nettime's avid reader on Sun, 9 Mar 2014 10:53:36 +0100 (CET)

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<nettime> Is bitcoin becoming "normal"?

Sorry, libertarians: Your dream of a Bitcoin paradise is officially dead
and gone

The apparent demasking of the currency's mysterious creator is the last
nail in the coffin

by Andrew Leonard,, 07.03.2014

So much rage. So much anger. So much disappointment. Newsweek’s Leah
McGrath Goodman stunned the Internet on Thursday with a report that, for
the first time, identified the man who created Bitcoin, the world’s most
successful, and infamous, crypto-currency. In a twist worthy of Thomas
Pynchon, the pseudonymous mastermind “Satoshi Nakamoto” turned out to be
a 64-year-old Japanese American named — incredibly — Satoshi Nakamoto.

This bombshell caused enthusiasts to explode in fury.

Goodman was attacked as a bad journalist: All her evidence — declared
scores of angry tweets and posts on Reddit – was circumstantial. (And it
is true, Goodman’s case, while persuasive and fascinating, is not
definitive. After the Newsweek story, in which he seemed to tacitly
acknowledge involvement with Bitcoin, Nakamoto would go on to deny to an
AP reporter that he was actually its creator.) Goodman was also
flagellated for invading Nakamoto’s privacy, for “doxxing” him by
publishing photos of his house and license plate that betrayed his
anonymity. She was put on notice that she would be responsible if
anything untoward happened to Nakamoto, who is believed to own a fortune
in Bitcoin, and could now be the target of violent thieves.

To people who live in the real world, the sound and fury seems mostly
absurd (although the horde of  media chasing Nakamoto through L.A. on
Thursday afternoon definitely wasn’t journalism’s finest hour).  If you
invent a multibillion-dollar digital currency explicitly designed to
remake the global financial system that gains serious traction, people
will want to know who you are. If you mastermind an anarcho-libertarian
project to break the hold of governments over money, history will demand
answers — and good reporters will find them. Exposing Nakamoto’s
identity is the very definition of “news.” If Goodman hadn’t figured it
out, someone else would have, but credit goes to the reporter who nails
the scoop.

So why all the rage? Could it be because Newsweek managed to stir up
something much deeper than just the ethics of “doxxing”?

To understand what’s fueling this storm of vituperation, we need to
journey all the way back to last week, when the all-consuming Bitcoin
drama was focused on the collapse of Mt. Gox, the onetime preeminent
Bitcoin exchange that somehow managed to lose around half a billion
dollars worth of the currency — whether to thieves or incompetence, no
one seems sure.

As journalists and pundits raced each other to seize upon Mt. Gox as
evidence of Bitcoin’s inevitable doom, the Wall Street Journal published
a story that, among other things, quoted one Bitcoin investor bemoaning
his losses. However, the investor felt his story had been
misrepresented, and published an open letter to the Journal reporter on
Reddit’s Bitcoin forum, where he is a regular contributor. One paragraph
stands out:

    I have dedicated my life to building and supporting the Bitcoin
project. I don’t give a damn about the money I lost at Gox. That’s not
important. What is important is that Bitcoin is resilient and enduring,
and will continue to grow and change the world for the better. It is a
story of human progress through technology. It is a story of the good
seeping into the cracks of a corrupted financial system. It is a story
of passionate people struggling against all odds to remedy the
calamities brought down upon society from the most potently misguided
people and institutions on Earth.

You will not easily find a more eloquent description of the utopian
dreams that so many Bitcoin enthusiasts have invested in Satoshi
Nakamoto’s supposed invention. Bitcoin has always been viewed as a
“currency of resistance” — a way to wrest control over the essence of
money away from governments, central bankers and Wall Street. Bitcoin
has been seen, from the beginning, as one of the most potent weapons in
the techno-libertarian arsenal.

There is a great geeky romance to this dream, this fantasy that a bunch
of programmers tinkering with code could remake the fundamental
infrastructure of the global economy. It was a romance made all the more
mysterious and entrancing by the creation myth of the currency. No one
knew who Satoshi Nakamoto really was! Bitcoin was the very model of a
true conspiracy theory. The whole improbable narrative felt like it was
ripped from the pages of a classic cyberpunk science fiction novel. But
it was real.

So just imagine the psychological ups and downs of the past two weeks
for the most fervent members of the Bitcoin community. First, the
Bitcoinistas were forced to suffer the derision of disaster
rubberneckers pointing at the Mt. Gox debacle and using it to mock the
entire project. Then they learned that the great mastermind who dreamed
up this transformative vision is a cranky model train enthusiast who
doesn’t get along with his family and created Bitcoin because he
resented the high fees he had to pay on international wire transfers to
buy train parts from overseas.

It all seems a little less romantic, doesn’t it? As Forbes reporter Andy
Greenberg, who has long been one of the best journalists covering
Bitcoin, lamented in a tweet, the denouement delivered a “crushing sense
of anticlimax.”

If the last two weeks have taught us anything, it’s that there is
nothing magically transformative at all about Bitcoin. Mt. Gox’s woes
impelled Japan’s financial authorities to announce that they will now
start regulating Bitcoin. The founder of the online drug emporium Silk
Road, once cited as proof that Bitcoin enabled resistance to the powers
that be, is now in jail. The geeks and dreamers who founded the first
Bitcoin institutions are being replaced by Silicon Valley start-ups.
There is no room for libertarian utopia in this scenario.

The irony here, though, is that a good argument can be made that
doomsayers are overstepping when they write Bitcoin off as a complete
failure. Good programmers and successful start-ups learn from their
mistakes — they iterate, to borrow a popular piece of Silicon Valley
jargon. Serious investment is now at play in the Bitcoin world, and
there is every reason to believe that the institutions that store and
transfer and exchange Bitcoin will become more secure. Bitcoin’s true
value may turn out not to rest in its potential to liberate mankind from
central bankers and government autocrats, but in its ability to achieve
the much more prosaic task of moving money around the world more cheaply
than it is currently practical to do so. Think of Bitcoin as the 21st
century version of a Western Union money order and you might not be far
off. The model train importers of the future may end up revering Satoshi
Nakamoto as their savior. No more big fees for international transfers.

But governments and bankers and Wall Street money men will still be
around. Neither Satoshi Nakamoto nor Bitcoin ever stood any chance of
operating outside the bounds of conventional society. There will be
regulation, there will be consumer protection, there will be rules and
taxes, and criminal prosecutions for those who break the law. Bitcoin
isn’t cyberpunk fantasy and it isn’t a Thomas Pynchon novel. It’s dull.
The thrill is gone. And that’s why people are so mad.

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