Does this look like something that’s about to die?


(This is among the few topics that puts my reverence for the Moldgod under serious strain.)

More here:


The apparently inverse relation between BTC value and investment level merits further commentary.

On a trivial personal note, I seem to have carelessly lost my Bitcoin wallet somehow, so my perfect detachment on the subject is even more impeccable than you might think.

Note: There’s a exemplary anti-Moldbug prognosis cited over at the other place. “The only extent to which the United States can allow anything at all with respect to Bitcoin is the extent to which it can reform itself to work inside Bitcoin.” OK, it’s perhaps an over-stretch in the opposite direction, but it still ends up far closer to the mark.

(Image source.)

ADDED: Found my Bitcoin account again — which I’m confident everyone will be extremely excited about. Better still, my BTC 0.0005 is still sitting there securely. Phew!

December 1, 2014admin 28 Comments »


28 Responses to this entry

  • Nick B. Steves Says:

    Just think there’s some pizza maker out there with his own private island now.


    Posted on December 1st, 2014 at 8:34 am Reply | Quote
  • Nick B. Steves Says:

    The thing with Moldbug’s Monetary Theory (MMT) (0 or money) that never really comes out is how the world continues to have so darn many currencies. Yes, the government of Ghana sort of forces you to use Ghanaian dollars (or whatever), but certain things kinda force others to use BTC. Therefore BTC and Gahanian donkey turds have some non-zero value. Which is worth more? Who knows.


    Alrenous Reply:

    MMT is true given frictionless game theory. The real world is highly frictional. (And humans are dumb.) However, the pressure never goes away; humans, while slow, never stop thinking. The world will constantly try to get to equilibrium until it actually gets there. The frictions are temporary and contingent; the pressure is neither. (That said, markets stay irrational longer than I can stay liquid.)

    The value of money is easy.
    The value of goods is hard; it has a real, subjective value, but being subjective there’s some measurement difficulties. The best we can do is price, and that’s not very good.
    However, the value of money is exactly and only in its price, meaning our only yardstick happens to be perfect.

    (You could measure a good’s value if you could get honest and articulate self-reports…so we’re talking some kind of post-human here.)


    Posted on December 1st, 2014 at 8:37 am Reply | Quote
  • Vimothy Says:


    Posted on December 1st, 2014 at 9:26 am Reply | Quote
  • Alrenous Says:

    Moldbug also predicted that USG will die and gold will remonetize. However, everything takes longer than expected. In this case, much longer. Gold is remonetizing… Slowly. Eventually. In modern times, so is Bitcoin. Economically speaking there’s nothing seriously wrong with either of them.

    However, the entire G8 (at least!) is politically committed to killing Bitcoin. Bitcoin’s main saviour so far is sclerosis – even though they want to kill it, they can’t get the measures past the internal squabbles. Secondly, America (Foggy Bottom) in particular is likely starting to worry that banning Bitcoin gives China an opportunity. (Not that they outright ban things anymore…too obvious.) If BTC-dollar trade is shut down, that drives BTC trade toward Chinese industry, which America’s dying economy cannot afford. With the petrodollar destabilizing, America similarly cannot afford to assume they can pressure China into following suit on BTC. Indeed, trying to apply such pressure would likely instead crack the petrodollar in two.

    On the other hand, the gears of the farce we’re forced, these days, to call ‘governance’ are even harder to stop than they are to start. USG will hit Bitcoin the same way they hit Napster, and similarly after a period of apparently doing nothing. Since this topic is more important and more complex, since there are more interests, the waiting period has been extended. The only question now is how hard they’ll hit and whether BTC will hit back. BTC has already taken the Napster/torrents lesson, so there’s that…
    Pirate bay looked untouchable for a while. A single website is a much simpler issue than a popularly legitimate currency. The embarrassment of failing to take it down is also cause for pause. (But again, not cause for stop.)

    Also, the Fed (who’s the fed these days? Can’t be arsed to know) does not care about BTC until it enters their monkeysphere. Until they can embarrass a rival or BTC investment somehow threatens their personal portfolio, the Fed will do squat. It’s peasant business, who cares about that? (You may recall this attitude from Medieval times…which will end in a similar way.)


    Henk Reply:

    A smart regulator might consider supporting Bitcoin ASAP, in order to make winner-take-all network effects get in the way of any improved successor. Bitcoin’s lack of real anonymity is a desirable feature from a regulator’s point of view.


    Posted on December 1st, 2014 at 10:37 am Reply | Quote
  • Undead | Reaction Times Says:

    […] Source: Outside In […]

    Posted on December 1st, 2014 at 11:45 am Reply | Quote
  • Nick B. Steves Says:

    “The apparently inverse relation between BTC value and investment level merits further commentary.”

    Hmm. A) Too bad they didn’t have log scale. B) one thing’s almost for sure: the relationship would not be simultaneous in time. Even irrational startup investment takes time. Could be the big rise in investments is a delayed reaction to a single impulse and the rest inertia.


    Posted on December 1st, 2014 at 1:04 pm Reply | Quote
  • John Says:

    Moldbug’s entire “death of Bitcoin” prediction was based on an expected DOJ indictment of anyone who ever participated on a Bitcoin exchange on money laundering charges. Now that clearly isn’t ever going to happen, and Bitcoin has made great strides towards official recognition and legitimacy since that post was written.

    It’s too bad Moldy isn’t blogging anymore as I’d love to hear his updated take given the developments of the past year.


    Kgaard Reply:

    Yes … monetary policy is very tough for a pure political analyst to get right because you need so much real-world data and experience to have a properly nuanced feel for on-the-ground realities. I would also like to hear how he has evolved on the issue …


    Posted on December 1st, 2014 at 3:02 pm Reply | Quote
  • Kgaard Says:

    Nick … The fact that it’s even possible to “carelessly lose” one’s bitcoin wallet seems a big hurdle for general acceptance of the thing, no? There are a lot of internet services I don’t use — iTunes topping the list — because when I change computers I can’t figure out how to gravitate over the iTunes system, and don’t care enough to figure it out. If bitcoin lives on one’s hard drive (or even in the cloud behind a bunch of passwords) one is likely to lose it eventually, no? If you go on a 1 year vacation you can put your dollars in the bank and leave your stocks with the broker and it will all be there when you get home. But what happens to your bitcoin if your house burns down or you get dementia and forget your passwords?


    Hurlock Reply:

    ” If you go on a 1 year vacation you can put your dollars in the bank and leave your stocks with the broker and it will all be there when you get home. ”


    Only if the financial system doesn’t happen to crash while you are on a vacation.
    And that happens pretty often nowadays…
    At least with bitcoin you know that the responsibility is yours entirely.


    sviga lae Reply:

    The best solution at the moment is deterministic wallets, such as https://electrum.org/, where your wallet is always recoverable from a randomly generated seed phrase, which may be easily stored.

    Relying on the continuity of a file on your computer is obviously bad, and leaving your keys in the hands of a third party is worse.


    Kgaard Reply:

    Hurlock … Replace “dollars” with “gold in a safe deposit box” and the principle still holds: It’s easier to be comfortable some technological or personal snafu or accident isn’t going to vaporize your gold than your bitcoin.

    Sviga Lee … How would you foolproof-ly store a randomly generated seed phrase? Let’s say you died. Would you have to leave that phrase in your will, or with your attorney, or in a safe deposit box? Seems like there’s still room for it to get lost (or, actually, stolen) …


    Hurlock Reply:

    Everything can get lost or stolen.
    There is no such thing as ‘perfect security’.

    Putting your money in the hands of a third party is ok if you know that they can be trusted to not lose your money. People are people so the only way to be sure that the third party doesn’t simply waste or lose your money is to make sure there is significant punishment awaiting this third party if they do lose your money.
    Nowadays, the third party in question (banks, especially big ones, in which most people store their money) will not get punished for wasting or losing your money.
    Nowadays, when the banks lose your money they get bonuses. And those bonuses come out from the taxpayer’s pocket.
    You suggestion that keeping your money with those guys in the current economic and political system is a good idea is simply ridiculous.
    Your options might be very limited, but it’s still a very, very bad idea. Chances are, you are better off stuffing your cash in your pillow than giving them to a banker. And chances are, that bitcoin is a much safer option than a bank if you know how to work with it.

    Posted on December 1st, 2014 at 4:40 pm Reply | Quote
  • dantealiegri Says:


    I don’t believe his prediction is invalid – the DOJ could still highly chill the bitcoin market. What I think is a smart comparision is the Paypal/bank issue. Right now the US isn’t regulating it as a bank, but you can be sure that they would be quick to change their minds if given a reason.

    The question in my mind is would they ever bother? I think the answer is yes – if one of the regulated environments of one of their major contributors started getting pressured, it is logical to assume that they would then go after block chain operators.


    admin Reply:

    It boils down to a “does USG rule the world (in detail)?” question. Unless that can be answered very strongly in the affirmative, the prediction is certainly invalid.


    dantealiegri Reply:

    Pretty much.

    And at this stage, they would have to be willing to shut China and Russia out of the internet, who would, in a snowdenish response, agree to host stuff just to use it as a weapon. Note that they have both been talking about not using dollars for oil prices.


    John Reply:

    Causing a short term price crash is far different from killing Bitcoin in the permanent sense. Moldbug wrote that post roughly a year ago, and every day since the Bitcoin network has gotten bigger and more global, with more capital behind it and deep institutional connections.

    There is also the downside risk to consider. If USG were to try killing Bitcoin with drastic legal action, but was not successful, in all likelihood that would drastically accelerate the death of fiat.


    dantealiegri Reply:

    The key difference is that he is saying that it isn’t a short term price crash – what he is saying is that if you make it known that you will get all people speculating in a currency, that no one will put any money into it.

    He says that the USG unseals some ruling that say, btc is illegal, because it is used for money laundering.

    People panic and want to get their money out, but our hypothetical holder cannot because the market has panicked and there are no buyers.

    I think the flaw in this, our hypotheical holder will just continue to hold at that point. Users located in russia ( and probably china ) will still continue to accept payment. The value of BTC will be re-normed against other currencies, so you will have an asset.

    What will be hard though, is to actually get value to USD, since the USG will have made loud disapproving noises. What I would imagine people would do is find friends in foreign countries, have precious jewelry shipped to them, bought in BTC and go that old route.

    Certainly makes things more expensive.


    Posted on December 1st, 2014 at 4:40 pm Reply | Quote
  • sviga lae Says:

    Do you care to reveal how much BTC you lost? Every misplaced wallet does the Lord’s work in applying deflationary pressure.


    admin Reply:

    Very little. Moving apartments, switching computers, general incompetence — bingo. As you say, my nano-scale contribution to deflationary virtue.


    Posted on December 1st, 2014 at 6:38 pm Reply | Quote
  • Aeroguy Says:

    Paper wallet + fireproof safe

    The trouble with cryptocurrency is that altcoin=fiat. Best case it plays out like gold vs silver. The biggest disadvantage of bitcoin over plastic is that the banks do take backs. You can carry a card because when it inevitably gets stolen one phone call undoes any damage. Of course having a third party you trust kind of defeats the purpose of bitcoin, unless there’s a trust free workaround.


    Posted on December 1st, 2014 at 8:09 pm Reply | Quote
  • orlandu84 Says:

    @ admin “The apparently inverse relation between BTC value and investment level merits further commentary.”

    It is late for me on Monday so please correct me gently if the following logic is unclear.

    Typically we imagine that people think before they invest in the following or similar way:

    Major premise: People invest in a good when they expect to take advantage of the market.
    Minor premise: People expect to take advantage of the market either when the value of a thing will go up due to increased demand or the value cannot realistically decline much more.
    Conclusion: People invest in a good when they expect the value to increase or not to decline much more.

    In reality most people have the following process:

    Step one: I have x extra dollars.
    Step two: The shiny costs x+y dollars.
    Step three: I buy shiny when y is a negative number or zero.

    Is the second process a very rational investment process? No, but it can be described. The lower the cost of something attractive goes, the more people will buy it. One might wonder why this extra demand does not cause the price to go back up all the times. The answer is marginal sales. Right now BTC et al are being bought primarily by nerds and some speculators on the chance that they might make some money in the long term. This buyers only buy when BTC is cheap or declining so that any upward movement of the value causes them to stop buying. Also, many will immediately get out upon gains in order to generate small but needed revenue – most nerds are poor. Moreover, as BTC is used more and more for regular transactions and not hoarding, the more stable its value will be. Why? Again, marginal transactions, i.e. the people will only use the bitcoin when its value is within a narrow range.


    Posted on December 2nd, 2014 at 2:02 am Reply | Quote
  • RJL Says:

    What if the US government builds a huge fuck-off computer, and wins all the upcoming mining competitions so that it can hoard all the new coins and fuck the bitcoin market? Possible? Likely?


    Posted on December 2nd, 2014 at 7:09 am Reply | Quote
  • Dark Psy-Ops Says:

    It sucks about your wallet. I’ll be off for a while, and I hope its smooth running for you here on out. It’s been a hell of a ride so far.



    Posted on December 2nd, 2014 at 10:49 am Reply | Quote
  • blogospheroid Says:

    Bitcoin price depends on both velocity and quantity. Higher velocity sometimes could mean lower prices (as you don’t need new coins to do commerce, just recirculate old ones)


    Posted on December 2nd, 2014 at 5:51 pm Reply | Quote
  • soapjackal Says:

    Bitcoin I think was assumed to be able to carry the entire counter economy. Then it was used as a massive speculative toy. Now that it doesn’t have that much attention the price has been stable as of late.

    I’m really interested in the damage something like Monetas is going to do to the whole system. That really can host the counter economy and allow it to grow easily and with easy access by those most likely to use it. The impact of agorism (at least the examples it cites) and generally ignoring how it could be used or its plausibility as a historical factor is something that will probably negatively effect NRx. Funding is a major hurdle. Especially if you are trying to fund Invisible Colleges.



    Posted on December 3rd, 2014 at 9:55 am Reply | Quote

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