6 ms·

Bitcoin and the dangerous fantasy of ‘apolitical’ money (2013)

43 points by simonebrunozzi 3y ago

7ero 3y ago
I've always wondered why bitcoin maximalist would want to live in a world run by the person who owns the most bitcoin.
- seydor 3y ago
  Because if that happened the people would convert their wealth to other tokens, leaving the rich man with nothing
  - endisneigh 3y ago
    why wouldn't the rich man also convert their wealth?
    - throwaway128128 3y ago
      Because everyone is sloshing to altcoins that will eventually drop to zero
    - seydor 3y ago
      wouldnt that devalue it?
- rlpb 3y ago
  That's not how Bitcoin works, and the article doesn't make any claim to the contrary. Neither Bitcoin owners nor Bitcoin miners control the rules of the network. If they were to unilaterally change the rules, their (now forked) Bitcoin wouldn't be accepted by sellers any more than I can use Monopoly money to buy a meal at McDonalds. Contrast with Ethereum, which with its Proof of Stake switch does give some level of control to Ethereum holders.
  - jrm4 3y ago
    This is technically true, but I feel like ends up actually meaning something very different from what people take from it. Which is to say, I see more reason to trust Ethereum to "work right, as stated" precisely because it's just federated enough?
- keep_reading 3y ago
  [flagged]
- RunSet 3y ago
  Supposing the alternative is a world run by the Federal Reserve, I suggest you audit each one carefully and make your choice.
- anonporridge 3y ago
  You make a habit of wasting your life beating on strawmen?
- swfsql 3y ago
  It's not ran by others. They can't throw inflation at you as they can't print more units, differently from the status quo.
seydor 3y ago
Beats the reality of "bombs and blood" money
- vkou 3y ago
  Digital money is also backed by bombs and blood[1], it just introduces a lot of technology and an additional parasitic class of early-adopters and middle-men, on top of all the ones that already exist. [1] No form of private property can exist without those things.
  - throwaway128128 3y ago
    Exactly! You need laws and a monopoly of force to enforce those laws in order for property to exist. Otherwise bitcoins can be freely stolen via rubber-hose cryptanalysis.
tromp 3y ago
> The designer of bitcoin’s algorithm tried his damnest to emulate gold. Just like gold, which one presumes to be in fixed supply under the Earth’s surface, bitcoin is also limited, artificially (through the design of its algorithm) to a plateau of 21 million units. Yet Bitcoin's emission is quite unlike that of gold. Every next generation gets to mine 32x less bitcoin. Over gold's millennia long history, every generation mines a roughly similar amount of gold as the next.
- cmdrk 3y ago
  perhaps similar in the amount of effort expended increasing to mine it out per generation?
  - tromp 3y ago
    By design, emission is independent of mining effort (hence the difficulty adjustment mechanism).
- hinkley 3y ago
  I think you’ll find that if you plot the mines gold versus available gold you’ll see that the percent of new gold introduced is asymptotic. It’s true that he doubled down, but I also suspect he anticipated what actually happened, which was that the price of bitcoin spurred custom hardware, which ramped up the capacity to mine coins past what Moore’s Law would have predicted. It also ruined PC gaming for the lower- and middle-middle class for a few years. Whether that’s prescient or just an artifact of a logarithmic drop off in the available key space is anyone’s guess. I don’t fix problems I don’t see as problems that often, and most of my peers are even worse.
  - tromp 3y ago
    > logarithmic drop off in the available key space What do you mean by that? The key space is either 2^160 for hashed keys, or about 2^256 for unhashed or Schnorr keys. The number of keys appearing on-chain is not limited by emission but by the block size limit of 4M weight units (each new key contributing a few hundred weight units).
optimalsolver 3y ago
Back when people still thought BTC would be used as actual currency, not a pointless instrument of speculation.
- 6kVShitPost 3y ago
  [flagged]
hiatus 3y ago
> No, there are two insurmountable flaws that make bitcoin a highly problematic currency: First, the bitcoin social economy is bound to be typified by chronic deflation. Secondly, we have already seen the rise of a bitcoin aristocracy These two issues are surmountable by other cryptos and unrelated to the idea of an apolitical currency. He goes on to describe the circumvention of the natural constraint of the gold standard with the rise in derivatives of those assets but that too does not seem to be a nail in the coffin for an apolitical form of money. Although maybe the existence of the "bitcoin aristocracy" at all points to the core of the problem with any form of currency we might create.
- TheOtherHobbes 3y ago
  Any competitive culture has to force redistribution to avoid self-harming extremes of concentration and monopolisation. It's the only way to make a participative progressive culture rather than a cynically exploitative, regressive, and oppressive one.
tossl568 3y ago
Cool. Buying more Bitcoin.
- anonporridge 3y ago
  Tick tock, next block.
jrm4 3y ago
Honestly, I find it weird that such a relatively old take on cryptocurrency is making it to the top of hacker news today? Love it or hate it, there's a whole lot of much more interesting available data and information, and arguable insight, on the issues raised here -- especially the former of "inflation" and so forth; E.g. if the world wants what crypto has to offer, the limited deflation and/or environmental waste issue has already been solved by other cryptocurrencies, with significant activity and years under their collective belt to prove it.
- landoftheice 3y ago
  [dead]
- ouid 3y ago
  [dead]
nologic01 3y ago
Money is a social invention, it can never be apolitical. It very much reflects societal structure and contracts, explicit or implicit. This (very early / prescient) critique of bitcoin is not casting a harsh enough light on the inadequacy of its design. But maybe now that the concept of designed and programmable money is on the table people can think of what type of monetary/credit system befits a good society. Bitcoin it aint and out bizarre private bank money perennially backed by the collective it aint either.
- TheOtherHobbes 3y ago
  reflects -> enforces I suspect you need to create a good society first and then decide on a resource/status hierarchy system for it. Trying to do it the other way around is unlikely to work. Bitcoin was always financial libertarianism. No accountability, no records, and - most of all, but only potentially - no taxes. Inevitably it turned into Ground Zero for anyone with a scam to upsell.
  - Obscurity4340 3y ago
    How is the block chain "no records" tho? Isn't it an immutable chain of records that inexorably identifies and documents ownership and transactions?
    - hinkley 3y ago
      Magic thinking, that’s how.
      - anonporridge 3y ago
        More like boogeyman thinking.
    - throwaway128128 3y ago
      Laundering money through mixers is a big part of coin culture.
- 3y ago
frank_bb 3y ago
[dead]
sjducb 3y ago
He doesn't really dig into what he means by apolitical, and what bitcoiners mean by apolitical. One of the big risks with fiat currency is that your government might do "something stupid" or "something corrupt" with monetary policy and cause the fiat currency to crash in value. The most popular cryptocurrency (Bitcoin) has a monetary policy that's set in stone. You're protected from an incompetent / corrupt government who either accidentally or deliberately break the money supply. That's what bitcoiners mean by apolitical. The article then goes on to point out how the monetary policy of bitcoin is not very good monetary policy. He's right when he says this, but you can only have good monetary policy if you've got a competent government. A lot of people don't have a competent government.
- kevingadd 3y ago
  Is the bitcoin "government"-equivalent competent? My impression is that it's not, because Satoshi basically left control of the software & network (and thus currency) in the hands of a bunch of randos of questionable competence. The result was all the infighting over stuff like block size changes. It hasn't collapsed at least...
  - Ferret7446 3y ago
    The bitcoin "government" is truly democratic by compute. Infighting is good (for now) because it creates stability (which is arguably the same reason why democratic/representative governments are good in general).
  - wmf 3y ago
    The idea is that no governance is required because the rules will never change. That has mostly held so far but it will be interesting to see what happens long term.
- seydor 3y ago
  bitcoin is not apolitical. libertarians like it but it's ultimately a tool for everyone to use as they see fit
bitcoin_anon 3y ago
This much is clear to me: - A globalized world needs a global money. In recent times, this has been $USD. $USD beats gold because it is more portable. - Money is too large of a concern for any government to do well. There is too much at stake. Too much incentive to do be a poor steward. Too much buddying up to the money printer. So what's left? Gold and Bitcoin. Gold for deep wealth and Bitcoin for global commerce.
friend_and_foe 3y ago
The premise is flawed. The world ran on a depoliticized money for thousands of years: gold. This experiment with government money is just over a hundred years ongoing, and really only fully realized since 1971. It would appear to me that it has been an abysmal failure; many countries have experienced hyperinflation, financial instruments have become monetized and bubbles have been pumped full of paper money, peoples savings are 1% of what they were when this all started, at best. The author gets a whole lot wrong about bitcoin (an algorithm that sends ones and zeroes from one device to another?) and clearly doesn't understand it. But that doesn't matter; this is a critique of the larger "fantasy of apolitical money", not a technical critique of bitcoin itself. What is it about an "industrial society" that requires a government to control the money? This is glossed over, but is at the crux of their position.
- throw0101b 3y ago
  > The world ran on a depoliticized money for thousands of years: gold. It ran on credit, at least for most people for their day-to-day life: * https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years The very first instances in the written, historic record (clay tablets) were of credit: * https://www.sfu.ca/~poitras/jesho_UR_14.pdf https://www.sfu.ca/~poitras/jesho_UR_14.pdf Entire civilizations (e.g., Incas) ran without currency (they used gold for ornamental jewelry, not transactions). > many countries have experienced hyperinflation, financial instruments have become monetized and bubbles have been pumped full of paper money, peoples savings are 1% of what they were when this all started, at best. Please list these "many countries". And of the ones that I'll bet you will list, they have specific causes: > There are differences in details and emphases, but the basic story of outside coercion, losing a war/civil war, internal corruption, incompetent/bad economic education/bad policies on banking/currency, elite minorities clinging to power, foreign denominated debt, collapse in real production etc. are the same in Weimar and Venezuela as in Zimbabwe. > As always, the “printing” is the result, not the cause. * https://clintballinger.com/2021/01/12/the-myth-of-hyperinflation/ https://clintballinger.com/2021/01/12/the-myth-of-hyperinfla... And there have been various 'incidents' ("bubbles) during the Gold Standard era without fiat / 'paper money': * https://en.wikipedia.org/wiki/Panic_of_1873 https://en.wikipedia.org/wiki/Panic_of_1873 * https://en.wikipedia.org/wiki/Panic_of_1893 https://en.wikipedia.org/wiki/Panic_of_1893 * https://en.wikipedia.org/wiki/Panic_of_1896 https://en.wikipedia.org/wiki/Panic_of_1896 * https://en.wikipedia.org/wiki/Panic_of_1907 https://en.wikipedia.org/wiki/Panic_of_1907 And in the pre-Gold Standard (<1870) there was the Tulip bubble, South Sea Bubble, canal mania. > What is it about an "industrial society" that requires a government to control the money? This is glossed over, but is at the crux of their position. It has been found (in the US) that it helps with financial stability, especially post-Fed creation: * https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://www.theatlantic.com/business/archive/2012/08/why-the... * https://archive.ph/FWKcL https://archive.ph/FWKcL
LIzzyytujghf 3y ago
[dead]
Kinrany 3y ago
From my understanding speculation is one of the reasons bitcoin works as a payment mechanism. If bitcoin was literally worth 0, any one company could decide to make money on it by using Bitcoin as their personal stablecoin. That would be enough to facilitate payments: one person buys BTC from the company above the fixed price, the other person sells below the fixed price. But thanks to decentralization any other company can jump in and start doing the same, compete on the spread of prices. If the price of BTC is too low at a certain time, all of available BTC gets tied up in transactions. There is more demand for BTC-minutes in that hour than there are BTC-minutes. So the companies can temporarily raise the price when they see it happening. This makes the price of BTC float above the peg depending on the amount of BTC available for sale and the load on the Bitcoin-as-payment-mechanism network. And if the peg is low enough, it is never really reached. If this theory is close enough to truth, then the instability of Bitcoin really is fundamental: less of a design flaw, more of a (rather severe) trade-off. Though I wonder if it's possible to construct a stable derivative based on future estimates of the load on the network: a unit that can be used to compare prices of BTC-minutes at different times in the future.

7ero 3y ago

I've always wondered why bitcoin maximalist would want to live in a world run by the person who owns the most bitcoin.

seydor 3y ago
Because if that happened the people would convert their wealth to other tokens, leaving the rich man with nothing
- endisneigh 3y ago
  why wouldn't the rich man also convert their wealth?
  - throwaway128128 3y ago
    Because everyone is sloshing to altcoins that will eventually drop to zero
  - seydor 3y ago
    wouldnt that devalue it?
rlpb 3y ago
That's not how Bitcoin works, and the article doesn't make any claim to the contrary. Neither Bitcoin owners nor Bitcoin miners control the rules of the network. If they were to unilaterally change the rules, their (now forked) Bitcoin wouldn't be accepted by sellers any more than I can use Monopoly money to buy a meal at McDonalds. Contrast with Ethereum, which with its Proof of Stake switch does give some level of control to Ethereum holders.
- jrm4 3y ago
  This is technically true, but I feel like ends up actually meaning something very different from what people take from it. Which is to say, I see more reason to trust Ethereum to "work right, as stated" precisely because it's just federated enough?
keep_reading 3y ago
[flagged]
RunSet 3y ago
Supposing the alternative is a world run by the Federal Reserve, I suggest you audit each one carefully and make your choice.
anonporridge 3y ago
You make a habit of wasting your life beating on strawmen?
swfsql 3y ago
It's not ran by others. They can't throw inflation at you as they can't print more units, differently from the status quo.

seydor 3y ago

Beats the reality of "bombs and blood" money

vkou 3y ago
Digital money is also backed by bombs and blood[1], it just introduces a lot of technology and an additional parasitic class of early-adopters and middle-men, on top of all the ones that already exist. [1] No form of private property can exist without those things.
- throwaway128128 3y ago
  Exactly! You need laws and a monopoly of force to enforce those laws in order for property to exist. Otherwise bitcoins can be freely stolen via rubber-hose cryptanalysis.

tromp 3y ago

> The designer of bitcoin’s algorithm tried his damnest to emulate gold. Just like gold, which one presumes to be in fixed supply under the Earth’s surface, bitcoin is also limited, artificially (through the design of its algorithm) to a plateau of 21 million units. Yet Bitcoin's emission is quite unlike that of gold. Every next generation gets to mine 32x less bitcoin. Over gold's millennia long history, every generation mines a roughly similar amount of gold as the next.

cmdrk 3y ago
perhaps similar in the amount of effort expended increasing to mine it out per generation?
- tromp 3y ago
  By design, emission is independent of mining effort (hence the difficulty adjustment mechanism).
hinkley 3y ago
I think you’ll find that if you plot the mines gold versus available gold you’ll see that the percent of new gold introduced is asymptotic. It’s true that he doubled down, but I also suspect he anticipated what actually happened, which was that the price of bitcoin spurred custom hardware, which ramped up the capacity to mine coins past what Moore’s Law would have predicted. It also ruined PC gaming for the lower- and middle-middle class for a few years. Whether that’s prescient or just an artifact of a logarithmic drop off in the available key space is anyone’s guess. I don’t fix problems I don’t see as problems that often, and most of my peers are even worse.
- tromp 3y ago
  > logarithmic drop off in the available key space What do you mean by that? The key space is either 2^160 for hashed keys, or about 2^256 for unhashed or Schnorr keys. The number of keys appearing on-chain is not limited by emission but by the block size limit of 4M weight units (each new key contributing a few hundred weight units).

optimalsolver 3y ago

Back when people still thought BTC would be used as actual currency, not a pointless instrument of speculation.

6kVShitPost 3y ago
[flagged]

hiatus 3y ago

> No, there are two insurmountable flaws that make bitcoin a highly problematic currency: First, the bitcoin social economy is bound to be typified by chronic deflation. Secondly, we have already seen the rise of a bitcoin aristocracy These two issues are surmountable by other cryptos and unrelated to the idea of an apolitical currency. He goes on to describe the circumvention of the natural constraint of the gold standard with the rise in derivatives of those assets but that too does not seem to be a nail in the coffin for an apolitical form of money. Although maybe the existence of the "bitcoin aristocracy" at all points to the core of the problem with any form of currency we might create.

TheOtherHobbes 3y ago
Any competitive culture has to force redistribution to avoid self-harming extremes of concentration and monopolisation. It's the only way to make a participative progressive culture rather than a cynically exploitative, regressive, and oppressive one.

tossl568 3y ago

Cool. Buying more Bitcoin.

anonporridge 3y ago
Tick tock, next block.

jrm4 3y ago

Honestly, I find it weird that such a relatively old take on cryptocurrency is making it to the top of hacker news today? Love it or hate it, there's a whole lot of much more interesting available data and information, and arguable insight, on the issues raised here -- especially the former of "inflation" and so forth; E.g. if the world wants what crypto has to offer, the limited deflation and/or environmental waste issue has already been solved by other cryptocurrencies, with significant activity and years under their collective belt to prove it.

landoftheice 3y ago
[dead]
ouid 3y ago
[dead]

nologic01 3y ago

Money is a social invention, it can never be apolitical. It very much reflects societal structure and contracts, explicit or implicit. This (very early / prescient) critique of bitcoin is not casting a harsh enough light on the inadequacy of its design. But maybe now that the concept of designed and programmable money is on the table people can think of what type of monetary/credit system befits a good society. Bitcoin it aint and out bizarre private bank money perennially backed by the collective it aint either.

TheOtherHobbes 3y ago
reflects -> enforces I suspect you need to create a good society first and then decide on a resource/status hierarchy system for it. Trying to do it the other way around is unlikely to work. Bitcoin was always financial libertarianism. No accountability, no records, and - most of all, but only potentially - no taxes. Inevitably it turned into Ground Zero for anyone with a scam to upsell.
- Obscurity4340 3y ago
  How is the block chain "no records" tho? Isn't it an immutable chain of records that inexorably identifies and documents ownership and transactions?
  - hinkley 3y ago
    Magic thinking, that’s how.
    - anonporridge 3y ago
      More like boogeyman thinking.
  - throwaway128128 3y ago
    Laundering money through mixers is a big part of coin culture.
3y ago

frank_bb 3y ago

[dead]

sjducb 3y ago

He doesn't really dig into what he means by apolitical, and what bitcoiners mean by apolitical. One of the big risks with fiat currency is that your government might do "something stupid" or "something corrupt" with monetary policy and cause the fiat currency to crash in value. The most popular cryptocurrency (Bitcoin) has a monetary policy that's set in stone. You're protected from an incompetent / corrupt government who either accidentally or deliberately break the money supply. That's what bitcoiners mean by apolitical. The article then goes on to point out how the monetary policy of bitcoin is not very good monetary policy. He's right when he says this, but you can only have good monetary policy if you've got a competent government. A lot of people don't have a competent government.

kevingadd 3y ago
Is the bitcoin "government"-equivalent competent? My impression is that it's not, because Satoshi basically left control of the software & network (and thus currency) in the hands of a bunch of randos of questionable competence. The result was all the infighting over stuff like block size changes. It hasn't collapsed at least...
- Ferret7446 3y ago
  The bitcoin "government" is truly democratic by compute. Infighting is good (for now) because it creates stability (which is arguably the same reason why democratic/representative governments are good in general).
- wmf 3y ago
  The idea is that no governance is required because the rules will never change. That has mostly held so far but it will be interesting to see what happens long term.
seydor 3y ago
bitcoin is not apolitical. libertarians like it but it's ultimately a tool for everyone to use as they see fit

bitcoin_anon 3y ago

This much is clear to me: - A globalized world needs a global money. In recent times, this has been $USD. $USD beats gold because it is more portable. - Money is too large of a concern for any government to do well. There is too much at stake. Too much incentive to do be a poor steward. Too much buddying up to the money printer. So what's left? Gold and Bitcoin. Gold for deep wealth and Bitcoin for global commerce.

friend_and_foe 3y ago

The premise is flawed. The world ran on a depoliticized money for thousands of years: gold. This experiment with government money is just over a hundred years ongoing, and really only fully realized since 1971. It would appear to me that it has been an abysmal failure; many countries have experienced hyperinflation, financial instruments have become monetized and bubbles have been pumped full of paper money, peoples savings are 1% of what they were when this all started, at best. The author gets a whole lot wrong about bitcoin (an algorithm that sends ones and zeroes from one device to another?) and clearly doesn't understand it. But that doesn't matter; this is a critique of the larger "fantasy of apolitical money", not a technical critique of bitcoin itself. What is it about an "industrial society" that requires a government to control the money? This is glossed over, but is at the crux of their position.

throw0101b 3y ago
> The world ran on a depoliticized money for thousands of years: gold. It ran on credit, at least for most people for their day-to-day life: * https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years The very first instances in the written, historic record (clay tablets) were of credit: * https://www.sfu.ca/~poitras/jesho_UR_14.pdf https://www.sfu.ca/~poitras/jesho_UR_14.pdf Entire civilizations (e.g., Incas) ran without currency (they used gold for ornamental jewelry, not transactions). > many countries have experienced hyperinflation, financial instruments have become monetized and bubbles have been pumped full of paper money, peoples savings are 1% of what they were when this all started, at best. Please list these "many countries". And of the ones that I'll bet you will list, they have specific causes: > There are differences in details and emphases, but the basic story of outside coercion, losing a war/civil war, internal corruption, incompetent/bad economic education/bad policies on banking/currency, elite minorities clinging to power, foreign denominated debt, collapse in real production etc. are the same in Weimar and Venezuela as in Zimbabwe. > As always, the “printing” is the result, not the cause. * https://clintballinger.com/2021/01/12/the-myth-of-hyperinflation/ https://clintballinger.com/2021/01/12/the-myth-of-hyperinfla... And there have been various 'incidents' ("bubbles) during the Gold Standard era without fiat / 'paper money': * https://en.wikipedia.org/wiki/Panic_of_1873 https://en.wikipedia.org/wiki/Panic_of_1873 * https://en.wikipedia.org/wiki/Panic_of_1893 https://en.wikipedia.org/wiki/Panic_of_1893 * https://en.wikipedia.org/wiki/Panic_of_1896 https://en.wikipedia.org/wiki/Panic_of_1896 * https://en.wikipedia.org/wiki/Panic_of_1907 https://en.wikipedia.org/wiki/Panic_of_1907 And in the pre-Gold Standard (<1870) there was the Tulip bubble, South Sea Bubble, canal mania. > What is it about an "industrial society" that requires a government to control the money? This is glossed over, but is at the crux of their position. It has been found (in the US) that it helps with financial stability, especially post-Fed creation: * https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://www.theatlantic.com/business/archive/2012/08/why-the... * https://archive.ph/FWKcL https://archive.ph/FWKcL

LIzzyytujghf 3y ago

[dead]

Kinrany 3y ago

From my understanding speculation is one of the reasons bitcoin works as a payment mechanism. If bitcoin was literally worth 0, any one company could decide to make money on it by using Bitcoin as their personal stablecoin. That would be enough to facilitate payments: one person buys BTC from the company above the fixed price, the other person sells below the fixed price. But thanks to decentralization any other company can jump in and start doing the same, compete on the spread of prices. If the price of BTC is too low at a certain time, all of available BTC gets tied up in transactions. There is more demand for BTC-minutes in that hour than there are BTC-minutes. So the companies can temporarily raise the price when they see it happening. This makes the price of BTC float above the peg depending on the amount of BTC available for sale and the load on the Bitcoin-as-payment-mechanism network. And if the peg is low enough, it is never really reached. If this theory is close enough to truth, then the instability of Bitcoin really is fundamental: less of a design flaw, more of a (rather severe) trade-off. Though I wonder if it's possible to construct a stable derivative based on future estimates of the load on the network: a unit that can be used to compare prices of BTC-minutes at different times in the future.