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Re: <nettime> The Monetary Future: How Bitcoin Is Being Destroyed
John Haltiwanger on Sat, 27 Oct 2012 23:26:41 +0200 (CEST)


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Re: <nettime> The Monetary Future: How Bitcoin Is Being Destroyed


On Sat, Oct 27, 2012 at 10:58 AM, Eugen Leitl <eugen {AT} leitl.org> wrote:

> On Fri, Oct 26, 2012 at 07:22:15PM +0200, John Haltiwanger wrote:
> > On Fri, Oct 26, 2012 at 1:40 PM, Nick <nettime {AT} njw.me.uk> wrote:
> >
> > > Interesting read.  That said, I would love to read more about the
> > > interplay of traditional capitalist power structures and bitcoin.
> >
> > Bitcoin is fundamentally flawed as an emancipatory currency due to it's
> > reliance on processing cycles. When I first heard about it, I eagerly
>
> It doesn't rely on processing cycles for maintaining the log of
> transactions. It needs some processing for the distributed mint,
> but adaptively so (difficulty goes down if mining rate goes down)
> and processing cycles are fundamentally egalitarian.

How can something that inherently favors those with pre-existing capital to
invest in computing architecture be "fundamentally egalitarian" ?

Those with the money to invest in the most hardware get the most bitcoins.
Hardly seems like an equal opportunity cost to me.

> > downloaded the client to begin mining. With my (relatively, at the time)
> > powerful desktop, it was something like 2 years until I had my first
> coin.
>
> You were late to the party, and by that time you probably needed
> GPU clients (which will be soon useless, since ASIC miner rigs
> are ante portas) participation in a mining pool.
>

I should have clarified that the mining client speculated that it would
take two years. I immediately shut it down in disgust.

> > There are also a limited total number of bitcoins, which from my point
> > of view can only lead to the exact same zero-sum situation we have with
> > always seemed like a state-coerced currencies: if I am going to be
> > rich, it is at the expense of others having the same opportunity.
> 
> This is a currency based on scarcity, just like gold or cowry shells.
> If you intended to become rich by mining, you should have been a year
> or two sooner to the party.

I downloaded the client within months of the launch of Bitcoin. And what
you are saying proves my point about the stupidity of building a currency
on scarcity: it's not going to lead us to anywhere new or 'revolutionary'.
You have to 'get there first' and 'mine harder/smarter'. What stupid
advice, "oh you should have been there earlier".

> The value of bitcoin is ability to do P2P transactions in real time without
> requiring a third party, using a naturally deflationary monetary system
> which however is highly frangible.
>
> That by itself is of obvious enough utility.

That is about the only interesting thing about it, yes. But the ability to
engage in P2P transactions is hardly a result of the means of the
currency's production, nor is it a feature unique to bitcoin itself.

Also "naturally deflationary" in the scope of something that is more
hoarded than traded seems like a misnomer to me. Since there are a limited
number of bitcoins, there is a "natural" tendency to hold on to as many of
them as possible. That way when the pie is all spoken for, one's slices
will increase in value as demand becomes satiable solely through trade.


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