The Internet of Money

In an article that might be the most important contribution to the understanding of Bitcoin since its launch, Eli Dourado writes:

[Bitcoin] is a currency, of sorts. You can spend it on things, especially drugs and gambling and getting around capital controls. Krugman and other economists have analyzed Bitcoin in these terms, as a substitute for dollars. This is rather like regarding the Internet as a substitute for, and not a quantum leap beyond, previous communication technologies. It is true that Bitcoin can substitute for other currencies, but as with the Internet, the abstraction of a permissionless application layer means that it is much more than a substitute: it is like a transport layer for finance.

Every Bitcoin transaction is defined in part by a bit of code, called a script, written in a programming language called Script. The script in one transaction defines how the next user can access the coins. In a conventional transaction, the script specifies the hash of the public key that is needed to spend the coins next, and demands a signature from the corresponding private key.

Script is not limited, however, to these conventional transactions that merely transfer coins from one person’s control to another’s. It can evaluate statements, execute conditionally, do math, and move bits around. It is not a Turing-complete programming language (there is no looping), because that would be a security risk; we do not want viruses to spread via Bitcoin’s blockchain, nor do we want Bitcoin transactions to run indefinitely or, if we ever figure out AI, become self-aware. Despite the lack of loops in Script, it can be used to construct some very interesting scripts. … 

Sometimes ratchets work right.

ADDED: In the comments thread to the article, Eli Dourado suggests: “It’s … possible that democracies won’t respond effectively against Bitcoin because they don’t respond effectively to much of anything.”

January 10, 2014admin 11 Comments »


11 Responses to this entry

  • fotrkd Says:

    The original screenplay [of Heathers] had a different ending in which Veronica kills J.D. by shooting him and then straps the bomb (a much larger and more complicated piece of equipment, described as being “a cylinder as large as a television set”) to herself, blowing up as J.D. does in the final ending. What is placed in the final ending as JD’s boiler-room speech about “imagine I blew up the school, imagine I blew up all the schools” is contained in a suicide note found in Veronica’s locker by Heather McNamara and Betty Finn. The movie ends with an eerie prom sequence set in Heaven, tying into JD’s assertion that the only place everyone will truly get along is in Heaven. The prom begins with students dancing within their social cliques, then switching partners in odd pairings like metalheads dancing with Heathers and one of the murdered jocks getting his prom picture taken with a tipped cow; the punch being served is the drain cleaner used in the first murder scene, and “Dumptruck” is singing onstage as the entertainment for the evening. This was intended to be shot but the studio thought it was too dark for the target teenage crowd and opted for a lighter ending.

    Our language can be seen as an ancient city: a maze of little streets and squares, of old and new houses, and of houses with additions from various periods; and this surrounded by a multitude of new boroughs with straight regular streets and uniform houses.

    And we extend our concept of number as in spinning a thread we twist fibre on fibre. And the strength of the thread does not reside in the fact that some one fibre runs through its whole length, but in the overlapping of many fibres.(Wittgenstein, Philosophical Investigations)


    Diogenes Reply:

    60-80 years later, I would’ve thought we’d gotten past the linguistic turn by now.


    fotrkd Reply:

    Like many philosophers, Wittgenstein didn’t think he’d have much chance of being generally understood in his lifetime. I think he put a 100 year figure on it (which is probably not far wrong). What makes you think he was talking about linguistics? It’s a bit like the misguided “prison house of language” interpretation of Derrida.


    Diogenes Reply:

    “Our language can be seen as an ancient city: a maze of little streets and squares, of old and new houses, and of houses with additions from various periods; and this surrounded by a multitude of new boroughs with straight regular streets and uniform houses.”

    Oh, look, it’s another metaphor for language. It’s not a kind of tool, it’s not the House of Being, it’s not a system of difference and deferrance, it’s not a memetic virus-like entity with its own spooky Will to Proliferation, it’s not a kind of organ (Chomsky), it’s not an inextricable aspect of how we get around in the world (Davidson), it’s like an ancient city! Wow, deep.

    If you can’t recognize the difference between talk of the ‘linguistic turn’ and linguistics qua linguistics, I’m not going to bother. Your point about Wittgenstein is intractable and therefore meaningless to me too; a final, fixed interpretation of Wittgenstein isn’t coming in 500 years, let alone 100.

    Forgive me my furore on this particular point, but this kind of navel-gazing discourse about language is so utterly, horrifically boring in 2014, especially given the gripping work that has been done by the Speculative Realists among others, not to mention our host himself.

    Diogenes Reply:

    Oh, and caring about Derrida is ‘misguided’, to use your term, in any case.

    fotrkd Reply:

    @ Diogenes

    OK. I still find it interesting, but I’ll limit my discussion of it on here (at least or unless I have something more substantial to say). There is a slight tension though in your ‘junk Derrida, forget the Wittgensteinian bore… (but) we won’t have a definitive understanding ever’ approach.

    Diogenes Reply:

    Perhaps, but I don’t really see it. One doesn’t need Derrida to tell you that texts are open to interpretation.

    Posted on January 10th, 2014 at 10:34 pm Reply | Quote
  • Kevin C. Says:

    Spandrell: “Bitcoin 1984

    Forbes: “Bitcoin Is Not Anonymous And Is Always Taxable

    Real Currencies: “Is the National Security Agency behind Bitcoin?

    Bitcoin Forum: “Has the NSA already broken bitcoin?

    Rick Falkvinge: “Bitcoin Could Lead To Liberty Paradise, But Also To Surveillance Dystopia

    Ajay Shamdasani: “Bitcoin better than cash for AML and KYC compliance, says founder of new digital currency exchange” [PDF] “Bitcoin’s Fatal Flaw Was Nearly Exposed.”

    I’d also point back at Vladimir’s four scenarios criticism, and particularly Nick B. Steves’ fifth scenario, in line with the above. Just as Dominique Boullier and Lesser Bull expect MOOCs to expand the power of HYP, I, and others, find it likely that Bitcoin will become another tool of the Cathedral Panopticon.

    Again, this faith that some clever technological trick will non-catistrophically overturn the Cathedral and pave the way for some new Golden Age is very Progressive. It reminds me of Geordi and/or Data whipping up some Treknobabble doodad in the last five minutes of the episode to free the Enterprise from the Negative Space Wedgie of the week. It’s poor-quality soft sci-fi, and one of the cancerous memes. I would again question whether one with faith in that sort of Deus ex Machina can be considered any kind of reactionary.


    VXXC Reply:

    Oh there’s no clever theological trick, just as their rise to power wasn’t clever theological tricks but the ol fashioned bloody slog.

    However…Sir…what is your kind of reactionary? All you counsel is despair.

    Perhaps the Father of the Reformation, and the City of God which plagues us for centuries and is now in it’s suicidal teological end state [look around for the results of the City of God made flesh], and the cringer at the door to the Dark Ages? I’m surprised the Vandals buried him.

    What do you counsel ever but despair? That all our works may be dust. Yes. We all end in dust. We don’t however need to live in filth, and my kind of reactionary wants to use the gifts God gave us to do something and indeed anything to raise us from it.

    We need Apostle Paul’s and we need Constantines. Man never needed an Augustine, he is a plague on all he touches. Despair is the enemy’s strongest weapon, it needs no prophets.

    God allows us to say shit when it is in our mouths, and to spit it out. We need not live this way, nor bequeath filth, pron, libido domine, bankruptcy, serfdom to an insane and evil class of pajama boy-things as our posterity.

    The actual Vandals would of course be an improvement.


    Nonzero Reply:

    I’ve suspected for a little while now that Bitcoin hasn’t recieved the money laundering treatment (fundin’ terrorists! A tool of child pornographers!) from Uncle Sam is because one of the alphabet agencies has cracked it or found some other way for it to aid total information control. I mean, I’d love to believe that a cadre of MIT nerds (or European equivalent) actually scored a big victory against the no-fun-allowed crowd in the USG, but I find it unlikely. After all, didn’t the Liberty Reserve debacle just happen last May?

    It’s 2014, not 2044. Any real (domestic) threat to dollar hegemony can be vaporized – except, of course, for Amazon gift cards…

    It’s actually a pretty funny thought that Jeff Bezos and a few other uppity internet billionaires secretly masterminded the overnight adoption of the ‘untraceable’ Bitcoin, just so they could avoid sales tax right up until the point that the USG really starts to flex the police state muscle.


    Posted on January 11th, 2014 at 4:24 am Reply | Quote
  • Orlandu84 Says:

    The simplest explanations are the most likely explanations so long as they explain all the relevant details. In general government inaction occurs on account of apathy, confusion, and over-extension. Since apathy and over-extension are fairly clear in themselves, allow me to note that by “confusion” I mean bureaucratic confusion, i.e. “that’s not my job, so I don’t care.” At the present moment I find apathy, confusion, and over-extension sufficiently explain why Bitcoin has not been crushed by the USG. Furthermore, we are only beginning to see the push-back against surveillance, e.g. Since it is more difficult to divide numbers than it is to multiply, encryption will gain at least parity in the end in such conflicts.


    Posted on January 11th, 2014 at 6:58 pm Reply | Quote

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