'm certainly not going to be believing you based on your qualifications.
> I'll indulge you, go on explain...
If I wish to transport gold across a border, I have to work out customs/tariffs, security, potentially bribes, etc. all of which cost money.
If I wish to transport Bitcoin across a border, I memorize the wallet key, and cross the border. Free.
There are extremely powerful interest groups that want money to be creatable on demand (and not subtle ones; the public loves credit). If a sound money system is in use (Gold, Bitcoin, etc) then it may hold for a long while but sooner or later be re-defined out of the system and replaced with something that can be created. The process has nothing to do with the other underlying technical realities of the sound money, the problem being solved is the soundness of the money itself.
No.
1. There was creation of state and of private money, or money-of-sorts, in societies where money wasn't based on gold.
2. If transport and holding was the issue, private money could have been limited to the amount of available gold.
No, that's really not the reason.
The article rightly notes that the ability to print money is relevant here, but I think they could have expressed it in simpler terms. In short: printing money is always a redistribution of wealth. If you print a million dollars and give it to a group, you've effectively taken money away from everyone else and redistributed it to that group. The pot of wealth in the country hasn't changed size, the recipients of the newly-minted money just have more of the pot.
In a socialist ideal, this is a key tool because it's one of the main ways of redistributing wealth from the rich to the poor. You print money and give it to the poor. This isn't creating value, obviously, it's just decreasing the value of the money held by the rich, and giving that value to the poor. A decentralized value store can't do that.
However, some socialists would argue that the ability to print money in modern western powers is primarily used to redistribute wealth from the poor to the rich, not the other way around. Due to this, a socialist might say it's better to use a decentralized value store now than to use a centralized value store that is used to redistribute wealth in the wrong direction.
If you're a socialist, the question on your mind with regards to bitcoin should be: Is the power to print money being used to redistribute wealth from the poor to the rich? And if so, is the short term benefit of avoiding this harm worth the longer-term harm of moving value out of stores where wealth can be redistributed from the rich to the poor? These are much more complicated questions: the first might be answerable with data, but the second question involves a lot of future variables which may simply be impossible to predict.
s/tool/ponzi scheme/... or in other words - I am entirely unconvinced that bitcoin has a positive short-term effect. Most of what happens with BitCoin is people buying it in exchange for fiat currency, a bunch of speculation, and mining (if that's not mostly over). I don't see it empowering workers' movements.
Go look up what System D is, and see what worker movements it could help benefit, because just from that statement alone you show just horribly informed you are and how narrow and ignorant your view of the World really is.
That's right... Because tether has proven that so well, hasn't it? By the way, Bitcoin will remain inflationary until the last one is mined 2140, as it continues to approximately discover the entire 21 million into existence until then. Which is long after you or I will be around, be even then you can create a form of colored coin derivative backed by other more stable assets (wheat, pork bellies?) now if you wanted to.
I thought stablecoins may have had some limited utility, but I feel they're just re-creating the same problem by using the same tools that fiat does and further convoluting it by attaching the Cryptocurrency Brand over it. I'm not impressed by it nor would I think people who are marginalized would want to rely on yet another centralized system for their existence.
BTC suffers from price deflation which is what everyone means by deflation.
Are you saying that the use of BitCoin significantly improves the situation of people without access to bank accounts? Or - that it has the theoretical potential to do so? If it's the former - then I disagree, if for no other reason than for the inability to exchange most things for BitCoin. As for the theoretical claim - you need to first prove that BitCoin is likely to become acceptable on a similar level as fiat currency, and moreover, that there are enough compelling usage scenarios for BitCoin over cash.
For undocumented immigrants, you will need to go to even more effort, because they can use their bank account at their country of origin.
About operation chokepoint - I understand there was an argument regarding the lack of due process in targeting certain companies, but - did it target individuals? In what way?
Now, indeed, governments do prefer capitalist interests to popular interests more often than not. But I don't see why this bolsters your argument. BitCoin is not useful not because the US government or other governments are great; and Mr. Varoufakis argued as much.
About "System D" - please post a link to what you mean, because I don't follow.
This weakens the rest of your argument. Bitcoin obviously isn't a Ponzi scheme. If speaking to an uninformed audience, this could be a good-enough approximation, but when speaking to an informed audience, a cheap shot like this just makes you seem uninformed (which you clearly aren't, based on the rest of your post).
> I am entirely unconvinced that bitcoin has a positive short-term effect. Most of what happens with BitCoin is people buying it in exchange for fiat currency, a bunch of speculation, and mining (if that's not mostly over). I don't see it empowering workers' movements.
On the whole, I agree with you on this, and I hope there's nothing in my previous post which makes it seem otherwise.
However, as with any large complex system, there are local effects, and the situation is not as simple as you're making it seem.
2. Are there enough of these local effects to counter-weigh the global negative effects?
AFAICT the answer to (2.) is negative, but I suppose I could be mistaken, since I don't follow BitCoin use closely.
To be clear what I mean by "local" in this case, is "within a sub-economy" not necessarily local geographically.
There are a few examples already in this thread, but I'll add a few of my own:
1. Workers in the US often send money back to families in third-world countries. Doing this with BTC is less expensive and faster than with wire transfers.
2. Transacting in Bitcoin has made the illegal drug trade safer, which primarily benefits the poor. Less violence, higher quality products, less risk of being caught.
> 2. Are there enough of these local effects to counter-weigh the global negative effects?
> AFAICT the answer to (2.) is negative, but I suppose I could be mistaken, since I don't follow BitCoin use closely.
I tend to agree with you here.
How high are those fees, these days? IIUC, in recent years, several companies have enabled regular-money-based transfers over the Internet at lower fees than in the past. Some quick searching indicates players include Zelle, PayPal, CashApp and Venmo For example, I just checked the PayPal (ugh) fee for transferring 1,000 USD to a Mexican bank account. If you have a US bank account linked to PayPal, the fee is zero. I've heard Zelle is also free (?)
Even if for some countries its probably more expensive - I wonder if it's that high. Plus, on the BTC side, you need to factor in the fees for converting to and from BTC.
About the illegal drug trade: I don't see how BTC improves product quality. As for the violence - world states, primarily the US, control the level of violence, and it isn't really about the method of payment. As for the risk of drug-runners being caught - most of these are small-time businessmen rather than workers. So I feel this is a bit of a forced example. If anything, the benefit here is possibly reducing state involvement in drug trafficking and bringing us closer to de-criminalization.
What we seem to actually be getting is multiple cryptocurrencies, in addition to fiat. Under these conditions, if the world falls into depression, where money is too scarce, then an easy solution is to launch new currencies. On blockchains that support smart contracts, this would be easy to do.
If Hayek was on the right track with his advocacy of competing currencies, this could be a more stable system than we have now. Easy deployment of local currencies could also help support local businesses over large monopolies.
Bitcoin, in this sense, is once again solving a problem that nobody has.
You could make the argument that gold is also for rich people, but no one seems to have a problem with it.
Each scenario has such a vanishingly small likelihood that it seems pedantic to debate them.
A more likely scenario is that we retain market economies and national currencies, with more or less corruption, more or less rule of law and more or less authoritarianism. Bitcoin would still exist but it wouldn't replace national currencies.
It seems that during periods of more corruption, less rule of law and more authoritarianism, we'll see more use of state power to debase national currencies for the benefit of the clique currently in power, with financial repression and confiscation for political adversaries and those not in the clique.
During times like this, an asset that is independent of the clique, digital, borderless, and difficult to detect, debase or confiscate might be a more secure way to protect the savings of the little guy and the big guy alike.
Any unregulated and unconstrained reputation system tends to lead to Zipf-type distributions. What that means for an economy is extreme power at the high end and lots of poverty at the low end.
Thus either there would be no control at all of the economy, or that control would go to the whales by virtue of their very gravity.
The former would be bad, because the system would effectively be blind to many things that political power handles (e.g. externality). And the latter would be worse, because there's no reason to believe that these powerful entities would care about the powerless.
Fiat currency did not cause the disconnect between productivity and wages, the same way that the disconnect between productivity and wages did not cause fiat currency. They were both caused by the shift to a complex global economy.
Also, if that's the root cause then surely you can point me to some correlation between "globalisation" and some measurable ills of the world? After all - causation does mean correlation.
Authoritarians are gross.
The issue is that Bitcoin is a currency that has both a fixed supply, and is naturally controlled by the very richest people. This leads to a series of incentives and effects of monetary policy that creates conditions where the average person loses out, big time.
No, BitCoin has basically _no_ control of the currency. The algorithm is what it is, and the initial "players" who have the most BitCoin are who they are.
But this article is remarkable in that it doesn't mention any feature or property of bitcoin at all! You could replace the word 'bitcoin' in the page with any other currency, monetary system or whatever means of accounting that you like (using shells for currency, perhaps?), and nothing would change. The article is amazingly content-free, and its arguments & propositions could be re-applied to whatever you like/dislike!
Of course! You could replace Bitcoin with any other fixed supply currency. This is literally the point of the article! He is arguing that Bitcoin cannot work for the common man, because it has all the issues of fixed-supply currencies that lead to fiat currency. Transitioning to Bitcoin would be akin to restoring the Bretton Woods system, and would be disastrous for everyone.
He is indeed addressing a feature and property of Bitcoin. That feature is fixed supply. That is what matters to an economist, because it has huge impacts. Varoufakis, in this essay, doesn't talk about the tech, because not only has he already done so, but because it is irrelevant to the analysis that he, as an economist, makes about the consequences of a switch to Bitcoin.
Point 2 is just: there will be inequality, the rich stay rich, the poor stay poor. Yes, true, unless you do some huge form of wealth redistribution, you won't change this. But note that this again is not related to the new currency. Jeff Bezos will still remain rich no matter what features your new currency has, because he already is rich.
So, I don't see how these points are related to bitcoin or in fact any currency.
It was removed because it gave very little flexibility in monetary policy, and gravely prevented deficit spending. This led to failure to control the business cycle, as well as inflation in general, which would have been disastrous.
If we restored Bretton Woods, 2008 would have been a complete disaster, and the current recession would be orders of magnitude worse and would last much longer. As for why control over inflation and deficit spending is helpful in recession, read Krugman, or Keynes if you like the classics.
Sound money ensured that money was invested in things that actually produced productivity improvements. We coasted on the residual returns of investments from earlier eras, but productive investment, I would argue, has declined since those earlier decades. ROIs on loaned money have declined in the zero interest rate era.
Take out the word 'bitcoin' from this, and all the points still stand. The super-rich tend to be the ones with power, and they are never motivated to change this.
(Which is kind of a truism really, because if the super-rich & powerful were willing to be generous, they wouldn't be super-rich in the first place...)
And yet those social democratic countries exist.