What is the moral legitimacy of bitcoin?

[demcp]

Hello everybody,

I' ve been reading about bitcoin and other similar coins (solidcoin etc) and I have also been trying to mine all those coins by downloading a dozen of so promising software, but without any kind of success til now.

So I am wondering what is the moral legitimacy of such a coin when:

• in order to mine coins you have to buy an expensive graphics card and spend hours and electricity money operating it
• there is no reward for somebody who is intelligent: the only thing you need is just brutal computational force!

All kind of money have some kind of legitimacy: you earn more because you are doing something better than other people, not because you have bought an expensive ATI card for example.

So, why do you think that the future of money should be something that probably has not a moral legitimacy?

If you think that I am wrong, please convince me.


Bitcoin address: 18HFBHxtLtrdD2fPJ9WUm99u4PSGtpEs7X
Litecoin address: LduJH3R2J6DKthcQb2Lh3HzsD7xgetDYJi

[Lethn]

In my mind the morality behind Bitcoin is simple.

For centuries mankind has been threatened by governments of all stripe whether they're communist, capitalist or monarchies to pay taxes, every one of them has used violence against the people to assert their power, now with Bitcoin they will have no choice but to work with us instead or they won't get any money at all. I guess it's kind of like when you finally get to move out of your parents house, in the end no matter what threats etc. they might use against you afterwards it means absolutely nothing because you've finally gained independence.

[greyhawk]

For centuries mankind has been threatened by governments of all stripe whether they're communist, capitalist or monarchies to pay taxes, every one of them has used violence against the people to assert their power, now with Bitcoin they will have no choice but to work with us instead or they won't get any money at all. I guess it's kind of like when you finally get to move out of your parents house, in the end no matter what threats etc. they might use against you afterwards it means absolutely nothing because you've finally gained independence.

Exactly.

Is a man not entitled to the sweat of his brow? 'No!' says the man in Washington, 'It belongs to the poor.' 'No!' says the man in the Vatican, 'It belongs to God.' 'No!' says the man in Moscow, 'It belongs to everyone.' We rejected those answers; instead, we chose something different. We chose the impossible.  

Imagine, an economy where the artist would not fear the censor, where the scientist would not be bound by petty morality, where the great would not be constrained by the small! And with the heat of your rig, Bitcoin can become your economy as well.

[Lethn]

Fail Greyhawk, fail

[greyhawk]

Fail Greyhawk, fail

I know. I forgot the "n" between "a" and "economy". But English is only my third language so that happens from time to time.

[Foxpup]

You seem to misunderstand what mining is. The purpose of mining is to secure the Bitcoin network from attack. Nothing else. Mining rewards those who can muster the computational resources needed to do this. To make money mining, you need to contribute real resources to provide security for the network - and do it more efficiently than everyone else, who are all competing for a limited reward.

I'm not sure why you think intelligence has, or should have, anything to do with it. Intelligence alone won't make you money, not in mining or any other field; you also need to be able to apply your intelligence to produce something of real value.

Also, don't lose sight of the big picture: the purpose of money (whether it be bitcoins, dollars, or gold) is to facilitate trade. Trade is necessary because different people are good at doing different things. If there's something you're not good at doing, it's no problem because you can buy the services of someone who is good at doing it, using money you obtained by doing what you're good at doing. Not everyone is able to mine bitcoins efficiently enough to make a profit, but that's okay because they can produce other things of value to trade for bitcoins.

[demcp]

Probably I should agree with many of the arguments about governments etc that have already been written here.

The problem is not only easy trade, but also the true origin of the money used for trade.

I have no problem to agree that encoding a transaction is more safe than leaving it without encryption.
But I cannot accept that this kind of 'securisation' could be the origin of the money:
It is the same unfair process like the printing machines of FED, which actually generates money from nothing, just because trade is based on US$!

Think about:

Bitcoin is doing a similar unfair process like Fed' US$ but from the opposite direction: First generate money and then introduces trade
(USA first introduced trade based on US$ -see oil and commodities markets- and then started printing dollars)

To stay away from arguments, the advertisement which appears now is about a "54Gh/s bASIC Bitcoin Mining Device Only $1069"...

So, probably there exist a moral problem doing trade with money generated with such a way, probably similar with trade using US$...

[DeathAndTaxes]

The arguments about government and state are just nonsense (not that I don't agree with them but it has no relevence on the topic at hand). 

Miners are paid for securing the network.  If the network isn't secure the coins have no value.

Encryption is only half the answer.  Sure encryption can ensure only the owner "spends (transfers) a coin however to have a functional transaction system you also need to ensure that a transaction isn't duplicated (aka "double spend").  In a traditional model that is accomplished using a central authority (i.e. eGold or Liberty Reserve).  In order to decentralize that process requires an alternative method to secure the network.   Bitcoin uses a proof of work.  PPC uses an different alternative caled proof of stake.  The initial distribution of currency is to miners but as miners sell, trade, and exchange the currency the second distribution to the general population occurs.

Your logic is like saying "what is the moral legitimacy of gold" based on some flawed premise that under a Gold standard the only mechanism on the entire planet to acquire and store wealth was mining gold.  Smart people, funny people, creative people, etc all were able to prosper under a gold standard without any knowledge or understanding on how to mine gold.  The initial distribution of gold was to gold miners but the second distribution to the general population enabled anyone to acquire gold.


Remember money isn't wealth.  Money is merely an accounting system.  Someone having a $100 bill isn't wealthy because of the $100 in abstract.  That person is "wealthy" because of what the $100 bill can purchase (i.e. goods and services).

[demcp]

I agree with you: bitcoin is similar to gold, a reason for the world "mining".
But I have also problem with gold.
If a currency is ambitious enough it has to obey the following simple rules:

• Generating analogous to a wide range of abilities: intelligence, creativeness, smartness, the sense of art... ...
• Decentralization: no higher authority, no higher "regulations"
• Safety guarantee: no duplicate transactions,...
  

E-coins introduced still now merely succeed at the #2 and #3 above.

Sorry guys, but according to the above requirements, bitcoin in its current version is probably a little first step to the next generation and not the next generation itself!

[ah2222255555]

"in order to mine coins you have to buy an expensive graphics card and spend hours and electricity money operating it"

We waste more energy and man-hours mining precious gemstones, they serve no function other than being pretty to look at.

At least now, the common man on the streets can get into the mining biz.

Heck, we spend probably use more energy transporting bottles water to parts of the world where there is no shortage of the stuff.
The world is a messed up truly whacky place to be alive. Long live bitcoin!


"    there is no reward for somebody who is intelligent: the only thing you need is just brutal computational force!  "

You need a little bit of intelligence to look into and analyze the benefit/cost and then the confidence to make the investment in hardware.

[lassdas]

But I cannot accept that this kind of 'securisation' could be the origin of the money:

It isn't the origin of the money, the protocol itself is.
The protocol says, there are <21million bitcoins.

This kind of 'securisation' is only used to initially distribute those coins for the first time.
You can of course argue if this way to distribute the <21million coins chosen by satoshi is fair or not, i myself can't think of any other method that could be more fair, those that do the security-work get a reward.

[Foxpup]

But I cannot accept that this kind of 'securisation' could be the origin of the money:
It is the same unfair process like the printing machines of FED, which actually generates money from nothing, just because trade is based on US$!

Wrong, wrong, wrong. It is not the same process. It is not even remotely similar. Bitcoins are not generated "from nothing", bitcoins are generated by the useful and valuable work done by miners. The Bitcoin network, and the fast, cheap, and secure transactions it makes possible, absolutely requires the continued efforts of miners to be useful. Mining does not merely make Bitcoin "more safe", it is absolutely critical to prevent double-spending, which would make bitcoins completely worthless. Without mining, bitcoins are worthless. The security provided by mining is the only thing that gives bitcoins value. Bitcoins are generated by the very process that gives them value, and these newly generated bitcoins are given to the very people who contributed their resources to produce that value. Is that, or is that not, a completely fair and moral system?

Generating analogous to a wide range of abilities: intelligence, creativeness, smartness, the sense of art... ...

What is this even supposed to mean? Are you suggesting that free money be given to people simply because they are intelligent, creative, or artistic? Because that's never going to happen; that's not what money represents. Money is a representation of value. You pay money to obtain things you think are valuable, and you receive money for producing things which other people think are valuable. Intelligence and creativeness and other virtues are not valuable in and of themselves, what is valuable is the application of these virtues to produce things of value. Merely being intelligent or creative or whatever is completely worthless if you don't actually do something productive with your skills.

[pringesgood]

For centuries mankind has been threatened by governments of all stripe whether they're communist, capitalist or monarchies to pay taxes, every one of them has used violence against the people to assert their power, now with Bitcoin they will have no choice but to work with us instead or they won't get any money at all. I guess it's kind of like when you finally get to move out of your parents house, in the end no matter what threats etc. they might use against you afterwards it means absolutely nothing because you've finally gained independence.

Exactly.

Is a man not entitled to the sweat of his brow? 'No!' says the man in Washington, 'It belongs to the poor.' 'No!' says the man in the Vatican, 'It belongs to God.' 'No!' says the man in Moscow, 'It belongs to everyone.' We rejected those answers; instead, we chose something different. We chose the impossible.  

Imagine, an economy where the artist would not fear the censor, where the scientist would not be bound by petty morality, where the great would not be constrained by the small! And with the heat of your rig, Bitcoin can become your economy as well.

... good arguments, but how you think governments came to be in the first place? we the people, from a lawless state, an economy where everyone can do w.e. the heck they want, from this we decided that it was better to have some form of government for its many benefits including individual protection. of course the trade off being freedom for security. ultimately the goal is to strike the perfect balance somewhere between freedom and security and personally i think this whole bitcoin movement is a reaction to much recent events of government having waaaaaaaaaay too much power, and i think it's cool. i hope bitcoin does endure the test of time and will somehow be incorporated into society at large to form a more balance economic for everyone.

[Luno]

Amazing OP!!

So you are complaining that Bitcoin is hard to make and therefore unethical?

It's like buying milk at Seven/eleven where you pay $2 for a liter of milk! I feel stupid and immorally treated at 3.am paying that much for milk, but at that time it's worth $2 to me.

If I didn't buy it and had black coffee the next morning, seven eleven would just go out of business!

So the point is that if Bitcoin was easy to get or make, they would be worth less. you might not even bother with them if they were $0.11 and easy to make, as many didn't at that time.

Gold is expensive because it is hard to get!

[newfluttershy]

So, even if we are to assume that money should be distributed according to people's abilities, not raw computational power, how do we do it? A decentralized network can't handle judging the subjective value of human works. Computers don't understand art or things of that nature. Humans do. So, therefore, for this idea to work, humans have to award the BTC. For this to work, we would need a centralized, issuing agency. A currency of that nature would fail your other criterion.

The key thing to remember is that Bitcoin will eventually be circulating just like any other currency. It's just that for the issuance of the 21 million units, this is the only reasonable way to do it.

[21after2]

So I am wondering what is the moral legitimacy of such a coin when:

• in order to mine coins you have to buy an expensive graphics card and spend hours and electricity money operating it
• there is no reward for somebody who is intelligent: the only thing you need is just brutal computational force!

All kind of money have some kind of legitimacy: you earn more because you are doing something better than other people, not because you have bought an expensive ATI card for example.

So, why do you think that the future of money should be something that probably has not a moral legitimacy?

You don't have to do those things to mine coins. It just increases your odds. Digging a hole is quicker with a crane than it is with a shovel.

• Generating analogous to a wide range of abilities: intelligence, creativeness, smartness, the sense of art... ...

You say things like this as if mining is the only way to get BTC. Mining may insert BTC into circulation, but plenty of people earn BitCoin by selling products or services.

I'm not quite sure what you're getting at here. At one moment it seems like you think BitCoin is unethical because only miners with powerful GPUs can earn it. I have BTC, and I haven't mined anything. Mining's main purpose is to secure the network, as someone has already mentioned; generating BTC helps pay those who put the money and time into securing the network as well as inserting BTC into circulation.

I also wondered if your problem was that it seems unfair for people to earn more BTC through mining when they spend money on better equipment, but that's part of what givs anything it's value; if something is easy to obtain, it's value goes down. The BTC miner's earn has high value because of the time and money they spent to mine it.

Unless you think mining is too easy because anyone could buy a powerful GPU and mine loads of BTC. This clearly isn't the case or else everyone would be doing it. In theory, anyone with a computer can mine. But only a few can make a profit from it, so I would doubt that it's "too easy" to get into.

You can easily earn more BTC by working harder or being better than others. Offer superior products or services and people will pay for it.

A currency isn't "legitimate" because it's morally sound. A currency is legitimate because it's used to pay for goods and service. Any currency is only as valuable as the value we assign to it.

[demcp]

New currency based on old views:

• The primitive accumulation of capital (initial distribution) seems not to matter for many people here, but:
  
  • Let's suppose that someone leaves his/her family and gets his/her independence. If the primitive accumulation of capital doesn' t matter, then why not to be a whore (male or female) in order to start his/her life with an amount of money?
    
  • What is the evolution done with bitcoin relative to the true gold: we are not mining with hands but with algebra and encryption theory due to suitable hardware/software
    
  • What is the difference between bitcoin community and the community of bankers? They didn' t care at all about the first origin of money (read history to ensure this)
    
  • Why to replace an inmoral and cynical money system with a similar one then?
    
• The problem of scarcity in economics again here: "bitcoin has value because it is hard to make it"(!):
  
  • This argument is ancient! I thought that a currency of new era could by-pass this... How? Wait for new currencies, after bitcoin..
  
  
  
  

[Aahzman]

I think we first should examine whether morality and legitimacy need be tied together at all.  Something doesn't need to be moral to be legitimate, nor does something need to be legitimate to be moral. Hugh Hefner, for example. An established, successful, legitimate businessman. Moral? That's debatable. Many would say that building an empire on the sexual exploitation of women is inherently immoral. Others would say that nobody at Playboy is holding a gun to any of those women's heads, and that they participate by their own choice. I would posit that many of the most legitimate businessmen in the last century of western culture were not moral. John D Rockefeller, Ross Perot, etc.  All very legitimate, very morally questionable.

As for having to invest money in hardware to earn bitcoins, as someone pointed out already the purpose of mining is to secure the blockchain. The rewards are just that, a reward for contributing to the cryptographical integrity of bitcoin.  But even if we were to accept the purpose of mining is to earn bitcoins, pretty much every job or career entails some financial investment by the earner. For example. I work for HP Canada. As a customer-facing solutions architect, I am expected to be presentable and look professional, therefore I had to invest in my wardrobe by acquiring a couple of new suits, some new dress shirts, a few new higher-end polo/golf shirts, shoes, etc. In other cases, employees are required to buy their uniforms. Then they have to get to the job and whether they take public transportation, drive their own vehicle, or walk, it costs them money to do so. Yes, even walking. Unless you go to work barefoot, you buy shoes.  Obviously, my examples do not take into account the hyper-thrifty folk who recycle everything, dumpster-dive for salvageable clothing/goods, etc.

As for your point, OP, that the intelligent are not rewarded proportionally for their bitcoining efforts, I disagree. Any fool with a decent GPU can mine. It takes enterprising, ambitious and intelligent bitcoiners to break out of the mining rut and earn their bitcoins by other means. Unfortunately, that includes scammers. Many scammers are amateurish and clumsy, but the clever, intelligent and devious ones are acquiring lots of bitcoins by their wits and schemes.   As has been said in many other threads: mining is pretty much stagnant right now, if you want to make serious bitcoins, develop a service, create a product, market and sell it.

[demcp]

Interesting reply.
One question is: do we want to change something or we just want to be the pioneers of a modern story of hitech stealing from people who don' t know?

I think we first should examine whether morality and legitimacy need be tied together at all.  Something doesn't need to be moral to be legitimate, nor does something need to be legitimate to be moral. Hugh Hefner, for example. An established, successful, legitimate businessman. Moral? That's debatable. Many would say that building an empire on the sexual exploitation of women is inherently immoral. Others would say that nobody at Playboy is holding a gun to any of those women's heads, and that they participate by their own choice. I would posit that many of the most legitimate businessmen in the last century of western culture were not moral. John D Rockefeller, Ross Perot, etc.  All very legitimate, very morally questionable.

As for having to invest money in hardware to earn bitcoins, as someone pointed out already the purpose of mining is to secure the blockchain. The rewards are just that, a reward for contributing to the cryptographical integrity of bitcoin.  But even if we were to accept the purpose of mining is to earn bitcoins, pretty much every job or career entails some financial investment by the earner. For example. I work for HP Canada. As a customer-facing solutions architect, I am expected to be presentable and look professional, therefore I had to invest in my wardrobe by acquiring a couple of new suits, some new dress shirts, a few new higher-end polo/golf shirts, shoes, etc. In other cases, employees are required to buy their uniforms. Then they have to get to the job and whether they take public transportation, drive their own vehicle, or walk, it costs them money to do so. Yes, even walking. Unless you go to work barefoot, you buy shoes.  Obviously, my examples do not take into account the hyper-thrifty folk who recycle everything, dumpster-dive for salvageable clothing/goods, etc.

As for your point, OP, that the intelligent are not rewarded proportionally for their bitcoining efforts, I disagree. Any fool with a decent GPU can mine. It takes enterprising, ambitious and intelligent bitcoiners to break out of the mining rut and earn their bitcoins by other means. Unfortunately, that includes scammers. Many scammers are amateurish and clumsy, but the clever, intelligent and devious ones are acquiring lots of bitcoins by their wits and schemes.   As has been said in many other threads: mining is pretty much stagnant right now, if you want to make serious bitcoins, develop a service, create a product, market and sell it.

[lassdas]

in order to start his/her life with an amount of money?

Not sure if i got that right, but do you want to give some kind of starter-money to every single person on this planet? How would you do that?
And how would you make sure, that noone comes along twice, or three, four, five times to get some more starter-money than others?
Pretty hard task in a digital world.

What is the evolution done with bitcoin relative to the true gold

Gold is quite hard to handle, you need a vault to store it, guarded armored vehicles to transfer it (not to mention that it takes weeks to move around the globe), or a centralized authority to watch over it and handle all accounting.
Bitcoin instead is as easy to store and transfer as emails and doesn't need (nor want) a central authority.

• The problem of scarcity in economics again here: "bitcoin has value because it is hard to make it"(!):
  
  • This argument is ancient! I thought that a currency of new era could by-pass this... How? Wait for new currencies, after bitcoin..

This argument is just untrue.
Bitcoin doesn't have value because it is hard to make it, turn that "argument" upside-down and it becomes true:
Bitcoin is hard to make because it has value!

If it had no value, noone would create it, difficulty would be down and it would be very easy to make.