Bitcoin, Magical Thinking, and Political Ideology
al3x.net
al3x.net
"everything wrong with Silicon Valley"
"crypto-libertarian political agenda that smacks of nerds-do-it-better paternalism"
"intellectual sinkhole"
"near-total obliviousness to reality"
"alarmingly magical thinking"
"unchecked predatory capitalism"
"short-sighted hypercapitalism"
There are interesting conversations to have around bitcoins but I can't quite put my finger on why they tend to get so intense.
It's like trying to explain to an 8 year old why Justin Beiber is just a fad. They have their hopes and dreams tied up in something you can't battle no matter how hard you argue.
The fact that there are adults who get upset that children like Justin Beiber probably suggests that irrational negative reactions do not necessarily suggest that there is an element of feeling as though your political ideology is being threatened (as others and myself have already suggested in this discussion).
It is, simply put, a platform of trust powered by the most massive compute engine humanity has ever built.
The vitriol on HN shocks me though. I would've thought this community would love something like bitcoin. But instead of good quality discussions most bitcoin threads here turn into haters vs 'fanboys'. You are a 'fanboy'. It's pretty hard to get taken seriously once that happens.... :(
I don't personally believe that Bitcoin is the road to some techno-utopia. Frankly, I expect that ultimately it will just be a blip on the radar; but there's no reason to get so angry about it unless its fundamentally a scary idea. Its a direct challenge to the authoritarian worldview and that's frightening.
The freedom provided by this new financial system does nothing to enrich the people who are imperiled by the existing financial system; quite the opposite, the lack of regulations endangers them because they are not highly educated, rational financiers so they have increased exposure to risk/fraud.
When I was in college, I hated banks. Once I bought a cup of coffee for $2 only to find I had racked up $40 worth of NSF fees accidentally. I'm sure this happens to poor folks all the time. Poor people often don't use banks because banks prey on the poor and often make them poorer.
Why didn't I just use cash? Because I wanted to buy things online, accept payments from others, and didn't want to carry cash around all the time.
If Bitcoin was less volatile, it would actually do a good job of solving some of the issues faced by poorer "underbanked" people.
The problem is that it is an incredibly difficult leap to even imagine a potential universe where Bitcoin is better for the people currently victimized by banks. At present, it is massively, catastrophically worse for them. The volatility is only one of a numerous set of problems that apply there.
I'm still interested to see how it will get used to solve real problems, but the protocol itself is at best a single tool that can be used to construct a system that actually helps the poor and the underbanked.
It has been less than four years since Bitcoin was invented. Looking at every major invention at age four, how many of them would be unequivocal successes for the group of people that eventually benefitted? Four years after the invention of computer networking, I'm sure computer networks were much worse than libraries for people doing research projects. Likewise with automobiles and travelers, airplanes and travelers, etc.
Bitcoin won't help poor people _directly_, but when it stabilizes I can think of at least a few ways it can help them indirectly. Another start-up company with a bitcoin backend challenging Western Union. All the not-wealthy immigrants who want to send money home without western-union's fees. Or maybe even bitcoin credit cards? Avoid the whole Visa/MasterCard infrastructure and whatever fees/rules it has. Of course, I still don't know how to deal with fraud & chargebacks..... so....
The 'very rich' can afford to spend extravagantly to acquire bitcoins, and can afford to do so at 'a loss' if they actually have some good reason to convert money from other currencies to BTC. The average poor or middle-class person who has bitcoins to sell will be unlikely to turn down an offer to buy BTC at above market prices or similar other arrangements.
You can argue that Bitcoin is a threat to the revenue streams that the 'very rich' rely on to become wealthy and stay wealthy; however, it is mostly a threat in that it displaces those revenue streams. Speculators that currently work in things tied to USD can just as easily do their speculation against BTC; you do nothing to put those people out of work. Investors, likewise, are not somehow directly threatened by a Bitcoin-based economy. It's just currency to them.
There are some people who are genuinely anti-government, and more people who are against government doing particular, broadly popular things and find it easier to adopt a rhetorical "anti-government" stance in advocating against these function than to advocate against them specifically.
On the other side, people rarely -- either honestly or as rhetorical cover for another position -- advocate for government qua government, rather than for particular government action. This suggests that people tend to have a, if any opinion on government as a general thing, a negative opinion, which can be more positive when it comes to particular government actions.
Now obviously I'm not saying that people are for any type of government or any specific action of government. But most people will adamantly defend the goodness and necessity of government in the face of any undesirable action or aspect of a particular government. It's very common to hear phrases like "democracy isn't perfect, but it's the best system there is," or "if you don't like something, you can vote to change it," or "government represents the people," etc.
I believe that the examples you give, to the extent tht they are valid at all, support my idea (that people take government for granted but have positive or negative views of government doing particular things) more than yours (that people love government).
> People love taxes (although they often think the taxes on themselves are too high),
This particular one I think is garbage. People tend to think that some level of taxation is necessary, because they think that some government functions are necessary. That's different than "lving taxes" in a general sense.
> they consider government to be virtuous ("who would take care of the poor without government")
Thinking that government is an essential mechanism for a desirable function does not mean that they think government is "virtuous". Or that government qua government (as opposed to particular governments or particular people in goverment) is even the kind of entity to which "virtue" or "vice" could meaningfully apply.
> and they believe that (and are grateful that) they are completely dependent on government for their own welfare and safety
I've certainly observed some people believing that certain government functions are desirable because they contribute to welfare or safety, but I've never encountered anyone that both viewed themselves as completely dependent on government for anything that did not resent that complete dependence, nor have I seen many people that show any signs of feeling completely dependent on government for welfare or security.
> It's very common to hear phrases like "democracy isn't perfect, but it's the best system there is,"
That's not a defense of government, that's a statement that given the inevitability of government, one particular way of organizing government is better than the alternatives.
> or "if you don't like something, you can vote to change it,"
That's a statement of an route of problem resolution available in a particular form of government, not a statement in favor of government qua government.
> or "government represents the people,"
I've never heard that statement made in a general sense (the closest is the observation that all governments are ultimately limited in power to what those subject to their power will tolerate), though I've heard similar statements about particular governments or forms of government, or as normative statements about what government should do.
I simply disagree. I think most people believe that without taxation (i.e. without forcefully taking funds from people who aren't willing to give, even if that's only a small portion of the tax base), many things which are generally considered good (like care for the poor, infrastructure, public defense, etc.) simply cannot exist. To me, that is equivalent to "loving taxes."
Granted, the word "love" is a very complex and vague one, so perhaps I should have phrased it differently, like "people are intensely thankful for government."
> but I've never encountered anyone that both viewed themselves as completely dependent on government for anything that did not resent that complete dependence, nor have I seen many people that show any signs of feeling completely dependent on government for welfare or security.
I hear it quite often. My father believes very sincerely that military conscription is a great thing, because without it no region of people could hope to survive due to the threat of invasion and attack. People are also gratefully dependent on simpler things like food and drug regulations, public transportation, and even government postal services. I think most people sincerely believe that, without government, there is no way to have a stable, thriving, "civilized" society. I have even often heard people say things like "without government, we are just apes beating each other to death with sticks."
Honestly, apart from the people I have met (mostly online) who are explicitly against the existence of the state (who are obviously in a tiny minority), I don't know of anyone who doesn't think of government as the most fundamental and primary cause for the enjoyability of modern society.
The only way you seem to disagree, now that you provide more detail, is that you use the word "love" in a bizarre way.
> I think most people believe that without taxation (i.e. without forcefully taking funds from people who aren't willing to give, even if that's only a small portion of the tax base), many things which are generally considered good (like care for the poor, infrastructure, public defense, etc.) simply cannot exist.
That's exactly what I said -- people believe that some government functions are desirable, and that taxation is necessary to those functions. That's very different than loving taxation, by any normal use of language.
> To me, that is equivalent to "loving taxes."
This is where we disagree. I think that, as I am overweight, continuing to lose weight is desirable. I believe that without controlling both the quantity I eat and what it is that I eat, that weight loss will not occur.
This is not equivalent to "loving dieting".
> Granted, the word "love" is a very complex and vague one, so perhaps I should have phrased it differently, like "people are intensely thankful for government."
I think you'd still be wrong.
People aren't "thankful for government" in some generalized sense, they are thankful for particular governments taking particular actions (and, quite often, the same people are also resentful of the same government taking different actions, and often broadly disapproving of even the existence of many other governments.)
This is essentially (among other errors) the fallacy of composition -- taking something that is true of some component (some particular action by some particular government) of a larger category (government in general) and treating it as if it was true of the larger category as such.
I've frequently seen this in the particular area of feelings about government from people whose own feelings are anti-government, and I think its easily understandable as an instance of the natural tendency to think that the things one thinks of as important subjects of positive or negative (in this case, "government" as such) are the same thing others think of as important, and that differences are all in the direction of feelings rather than their subject.
Is it really that bizarre? I obviously didn't intend to invoke the romantic or familial definition of the word, which leaves the more general definition. As I clarified, I mean that most people attribute most things that are good about the world (on all scales larger than the individual or family), and thus are extremely thankful for government. I don't think it's bizarre to describe this as "love."
> That's exactly what I said -- people believe that some government functions are desirable, and that taxation is necessary to those functions. That's very different than loving taxation, by any normal use of language.
No, I don't think it is. Would you agree that people would use the opposite word, "hate," to describe the act of removing taxes and thus (in their minds) removing the possibility of having all these nice things like welfare and infrastructure?
> This is not equivalent to "loving dieting".
There is a subtle difference, because the act of dieting is a purely personal decision that essentially only affects the dieter. It's more analogous to one's personal amount of taxation, which I already conceded is not widely loved. But even so, if dieting is the only effective way of acquiring a healthy weight, then it's not unreasonable to love that fact. It would certainly be vastly preferable to having no way of acquiring a healthy weight.
> People aren't "thankful for government" in some generalized sense, they are thankful for particular governments taking particular actions (and, quite often, the same people are also resentful of the same government taking different actions, and often broadly disapproving of even the existence of many other governments.)
I have already addressed this. I never said that people are thankful for any and all government actions. I said that people are thankful for government, because government does things they believe are overwhelming good and that could not be done without government.
> This is essentially (among other errors) the fallacy of composition -- taking something that is true of some component (some particular action by some particular government) of a larger category (government in general) and treating it as if it was true of the larger category as such.
Absolutely not. The key here is that people believe that only government can do the things that they are thankful for. They think that no government means a bad society. It would be a fallacy of composition if I said "people like social welfare programs, therefore people like governments since governments provide social welfare programs." But it's no longer a fallacy of composition if I assume that only governments can possible provide social welfare programs.
Believing that government is essential for some desirable things does not mean loving government (or even having any emotion at all about government as such), any more than believign that government is essential for some undesirable things (a belief shared by many of the same people) means hating government.
> It would be a fallacy of composition if I said "people like social welfare programs, therefore people like governments since governments provide social welfare programs." But it's no longer a fallacy of composition if I assume that only governments can possible provide social welfare programs.
Yes, it is still exactly the fallacy of composition, the same way that "People hate aggressive wars, and people believe only governments can launch aggressive wars, so people hate government" is the fallacy of composition.
People can like or dislike things for which they see government as necessary without liking or disliking government. It is exactly the fallacy of composition to conflate like or dislike of particular actions of government with like or dislike of government, regardless of whether or not government is essential those actions.
> the same way that "People hate aggressive wars, and people believe only governments can launch aggressive wars, so people hate government" is the fallacy of composition.
That's not a fallacy either. It just happens to be false, namely because most people don't hate aggressive wars.
You make that sound like a bad thing, but it really depends what the discussion is like. If someone criticizes the government and someone else responds with a smarmy comment like "hey, stop whining or move to Somalia" then yeah, that's just blind patriotism.
On the other hand, if someone says "The government did X wrong, therefore government is bad and should be dismantled," then I would say it's perfectly logical to respond with "Government also does Y and Z, which are both good, so maybe it's worth trying to reform rather than demolish." I wouldn't consider that blind patriotism, but rather a "don't throw the baby out with the bathwater" style of reasoning. I'm not trying to take either side here (what kind of government we need or don't need is a valid open question), but arguing that government is still necessary despite failures in the system does not make someone a shameless government apologist; it can also be seen as a pragmatic position.
Certainly so. That's why the libertarian/anarchist/anarcho-capitalist (whatever you want to call it) arguments I am most attracted to are the ones that attempt to show why societies without governments can also do Y and Z, and perhaps do them more effectively than governments. I dislike the more prominent libertarian line of argument, which appeals to "natural rights" and morality, and basically says "I don't care if government is the only way to do Y and Z, government shouldn't do it because it violates my rights."
By this I mean a certain likeness to many other speculative schemes that came before. I remember reading somewhere that Groucho Marx had lost a significant portion of his assets in the stock market in the 20s, because he had invested without knowing what he was doing at a time when everybody was investing without knowing what they were doing.
The tone of much of the writings these days that push Bitcoins leads me to believe that we might be heading in a similar direction with Bitcoin. Now imagine yourself in the position of a person that thinks as I do. Wouldn't you say that some of the hurrah-praise of Bitcoin in technology corner to me might reek of hubris?
Too many people wanting to get rich quick. Too much fluctuation. Too much speculation.
Best case scenario is that this is a good hedge with decent risks, worst case scenario is that it is a worthwhile asset class to manipulate at a lower cost compared to other asset classes.
EDIT: I don't agree with the larger tone of the article, but there are merit-worthy points that are made in it.
Bitcoin's creator satoshi wrote extensively about economics and politics and, to my understanding, its invention was explicitly anti-authoritarian.
The only part that I may slightly disagree with is that unlike the case of denim or Che shirts, there is at least a theoretical endgame that escapes the traditional framework.
Note that I don't think bitcoin will reach that endgame, but I think that is a slight distinction.
Forms of control are not always very direct. Let us, hypothetically, say the big state actors jump in to take control of 80% of the available bitcoins available, under various entities, they have control and authority and little accountability.
This is already a reality in some equity markets, where retail investors are under 20% and rest of the players are institutional players. It will take much lesser than what it takes to move a large equity market, to move BT.
There is a good reason why there is no global barter system. It simply won't work at that scale. A global barter system -- that would be truly subversive.
I don't understand how people in a country freed from corporate oppression by government regulation a mere century ago can think that doing away with regulation can "free" you from anything.
Only people who really care one way or the other are going to be bothered to write about their feelings towards it.
(I own no bitcoin, but am not threatened by it either. It is fun to watch and read about, and I'm not getting hurt so I don't see any reason to be angry at it.)
My theory is that the more something challenges your world view, the more violently against something you will be.
Everyone is ruining everything, everybody is bad, and we ought to regulate everything to fix it. Because somehow bureaucrats are immune from whatever ails people that are seeking the pursuit of happiness.
The blog post is disconnected from reality in so many places that I couldn't even begin to respond.
Somebody who kept their thinking connected to reality would have a pretty hard time getting to those kinds of views in the first place.
It's just an observation I've made. People will have to agree or disagree based on their own judgement.
I acknowledge that I am not providing any evidence for this. It wouldn't be worth the effort to me of deconstructing his post sentence by sentence.
Enough.
Save your unsupported observations and your fucking breath.
Your contributions and the contributions of other libertarians in this thread amount to little more than endlessly bleating that (in the opinion of the greedy), greed couldn't possibly have led to financial calamities, and that impediments to greed like democratically elected governments and legislated, popular laws are to blame for financial calamities....the disasters that history has shown repeatedly arise only when those same laws are weakened.
http://en.wikipedia.org/wiki/Category:Economic_disasters_in_...
I think this kind of statement speaks for itself.
> other libertarians
I'm not a libertarian. I think libertarians are terribly mistaken.
> the disasters that history has shown repeatedly arise only when those same laws are weakened
That's right. When "deregulation" actually means something like "let's allow private ownership and operation of a coropration that has a government-granted regulatory monopoly," it is a total disaster. You have to get rid of coersion from the market completely for it to function as a market. So I agree with you---a mixed economy is complete and utter crap.
It's because it's more a religious discussion than a rational debate. You see the exact same pattern of phrasing used by proponents of Bitcoin, by American fundamentalists and spinoffs, and by atheists who are actively pushing for the complete removal of religion.
I've given up learning anything useful about Bitcoin since I don't find any of the people talking about it trustworthy.
Edit: I hear you below! :) I should have clarified that Bitcoin will GIVE WAY to a way to trust people through their monetary transactions. Think credit agencies and lobbyists.
It's like a preacher once told me. God is good because the Bible says so. The Bible is right because God says so. At no point is there anyone qualified to say, "Look. This is God and this is what he's doing. Come to your own conclusion."
Edited to add:
> I should have clarified that Bitcoin will GIVE WAY to a way to trust people through their monetary transactions. Think credit agencies and lobbyists.
That's still a different problem. If I give someone a million dollars, that doesn't make me trust them to teach me truthful information; it makes me trust them to teach me the truth as they know it. A preacher will tell me God is good whether or not I've given them a million dollars. That doesn't actually verify that God is, in fact, good.
Obviously, anyone who realized that Bitcoin provides a solution to this problem will immediately theorize that it could potentially replace things in the world they don't like (and thus really like Bitcoin), and anyone who likes those things which could be replaced will really dislike Bitcoin, and maybe most of them will be so passionate that they become untrustworthy. But still, the technical marvel of Bitcoin is still there and can still be enjoyed.
I kinda wish we had a Castronova-style petri dish virtual world to experiment with, but that still doesn't isolate variables well enough, nor would it be quite inclusive enough, to form conclusions I'd accept as legitimate.
:)
From the about page.
If not, he's got a very good reason to talk down Bitcoin, since it's catching on and he's smart enough to recognize the threat that this poses to traditional banks and banking.
Add to that his political biases, and there's no way he could ever form a positive opinion of Bitcoin, no matter how innovative or positive a force in society.
... for Christ's sake. Give it a rest, he's not a mustache-twiddling dastardly capitalist and the banking system is not trying to keep Bitcoin down.
The banking system is ignoring you.
I'm not talking about Winklevii clowns or a few comments from a few figures or a Senate hearing.
I'm talking about the corporations for whom 8 billion ('market cap' for Bitcoin) is pennies. Chase has 2.5 trillion in assets. It does not care about Bitcoin.
More importantly, no one in Bitcoinland seems to realize that Bitcoin is re-implementing our financial system, and doing it badly--perhaps because when they do, they realize how silly it all is.
>Chase has 2.5 trillion in assets. It does not care about Bitcoin.
You sure about that? Check out this thread, and all the Bitcoin businesses who have been shut down. Chase has banned all Bitcoin-related businesses. Doesn't sound like ignoring to me.
http://www.reddit.com/r/Bitcoin/comments/1t0yk5/final_word_f...
Truth is, anyone who's been paying attention knows that banks have been systematically shutting down Bitcoin related businesses for the past few months. Again, not ignoring.
Though, even the recent events that have caused the price to crash hasn't changed my views. I still think bitcoins show a huge amount of potential and 2014 is going to be a big year for crytocurrencies.
I think it's a very interesting question to ask how a community as smart as the SV hacker crowd can be so fundamentally blind about basic economics that we have known for centuries. I think our markets desperately need new technology and I'm glad we're thinking about it, but throwing away the economics playbook of the last 500 years seems like a step backward in financial technology rather than a step forward.
Agreed. I've been following bitcoin for a couple of years, and this year when my friends/family started talking like that I was a bit disheartened. To be fair, If I heard something along the lines of "using bitcoin to obtain resources that are hard/ more insecure using traditional means/trust models", my eyes would have lit up.
It seems like all the voices around speculating price points in fiat have been drowning out those of utility (of course, this is not limited to just bitcoins), though those who find it's utility still trudge on.
Right now, I'm interested in the interactions around the exchange process because I think that's where the trust model applauded by many (myself included), is at its weakest. It would be pretty cool if there were some kind of platform built into/on top of a bitcoin client that allowed for a peer to peer exchange where maybe using the current banking system in some way, users could escrow/deposit/withdraw fiat into the network (using the network as a ledger that associates fiat amounts with addresses maybe with something like prepaid debit cards). I guess if I were to simplify that rambling a bit, I would like to see the exchange process built into a protocol and not a service it is today.
Oh, it happens all the time. Smart people are blinded by ego & overconfidence in their own intelligence. It's sort of like Dunning-Kruger for smart people.
That's the traditional narrative, coming from the regulators themselves. "we messed up, so you need us even more". It also totally ignores the state's role through policy in pumping up several running bubbles - tech bubble, housing bubble, higher education bubble. Why are people encouraged into top-0.1%-enriching investment vehicles, like 401ks or mutual funds or pension funds? Why, because they need to protect themselves from inflation. And who do you suppose creates the inflation? It's not a law of nature; it's the state and its "Regulators". The reason why those peddling the traditional narrative are terrified that we will see by example that inflation is not natural. It is in their interest to pooh-pooh it.
At least bitcoin bubbles are short and only sweep under people who are accepting the risk. Without prejudice to either position on the regulation good/bad issue, the VERY LAST thing we need is more of THESE regulators.
Yes they did. That is the literal, intentional, lawful purpose of Freddie Mac and Fannie Mae, which are the source of a bubble market for bad mortgages.
No. Freddie and Fannie are force-backed government bureaus that risk/waste taxpayer money in the pursuit of American housing policy (i.e. that everyone needs to live in a standalone house).
They are not subject to market pressure, because they are part of the government. That is the very definition of not being part of the market.
FMFM are an organization that is subsidized by the government and is held accountable to the government. In the same way Farmers are subsidized and held accountable to the government. In the same way hospitals and eldercare are largely subsidized. In the same way weapons manufactures are subsidized. In the same way fire departments, police, road construction, rail, utilities, and air are all subsidized by the government.
And whoa, low and behold they are all also held to the same regulatory and market pressures any other company are held to. Just that, society decided these institutions are important to THE PEOPLE as a whole to let them go to shit because they don't attract investment because the margins are too thin.
Its not as black and white as you want to make it. Look hard enough at an "market" and you will find government subsidizing it in some way, even when it regulates.
Sorry, but this whole "let's ignore vast swaths of economic history because I really like libertarianism" thing needs to stop.
The point is that we have data: we know what happened with regulation, and with less regulation, and with less regulation things were worse. Suggesting that the solution is to remove even more regulation seems a very strange conclusion to draw from this experience.
(As an aside, I'm not sure why bitcoin bubbles being "short" is helpful. What is the advantage of high volatility?)
That's a post hoc, ergo propter hoc fallacy.
In any case, regulation is force. What if some people want to take on greater risk (as you see it) and engage in unstable speculative investment? They should have that right.
The government has the job of trying to shape society. Deciding that home ownership is a good thing and giving people tax breaks isn't the same as telling people to buy houses that cost more than they can afford. Encouraging people to go to college doesn't mean that harvard should charge 100X what they charged fifty years ago. It's the role of government to provide incentives and penalties. It's the unfortunate role of the market to pervert and distort those things to maximize profit at the expense of society.
It's easy to think of regulators as some Other that has come in and destroyed our economic eden. The fact of the matter is that things were significantly worse for everyone before we had government regulation. Inflation [1] and economic bubbles [2] existed before the modern financial system. Price gouging, monopolies, child labor exploitation...all reduced by government regulation.
We may not agree on the role of government, but it doesn't make a lot of sense to use them as a boogeyman that is responsible for all of society's economic ills. The idea that mankind was in a perfect state of nature before modern government borders on being religious. The system isn't perfect, but I hope we all can agree that there is plenty of blame to go around.
[1] http://ancienthistory.about.com/od/fallromeeconomic/a/econof...
If there is any greed in inflation, its the politicians channeling assets to the already wealthy, which is what inflation does. The us inflation went haywire after 1970 when Nixon went off the gold standard and not surprisingly 1973 is when the closing of the poverty gap turned a corner and the rich started getting richer and the poor started getting poorer again.
> I’ve enjoyed the thought experiment of Bitcoin as much as the next nerd, but it’s time to dispense with the opportunism and adolescent fantasies of a crypto-powered stateless future and return to the work of building technology and social services that meaningfully and accountably improve our collective quality of life.
So... because you feel that this is what we should be expending resources on, the full coercive power of the state should be brought to bear in order to force others to do it. Neat!
If anything, we have a vast set of regulations that are enforced with an insufficient amount of coercive force, sometimes with no coercive force at all. Many of those said regulations are ignored by people like bankers who know that any defiance will at most be punished with small fines.
When men with guns show up to lock you in a cage against your will I don't think it particularly matters if it was the "full force", half the force or a tiny percentage of the force of the state... the end result is the same.
As for the second part of your response, I suppose the level of necessary regulation and enforcement is another topic altogether and one which I didn't attempt to address in my initial comment.
Worse, the traditional droves of biz and finance folks are noticing it enough to start the normal games, except without any meaningful oversight or regulation--and if we as cryptopunks think that our presumably vast experience in libertarianism and software is a competitive advantage over those fuckers, we're delusional.
I can't buy bread with it, I can't pay rent with it, I can't be payed in it, and the market is so volatile and unregulated that I'd be hesitant to try and convert any USD into BTC.
There's no middle class in the bitconomy, it seems; only vultures and fools.
In a freer market (e.g. the free banking era of the 19th century sweden) there were definitely no "banks that were too big to fail". When a bank collapsed, its assets would be auctioned to smaller competing banks, who would pay fair market share. Now, we have the biggest, most politically connected banks that get a government-subsidized rate (typically federal reserve) to take over a failing bank in the name of stability. That dynamic is what causes aggregation and too big to fail banks.
If you are living in a country where the currency is already going crazy, then maybe Bitcoin gives you a good option. Otherwise, you need for your currency to be somewhat stable.
Just like git and GitHub. One of the useful features of git is that it is decentralized; GitHub lowers the barrier to entry to nearly 0. One of the useful features of bitcoin is that it is decentralized; coinbase lowers the barrier to entry to nearly 0.
Does that mean it is not innovative? No. It is certainly innovative, especially in how it has been marketed. Alternative currencies are a dime-a-dozen in communities that are interested in currencies and communities that want to subvert existing currencies. But none of the others have gotten as far as Bitcoin has, in terms of both usage and how seriously it is taken.
Does that mean you cannot make money off it. No. You can certainly make money off it. That said, you can make money off how a bunch of horses are going to run on a given day too.
Does that mean you cannot pay for things with it? No. You can certainly pay for many things using it. Does that mean it is as good as the USD. No, it is not.
The true genius in Bitcoins lie in tapping into the Matrix-esque narrative that you are empowering every wannabe-Neo out there; which almost every nerd secretly aspires to be.
What that narrative misses out on is that, at a global level, any abstraction (currency, political boundaries, taxation) is already mainstream. By the time you make something niche acceptable by everyone, you have already inherited all the good and bad of something that is mainstream.
There are basically four value propositions for Bitcoin, that I've been able to discern:
1) It has "no" (really: fixed) monetary policy; I view this as a weakness, but I will treat it as a strength for the purpose of this post.
2) It does something of an end-run around banking systems, at least democratizing transaction fees
3) There are ways of obtaining bitcoin that are largely untraceable (mining), which make it usable for black-market activities
4) Novelty
#4 obviously goes away with time, but nobody is suggesting that as a serious long-term value proposition so that's not a big deal.
It's well-documented that #2 goes away when the transaction volume gets high enough: the solution to the protocol-inherent transaction volume limit is to move most transactions off the blockchain, which means using something that at least parallels the modern banking system.
Arguably, this also defeats #3, but #3 has the greater problem that it is actively undesirable to most people.
#1 thus remains as the only value proposition, but this value proposition is fundamentally based on a lie. The monetary policy of Bitcoin is not set in stone; it is in fact controlled by a quorum of the existing mining capacity.
If Bitcoin becomes popular with the general populace, however, at some point a large enough coalition of actors will emerge who can adjust monetary policy to their advantage -- specifically, by increasing block rewards, making their hardware more valuable. The incentives actively encourage this manipulation in the long term, and the group to which the incentives apply (mining hardware owners) are precisely the group empowered to do the manipulation.
There are only two things preventing this from happening right now: first, many hardware owners are either in it for the ideology or have substantial speculative positions in Bitcoin that would be endangered by manipulation of monetary policy, and second, that such a shift in monetary policy would discourage adoption (after all, this is one of the purported benefits of Bitcoin). Both of these impediments go away with widespread adoption.
Government central banks may do this now, sure, but they generally have a little more accountability than an anonymous coalition of hardware owners.
> one that has unfortunately attracted outsized attention and investment before correcting any number of glaring security issues.
[links to bitcoin's own wiki about issues of which a small subset are security]
bitcoin has fixed many, many security issues over the years. most, if not all, of the remaining security issues are the same that any other tcp/ip talking protocol has and are based around DOS. straw man.
> Far from a “breakthrough”, Bitcoin is viewed by many technologists as an intellectual sinkhole.
bitcoin solves a previously 'unsolvable' problem. bootstraps multibillion dollar, zero trust, decentralized value transfer system and economy.
> A person’s sincere interest in Bitcoin is evidence that they are disconnected from the financial problems most people face while lacking a fundamental understanding of the role and function of central banking.
Or perhaps they are amateur historians: http://en.wikipedia.org/wiki/Hyperinflation#Examples_of_hype...
> If the broader Bitcoin experiment doesn’t implode, the currency will be regulated just as any other. In this best-case scenario for Bitcoin, what of the benefits Dixon claims?
Then it will be doomed, just like bit-torrent.. drat!
> If Bitcoin’s strength comes from decentralization, why pour millions into a single company? Ah, because Coinbase provides an “accessible interface to the Bitcoin protocol”, we’re told. We must centralize to decentralize, you see; such is the perverse logic of capital co-opting power. In order for Bitcoin to grow a thriving ecosystem, it apparently needs a US-based, VC-backed company that has “worked closely with banks and regulators to ensure that the service is safe and compliant”.
This quote right here is the tell that tips the hand. This has absolutely nothing to do with bitcoin and everything to do with outrageous barriers to entry into the payment market. Many have tried and been shut down.. coinbase is becoming successful because they are able to get over the arbitrary barrier of entry.
The author is saying "oh bitcoin will never succeed because real technologists think it's dumb and regulation will happen.. and even looky here they are centralizing anyway because they are hypocrites"
This is, from the most casual observation, asinine. a) bitcoin was bootstrapping itself well before coinbase came along. b) coinbase is succeeding because they are able to successfully battle the very regulations that many in the bitcoin community find burdensome in the first place.
> What’s unclear is the role that Bitcoin or a similar cryptocurrency could play in rectifying this dire situation [under and unbanked peoples].
What is clear is that the author is clearly removed from reality with regard to the unbanked who have access to cellphones but not banks; and insurmountable friction between local economies and more profitable ones. Many, many, many people have already used cryptocurrency in this regard and there is zero evidence that people are doing it less today than they were yesterday.
> I’ve enjoyed the thought experiment of Bitcoin as much as the next nerd, but it’s time to dispense with the opportunism and adolescent fantasies of a crypto-powered stateless future and return to the work of building technology and social services that meaningfully and accountably improve our collective quality of life.
So.. what does the author think here? Bitcoin is a fad and will have a similar fate to beanie-babies? It is over valued at the moment? Does the author really want to stake his reputation on the fact that cryptocurrencies are nothing more than 'an intellectual sinkhole?'
tl;dr; citation needed
Too little in that overnight exchange operations are prone to shutdowns due to hacking, but too much in that regulations put up needless barrier to entry such that more exchanges exist outside the US than exist inside.
What none of these arguments ever address is the massive gains in economic efficiency that Bitcoin can clearly provide. It cuts out parasitic elements of the financial system that have grown like a giant parasite over the entire society.
The author claims that Bitcoin is steeped in nerd paternalism, but what about the epic paternalism of banks and regulators? Paternalism is their entire argument against Bitcoin, which basically amounts to "if people gain economic freedom, they will hurt themselves".
I could get into my house faster at night if I didn't go through the trouble of locking and unlocking, too. Every security measure has overhead. "Massive gains in economic efficiency"? What's the tradeoff for this? If it's reduced security, then most people will say, "No thank you".
Having said that, I think there are serious hurdles to overcome with Bitcoin, and the hype cycle and speculators are doing very little for the credibility of Bitcoin.
Consider wire transfers. Those undeniably work, but their reputation has been tarnished to the point that most people who do business online will run the other direction if the other party so much as mentions the concept (see: craigslist).
What currencies need to work, more than anything else, is for people to believe they will work -- i.e., credibility.
That's what, ultimately, discussions of supposedly "intrinsic" value (which are somewhat dubious taken literally, value is, arguably, inherently extrinsic) of commodity currency and the reliability of the particular governments backing fiat currencies are about -- credibility. Because, ultimately, a currency like anything else is worth exactly what people are convinced that its worth.
The only big distinction between the US Dollar and Bitcoin, from a practical perspective, is that Bitcoin doesn't have any armies willing to defend its status as legal tender. Even if everybody stopped 'believing' in the dollar, its buying power might tank, but it's still legally required to be accepted as payment for all debts, public and private. That legality is implemented through force of law, not good natured belief.
I like your style, calling out the other side for using biased and loaded vocabulary and then you turn around and do exactly the same.
As the original article states, what some people view as a parasite on the system some people view as necessarily regulation and consumer protection. Just look at one of the other Coinbase stories currently on the front page [1]. Due to a mistake by Coinbase a customer was potentially looking at a loss in the five figures USD. The point of regulation is to make sure things like that don't happen and to have a course of action to correct them if they do happen. It isn't about "if people gain economic freedom, they will hurt themselves". It is about "if people gain too much economic freedom, they will hurt others".
Using an analogy that has been mentioned elsewhere in this thread, think of your front door lock and your home. Would you get ride of all locks because someone robbed your house? Or would you invest in some other type of lock and security that might not have the same vulnerabilities?
Show me the percent of BTC transactions used for actual business that a middle-class or poor person would conduct.
As it stands, the impression is just of a huge virtual casino, where you are at the table with either crazies or sharks from investing firms.
When did he ever even claim that Bitcoin will never succeed? It's certainly not in the article.
'clearly removed from reality' is strong criticism to direct at the author of a piece you seem not to have read to completion.
To pick at a few things: * I'm not sure about you, but I'd think that a bittorrent-like outcome is not a successful one. Bittorrent is certainly ubiquitous but its major use is still an illegal one; the analogous outcome for bitcoin would be one where its primary transactional value is on SilkRoad-like sites. Can you elaborate more on your analogy?
* You strongly imply that you have some sort of argument (and maybe evidence?) about how cryptocurrency will/could impact the unbanked in a positive way. Can you elaborate?
* Your last point seems to take it as a foregone conclusion that bitcoin is going to a high valuation and is here to stay. Do you really believe it's an inevitability at this point?
That's not a good analogy, at least for me, because I think that copyright protection should not exist and that all drugs should be legal to buy, sell, consume, and manufacture.
The unbanked stand the most to gain from bitcoin. There are many, many reasons why people are unbanked, but by and large it is because they are poor and in poor economies. Sometimes it's because they owe banks money (as is the case for most unbanked in the usa). It seems to me self-evident how bitcoin impacts the unbanked.. they can now receive money where before they couldn't. There is no legal framework or local institution necessary to create a bitcoin wallet. You just do it with maths. I have personally sent bitcoin to an unbanked friend (owed money for years to a bank from an overdraft charge and enver dealt with it) who was able to get cash for it in a pinch. Western union doesn't work when one doesn't have an ID. http://www.reddit.com/r/Bitcoin/comments/1rjvby/why_i_really...
My last point was really meant to point out that the author isn't saying anything at all other than hand-wavy attacks. What is the authors stance? Does he think it will fail? Does he think it will succeed? He seem sto strongly imply that it is dumb, stupid, overhyped, etc etc; but stops short of actually making any type of reality-prediction.
I think cryptocurrencies are here to stay; bitcoin's likely, but im less "certain" of that. High valuation? Well.. eventually; but again that may end up being spread out across many cryptos rather than just bitcoin, but I do think it is about 100x as likely that bitcoin gets to 10k than 0. I wouldn't go so far as to say that it is obvious this is all true; but if you ask what I think, then yes.. I do think it is a 'foregone' conclusion that cryptocurrency will acheive s-curve adoption. Of course these things are not prove-able; and I don't have a crystal ball.. but distributed consensus to a limited digital asset is the perfect avenue for money. It clicked for me the first moment I read about it in 2010; and it clicked for many others in the same way. Other's took more convincing. I see about a 1000-1 ratio of people who go from thinking bitcoin is trash to believing in cryptocurrencies vs the other-way around. Literally every metric I have looked at over years points to continued increased adoption; continued minds being changed in the same direction and no sign of slowing down.
yes yes and yes
Even cmdrtaco didn't really have his reputation trashed by "No wireless. Less space than a nomad. Lame."
One typical example is how often people write that bitcoin will not be widely adopted because it is so widely used for criminal activity. A journalist on the FT blog, discussing this, told the story of how he had asked the head of a major company in an interview how he could consider moving the business to the web when so much of the internet (at the time, 20 years ago) was devoted to criminal activity. It seems like a stupid question now.
The discussion has reached a place of little common ground--a sign, perhaps, that maybe soon the universe will actually hand down a ruling and we can put down our HN accounts and go home.
All of the debates on this issue have happened already. There's nothing left but vitriol and broken dreams.
If I were to step aside and look at the current ground in context, I think we're seeing the effects of China's rebuff, and I think we're seeing Bitcoin fail on the global stage.
There's only so much cheap faith in the world, and every time Bitcoin lets people down that rich resource is depleted. We've seen Bitcoin build up attention in the tech world (initial crash way back in the day), in the financial world (the most ludicrous crash, back in the spring), and now in China.
What's left?
Beyond that, as someone who does not set much stock by bitcoin, I do wonder about “roughly a 2.5% tax on all transactions” cited. That's maybe right for CC transactions or something like that in western countries, but when you start moving money around between countries, possibly including some less developed places, that % climbs quickly. I'm not much of a bitcoin fan, but perhaps some niche (and it's not a small niche - look at Western Union) like that would be a good place for it, and I'm willing to keep an open mind even if I wouldn't spend a cent of real money on the things until they calm the hell down.
The idea that macro economics is "figured out" has been debunked countless times. Both sides can cherry-pick examples ad-infinitum and call the other side ridiculous. Anyone who thinks they firmly know "why" a certain recession happened is suffering from ignorance of their own ignorance in my opinion. Clearly something isn't working right today if 2008 happened, and not to mention how the very economic policies we consider so great for us here domestically often have incredibly ill effects on third world countries. It's a hard, complex problem, and I've frankly given up on solutions that require as a premise that everyone else shut up and do exactly what you say.
Perhaps you believe that social problems can't be solved through technology. That is an acceptable and even admirable belief, but why should that stop me from having a different belief? One of the nice things about our society is that different people can try different strategies. Some people think that the way to reduce car deaths or prevent drunk driving (a clear social problem) is through education and stricter laws. Honest and valuable social strategy. However, others think you can accomplish it technologically by making cars that drive themselves and avoiding the problem altogether. There's no reason we can't try both and not politically demonize the other side (I'd remind you that suggesting a car that drives itself in the 50s as a solution to drunk driving would have probably had you labeled a nut -- that doesn't mean we should have hung any AI researchers out to dry for working on the beginnings of such a system).
The worst part about this is how he immediately considers anyone who believes in this as removed from reality. Why assume the worst of people you clearly have not met all of. I don't know OP's past, but I can tell you that my parents are from foreign country that has experienced hyperinflation in a very real way. Many of my feelings are a result of this: precisely because I feel hyperinflation is more real to me (and obviously more real to my parents) than someone whose entire family is from the United States and has only ever heard about it as a curiosity from Zimbabwe that they can refer to at a cocktail party. I see hyperinflation as a real problem -- just because it doesn't happen in the US doesn't mean it doesn't exist or is a fantasy. I very much believe that BTC offers the first real alternative for people trapped in countries where they can't get USD in or out during these events. And yes, this may mean it would circumvent that country's regulations: but even if you think the US government is doing things for the betterment of its population, I can guarantee you that's not the case everywhere else. Now you may disagree and think the right strategy is a different one involving the UN or the World Bank perhaps. That's fine, but please don't extrapolate that into a personal judgement of my character.
I believe no one ever said this; it has been misreported by Gawker and others.
If you're curious, the original talk is here with no mention of secession: www.youtube.com/watch?v=cOubCHLXT6A
This article is filled with hyperbolic nonsense like this, parading as real arguments. A 25M investment is not "pouring millions". And Coinbase is but one service in the Bitcoin ecosystem. There are and will be more competitors. Coinbase changes nothing about the decentralized nature of Bitcoin.
Bitcoin is a shakeup, it is also a hedge on countries falsely holding their currencies higher, which does harm lower class in labor and is deliberate -- China.
It is probably the first in many experiments in digital currency that is not locked to a state that is somewhat accessible by the entire world. There will still be fiat currency issued by countries, that is not going away. It is not a black or white world, it is another investment/hedge out there to keep balance in check. Bitcoin is mainly in early-adoption and now markets are getting into it, typically investors and technologists are the first to new money and innovation, not because they are better but because they are watching earlier. The street is at least 6 months ahead of the rest of the economy if not more.
On the flipside if bitcoin is libertarian, healthcare shake up going on right now is also one of those moments. Yes it isn't perfect but it is eventually moving us away from company insurance to individual insurance and where needed help with that. Just like retirement funds are better managed by individuals with their own advisors or independently than to trust putting all your retirement in a companies fund like Enron. Competition and not pegging your success to one thing is good.
In the end I see it as a good thing, bitcoin just shook up the currency world and we are watching it play out in all its ways through the differentiation machine that is the human network.
I am not disconnected from or ignorant of the mainstream economic view that central planning of monetary systems and economies are necessary or preferable. I simply disagree, on a fundamental level, with this mainstream economic view.
The story of Bitcoin is still being written, and it is not going to be a cut-and-dried "Tulip Bulbs 2.0" story. It's going to be a genuinely new story, and trying to get out in front of it doesn't really make you look smart or clever, but as someone who doesn't really grasp the extent of what is happening with Bitcoin and how fascinating it is.
This is why there actually is still room for massive change in e payments industry but it would likely involve cardholders giving up their cherished mileage cards and I suspect will only happen with government intervention (as has already started happening with debit cards in the us).
I've always thought the biggest problem (long term) with Bitcoin is the hard limit of the number of coins out there. This encourages hoarding. Which in itself causes all kinds of structural problems. A vibrant economy hoarding does not make.
Then they laugh at you.
Then they fight you. <-- You are here.
Then you win.
If I never see this quote used again on a tech forum it will be way too soon. That's not what I'm thinking now, that's what I was thinking 15 years ago. I can't even process a reaction to someone using it now.
They laughed at Einstein.
And they laughed at Bozo the Clown.
Which one is Bitcoin?
This has incorrectly led VCs to invest in the "Bitcoin as a protocol" concept. I wrote about it in my recent blog post: http://deepinsand.com/post/70415437372/vcs-are-wrong-about-b...
i really don't like being assigned a bunch of political views just because i recognize how elegant bitcoin is, and have bought an amount in bitcoin that wouldn't concern me if i lost it. this doesn't mean i'm a paranoiac or a libertarian or don't appreciate the need for central banks. i know it is risky but i also think the bitcoin network iteself has long term value and until the point that it is priced at that value i stand to make money from holding it.
this person clearly has a political axe to grind.
The protocol is the same algorithm that has existed for years. Bitcoin adds an economic incentive on top of it, hence my designation as an "economic innovation".
I consider the technological breakthrough to be hash cash. It couldn't have been possible in a P2P network without the economic incentives reaped from Bitcoin mining.
The analogies to Uber and AirBnB are actually pretty strong here. The tech that brought them to bear was the internet/mobile, but the payment/reputation structure is what made the P2P network possible.
The only difference is that Bitcoin literally pays the nodes to act nicely.
I'm not saying bitcoin is on the level of relativity. I just disagree with your assessment of the novelty of bitcoin on a technical level.
You know who has that kind of computing power? States.
The obnoxious thing--to me--about this play money trend isn't that people are giving it serious attention and thought, it's the shiny ideals in the eyes of the greedy.
It provokes a reaction in me: how dare any Bitcoin advocate take moral ground against a system that, whatever its flaws, protects its community from the disasters Bitcoin repeatedly faces?
Greed. Greed greed greed.
Unsurprisingly, PG takes Bitcoin seriously.
I did. That's why I was wise enough to buy bitcoins very early on.
> take moral ground against a system that, whatever its flaws, protects its community from the disasters
Because the Federal Reserve fundamentally cannot and certainly does not protect people from disasters.
>>> I did. That's why I was wise enough to buy bitcoins very early on.
You take a post complaining about greed, and then RUB IT INTO HIS FACE that you made more money than other people in this venture.
BTC is a grand experiment, no matter what its price. The true enthusiast wants BTC for what it represents, not to use it to make a quick buck.
But I made my point: it's unjust to claim that everyone who made money on bitcon just got lucky and to therefore condemn them.
My personal beef with this whole BTC thing is that it once represented a potential future of money exchange. But today, the big news of BTC is how much money people are either making or losing.
The entire "technocrat" viewpoint of BTC seems to be disappearing beneath a wave of greed. And its a shame too... the technocrat viewpoint is the most interesting to me.
True, but if people are going to say that bitcoin earnings are not deserved because they are based on a lucky guess, I am going to provide the only counterexample I can personally attest to.
Since I can only read my own mind, that counterexample is myself.
The 2008 collapse is ultimately part of long-term stagnation in the economy. It would have been better to just take the medicine and build a healthy economy after that, that to keep living under the fantasy that government manipulation of the economy can help us in the long run.
Hoover tried desperately to solve the problem of the Great Depression in his first (and only) term, but when the Black Friday market crash occurred only 8 months into Hoover's presidency, it is clear who deserves the blame of the famous market crash that set off the Great Depression.
Deregulation of banks, laissez-faire economics, and a complete reluctance to increase the monetary supply are all cited as reasons for the Great Depression of 1930s.
The ideas of Laissez-faire economics should have died in 1930. It is part of the Government's job to prevent such depressions from occurring ever again.
Coolidge did the same thing as all prior presidents in economic recessions, and it always worked for them.
Hoover, incluenced by the Progressive philosophy of "governmnet solves all problems and individuals be damned," tried to "force" a solution to the recession. Unlike every prior case, it got much worse for much longer.
So if you want to assume correlation strongly suggests causation, I win the argument.
If you instead want to say that we need to look at root causes, I say the notion that we need or can solve economic problems with top-down force instead of bottom-up individual pursuit of values is ludicrous.
> It is part of the Government's job to prevent such depressions from occurring ever again
That is just your assertion. And the notion that the government can do that is fantasy thinking. I think they can influence contractions and expansions but the net of it is less economic production in the long run; it doesn't gain you anything. And sometimes they screw up small and cause things like Freddie and Fannie's mortgage bubble. And eventually they screw up big, as any puppet master does, and you get hyperinflation or bank crises.
Pure ignorance of the first (and second, and third...) financial crisis of the US.
Going back to the first US Banking Crisis: the Panic of 1819... then President Monroe set the standard on how financial crisis would be handled. (Its a complicated story because the US was so different back then... there was the Federally-chartered "Bank of the US", among other things)
To solve the Panic of 1819, President Monroe would nullify certain debts, to ease recovery. Sound familiar?? State-level banks then increased the monetary supply, and Congress passed more Tariffs to discourage exports/imports.
The one thing that is constant in this country's 200 year history, is that the Federalists and the Non-Federalists have been arguing the cause and effect of government since the start. Federalists blame the "free market" of 1816 for causing the panic of 1819 (ie: It was inevitable due to Wartime debt from 1812 and a crisis in Europe). On the other hand, the Non-Federalists blame the centralized "Bank of the US" for setting off the panic.
---------------------
The one thing that is clear to me, is that the proud history of the US is for this debate to spin up every 20 years as the US hobbles from crisis to crisis. The President will do the same thing and step in and sponsor new laws... he'll also forgive debts, the monetary supply will expand in some way, and Congress will pass something irrelevant to the discussion.
There are a number of BTC Enthusiasts who I find agreeable. Anyone who is working for the sake of innovation, anyone who is willing to partake in this grand experiment...
But I constantly am surrounded not by technology enthusiasts, but instead by greedy techies who are obsessed with only the PRICE of BTC. Where are the articles about BTC adoption? Where are the articles about "stress testing" BTC services?
When the biggest "news item" of BTC is its price, you KNOW it is driven by greedy bastards who just want to strike it rich. No offense to the true believers out there (and I know the "true" BTC fans out there exist...)... but you guys are in bad company.
Far too many people are speculators... not enthusiasts. I'm hearing less and less about "buying things with BTC", and more and more about "how much money I made using BTC". It is disgusting.
Here's 8 of them https://www.hnsearch.com/search#request/submissions&q=accept...
Until bitcoin stops being opt-in, I don't see the problem.
Bitcoin is too unstable for me, and I am not interested in using it as a way to invest my money (either high risk, or as a hypothetical low-risk investment). Therefore, I do not own any bitcoin, and never have^. Nevertheless, it is no skin off my back if others decide that they do want to use bitcoin.
^ Actually, I think I may have gotten a tenth of one from a facet a few years ago... can't really remember. Can't be arsed to look around to see if I did.
It's an unfair comparison between the two systems.
It'd be like being angry at base-jumpers. Base-jumpers can call us "boring ground-whores" all they want, but so long as I am not forced to take up base-jumping then I don't see any reason to become upset. If they eschew the benefits of a life set firmly on the ground, then go splat, it is no skin off my back.
I would not think to ask them how they "dare take moral ground" against a normal risk-adverse lifestyle.