Patrice Riemens on Fri, 30 Jan 2015 11:02:57 +0100 (CET)

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<nettime> Geert Lovink & Patrice Riemens: The Bitcoin Experience, Part One

Geert Lovink & Patrice Riemens

The Bitcoin Experience - Part One

We admit: we are fazed and befuddled by the Bitcoin phenomenon. And we
are getting more so as we progress - or think to progress - in getting
to grips with it. It has meanwhile become clear that Bitcoin, probably
to the chagrin of its believers, has become much more than, well,
Bitcoin. That is why we have decided, both to split our essay (essay is
the right word indeed, an attempt) in two parts - and to take it, to use
the charitable word, as a 'work in progress', even though the gestation
period of even this first part has been inordinately long. We have also
taken the open Source injunction to 'release early' to heart - was it
only because writing appears to stay stuck in the incubation stage. This
first part, which was our original plan, is about Bitcoin we know as
Bitcoin. What the Dutch so nicely call 'progressive understanding' has
compelled us to look at the inevitable: Bitcoin after Bitcoin. So the
Part Two will look at the probable inescapability of digital
crypto-currencies 'liberated' from the fiat and the sovereign - and its
consequences. If we ever manage amidst our befuddlement.  Hopefully you
will bear with us - after all you are not obliged to read, less so to
believe, as the 'Bitcoiners' do. But if you plod on, let us pray first:


(from the Bitcoin Magazine, November 2013 issue)

Bitcoin is not the response to an effective demand, but to an emotional
desire. The internet crypto currency expresses a longing for liberation
through the mediation of technology. It grows out of a post-apocalyptic
will to start all over again, in between financial crises of epic
proportions, to put an end to the never-ending recession. This time, so
do believers in Bitcoin maintain, the economy will be lead by our tribe
of techno-libertarians, and not by the vile, corrupted banksters and
politicians in their employ. Amidst the rubble of the collapsing global
capitalism, there is nothing left to demand ? who would listen anyway?
What is your blueprint for the next monetary system? After all, Bitcoin
architecture is not a given. Let?s be frank: everything is up for grabs,
including the premises of the Bitcoin project itself, which is what we
intend to do here.

The historical concurrence between Bitcoin and Occupy is no coincidence.
The enthusiasm for Bitcoin amongst geeks and IT entrepreneurs stems from
the popular disillusionment with the financial system, matched with an
equally strong belief in the Internet ideology of nodism and anonymity.
In line with the 'anarcho-geek' character of Bitcoin,[1] its 'rugged
individualists' community exudes a deep distrust, even hatred of all
'big' institutions, foremost governments (as exemplified by the US
government), but also of big business and large financial institutions.
All stand accused, and to a large extent for good reasons, to squeeze
the 'little guy' out of a living by all possible means.

Geeks and assorted believers in information technology assume that the
only solution to overturn this unfair system is to truly implement the
distributed, decentralized, 'original' values of the Internet. They
reject the Internet of monopolies such as Google, Amazon and Facebook to
embrace a romanticized version of it. They call, not for the Internet of
the military, the telecommunication giants and their centralized
logistics, but for a peer-to-peer assemblage of users who arrange their
own monetary rewards. E-commerce was in their eyes was its failed,
compromised fore-runner since it did not question the nature of the
currencies being used.

Bitcoin is driven by the eagerness of a specific, 'tech' elite to
achieve social escape velocity so as to bail out from the murky
complexity of the world. It should be seen as the umpteenth avatar of
the privileged classes wanting to pull out of the grudge of everyday
reality and its messy social sphere. Bitcoin is part and parcel of the
'Masters of the Universe' narrative, this time in its 'Geek'
declination, but given its appeal, it cannot be considered as some
subaltern, folkloric movement. The Bitcoin ideology reflects a profound,
and widely shared, distrust in existing organizational formats and

Bitcoin is based on ?distributed trust? instead of ?contract trust?.
Governments and banks, among other 'real world' institution, function on
basis of contract trust, enshrined and enforced by way of charters,
constitutions, laws and regulations etc.  Instead Bitcoin believers want
a technology-implemented, disseminated form of trust, shared and borne
by all the individuals involved, not unlike the broadcast - one-to-many
- vs. narrowcast - one-to-one, many-to-many - polarity that propelled
the Internet revolution of the 1990s. This approach forms the core of
Bitcoin?s utopian impulse.

As Evgeny Morozov puts it: Bitcoin proposes an 'algo' solution for a
political problem. It is based on the conviction that ?all politics
sucks? and always will, and that technical solutions are always
'cleaner' and 'better' than social ones: ?replace the messy social with
beauty of pure mathematics?, as the parole goes.[2] Bitcoin believers
hold for evident that what really matters is mastering the technology,
and that those who master the technology will rule - by right. Hence
their approach, and consequently, they themselves, should be in command
- instead of, e.g. politicians. However, Morozov?s superior Realtheorie
might very well turn out into a dead-end street. In terms of strategy it
unfortunately boils down to a collection of truisms amounting to a 'been
there, done that' brand of indifference and cynicism. Morozov?s argument
is a perfect way to close down the conversation. Stated without much of
an understanding of alternative practices, his calls to ?return to
politics? proves problematic because it glosses over the moral
bankruptcy of Western democratic procedures. Robust technology critique
may please ?old media? like liberal newspapers and established
publishing houses whose business models are crumbling under the
onslaught of the digital, the rise of social media and the emergence of
intermediate powerhouses such as Google and Amazon.

But Bitcoin holds the promise to do better than that. Does it?

The sheer size of the speculative finance complex constitutes the
macro-economic background against which Bitcoin has emerged. For quite
some time now, monetary and fiscal balances have grown completely out of
control, both in terms of quantity, as in terms of the velocity with
which they circulate - the former being also a consequence of the
latter. In many eyes, the relationship between the financial sphere and
the 'real economy' has been lost, to be replaced by a situation where
the sheer size of speculative finance dwarfs the actual needs of the
everyday, 'brick-and-mortar', products and services-based economy.

However, one of the major difficulties with Bitcoin is that it does not
scale either, but then in the reverse direction. By any count the
maximum size of the potential circulation of bitcoins is dwarfed,
several times over, not only by the size of the current financial
speculative, balances, which form a recognized problem, but also by the
amounts needed to run the 'real economy' itself. The self-imposed,
constitutive limitation on the total number of bitcoins in existence
(just short of 21 million when all have been mined', i.e. created), and
the fact that the unit of account can only be shifted nine decimal
places, reduces the usability of Bitcoin to that of a very local
currency, not a planetary one. This is but one, yet a very practical
issue with Bitcoin as an alternative to our present global monetary

The scarcity of Bitcoin is designed - 'it is not a bug but a feature'.
It is not due to a technical limitation, to be resolved in due time by
more powerful computers. This is probably predicated by the
retro-futurist desire amongst geeks to return to the dependable quality
of gold. The idea being to retain the timeless neutrality of gold
without its material disadvantages, abolished by the magic of the
digital. Bitcoin presents itself as destined to become the virtual gold.

But on the other hand, Bitcoin believers want to re-create a
friction-less, costs-free payment system between individuals. Thus,
Bitcoin can be seen as the revenge of the so-called small guy against
the molochs of finance who have crushed daily monetary
wheeling-and-dealing under monopolistic intermediation fees and
regulations that favour large players. However, this peer-to-peer model
is difficult to reconcile with the glorification of gold, which
basically denotes a hoarding attitude, besides Bitcoin believers?
ingrained fear of inflation.

Bitcoin has also emerged at the peak of the continuing US dollar
dominance despite the ongoing economic crisis. One of the many issues on
which the Bitcoin community of believers is strangely silent about is
the dual role of the US Dollar, the currency they, implicitly or
explicitly, take as their by-default reference. The US dollar, however,
being on one side an ordinary fiat currency, partakes in all the sins
lambasted by Bitcoiners, among others its inflationary tendency so much
feared by them. On the other side it is the 'imperial' currency of the
United States of America, welcomed and used by the entire world, and yet
subject to the sole decisions of the US Federal Reserve, usually taken
solely with the political-economic interests of the USA in mind. The US
Dollar is the all-powerful economic agent of the United States?
structural hegemony. It remains for the time being the only currency in
the world with such an 'exorbitant privilege'. The standing and position
of Bitcoin in such a dispensation are, to say the least, unclear.
Suffice to say that a true sovereign currency would never refer itself
to the US dollar (or Euro, Yen or Pound for that matter).

So far we have discussed the financial and economic weaknesses. There is
worse to come.

Ponzi Schemes and Messianic Religions

One of the main critiques addressed at Bitcoin is that it is shares its
design with a Ponzi scheme. Just as in the Ponzi scheme, the pyramid
set-up of Bitcoin turns early players into winners, at the expense of
gullible latecomers. This is not accidental but deliberate: Bitcoin is a
typically geek-meritocratic project. Bitcoin's believers' usual retort
is that people calling Bitcoin a pyramid neither understand what Bitcoin
really is, nor, for that matter, know what a Ponzi scheme looks like.
Yet Bitcoin exhibits so many resemblances to a classic Ponzi scheme that
the 'duck test' allegory easily comes to mind.[3]

At the same time Bitcoin also manifests all the signs of being a
religion. A religion with a core of true believers, absolutely convinced
both of the superiority of Bitcoin as a payment system, but also of its
unavoidable and speedy adoption worldwide, regardless of cultural and
political differences. Despite the limited options Bitcoin offers as a
financial instrument (basically only peer-to-peer transactions), Bitcoin
believers are convinced that it will actually take over the
monetary/financial system as a whole. Their argument, however, mostly
hinges on near-otherwordly certitude, the hallmark of a messianic
religion. Ominous is also the fact that Bitcoin believers hold their
currency to be so much more than a financial vehicle: a whole new,
brilliant 'way of life' (including t-shirts, ATMs, apps, gambling sites
and glossy magazines).

Open Contradictions

A possible way to reach for a better understanding of Bitcoin is to
apply a theory of open contradictions. What, for instance, represents a
payment system that turns out not to be primarily meant for payments?

"Bitcoin makes payments frictionless and free", and "hoarders give
Bitcoin value." The Bitcoin literature is replete with such conflicting
statements and associated theories ? all brought forward with equal
enthusiasm. When bitcoins increase in value, the incentive to spend them
is simply absent, and only losers will spend or sell. Such
inconsistencies are ostensibly not a problem for the Bitcoin community:
with bitcoins everything should, and therefore is, possible. Yes, you
can have the cake and eat it (and own the bakery in the process). This
is especially glaring in Bitcoin's 'theory of value'. Whereas Bitcoin is
predicated to function optimally as a peer-to-peer medium of exchange,
and this preferably within a closed Bitcoin economic circuit, Bitcoiners
are encouraged to hoard their funds. After all, the scarcity of
bitcoins, whose supply is ultimately limited to 21 million units
(20.999.999,9769 to be precise), will automatically push up their value
over time.

This deflationary Bitcoin model not only gives the creeps to any
mainstream economist or politician, but it is also essentially adverse
to transactions ? Bitcoin's advertised principal raison d'etre ? since
every spending amounts to a distress sale. Bitcoin is here probably
victim of its origins, the culture of rugged individualism, coupled with
the anarcho-capitalist axioma that "greed is good". This, however, does
not make for sound economics, based on social exchange. The mining
principle, Bitcoin?s foundation myth and principal motor, points to a
dark past, not a common future ? the necessary condition for a currency
meant to be used by billions of human being. You do not design a
currency for yourself. This forms a basic premise of economic exchange.
Slaves do not need Bitcoin. Life is subordinated to the economy. Code is
not only law but code is life.

If the original sin of fiat money is inflation, then the original sin of
Bitcoin is the hoarders vs. spenders contradiction. Out of this comes
our social and political critique of Bitcoin.

The modalities of Bitcoin ? as put fervently forward by Bitcoin
believers themselves ? could make it uniquely convenient as a
peer-to-peer payment system - but for all practical purposes,
exclusively so. Hence the emphasis on transactions between individual
persons, unhampered by despicable middle entities, such as banks, and
unhindered by even more despicable actors such as governments with their
bevy of regulations and ... taxes.

As conceptualized by its true believers, Bitcoin is the money of the
Multitudes. Yet, the problem is that Bitcoiners are not part of the
Multitudes ? and most probably do not want to be associated with them.
>From the perspective of social movements that fight for global justice,
solidarity and the redistribution of wealth, the hoarding principle is
simply a no-goer. The ?mining? procedure with it ?first movers? logic
would have to replaced by an independent body that issues the coins and
sets its exchange value in comparison to neighboring currencies. This
doesn?t necessarily have to be done by a nation state or even an
established international governing body. Our critique should not
culminate into some ?reformist? policy that stamps out the anarchist
roots of the project. But we have to make clear to our brothers and
sisters: there is simply no way to legitimize the gross start-up logic
that solely benefits founders and early investors while leaving ordinary
users, and all those who build up the venture, empty handed, just
because they came in a little later. Bitcoin and its offspring need to
go back to the drawing board and come up with an alternative to the
mining principle - never mind one that is less electricity consuming.

On the other hand, true Bitcoiners are remarkably reticent, not to say
loath, to talk in terms of more than one (or a very few) person(s)
businesses, and surely so of enterprises at the corporation level. Quite
aside from the infatuation with hoarding discussed before, Bitcoin
functions mostly in the sphere of small/micro payments and is in that
sense adversary to speculative finance tools, developed by the very same
'quant class'. In a 'demography' consisting of just a minority of the
world's population (in our guess: the largely white, largely male, North
American 'anarcho-geek' sphere and a few outliers on the rest of the
planet). This appears to be also implied by both the limited number of
bitcoins that may be put in circulation [4].

In Bitcoin circles the grudge is stark against taxes ('imposition is
thievery'), but also against fees and commissions banks levy on all
possible transactions, and which, due to ultra-low interest rates,
appear to have become their main source of income, in the payment system
at least. A result of this sentiment is the invisibility of
intermediates, a general weakness of cyberculture that tends to black
out its own infrastructure costs and takes its existance for granted as
?a second nature?. Bitcoiners believe their currency is the unique
answer to this mess, especially at the level of micro-payments. This is
true in a technical sense ? all virtual currencies have the potential to
enable friction-free and fees-less transactions ? but the volatility of
Bitcoin makes this assumption extremely problematic for, well,

Simple maths shows that Bitcoin, in its current form, does not scale to
the extent of making even a relatively modest economic/ financial system
possible. It is therefore condemned to remain a niche, something Bitcoin
believers are fairly disingenuous in denying, given the essentially
elitist disposition of their anarcho-geek community (though
'meritocratic? would be their description). With other words, Bitcoin
pretends to be an universal alternative currency, but fails to make the
grade. But as a niche, Bitcoin shows also all the characteristics of an
ongoing experiment, and that?s its major redeeming feature.

Apart from their technological development, innovation, and creativity
aspect, virtual/digital crypto-currencies are at this stage essentially
a social experiment, just like LETs were before ? and still are. They
reflect a desire for autonomy and 'sovereignty in one's own circle' (a
Dutch religious-cultural classic, btw), and escaping the oppressive
complexity of the larger world ? and foremost its larger institutions.

Complementary currencies (i.e. existing alongside the existing monetary
system) largely focus on the local sphere, which, depending on the
prevailing circumstances can substantially vary in size: the WIR bank in
Switzerland, for instance, functions at the national scale [5]; in other
countries, specific local currencies have not transcended the level of a
middle-sized town or province. Yet, complementary currencies, by virtue
of being local, are inclusive. Alternative crypto- and virtual
currencies (which intend to replace the existing monetary order), on the
other hand, attempt to function at a much larger, possibly global,
geographical scale. But since the number of participants in the system
is just as severely constrained with them also, they are, ipso facto,

Simply put, for us, Bitcoin is a temporary, future, and de facto
complimentary currency, not an alternative one. The difference between
alternative and complimentary currencies, though blurred by operating
both of them outside the regulated, mainstream economic and financial
sphere, is essential. They vary greatly in concept, aims, and modus
operandi ? and outcomes. Both forms of 'voluntary' currencies also
display radically different politics. Bitcoin as an alternative currency
wants to displace, and replace, the current monetary arrangements.
Therefore it is also does not want to be limited in scope and reach,
whether geographically or economically. But that makes also it main
weakness, in the absence of an 'authority' that both (somehow)
guarantees it while at the same time compels its use by legal means.
Bitcoiners, however, will argue that this constitutes precisely its main
strength - a valid argument within its - small - world, a totally
preposterous one at the - real - world scale. Meanwhile, others in the
Bitcoin 'community' aspire, and work, for recognition and certification
by the ?system? ? yet another example of the ?open contradiction?.

Complementary currencies, as their name indicate, have more modest yet
long-term ambitions. They are local (as opposed to national, or even
global, as Bitcoin, and some other virtual currencies, assert to be),
and unless entirely used within a 'closed' community, something that
limits their scope even further, complementary currencies are pegged to
the 'real existing' money of account in their (national) sphere of
circulation, which they do not intend to replace entirely (for one, many
complementary currency schemes provide for 'hybrid' payments, part
'local', part 'real' money).

Whereas complementary currencies have at the very least the political
aim to foster the local economy, and usually, given their adopting
constituencies, more than that (think fair trade, eco-friendly,
small-scale, not-for-profit, etc.), Bitcoin has no such aim at all, or
rather, for all practical purposes, serves the anarcho-capitalist agenda
of individual achievement and wealth accumulation in a 'rugged
individualist', meritocratic and competitive environment.

Bitcoin believers remain obsessed with inflation. Fear of inflation is
typically a middle class syndrome. Price rises and monetary devaluation
have a different impact for different societal/economic classes. The
poor suffer at 'ground level' as price increases affect their
consumption, and they must see how to make up day-to-day with their
(low) earnings. But they do not hold wealth. The rich, and especially
the super-rich, do hold (a lot of) wealth, but that is usually in the
form of tangible assets or ownership deeds (shares, stakes in
enterprises etc.), monetary balances being secondary. It are the middle
classes whose holdings (often in the form of savings, e.g. towards their
pension) are the most at risk. This has been seen in past inflationary
and hyper-inflationary bouts, when the nest eggs of the middle classes
were wiped out, resulting in trans-generational trauma. The middle class
character of Bitcoin is well demonstrated by this obsessive fear of
inflation - and their embrace of hoarding of a currency that supposedly
'only can accrue in value'.

The do-it-yourself aspect of Bitcoin is part of the free labour
movement. This time it is free as in ?free of fees?. In keeping with its
supposedly 'friction-less' character, Bitcoin is hailed as a uniquely
community-managed adventure, based on the DYI activity of its members.
Only, given the increasingly complex aspect of Bitcoin's principal
occupation, mining, now restricted to a limited number of
(terabyte-)powerful entities, it is unclear in what this activity of the
many is precisely made of (unless one considers hoarding as work). And
in consonance with the nature of anarcho-capitalism, very little is
clear either of what the community exactly consists of - or whether it
is a real community at all.

In so far DYI is equivalent to free labour, it is hard to fathom how
exactly this works in a set up that is geared towards and based on
(economic) transactions on one side, while on the other is so greatly
concerned with value and possession on the other. Given Bitcoiners'
absolute detestation of fees and other transaction costs charged by 'the
system', it is interesting to note that Bitcoin, which is supposed to do
away with these institutional charges and banking fees, actually does
provides for them on (very) small transactions (but not on large ones,
itself a none too egalitarian feature), and also that its theoreticians
asserts that when mining will terminate (in 2040, with 21 million
bitcoins in circulation) the system will maintain itself ... through

Lately Bitcoin has reached some sort of cruising speed (however bumpy) ?
and this not only in the minds of its believers - new problems are
popping up in its relationship with 'the real world'. The powers that
be, and more specifically their financial/monetary arms, want to
regulate the new kid on the block. A part of the Bitcoin 'community' has
decided it wants that too, spurred both by a desire for wider
recognition and acceptance, but also because Bitcoin's reputation,
already shaky at the best of times, has now been further tarnished by a
number of massive, high-exposure scams. Regulation under a central,
external authority is, of course, totally at variance with Bitcoin's
central tenets, and besides being yet another blatant example of 'open
contradiction', such moves have now split the community and the Bitcoin
Foundation. And it obviously needs little argument to declare that a
regulated Bitcoin degrades into nothing more than yet another new,
ueber-hip and flashy financial vehicle ? which is anyway how it is
looked at by the 'financial sector'.

Rather sooner than later money will be split in two: the morally
bankrupted official ones and the informal (local) ones. The need for P2P
payments will only increase. By now, the banking system as we know it
has become largely dysfunctional for ordinary monetary transactions
between small and medium size economic actors. Low interest rates and
other factors 'force' banks to levy hefty fees and commissions, while on
the other hand, ubiquitous electronic networks hold the promise of next
to transaction costs-free transfers of money (and more).

It is unavoidable therefore, that ordinary payments will drop out of the
cumbersome and expensive banking system and that various other platforms
will come in its place. This evolution has already started, e.g. on the
mobile phone front (think Mpesa for instance). P2P transactions, whereby
the exchange is entirely in the hands of participants, with no middle
instance in between, are the endpoint of this trend.

Bitcoin pretends to be the ultimate solution within this fast-paced
transformation of the monetary sphere. We have argued that this
contention is very questionable on many practical and social grounds. In
the tradition of software forking (creating similar but different
clones) there is an inevitability of forking: Bitcoin after Bitcoin
(which will pursue in part II). The other direction would be to go
?meta? and create an exchange for all the different crypto-currencies
(see Ethereum [6]). Regardless, our thesis is that one or the other
might entail a return to the nature of trust, contract vs. distributed
trust, on a 'working scale'.

And let?s not fool ourselves (and others): Bitcoin is, in the end, an
accounting system. It has a ledger, even though it is a distributed one.
If you cut off mining and the blockchain from Bitcoin (as we propose),
the problem that remains is called trust. The blockchain ? the
distributed verification algorithm that vouches for the validity of
bitcoins transfers, guaranteeing that no bitcoin is spend twice?is the
nearest approximation of the Divine in the Bitcoin religion (and, we
found out to our dismay, in next to all other future, planned
crypto-currencies we have come across) [7]. It is also the most
important of the general weaknesses in the Bitcoin model, since it
assumes the permanency of powerful, always online computers/server
farms/cloud services that supposedly no one pays for, and of the whole,
complex and fragile infrastructure that sustains them.

It is also the mainstay of Bitcoin's inflexible faith in algorithms and
machines above the ? always fallible, and crookedly inclined ? human
being, another reminder of its solidly 'Anglo' origins. Other systems
may well want to do away with the blockchain as implementer of 'designed
trust'[8], but is that realistic? The problem then is where to position
that trust - which is the imperative constituent of any monetary system.
This brings us back to the scalability issue, which basically says that
as the number of participants in a system grows, the need for an
impartial, 'enforced authority' (which however needs to be voluntarily
accepted) rapidly increases, soon becoming mandatory.

Needless to add that Bitcoiners forcefully reject this argument, in
their absolute belief of the ('rugged') individual and the distributed.
Since the argument itself is grounded on values/beliefs, no conclusive
elucidation can be arrived in the matter - beyond pointing out to the
irrefutable smallness of the factual Bitcoin constituency, both actual
and ideal.

Farewell, Winkelvoss Bros. The future of Bitcoin is bright but will come
after Bitcoin. The advance of small scale digital (crypto)currencies
that operate within a specific social setting (be it local or
translocal), either labeled alternative or complementary, is definitely
unstoppable. However, as we have seen before, the trickiest part, in
terms of adoption and economic effectiveness, is their relation with the
'real existing' money (termed as ?, £, $, whatever...), and in this,
complementary currencies are much more flexible than alternative ones.
Bitcoin wants to belong to the latter category, and is moreover prone to
rather robust speculative stints - up and down - in its relationship
with 'real' money.

However, technological advances to which the current banking system is
ill-prepared, especially at the 'retail' level (never mind the not
improbable collapse of the financial/monetary system as we know it),
makes that non-banking, and possibly non-centrally regulated, electronic
payment systems will win the day, especially in the realm of
transactions by or between individuals. Banks want to get rid of
individual, private, 'little guy' customers anyway, they are a nuisance
with their puppet house payments. Profit margins remain too low in the
consumer sector, despite the rise in fees. When and how this will all
?flip? remains a matter of speculation and depends on a lot of factors,
including political ones.

What is less speculative, however, is that the currency/ies that will
emerge will not be denominated Bitcoin, at least not in its current
representation. Bitcoin, however, and that might be its greatest and
undeniable merit, has very much accelerated the thinking about this
evolution, has spawned a multitudes of parallel solutions, and has, both
on the social as well as on the technical plane, by trial and error,
cleared a lot of ground for others in this process.

Why can we communicate on a global level, but not pay? We can
communicate on a global level, though it is less frictionless than is
often thought (try Central Congo, for one). The higher the degree of
'development', the smoother communications are. The same applies to
money transfers, which, in Northern Europe at last, are almost
friction-free and largely costless. In this context the problem resides
much more with the banking system, wavering on the verge of collapse due
to its extreme (and excessive) financialisation, than with the existing
payment infrastructure itself, which, if run like an utility, and its
costs born out of public funds, could be largely seamless and free of

Since this is not the case, and most probably will not be in any
conceivable future, all kinds of new, mostly (Inter)net-born formats
will continue to arise, Bitcoin being just one of the first and most
emblematic. Or as one of its promoters says: "Bitcoin only represents
the first wave of game-changing technological innovations to come",
adding for good measure that "the technology behind (B)itcoin cannot be
legislated away". Nor that of many more formats.

Large-scale use of mobile money in parts of Africa provide an
interesting ?Lehrstück?, one that is not easily transferable to other
parts of the world where the banking system has a tight grip on the
economy. What mobile money does have in common with Bitcoin is the
larger techno-historical movement from communication to payment. Because
Bitcoin is 100% internet-based it does not see itself as an extension of
the world od commercial telecom providers. Mobile money does. Such
anthropological comparisons can be productive and reveal implicit
cultural values hidden in the shiny interfaces and self-evident
processual knowledge.

Bitcoin, as an anarcho-capitalist experiment, does not scale and was
perhaps never meant to. Perhaps this was not even desirable in the first
place and claims need to be downsized accordingly. If Bitcoin was
?merely? going to be a (built-in) payment protocol, for instance inside
HTML, it would be a bold undertaken. A first step would be to strip off
its libertarian mining ritual and blockchain religion ? and then see
what?s left. Right now, crypto currencies are the avant-garde of our
age. In line with the Zeitgeist the avant-garde this time is neither
progressive nor artistic but technical and entrepreneurial, willingly or
not fueling the growing social inequality. No esthetics please, we?re
strictly conceptual. And if everything fails, Bitcoin can always
retrospectively go into history as an artwork, a true social sculpture
(courtesy to Duchamps, Beuys and Jaromil).

(to be continued in part II)


[1] Ippolita, In the Facebook Aquarium, Institute of Network Cultures,
Amsterdam, 2015.

[2] Geek suprematism, run by an ?algocracy?,

[3] ?If it looks like a duck, swims like a duck, and quacks like a duck, then
it probably is a duck.? More on"

[4] 21 m at the most, which, when fractioned by 9 positions
behind the zero, gives a maximum of 220 bn units of micropayment (say, the
equivalent of 1¢ US) at a conservative valuation of Bitcoin at US$ 100
per unit. Going by the 1 Dollar - 100 cents division of currency, this
in a total maximum amount of 2.2bn 'Bitcoin Dollars', or a somewhat
economy by all means (please do the math yourself - and correct us if wrong).

[5] Official site: (in German, French or Italian
only) Wikipedia entry in English (but disputed):

[6] See:

[7] See especially Eduard de Jong's presentation at the MoneyLab

and article "One Chain to Rule Them all":

[8] Caroline Nevejan, Presence and the Design of Trust, PhD dissertation
University of Amsterdam, 2007. URL:

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