2013-02-09 On Wikileaks, Bitcoin...

[Piper67]

http://monoskop.org/log/?p=7347

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[grondilu]

http://monoskop.org/log/?p=7347

It may be a criticism of bitcoin, but you gotta admit it is a great text.

The description on how bitcoin works is one of the best I've ever read, for instance.

And the part about money, credit-based money, capital and central-banking is also very good.


In other words, he makes lots of good points.

[marcus_of_augustus]

http://monoskop.org/log/?p=7347

It may be a criticism of bitcoin, but you gotta admit it is a great text.

The description on how bitcoin works is one of the best I've ever read, for instance.

And the part about money, credit-based money, capital and central-banking is also very good.


In other words, he makes lots of good points.

I disagree. It reads like a lefty rag posing as erudite commentary, of the type that has been effusing from the marble halls of intelligentsia since they developed their crush on Marx and his followers.

Not to mention that some of his assumptions/premises, many actually, are fundamentally incorrect, or at best misguided. Many of the same assumptions that have born rotten fruits and led directly and provably to the parlous state that govt. monies and state-backed financing finds itself in today.

Hint: "Buy cheep, sell dear."

[meanig]

I couldn't be arsed reading all of it but the few bits I skimmed through were full of rubbish.

Near the start,

However, what allowed Bitcoin to break into the mainstream – if only for a short period of time – is the Craigslist-style website “Silk Road” which allows anyone to trade Bitcoin for prohibited drugs.

Bitcoin has never even been close to breaking into the mainstream yet.

And near the end,

There is no a priori technical reason for the hard limit of Bitcoin; neither for a limit in general nor the particular magnitude of 21 million. One could simply keep generating Bitcoin at the same rate, a rate that is based on recent economic activity in the Bitcoin network or the age of the lead developer or whatever. It is an arbitrary choice from a technical perspective.

It's impossible to define what economic activity is on the Bitcoin network.

I don't care how fancy his essay sounds, the guy is just a moron with a dictionary in one hand and a copy of Capital by Karl Marx in the other.

[Roger_Murdock]

Some choice quotes.

Exchange as the dominant medium of economic interaction and on a mass scale is only possible if parties in general are limited to the realm of exchange and cannot simply take what they need and want. The libertarians behind Bitcoin might detest state intervention, but a market economy presupposes it.

Yes, the only way to prevent people from "simply tak[ing] what they need and want" is to create a state and give it a monopoly on violence, thereby empowering it to simply take what it needs and wants.  

The fact that ‘unbreakable’ digital signatures—or law enforced by the police—are needed to secure such simple transactions as goods being transferred from the producer to the consumer implies a fundamental enmity of interest of the involved parties. If the libertarian picture of the free market as a harmonic cooperation for the mutual benefit of all was true, they would not need these signatures to secure it. The Bitcoin construction—their own construction—shows their theory to be wrong.

Huh? Exactly which theory would that be?  The one that says that all men are angels and engage in trade for the purpose of benefiting others? Because I'm not familiar with that one. But I am familiar with Adam Smith's "invisible hand." The entire point of that analogy is that people who engage in voluntary trade are generally acting "selfishly" (i.e. pursuing their own interests) and yet the net effect is to promote the interests of all.  So yes, some people will steal if given the chance.  (See, e.g., the government.) But the market will provide solutions. (See, e.g., Bitcoin.)  

The Bitcoin forum is—among other things—a remarkable source of ignorant and brutal statements about the free market, such as this: “If you want to live then you have to work. That’s nature’s fault (or God’s fault if you’re a Christian). Either way, you have to work to survive. Nobody is obligated to keep you alive. You have the right not to be murdered, you don’t have the right to live. So, if I offer you a job, that’s still a voluntary trade, my resources for your labor. If you don’t like the trade then you can reject it and go survive through your own means or simply lay down and die. It’s harsh but fair. Otherwise, I’d have to take care of myself and everyone else which is unfair. requiring me to provide you a living is actual slavery, much worse than nonexistent wage slavery.”

Weird. I find the opposite view to be "ignorant and brutal," i.e. the one that supports "positive rights" (and the violence that necessarily accompanies them).

Libertarian Bitcoin adherents and developers claim that by ‘printing money’ states—via their central banks—devalue currencies and hence deprive their subjects of their assets. They claim that the state’s (and sometimes the banks’) ability of creating money ‘out of thin air’ would violate the principles of free market because they are based on monopoly instead of competition. Inspired by natural resources such as gold, Satoshi Nakamoto chose to fix a ceiling for the total amount of Bitcoin to some fixed magnitude. From this fact most pundits quickly make the transition to the ‘deflationary spiral’ and whether it is going to happen or not; i.e., whether this choice means doom for the currency by exponentially fast deflation—the value of the currency rising compared to all commodities—or not. Indeed, for these pundits the question why modern currencies are credit money hardly deserves attention. They do not ask why modern currencies do not have a limit built in, how credit money came about, if and how it is adequate for the capitalist economy and why the gold standard was departed from in the first place. They are not interested in explaining why the world is set the way it is but instead to confront it with their ideal version. Consequently, they miss what would likely happen if Bitcoin or something like it were to become successful: a new credit system would develop.

Project much? I have seen a TREMENDOUS amount of interest in understanding these subjects within Bitcoin circles.  Hell, the Bitcoin forum was the first place I discovered ANY interest in them.

Now, the value of modern credit money is backed by its ability to bring about capitalist growth.

Oh, so that's what it's backed by?

Hence, all money in society comes into being not only with the purpose of stimulating growth but also with the explicit necessity: it is borrowed from the central bank which has to be paid back with interest. While clearly a state intervention, the central banks’ issuing of money is hardly a perversion of capitalism’s first purpose: growth. On the contrary, it is a contribution to it.

Wow.

Systematic enmity of interests, exclusion from social wealth, subjection of everything to capitalist growth—that is what an economy looks like where exchange, money and private property determine production and consumption. This also does not change if the substance
of money is gold or Bitcoin. This society produces poverty not because there is credit money but because this society is based on exchange, money and economic growth.

Yes, if we could only find a way to get rid of "exchange, money and economic growth," there would be no poverty.

The libertarians might not mind this poverty, but those on the left who discovered Bitcoin as a new alternative to the status quo perhaps should.

Thanks for not assuming bad faith on the part of people with whom you happen to disagree politically. But yes, we libertarians love poverty (really, all forms of human suffering).

[kiba]

Libertarian Bitcoin adherents and developers claim that by ‘printing money’ states—via their central banks—devalue currencies and hence deprive their subjects of their assets. They claim that the state’s (and sometimes the banks’) ability of creating money ‘out of thin air’ would violate the principles of free market because they are based on monopoly instead of competition.

Complete nonsensical statement.

Printing money is not a violation of free market principles. It's just stupid in a market in which currencies are allowed to compete with each other. Fiat currencies like the USD have an overwhelming advantage because it's the only form of money accepted by the government, which allows printing money on a whim to be more harmful than otherwise.

I only skim the other part of it, too lazy to read the rest of it. I am not impressed by the eassy, though.

[Roger_Murdock]

You know what I liked best about this "critique" of Bitcoin? Its irrelevance. You don't like Bitcoin? It doesn't pass your test for "social justice"? Seems a little too "libertarian"? Well, sorry.

But I'm still gonna use it.

[kiba]

You know what I liked best about this "critique" of Bitcoin? Its irrelevance. You don't like Bitcoin? It doesn't pass your test for "social justice"? Seems a little too "libertarian"? Well, sorry.

But I'm still gonna use it.

Libertarianism? Who care about that? Bitcoin will succeed and fail on its own merit, not because of a couple of radical fringe of idealogue, although we were the early adopters.

[21after2]

I'm still reading it at the moment, but it feels to me like the author just really does not like libertarians. I'm not a libertarian by any means, but it annoys me that he's linking the entire currency to one political ideology.  

[kiba]

I'm still reading it at the moment, but it feels to me like the author just really does not like libertarians. I'm not a libertarian by any means, but it annoys me that he's linking the entire currency to one political party. 

An idealogy.

[justusranvier]

I'm still reading it at the moment, but it feels to me like the author just really does not like libertarians. I'm not a libertarian by any means, but it annoys me that he's linking the entire currency to one political party.  

The author is a Marxist who is desperately trying to find some combination of mental contortions that can magically transform voluntary exchange into exploitation.

Yet, the question of who owns which Bitcoin in itself starts to problematise the idea of harmonic cooperation held by people about economy and Bitcoin. It indicates that in a Bitcoin transaction, or any act of exchange for that matter, it is not enough that Alice, who makes coffee, wants shoes made by Bob and vice versa. If things were as simple as that, they would discuss how many shoes and how much coffee was needed, produce it and hand it over. Everybody happy.

Instead, what Alice does is to exchange her stuff for Bob’s stuff. She uses her coffee as a lever to get access to Bob’s stuff. Bob, on the other hand, uses his shoes as a leverage against Alice. Their respective products are their means to get access to the products they actually want to consume. That is, they produce their products not to fulfil their own or somebody else’s need, but to sell their products such that they can buy what they need. When Alice buys shoes off Bob, she uses her money as a leverage to make Bob give her his shoes; in other words, she uses his dependency on money to get his shoes. Vice versa, Bob uses Alice’s dependence on shoes to make her give him money. Hence, it only makes sense for each to want more of the other’s for less of their own, which means deprive the other of her means: what I do not need immediately is still good for future trades. At the same time, the logic of exchange is that one wants to keep as much of one’s own means as possible: buy cheep, sell dear. In other words, they are not expressing this harmonious division of labour for the mutual benefit at all, but seeking to gain an advantage in exchange, because they have to. It is not that one seeks an advantage for oneself but that one party’s advantage is the other party’s disadvantage: a low price for shoes means less money for Bob and more product for her money for Alice. This conflict of interest is not suspended in exchange but only mediated: they come to an agreement because they want to but that does not mean it would not be preferable to just take what they need. This relation they have with each other produces an incentive to cheat, rob, steal. Under these conditions — a systematic reason to cross each other — answering the question who holds the tenner is very important.

Got it?

If you and I trade coffee for shoes we live in state of blissful utopia, with no incentive to disagree or to cheat, rob or steal from each other.

If on the other hand you and I decide to trade our coffee and shoes for currency, perhaps because we'd like a convenient solution to the double coincidence of wants problem, then gravity reverses itself, dogs and cats start sleeping together, and we suddenly transform into evil capitalists who will no doubt slit each other's throats and start raping kittens at the drop of a hat.

[21after2]

I'm still reading it at the moment, but it feels to me like the author just really does not like libertarians. I'm not a libertarian by any means, but it annoys me that he's linking the entire currency to one political party. 

An idealogy.

Very fair point. I edited my original post for accuracy.

I'm still reading it at the moment, but it feels to me like the author just really does not like libertarians. I'm not a libertarian by any means, but it annoys me that he's linking the entire currency to one political party. 

The author is a Marxist who is desperately trying to find some combination of mental contortions that can magically transform voluntary exchange into exploitation.

Yet, the question of who owns which Bitcoin in itself starts to problematise the idea of harmonic cooperation held by people about economy and Bitcoin. It indicates that in a Bitcoin transaction, or any act of exchange for that matter, it is not enough that Alice, who makes coffee, wants shoes made by Bob and vice versa. If things were as simple as that, they would discuss how many shoes and how much coffee was needed, produce it and hand it over. Everybody happy.

Instead, what Alice does is to exchange her stuff for Bob’s stuff. She uses her coffee as a lever to get access to Bob’s stuff. Bob, on the other hand, uses his shoes as a leverage against Alice. Their respective products are their means to get access to the products they actually want to consume. That is, they produce their products not to fulfil their own or somebody else’s need, but to sell their products such that they can buy what they need. When Alice buys shoes off Bob, she uses her money as a leverage to make Bob give her his shoes; in other words, she uses his dependency on money to get his shoes. Vice versa, Bob uses Alice’s dependence on shoes to make her give him money. Hence, it only makes sense for each to want more of the other’s for less of their own, which means deprive the other of her means: what I do not need immediately is still good for future trades. At the same time, the logic of exchange is that one wants to keep as much of one’s own means as possible: buy cheep, sell dear. In other words, they are not expressing this harmonious division of labour for the mutual benefit at all, but seeking to gain an advantage in exchange, because they have to. It is not that one seeks an advantage for oneself but that one party’s advantage is the other party’s disadvantage: a low price for shoes means less money for Bob and more product for her money for Alice. This conflict of interest is not suspended in exchange but only mediated: they come to an agreement because they want to but that does not mean it would not be preferable to just take what they need. This relation they have with each other produces an incentive to cheat, rob, steal. Under these conditions — a systematic reason to cross each other — answering the question who holds the tenner is very important.

Got it?

If you and I trade coffee for shoes we live in state of blissful utopia, with no incentive to disagree or to cheat, rob or steal from each other.

If on the other hand you and I decide to trade our coffee and shoes for currency, perhaps because we'd like a convenient solution to the double coincidence of wants problem, then gravity reverses itself, dogs and cats start sleeping together, and we suddenly transform into evil capitalists who will no doubt slit each other's throats and start raping kittens at the drop of a hat.

Yeah, that was one of the most idiotic paragraphs I've read. I almost want to write my own essay in response to this one, lol.

[Roger_Murdock]

Oh man, nice catch justusranvier. I can't believe I missed that piece of idiocy.

[21after2]

The libertarians behind Bitcoin might detest state intervention, but a market economy presupposes it. ... The fact that ‘unbreakable’ digital signatures—or law enforced by the police—are needed to secure such simple transactions as goods being transferred from the producer to the consumer implies a fundamental enmity of interest of the involved parties. If the libertarian picture of the free market as a harmonic cooperation for the mutual benefit of all was true, they would not need these signatures to secure it. The Bitcoin construction—their own construction—shows their theory to be wrong.

This section in particular really bugged me. To my understanding, libertarian ideology views the role of the state as protection of the rights of the people. Freedom for individuals to live as they choose as long as they do not bring harm to others. In the author's claim of exchange "[producing] an incentive to cheat, rob, and steal", a libertarian would want the intervention of the state in the manner of protecting the individuals who have been harmed, right?

I get the impression that libertarians see a difference between state intervention and state regulation: the state should intervene when the rights of the individual are in danger; the state should not regulate the behaviors of the individual (unless those behaviors harm others). In short, libertarianism is less about "no government" and more about "government fulfilling its proper role."

If I'm right, then there are two problems with the author's argument: the incorrect presupposition of the argument's foundation (libertarian ideology fueling Bitcoin), and the misrepresentation of that ideology. This is, to me, one of those arguments where the author's mind was made up before he started.

[kiba]

This section in particular really bugged me. To my understanding, libertarian ideology views the role of the state as protection of the rights of the people. Freedom for individuals to live as they choose as long as they do not bring harm to others. In the author's claim of exchange "[producing] an incentive to cheat, rob, and steal", a libertarian would want the intervention of the state in the manner of protecting the individuals who have been harmed, right?

I get the impression that libertarians see a difference between state intervention and state regulation: the state should intervene when the rights of the individual are in danger; the state should not regulate the behaviors of the individual (unless those behaviors harm others). In short, libertarianism is less about "no government" and more about "government fulfilling its proper role."

Some libertarians are anarchists who saw the state as completely illegitimate. This is the ideology of the Silk Road's operator.

If I'm right, then there are two problems with the author's argument: the incorrect presupposition of the argument's foundation (libertarian ideology fueling Bitcoin), and the misrepresentation of that ideology. This is, to me, one of those arguments where the author's mind was made up before he started.

Libertarianism may be the ideology that drives Satoshi to create bitcoin, but we don't know if satoshi is a libertarian. Bitcoin is very appealing to the libertarians though.

[21after2]

Libertarianism may be the ideology that drives Satoshi to create bitcoin, but we don't know that. Bitcoin is very appealing to the libertarians though.

I agree. I believe that Satoshi had a libertarian background when he designed Bitcoin, but that doesn't make Bitcoin exclusive to libertarians. It's an idea that can connect with all beliefs: a currency that is free, transparent, and secure.

[grondilu]

Libertarianism may be the ideology that drives Satoshi to create bitcoin, but we don't know that. Bitcoin is very appealing to the libertarians though.

I agree. I believe that Satoshi had a libertarian background when he designed Bitcoin, but that doesn't make Bitcoin exclusive to libertarians. It's an idea that can connect with all beliefs: a currency that is free, transparent, and secure.

He wrote somewhere that the fixed amount could have some appeal for libertarians, something along this line.  The way he used the third person and the conditional to talk about them suggests he is not a libertarian, though he probably sympathizes with the ideology.

[kiba]

I agree. I believe that Satoshi had a libertarian background when he designed Bitcoin, but that doesn't make Bitcoin exclusive to libertarians. It's an idea that can connect with all beliefs: a currency that is free, transparent, and secure.

And it allows congresscritters to hide their bribe stash. 

[iCEBREAKER]

I'm not a libertarian by any means, but it annoys me that he's linking the entire currency to one political ideology.  

Don't let the silly Marxist get under you skin.  Transmute that annoyance into amusement; just laugh at him.  It's a fun and healthy use of willpower.

Small minds like his can't hope to say anything intelligent about, much less contribute to, the Bitcoin experiment.

So, as an ego defense mechanism, he needs to reduce Bitcoin down to and conflate it with something he has pre-made (supposedly withering) critiques of (IE Libertarianism).

The notion that a hot new technology like Bitcoin has anything to do with an old busted ideology like Marxism is sheer comedy!   

[grondilu]

I also noticed the marxist phraseology, especially when he claimed that free trade was a mutual exploitation of the needs of each trader.  

But I didn't mind.  Being marxist is not a crime, and I do not completely object this idea of a mutual exploitation instead of a mutual cooperation.  If you exploit someone, you do it for your own good.  So if two people exploit one another, in the end they both do it for their own good.   It's more of a point of view than anything else.  It seems to me that Adam Smith was saying the same thing but differently when he talked about the invisible hand acting for the good everyone from the pursue of selfish individual interests.


Anyway, what I liked in his text was the description of how bitcoin works, and his thoughts about money and private property.  I especially liked his analysis of money, which he concludes as money being an expression of social conditions where
private property separates means and need.