A BTC Bet

from Jim:

I think Moldbug has excessive belief in the power of the state. He thinks governments are always omnipotent, I think they are bluff and theater floating over a storm tossed sea of anarchy. A part of town where order comes from the police is an unsafe part of town. And if one is in that part of town, and feeling nervous, as one should, one ducks into a mall or a McDonalds for safety. That nervous people are inclined to head for the mall, not the police station, leads me to believe that attempts to demonetize bitcoins are likely to fail.

April 14, 2013admin 22 Comments »
FILED UNDER :Commerce

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22 Responses to this entry

  • Anonymous Says:

    I think bitcoin as a speculative bet is dumb now, but i’m not a very smart guy relative to this corner of the web

    There are a lot of people (many of them from the retard wasteland of reddit) who bought coins at over 200 USD/per coin and then couldn’t sell them at all because of issues with the exchange, who are now saying “god damn, that was dumb” and are now looking to get their money back “before the next crash”.

    Similarly there are a lot of people who bought coins for a couple bucks each, who saw their coins be “worth” 250 USD per that fateful day and started dreaming about all the “money” they had just “made”. They were already starting to spend it (in their heads) and they figured well it’ll keep going up and i’ll be even richer. Then the price crashed, and then the exchanges crashed so there was no way for them to dump them on the way down from 250. They got a taste of “wealth” and then saw it ripped away. “That won’t happen to me again” they are saying.

    So to me, any time the price flirts with 200 again (if ever) there will be a ton of people looking to get out, with only a constantly shrinking number of libertarian aspergers idealists (“BTC at anything under 10kUSD is CHEAP CHEAP CHEAP”) looking to buy.

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    Posted on April 14th, 2013 at 11:14 am Reply | Quote
  • spandrell Says:

    don’t bet. just buy bitcoin

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    Posted on April 14th, 2013 at 1:19 pm Reply | Quote
  • Nick B. Steves Says:

    Full discloure: I’ve recently added $300 to my bet raising the total bet to $1200. This is tiny fraction of my net worth and a small fraction of my (ACK!!!) gold holdings. So far I am very much in the money on BTC (and only wish I had put more in back in 2011!!)

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    Posted on April 14th, 2013 at 7:35 pm Reply | Quote
  • Contemplationist Says:

    Buying would be betting in this case.

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    Posted on April 14th, 2013 at 10:12 pm Reply | Quote
  • Vladimir Says:

    The problem with this argument is that: (1) destroying something like Bitcoin is a much easier task for USG than ensuring a decent level of public safety, and (2) the reason why public safety is so bad is not because rectifying this situation would be a difficult problem for USG, but because it would require some unacceptable ideological compromises on its part.

    On top of that, even if it somehow were impossible for USG to eradicate Bitcoin, it’s still more absurd to claim that USG wouldn’t be able to “demonize” it. Those who hold the mass media megaphones can demonize whatever and whomever they please.

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    Posted on April 14th, 2013 at 10:38 pm Reply | Quote
  • Handle Says:

    Foseti is right.

    People who work inside the machine know how the other people think about their work and the mental tool-kits and intellectual habits they rely upon coordinate with each other to achieve it. More of our brain processes occur by autopilot than we realize. You ever drive to work and wake up from your morning zombie trance wondering how you got there from home? We live a lot of our life that way without realizing it, or fooling ourselves into thinking otherwise.

    This idea from the outsider’s perspective “USG will crush BTC!” frames things in a instinctively satisfying personifying manner, but it’s not how the actual functionaries will accomplish their tasks. The laws themselves are written in a highly abstract manner, and while that may begin as a pretext to target the original reification of a novel phenomena, the enforcers of the law rarely go about their task with such individualized animus. They believe they are doing something abstract too, in order to neutralize symptoms, not diseases.

    And the symptoms of BTC are money laundering, tax evasion, smuggling, purchasing contraband, financing criminals and terrorism, escaping capital controls and all manner of regulations, etc, etc.

    These are the same symptoms associated with cash. And because of that, we already have laws that deal with cash transfers, such as mandatory reporting of purchases exceeding $10K.

    Government workers will believe themselves to be enforcing all the laws already on the books forbidding all the things mentioned above, and see BTC merely as one potential instance of a whole host of possible novel technologies which could facilitate these crimes. And they will think they are fighting crime, the mechanism is merely incidental.

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    admin Reply:

    My problem with this whole discussion — fascinating as it is — stems from the way it lurches from questions of government motivations, to assumptions about government capabilities. Does it matter much why USG hates, or will come to hate, Bitcoin? There are a wide range of things that USG hates, but seems unable to eliminate. The more important question is whether Bitcoin can be suppressed.

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    Nick B. Steves Reply:

    USG has already choked off most illegal activity going into and out of Mt. Gox. In order for me to get dollars in or out of there, I had to “verify”: Photo ID and utility bill. Once you’re in bitcoin, however, there’s literally nothing USG could do (short of banning all legitimate business transactions) prevent btc floating around in any amounts. There is no bank, just millions of wallets all connected to the network. Now this makes things risky for the criminals because if 100k btc change hands in one transaction, people will notice. But there’s nothing preventing the criminals from creating 1000 new one-time use addresses, and transfering 100 btc into each of them over a 5 hour interval. If BTC grows big enough, criminals could just stay in BTC, pay their suppliers and goons with it, etc., and only trickle out cash at allowed rates.

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    Mike Reply:

    I wonder: what’s the official cathedral line on Bitcoin? How does it differ from the US government’s mostly-indifferent response so far?

    I mean, the US has imposed regulations on BTC currency exchanges, but it’s hardly surprising that BTC would eventually be subjected to the same rules governing the exchange of every other currency. So that is not necessarily evidence of a cathedralist plot against Bitcoin.

    To know what the government will do about Bitcoin, we need to know what the cathedral thinks about Bitcoin. Any ideas?

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    admin Reply:

    My sense of the Cathedral is probably more economistic than most others in the reactosphere. I think Keynes is an integral — and central — component. Since Bitcoin ultimately implies depoliticization of money (i.e. exact anti-Keynesianism), I don’t find it difficult to anticipate the Cathedralist line on the topic. More generally though, one would have to maintain that the Cathedral is perfectly distinct from the Idea of the activist State, if one were to predict that it could be — in the end — indifferent to the Bitcoin subversion of national currencies and hollowing-out of the tax base.

    Mike Reply:

    Good points – the cathedral will never stand for tax evasion, so once Bitcoin starts enabling that, the cathedral is going to have to think of some way to delegitimise Bitcoin, or admit defeat on that count at least.

    The economistically-specialised cathedralites have more to lose from Bitcoin, so they’re more explicit in their criticisms of it (Krugman, for instance).

    I think the cathedral has figured out that Bitcoin is an anti-cathedral appliance of computing, but they’ve also figured out that they don’t want to get bogged down in a prohibition campaign with a marginal chance of success. Viewed in that context, Bitcoin is a negative black swan event for the cathedral (and therefore a deus ex machina for liberty).

    I think this explains why other cathedralites, e.g. Felix Salmon, sound indifferent about Bitcoin – there’s no official cathedral line on Bitcoin, so the cathedralists are holding their fire for now to keep their options open. But they can see the danger and so they’re hardly likely to endorse Bitcoin.

    Also, key cathedral target groups, e.g. young men, are the key Bitcoin demographic. If the cathedral attacked Bitcoin, they’d get themselves offside with a key target group. So they’re biting their tongue for now.

    Handle Reply:

    There are times when the Cathedral Economists and the USG’s need/desire for control come into conflict. The most obvious recent example of this is the crushing of the closest thing we had to Robin Hanson’s dream of “Futarchy” and “Prediction Markets”, Intrade. Purportedly it was about commodity dealing, but in reality it is mostly about unrestricted gambling. The Economists were all aghast, but they lost out in the end, and have been mostly silent since. Almost no one in academic circles took the prosecutions side of the case, but it didn’t matter. Similar things could be said about the Aaron Schwartz episode.

    Sometimes there are gaps and seams in the Cathedral reciprocal-bolstering alliance. And in the end, power and control wins.

    spandrell Reply:

    BTC will crash when USG jails the first bitcoin user. Nothing is worth gang-rape by blacks in a US federal prison.

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    admin Reply:

    Not all Bitcoin users are in the United States.
    Also, if BTC becomes comprehensively criminalized, it will find lots of users who are willing to accept the possibility of prison time as part of a sufficiently lucrative gamble. That’s what criminals do.

    Posted on April 15th, 2013 at 2:15 am Reply | Quote
  • spandrell Says:

    Yes but the people who run the exchanges are not criminals.

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    admin Reply:

    If the exchanges are closed down, they’ll be replaced by black markets — hardly an unprecedented occurrence.
    That’s the strongest reason to suspect that USG might not try to shut them down — at least not soon — for fear of losing all possibility of influence and monitoring.

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    spandrell Reply:

    My point being that the sort of highly skilled person needed to run a Bitcoin exchange is unlikely to be the sort of criminal to risk jail.

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    admin Reply:

    Serious criminals have access to plenty of talent — just look at the sophisticated financial servicing arms of the international narco-cartels: “The money generated by the wholesale cocaine transaction is maintained for the organization by financial experts familiar with international banking, who are responsible for laundering, banking and investing drug profits, and for assuring that a portion of the drug profit is returned to Colombia for reinvestment in the organization’s cocaine enterprise. The cartel’s own financial experts are supported by a complement of bankers, lawyers and other professionals in the United States, who play a crucial role in facilitating these transactions.”

    Posted on April 15th, 2013 at 5:23 am Reply | Quote
  • spandrell Says:

    So the model is that Bitcoin will succeed and change the world when international crime syndicates start to use it. Government being known to not be very efficient at cracking them down.

    It does sound like a fun scenario. So yes perhaps a Bitcoin exchange in HK might be useful to get the triads interested.

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    admin Reply:

    To some considerable extent it’s simply definitional. If USG criminalizes it, either it dies, or it survives criminally.

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    Posted on April 15th, 2013 at 8:35 am Reply | Quote
  • Nick B. Steves Says:

    admin writes:

    Since Bitcoin ultimately implies depoliticization of money (i.e. exact anti-Keynesianism), I don’t find it difficult to anticipate the Cathedralist line on the topic. More generally though, one would have to maintain that the Cathedral is perfectly distinct from the Idea of the activist State

    That’s a great couple of lines there. Dense. The Cathedral is, I think, more about the politicization of everything, immanentizing eschaton, than it about the activist State per se. Creating an (ever increasingly) activist State, by “popular” mandate, just happens to be one of inevitable effects (accidents) of politicizing everything. But tolerated opinions within the Cathedral vary in just how activist the State ought to be… “Rights” to abortion, to be put to death upon request, to smoke pot, to not to be killed by drones remain increasingly popular opinions on the Left. Stalin (RIP) had some good ideas but no doubt went a bit too far.

    The entire concept of the politicization of money (which is, when one devotes three axons to it, a corollary to the Politicization of Everything) probably hasn’t occurred to very many in the Cathedral in at least 2 generations. Of course, gov’ts issue money… in just the right quantities for the good of all the people. What other possible arrangement could exist?

    But of course very few Card-carrying Cathedral members ever contemplate the Politicization of Everything. Hell… they’re just making the world ever safer, fairer, cleaner, and right. Truth-n-goodness all the way down. Whaddaya wanna go back to the “Dark Ages”?

    So the key to the strategy, so far as in is the power of the Dark Enlightenment to implement a strategy (which is to say, not much), would be to keep alternative crypto-currencies hip and cool and lefty for absolutely as long as possible.

    Eventually, and it will take many years at least, BTC destroys not so much the Cathedral or the USD (I’ll still have to pay taxes in them), but rather the ability of the Cathedral to continue to pay for its breads and circuses by borrowing (one way or another) from my great-grandchildren. That would be a huge step toward sanity, even if not a final step toward The Reaction.

    [Lord, give me the concision of Nick Land.]

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    Posted on April 15th, 2013 at 7:48 pm Reply | Quote
  • Nick B. Steves Says:

    After the much anticipated Great Bitcoin Crash of April 10-12, the USD/BTC price has continued its upward trajectory and is now printing around $160. Blockchain.info charts continue to show near historically low ratios of trade vs. transactions, which means that the actual BTC economy is growing on average faster than the trade price.

    This article (admittedly from a BTC-flag-waving source) goes into a lot of the very technical details surrounding the so-called crash. Suffice it to say that is far from clear that USG was behind the crash, or yet even whether USG realizes the threat the BTC may present to USD global reserve currency status… an awful lot of auto-bathwater-ingestion no doubt goes on in the Halls of Cathedral Power.

    My goggles of prognostication suggest that BTC will race past its old high ($266) and touch $300 before May 2013 is over. It may meet some resistance there. A little further out on the limb suggests that BTC will pass $1000 before year-end 2013, assuming no USG “externalities” are brought to bear on the currency and Mt. Gox continues to get its shit together.

    [Reply]

    Posted on April 24th, 2013 at 3:23 pm Reply | Quote

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