4 ms·

The crypto industry is extremely untrustworthy, but for me, I don't think "there's no actual value creation at the bottom of it" is more true of e.g. Bitcoin th

The crypto industry is extremely untrustworthy, but for me, I don't think "there's no actual value creation at the bottom of it" is more true of e.g. Bitcoin than USD. Assume USD is somehow attached to food, shelter, and other necessities (for the record, I agree that it is, but only indirectly). Those necessities are the things we need, but we don't need money to create them. We just need energy and physical resources (which, technically, also just require energy). All money is an accounting system built on top of the physical processes that we use to grow, gather, hunt, cultivate, shape, and build matter. So there's nothing weird, to me, about money being built almost directly on top of energy usage. I think it makes sense. Most money is built on top of gold or other precious-but-unnecessary materials, which I can't say seems more attached to real value than energy. But even if we assume 1 unit of money is 1 day's worth of food, who's to say that unit of food is actually a necessity for the holder? That food is a specialized form of energy; energy which has been used and which can't be unused. The food itself is an accounting of entropy. But it (mostly) can't be converted into shelter or other necessities, only traded or stored. So, again, I don't see "this money is an accounting of energy used" as outlandish, but reasonable. Let me conclude, however, by roundly rebuking crypto grifters and the majority of the industry. They're generally not operating on the arguments I've made above anyway.

wpietri 2y ago
All currencies are built on trust. The reason the wildcat banking era failed was lack of trust. The reason various national currencies failed was never about resources, but lack of trust in the government behind the currency. The USD has been a very strong currency because it's backed by a stable government with a strong economy and has a stoutly independent central bank, which has built up enormous trust as a custodian of the currency. I grant that the rhetoric of Bitcoin is about energy usage, but it doesn't work that way in practice. The most obvious use is the rise of Ethereum and its shift to proof of stake rather than proof of work. But there's plenty of other evidence. David Rosenthal has some good evidence there, like: https://blog.dshr.org/2024/10/it-was-ten-years-ago-today.html https://blog.dshr.org/2024/10/it-was-ten-years-ago-today.htm... https://blog.dshr.org/2024/05/sufficiently-decentralized.html https://blog.dshr.org/2024/05/sufficiently-decentralized.htm...
- digging 2y ago
  Well, yeah. I avoided the subject of trust because it wasn't the subject of the comment I was responding to. It's a different component of money. Money depends entirely on trust which is a form of belief. But it only matters because it accounts for energy. Because there is nothing to trust in if money can't be exchanged for energy. We trust that our paychecks will buy food because our society is usually fairly robust in that respect. We trust that the US government will go to war to prevent the USD from being deprecated, which lets us continue to use USD. There's no trust that Bitcoin can always be exchanged for any arbitrary good or service - whereas USD can be turned into anything you want. Bitcoin will always account for some energy usage, but so will starting forest fires. The difference is that nobody is ever going to trade me anything of value for starting a forest fire. That's the trust element. But starting a forest fire leaves just as real an impact on the universe as mining crypto, as mining gold, as building bombs to threaten grifters with.
  - wpietri 2y ago
    That also doesn't make much sense to me. Money existed long before energy was a significant commodity. Like, thousands of years before.
    - digging 2y ago
      Energy is used to grow food, so, no. Keep in mind the context of my first comment.
      - wpietri 2y ago
        Again, for most of agricultural history, energy was not used to grow food. The key commodity was land. The concept of energy you're referring to didn't come along until the 1800s, a couple thousand years after people invented the coin, and didn't have any real economic meaning until the industrial revolution. I get where you're trying to go, but I just don't think it makes sense. If you're serious in trying to find some sort of fundamental thing behind money, you might read Buchan's "Frozen Desire".

wpietri 2y ago

All currencies are built on trust. The reason the wildcat banking era failed was lack of trust. The reason various national currencies failed was never about resources, but lack of trust in the government behind the currency. The USD has been a very strong currency because it's backed by a stable government with a strong economy and has a stoutly independent central bank, which has built up enormous trust as a custodian of the currency. I grant that the rhetoric of Bitcoin is about energy usage, but it doesn't work that way in practice. The most obvious use is the rise of Ethereum and its shift to proof of stake rather than proof of work. But there's plenty of other evidence. David Rosenthal has some good evidence there, like: https://blog.dshr.org/2024/10/it-was-ten-years-ago-today.html https://blog.dshr.org/2024/10/it-was-ten-years-ago-today.htm... https://blog.dshr.org/2024/05/sufficiently-decentralized.html https://blog.dshr.org/2024/05/sufficiently-decentralized.htm...

digging 2y ago
Well, yeah. I avoided the subject of trust because it wasn't the subject of the comment I was responding to. It's a different component of money. Money depends entirely on trust which is a form of belief. But it only matters because it accounts for energy. Because there is nothing to trust in if money can't be exchanged for energy. We trust that our paychecks will buy food because our society is usually fairly robust in that respect. We trust that the US government will go to war to prevent the USD from being deprecated, which lets us continue to use USD. There's no trust that Bitcoin can always be exchanged for any arbitrary good or service - whereas USD can be turned into anything you want. Bitcoin will always account for some energy usage, but so will starting forest fires. The difference is that nobody is ever going to trade me anything of value for starting a forest fire. That's the trust element. But starting a forest fire leaves just as real an impact on the universe as mining crypto, as mining gold, as building bombs to threaten grifters with.
- wpietri 2y ago
  That also doesn't make much sense to me. Money existed long before energy was a significant commodity. Like, thousands of years before.
  - digging 2y ago
    Energy is used to grow food, so, no. Keep in mind the context of my first comment.
    - wpietri 2y ago
      Again, for most of agricultural history, energy was not used to grow food. The key commodity was land. The concept of energy you're referring to didn't come along until the 1800s, a couple thousand years after people invented the coin, and didn't have any real economic meaning until the industrial revolution. I get where you're trying to go, but I just don't think it makes sense. If you're serious in trying to find some sort of fundamental thing behind money, you might read Buchan's "Frozen Desire".