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Re: <nettime> The Monetary Future: How Bitcoin Is Being Destroyed
John Haltiwanger on Wed, 31 Oct 2012 01:15:46 +0100 (CET)


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


On Sat, Oct 27, 2012 at 3:14 PM, Eugen Leitl <eugen {AT} leitl.org> wrote:

 <...>
> When I'm trying to form an opinion about something, I try to research it
> first. In general I did not care about minting other than a means to
> obtain play money to test transactions. I find this curious that so many
> are focusing on the most irrelevant aspect of a P2P monetary system, the
> distributed mint, and expect a personal, handsome profit from
> seigniorage. There's a reason that difficulty is adaptive.  The system is
> supposed to homeostate so that the rate of production is limited. This is
> by design.

Limiting the rate of production as an inverse to popularity is an
interesting choice, and worth experimenting with. It increases the effects
of existing vertical dynamics, however, as those that already have coins
and/or mining facilities wield increasing power as those new to the game,
eager to participate, have only these vertical actors as recourse to engage
in the currency.

> > > 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 would like to comment further on the cowry shell concept at a later time,
but I want to point out that cowry shells are renewed along life
cycles---as a currency it exhibits the notion that an absolute total number
of 'credits' is not a healthy concept. That there is a maximum to the
number of bitcoins is a major reason why I say that it is inherently
flawed.

> > 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
>
> I understand when inventors and patent holders of cryptocurrencies
> scoffed at the first cryptocurrency to succeed wildly, by solving the
> issue of double spending without resorting to centralism, and hence a
> single point of failure. A simple case of sour grapes.
>
> What is your track record, so far?

> > or 'revolutionary'.
>
> If you figure out a tamper-proof way of measuring underlying economy and
> a tamper-proof way of issuing a matching volume without any single point
> of failures, feel free to publish. It will make quite a splash, I assure
> you.

It is interesting how you seem to conflate my right to make critical
statements about BitCoin with the amount of success I have had in launching
my own currency.

> > You have to 'get there first' and 'mine harder/smarter'. What stupid
> > advice, "oh you should have been there earlier".
>
> Look, I just pointed out the problem with where you focus and your
> approach.  If you think that issuing P2P currency with the intent to make
> a personal profit is stupid, I agree.

But isn't this exactly what BitCoin does when it gives those with the most
capital to put into the system the ability to become (the most successful)
mints? Wouldn't that be a significant reason that it has been so 'wildly'
successful, namely that there are a finite number of bitcoins and if one
approaches with a 'collect them all' attitude then PROFIT.

A P2P currency should strive to limit the effects of capital-derived
vertical dynamics. This means that joining "two years too late" does not
put someone at a significant disadvantage. (And yes, in my opinion, having
to purchase BitCoins from someone who 'got there first' in order to engage
in the currency is a significant disadvantage).

> > > 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
>
> Why are you so focused on production?

The flippant answer would by: why aren't you?

I don't see the point in buying into a currency where the actual unit of
value reinforces existing vertical dynamics: cash to make a mine, earliness
of adoption, hoarding of resources. Let's say that you seem content with a
currency that embodies libertarian ideals, and that I am not.

> > currency's production, nor is it a feature unique to bitcoin itself.
>
> As compared to which successful digicash system, exactly?

BitCoins successes outside of the Silk Road (a brilliant hack, FWIW) is
highly debatable. My point is that P2P currencies in general have these
aspects. As you can tell, I only really care about the first one.

> > Also "naturally deflationary" in the scope of something that is more
>
> Deflationary in the sense is that the total amount is limited, and will
> be approached asymptotically.
>
> > hoarded than traded seems like a misnomer to me. Since there are a
> > limited
>
> If you want the currency to be useful, you need to grow the underlying
> economy, so people are more incited to spend than to be unable to spend.
>
> So what kind of business that is accepting BTC are you running,
> personally?

First I tell you that I do not believe in the currency, and then you ask
why I'm not building a business around it?

> > 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
>
> Nobody prevents you from designing a P2P cryptocurrency with built-in
> demurrage.
>
> You're hating on an experiment. As I understand the designer was unhappy
> with the rate of adoption, it would be indeed been much better if the
> minting craze didn't happen. I don't think that flaw needs to be fatal.

Nowhere did I say anything about hate. The first respondant, Nick, said he
was interested to "read more about the interplay of traditional capitalist
power structures and bitcoin."

My response is that bitcoin does very little to escape these traditional
power structures, as is evidenced by the fact that only the privileged can
play, and the more people that are playing the more privileged you have to
be to engage.


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