Quote note (#145)

Joichi Ito on why Bitcoin is not like the Internet:

The founders of the Internet may have been slightly hippy-like, but they were mostly government-funded and fairly government-friendly. Cutting a deal with the Department of Commerce seemed like a pretty good idea to them at the time.

The core Bitcoin developers are cypherpunks who do what they do because they don’t trust governments or the global banking system and are trying to build a distributed and autonomous system, one that is impervious to regulation and meddling by anyone at any time. At some level, Bitcoin was designed to not care what regulators think.

ADDED: More Internet / Bitcoin comparison.

January 19, 2015admin 20 Comments »
FILED UNDER :Political economy


20 Responses to this entry

  • Quote note (#145) | Neoreactive Says:

    […] Quote note (#145) […]

    Posted on January 19th, 2015 at 12:42 pm Reply | Quote
  • Paul Ennis Says:

    Interesting to see mining focused upon (not done often enough) especially at this time. Bitcoin is entering a strange phase where home mining is unprofitable for new adopters and there are virtually no decent vendors of mining equipment left. The current catch-22 with the price, where miners need to clue in their USD bills, whilst also operating less powerful machines (relative to the difficulty) might be a painful bump for Bitcoin to ride in 2015.
    We’ve also seen how this has benefited scammers. New adoptees looking to ‘mine’ at pbmining, ltcgear, hashie and so on all found out pretty fast that they were scams or ponzis. I’ve seen so many people burnt in the last few weeks that are not going to come back (then again it’s also a good way to introduce people to real-world finance/dodginess/corruption).
    I’ve invested mostly these days in the new ventures, the counterparty assets approach, and my beloved Darkcoin (which I do mine but purely for fun). My Bitcoin has gone into cold storage with just pocket money for VPNs swishing about.


    Posted on January 19th, 2015 at 1:26 pm Reply | Quote
  • VXXC Says:

    What are the profit margins of this “business”?


    http://www.loper-os.org/?p=1468 {== Comrade Ogilvy Nakamoto.

    http://www.loper-os.org/?p=1446 {== Mt. Gox, or modern Chumpatronic engineering

    “The Bitcoin Kill Switch is quite alive, well, and waiting to be pressed:
    “I can’t assure with 100% certainty that the all the black dots are owned by Satoshi, but almost all are owned by a single entity, and that entity began mining right from block 1, and with the same performance as the genesis block. ” http://www.loper-os.org/?p=1139

    Here’s category link for above links. http://www.loper-os.org/?cat=42

    Bitcoin is Scientology for Aspergers.


    Posted on January 19th, 2015 at 3:24 pm Reply | Quote
  • Kgaard Says:

    The commenters zero in on the same problem I see: There is no effective method to balance supply and demand for bitcoins, so there is no way to keep the value stable. Thus it’s useless. Thus, in principle at least, it should be worthless.

    BUT … this is still an interesting article. This was the key point:

    “I believe that Bitcoin is the first “killer app” of The Blockchain as email was the killer app for the beginning of the Internet. We are in the process of inventing eBay, Amazon and Google. My hunch is that The Blockchain will be to banking, law and accountancy as The Internet was to media, commerce and advertising. It will lower costs, disintermediate many layers of business and reduce friction. As we know, one person’s friction is another person’s revenue.”

    Intuitively I feel he is right about this, though I only barely understand the concepts because I am not a tech person. Law and banking are ripe for destruction by internet forces. That seems obvious.


    admin Reply:

    There’s this thing people have been using to balance supply and demand — it’s called a ‘market’.


    Kgaard Reply:

    Doesn’t work with currency. That’s what everyone screws up. If you have a monopoly supplier of an item, there IS NO MARKET on the supply side. Again I refer you to the Singapore M2 chart. It exploded. Why did the currency not collapse? Because the monopoly supplier of that currency, the Singapore central bank, was supplying it at precisely the demanded level.

    If you try to analyze currencies as if they were physical commodities it will lead you down a trail of woe to a sea of despond and a pit of despair.


    admin Reply:

    There are plenty of markets for items with drastically inelastic supply. The art market is one obvious example. (Szabo’s ‘collectibles’ is a category that captures many of these.)

    Izak Reply:

    What if we prefer to dwell in a kiddie pool of marginal disappointment?

    Kgaard Reply:

    You just made my point Nick: The price of a Cezanne has risen from $100 to $100,000,000 over the last century because the supply is fixed (at 950 paintings, to be exact) yet demand keeps increasing.

    Bitcoin is not a Cezanne. It is a bunch of 1s and 0s on your computer. It has no utility. It may be scarce, but so what? Lots of useless things are scarce. If limited supply is by definition the mark of value, I have some Canadian-listed miners I would like to sell you, such as this one:


    There are hundreds more where this one came from. They all have limited share counts. They even have assets. But they are worthless because no one wants them. And no one wants them because they have no utility at prevailing metal prices.

    For Bitcoin to have value it must be more than scarce. It must serve some FUNCTION. And as has been demonstrated, it doesn’t serve any of the three functions of a currency. So if it goes to zero it wouldn’t surprise me.

    vimothy Reply:

    There’s this thing people have been using to balance supply and demand — it’s called a ‘market’.

    But that’s too broad. The thing that is supposed to balance supply and demand is the price: prices clear markets. But since money is the unit of account (things are priced in money), we would like to prevent wild fluctuations in its price, which would necessitate wild fluctuations in all other prices. Hence central banking, the historical gold standard and so on. Or, if you prefer, hence why we do not use art as money.


    admin Reply:

    Precious metals used to do that. Demotic populism in its infinite wisdom scrapped that system, and replaced it with a set of paper political promises backed by the mediated will of the electorate. That’s just about over. The next stage is bound to be messy.

    Posted on January 19th, 2015 at 3:26 pm Reply | Quote
  • Paul Ennis Says:

    ‘Scientology for Aspergers…’ is a nice line (though surely you must see all in the spectrum would wish to lay claim…especially those with anxiety disorders – a currency that means you never need to leave the house again).

    ‘Law and banking are ripe for destruction by internet forces.’

    Perhaps you might search for the worth somewhere around that trend 😉


    VXXC Reply:


    I’ve found your Value for Bitcoin.

    [Bitcoin is] ‘Scientology for Aspergers…’ is a nice line (though surely you must see all in the spectrum would wish to lay claim…especially those with anxiety disorders – a currency that means you never need to leave the house again). ”

    Odd as I certainly wasn’t looking for it.

    I think perhaps Moldbug’s virtual solution to The Dire Problem may also have some application.


    pseudo-chrysostom Reply:

    occupying peoples time with ‘virtual’ engagements is all but inevitable i think, as it has the triple threat of filling a necessity, being simple to implement (indeed, people will do it all by themselves, because…), and oh so eminently desirable. i fully support it.


    Posted on January 19th, 2015 at 5:02 pm Reply | Quote
  • Quote note (#145) | Reaction Times Says:

    […] Source: Outside In […]

    Posted on January 19th, 2015 at 5:27 pm Reply | Quote
  • Paul Ennis Says:

    Second note meant for kgaard (it responds to one of his quotes).


    Posted on January 19th, 2015 at 9:31 pm Reply | Quote
  • Paul Ennis Says:

    The function of Bitcoin is, surely, to buy things with ease on the internet sans banks fees and, if used right, anonymously. This is what sustains it in spite of the trading blips. Of course, what is unspoken here is that Bitcoin is the currency of the deep web and as such it has a very useful function for an entire black market (from hackers ddosing to people buying weed to legit purchases of vpns, etc.). Maybe you need to get murkier.


    Kgaard Reply:

    Ah, well, now you are on to something. I agree that this is a real utility. So maybe there is hope.

    What’s interesting from a monetary policy standpoint is how bitcoin is attempting to solve the supply-side of the equation. The creators of bitcoin recognized the supply of the currency would have to grow SOME … but they had no way of really knowing how to property calibrate the rate of money-supply growth, because that rate is always fluctuating. Hence they came up with this crazy mining formula, which makes no sense to the average guy (because it’s inherently arbitrary).


    Posted on January 19th, 2015 at 9:34 pm Reply | Quote
  • Lucian Says:

    I once heard a flannel-wearing Marxist denounce BitCoin as potentially fascistic in a literature tutorial.


    Hurlock Reply:

    And that’s pretty much the only argument in favor of bitcoin that you need.


    Posted on January 20th, 2015 at 2:28 am Reply | Quote

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