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Why I want Bitcoin to die in a fire

Bitcoin just crashed 50% today, on news that the Chinese government has banned local exchanges from accepting deposits in Yuan. BtC was trading over $1000 yesterday; now it's down to $500 and still falling.


I want Bitcoin to die in a fire: this is a start, but it's not sufficient. Let me give you a round-up below the cut.

Like all currency systems, Bitcoin comes with an implicit political agenda attached. Decisions we take about how to manage money, taxation, and the economy have consequences: by its consequences you may judge a finance system. Our current global system is pretty crap, but I submit that Bitcoin is worst.

For starters, BtC is inherently deflationary. There is an upper limit on the number of bitcoins that can ever be created ('mined', in the jargon: new bitcoins are created by carrying out mathematical operations which become progressively harder as the bitcoin space is explored—like calculating ever-larger prime numbers, they get further apart). This means the the cost of generating new Bitcoins rises over time, so that the value of Bitcoins rise relative to the available goods and services in the market. Less money chasing stuff; less cash for everybody to spend (as the supply of stuff out-grows the supply of money). Hint: Deflation and Inflation are two very different things; in particular, deflation is not the opposite of inflation (although you can't have both deflation and inflation simultaneously—you get one disease or the other).

Bitcoin is designed to be verifiable (forgery-resistant) but pretty much untraceable, and very easy to hide. Easier than a bunch of gold coins, anyway. And easier to ship to the opposite side of the planet at the push of a button.

Libertarians love it because it pushes the same buttons as their gold fetish and it doesn't look like a "Fiat currency". You can visualize it as some kind of scarce precious data resource, sort of a digital equivalent of gold. Nation-states don't control the supply of it, so it promises to bypass central banks.

But there are a number of huge down-sides. Here's a link-farm to the high points:

Mining BtC has a carbon footprint from hell (as they get more computationally expensive to generate, electricity consumption soars). This essay has some questionable numbers, but the underlying principle is sound.

Bitcoin mining software is now being distributed as malware because using someone else's computer to mine BitCoins is easier than buying a farm of your own mining hardware.

Bitcoin violates Gresham's law: Stolen electricity will drive out honest mining. (So the greatest benefits accrue to the most ruthless criminals.)

Bitcoin's utter lack of regulation permits really hideous markets to emerge, in commodities like assassination (and drugs and child pornography).

It's also inherently damaging to the fabric of civil society. You think our wonderful investment bankers aren't paying their fair share of taxes? Bitcoin is pretty much designed for tax evasion. Moreover, The Gini coefficient of the Bitcoin economy is ghastly, and getting worse, to an extent that makes a sub-Saharan African kleptocracy look like a socialist utopia, and the "if this goes on" linear extrapolations imply that BtC will badly damage stable governance, not to mention redistributive taxation systems and social security/pension nets if its value continues to soar (as it seems designed to do due to its deflationary properties).

To editorialize briefly, BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states ability to collect tax and monitor their citizens financial transactions. Which is fine if you're a Libertarian, but I tend to take the stance that Libertarianism is like Leninism: a fascinating, internally consistent political theory with some good underlying points that, regrettably, makes prescriptions about how to run human society that can only work if we replace real messy human beings with frictionless spherical humanoids of uniform density (because it relies on simplifying assumptions about human behaviour which are unfortunately wrong).

TL:DR; the current banking industry and late-period capitalism may suck, but replacing it with Bitcoin would be like swapping out a hangnail for Fournier's gangrene. (NSFL danger: do not click that link)


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Bitcoin = Digital Tulip Bulbs.


The best snarky name I've read for BtC is "Dunning-Krugerrands".


If we didn't have the banking issue we have had recently then the BitCoins would have been almost exclusively used by the less savory part of society.
But as we did have the problem the BotCoins appeared to be a proper alternative, I can kind of understand that.
I do agree with mr Stross though. No matter who controls the currency, they all seem like money grabbing bastards. If it is proper money, you can at least find out where they live...


The bitcoin people are about to get a harsh lesson in why you want a central bank.

As long as bitcoin was deflationary (i.e. the price of goods and services was going down, in terms of bitcoins, i.e. the value of bitcoins was going up), everyone was happy. And the fact that there was no central bank to prevent run-away deflation was considered a good thing. This is because everyone was looking at bitcoin as an investment, not as a currency. But once things turn inflationary (i.e the value of bitcoins is going down), it turns out there is no central bank to prevent runaway inflation either.

For fun, calculate what the inflation rate has to be for a currency to lose half it's value in a 24-hour period. Lets just say that Zimbabwe and the Weimar Republic should no longer be the (ahem) gold standards for runaway inflation.

The thing about the inevtiable, it has a bad habit of actually happenning.


I see it as something of a prototype for digital currencies. It is very inflated (though that doesn't stop me from wishing I had mined a few years ago when I first heard about it.)

The flaws of bitcoin aside, I think we'll see more private currencies in the future. Governments are doing their best to regulate them or outright ban them, but I'm not sure how successful they will be in the long run.


On the down side, due to its deflationary nature, it's hard to think that Bitcoins will ever fully die off, at this point. I think it crossed the threshold of stability, and since BtC will always get slightly more valuable with time, I think we're stuck with them. They'll sit in the background, bubble up from time to time, and mostly just be a nuisance.


No. Bitcoin could only be considered equivalent to tulip bulbs it tulip bulbs were Triffids and had been unleashed on the Dutch as a weapon of sabotage.


Charlie, are you actually worried that Bitcoin might win? Because I don't see how it possibly can.


A lot of people who should know better seem to think it's a good thing.

I'm not saying all cryptocurrencies are inherently bad. But Bitcoin in particular was designed with an agenda in mind, to further certain ideological goals that I consider to be toxic.



Or BitCoin could actually be a False Flag operation. To control a globally unregulated digital currency you need a globally regulated internet - a mandatory surveillance program on every computer (hard-wired into the CPU, obviously).

How is this for a horror scenario? :-)

11: does not make for a good source. They are using bad information in compiling their report.

The report uses energy consumption numbers from which are pretty much made up. DO you really think that the entire Bitcoin network is mining at a $19 million a day loss? Energy consumption numbers listed on that page are not sourced from anywhere.


The destruction of the redistributive welfare state would indeed be bad. But I don't read that as BitCoin's agenda. It seems more like an unfortunate side-effect of the real agenda, which is destroying the crony-capitalist banking system that led to the 2008 collapse (if it pisses off and/or nobbles the "surveillance-industrial complex" along the way, all the better.)

I think these last two goals are eminently worthy and I'd love to hear proposals for executing them without the unintended side-effects on the welfare state.


since BtC will always get slightly more valuable with time

I think that's a dangerous statement to make in view of its extreme volatility. Yeah, if you mean the long term price trend with the bubbling stripped out, that's plausible, but you're looking for a small signal buried in a lot of noise.

(Or in other words, it depends on from where you draw the line. Start when it was valued at less than a dollar, you may find it never drops below that point. Start from yesterday's $1000 level, and it may be it never reaches it again.)

very easy to hide
Well, strictly speaking, it is impossible to hide, since all transactions and thus all accounts are fully public. Anyone can check the amount in your wallet.

The only difficulty is figuring out which among the 2^4096 wallets is yours. Once that is known, tracing becomes a little more tractable. Most traces will start at the currency trading place, where your account is definitively not anonymous.

(oh, and I hate goldbugs as well)


I don't think they're smart enough to do that (for any value of "they" less pervasive and creepy than the Bavarian Illuminati, Robert Anton Wilson version).

My impression is that the TLAs like the NSA or GCHQ have some really smart, well-adjusted folks running around, but there's so much Shit Happening that all they can do is stay in reactive mode the whole time. They have huge management overheads -- too many committee meetings and classification levels -- not to mention some degree of legal constraints and oversight (even if it's not transparent or accessible to those of us on the outside) that would hamper really fiendish long-range plots like this. Anyway, why would they bother? All they'd need to do is nobble the CEOs of Intel and ARM Holdings and that's 95% of the job done.

Bitcoin to me looks more like the work of one of the scary-bright early 1990s cypherpunks -- I've heard Nick Szabo mentioned as a possible "true name" for "Satoshi Nakamoto". (I'm pretty sure it's not the work of he who goes by the handle Mencius Moldbug these days -- he has his own politically-disruptive software project on the go -- or Tim May or, or, um, blanking on names.)


I largely agree, but there's a couple of points on which you're not quite correct:

- Bitcoin's carbon footprint is less about the increasing difficulty, and more about the nature of mining: it's configured so that no matter how much processing power is thrown at it, the amount of currency generated remains the same. As more people add miners, it gets _less_ efficient. A single machine would produce as many bitcoins per day as the entire planet's collective computing infrastructure.

- Because CPU mining is so much slower than using dedicated hardware, people distributing malware aren't likely to earn much at all - so the thieves won't prosper.


Once upon a time, small change, things like pennies, didn't have a consistent exchange rate with national currencies. The coins were too expensive for national governments to produce consistently, leading to shortages and inflation, and it disproportionately affected the poor, who used small change for their transactions. Over the centuries, people hoped to profit from schemes to mint small change during shortages -- sometimes legally, sometimes not.

Bitcoin is the Bizarro-world mirror image of that. Expensive, a plaything for the rich, easy to produce, but inherently deflationary. There is a constant, though: the schemes to profit.

However, like the variable value of a penny, there appear to be ways to tame it. Of course, those methods will cause Bitcoin to lose its comparative advantage in the black market and among ideologically-motivated speculators. Too bad, so sad.


Triffids in Tulip-er Holland... I would read that novella.



I am a great admirer of your work, so it really pains me to see that you've made this post based on fundamentally inaccurate information.

Your primary assertion "Mining BtC has a carbon footprint from hell" is based on untrue 'research' published by the site, which is referenced by the source article you link to.

Bitcarbon based their entire calculation on a wildly-inaccurate, very outdated guesstimate of power consumption they found at

Clearly neither Bitcarbon, nor your source, made any effort to verify this number (despite a note at pointing out that it is probably not reliable). This totally undermines their data and brings all of their claims into question.

The fact is that the hardware that Bitcoin transaction processors are using today is 50-100x more efficient than it was a year ago. Although the difficulty of the work is increasing, the power consumption is not. In addition, far less power is being lost as waste heat.

Moreover, any financial network has operating costs. It costs billions merely to print banknotes. What does it cost to store and transport them securely? What is the cost of running a bank with all its physical branches and staff? Do you also wish them to "die in a fire"?

I hope this information will be helpful, and I look forward to your response.


ps I use bitcoin and I am far from being a libertarian.

I think that's a dangerous statement to make in view of its extreme volatility.
It's not in view of the volatility, but in view of its acceptability.

Bitcoin can be considered as a currency, traded among banking accounts for financial transactions on the currency market (BTC China, Kraken, all are currency marketplaces, not "bitcoin banks"). Or it can be considered as a money, traded in exchange for goods and services.

Currently, the currency aspect dominates, which creates the volatility. Most currency markets have a dampening effect because the currency is backed by a money, and the free-flowing currency is usually small compared to the GDP of the associated economy. Not so much with Bitcoin.

As (if) the monetary economy around Bitcoin develops, it will come to dominate the flow of currency, and that's when the deflationary effects kick in. We're currently in a regime where the currency traders have a massive influence (fluctuate), plus a deflationary bubble : the amount of goods and services offered for bitcoins grow a lot faster than the amount of bitcoins mined.

So, I do expect for the medium term the ratio of bitcoin/€ (or $) to go up. Unless you get enough uncertainty in the system to break down that deflationnary bubble.

Anyone up for breaking SHA-256?


There is a constant, though: the schemes to profit.

Yeah. "I can't think of anything economically useful or valuable to do, so I think I'll just try and manufacture money instead." Even the bankers issuing subprime loans and bundling them as CDOs and similar instruments tried to kid themselves they were helping people buy their homes. Whereas the bitcoin miners seem to me to have motives closer to the coin-clippers and forgers of old.

Pity we don't have someone of the calibre of Sir Isaac Newton hammering their asses.


Uh, Charlie, this is satire ? I read your supposed-drunken-charlie-turd-tweets, so I'm not entirly sure about it.

- "...Bitcoin to die in a fire" -> a digital one ?

- "Bitcoin's utter lack of regulation permits really hideous markets to emerge, in commodities like assassination (and drugs and child pornography)." -> oh noes, you did it.

- "Bitcoin mining software is now being distributed as malware" oh noes 2.0 !

- "imply that BtC will badly damage stable governance" -> dear...

Anyway, satire or not, I'm ok with you going Trotskyism and I'm eagerly awaiting the re-release of accelerando under the guidance of the fifth international !


And we have a clear winner in the first-libertarian-to-show-up sweepstakes!


My work here today is done.

I shall shortly retire to the pub ...


I don't think they're smart enough to do that (for any value of "they" less pervasive and creepy than the Bavarian Illuminati, Robert Anton Wilson version).

My impression is that the TLAs like the NSA or GCHQ have some really smart, well-adjusted folks running around, but there's so much Shit Happening that all they can do is stay in reactive mode the whole time.

All right, perhaps not a False Flag. But very convenient for a certain reactive mode which may involve destroying even more privacy to save the economy from the horrors of Bitcoin. Also may facilitate intelligence cooperation between Western countries and China, which is not a good thing.


Damm me to - thats the next genre to "borrow" for the laundry the "cosy catastrophe" obviously a post case nightmare green book.

Maybe mutant variants of skunk plants mutate and start wandering around Amsterdam - maybe that Dutch guy from avid could get promoted.


The super-skunk they sell in Ams is definitely toxic, yes: ambulatory hemp plants in a Laundry novel? Yeah, I think I need to file that away for a rainy day.

(In other news: I'm taking a day off writing today, but expect to pass the halfway mark on Merchant Princes #8 some time on Saturday.)


The average return on a hacked desktop running a bitcoin mining malware is in the cents/month. I'm not even convinced it is more valuable as a bitcoin miner or a spambot - I suspect the spam activity would be more remunerative.


"Less money chasing stuff; less cash for everybody to spend (as the supply of stuff out-grows the supply of money)."

There is enough bitcoin for everyone to use. 2.1 quadrillion units after you divide a bitcoin to the eighth decimal place. So this idea of there not being enough for people to spend is logicaly false. This was the only economic point you had. I'm all for supply and demand free markets. The alternative interventions are evil.


Bitcoin is one of those things that never quite made sense to me. That we don't really know who invented it, it seems too good to be true and everyone is flocking to it makes it seem like something straight out of a fairy tale. And fairy tales seldom go well for foolish mortals.


While I’m no expert, I suspect that, when push comes to shove, the untraceability and tax avoidance are going to prove very overrated.

Since it’s a peer-to-peer protocol, there’s nothing stopping the IRS (and its equivalents) from sitting on the network and logging the IP addresses of miners. The use of out-of-country exchanges may make everything else hard for the IRS to track, but if they crack down on the miners, that’s going to seriously undermine the system.


I agree with most of this except:

"Bitcoin's utter lack of regulation permits really hideous markets to emerge, in commodities like assassination (and drugs and child pornography)"

Really, BTC allows them to emerge? Because there were not markets for assassins, drugs, or child-porn before BTC?

Generally my opinion is; while BTC has many flaws, I think competeing currencies are a good thing economically. We need more, but are stifled by the central-bank monopoly. I hope BTC opens the door for better things.....


omg, first time ever someone called me a libertarian.

I shall have a beer, too. *sigh*

(If your pub accepts btc, I'll buy you the first pint from the 0.75 btc I own. Bought them a year ago via a swiss paypal account via a now defunct german bitcoin trading site, which was registered in London and had its account in poland. true story.)

((otherwise, if you ever come to Hannover, I'll buy you a nice Herrenhäuser payed with hard euros))


You drove by from Hacker News, didn't you? Confess!


Come to think of it, that's a good question. How are people paying for illegal stuff on the net now? This is something I never even wanted to risk googling but if child porn rings are turning a profit, someone's paying them somehow and it ain't in hand-written IOU's. Do they use credit cards? If so, how? Aside from the unforgivable ick factor of what's being bought and sold, there's an interesting technical problem here.

There is enough bitcoin for everyone to use. 2.1 quadrillion units after you divide a bitcoin to the eighth decimal place.
You are mistaking the total amount for the individual value.

The total amount of bitcoins is fixed. However, if you use it as a money, i.e. for goods and services, the amount of those goods and services available for that money is NOT fixed. So the cost, which is simply the ratio of amount/good is completely tied to the goods. In an economy, the ratio of goods+services vs available money is an important indicator of the working of the economy. Read the pointers given by our host on inflation and deflation to see what a change in that ratio does to an economy.

One of the points (which is sold as a "very good point") is that the monetary policy of the Bitcoin Central Bank is hardcoded, and cannot be changed (except by an unlikely consensus of almost every bitcoin software user and writer). Conversely, an unflexible monetary policy... well, it's a bit of what's causing right now the euro woes (Central Banks refusing to change their policies in response to facts, and sticking to theories).

Right now, it's not a problem. It's not a problem because there is NO Bitcoin economy sphere; every single bitcoin actor (customers, sellers) operate in a sphere where alternate payment methods abound and in fact dominate their economic function (save for all those "bitcoin lotteries! Win thousands for cents!"). So those alternate moneys stabilize the non-existent bitcoin economy.


Yup. You will note that most credit card transactions go through two agencies -- Visa and Mastercard -- who are easily leaned on not to handle payments for stuff governments disapprove of. Paypal are similarly problematic. Any centralized lending or credit agency is vulnerable to a single point attack, and banking regulations are the fulcrum.

Now, whether you think this is a bad thing or a good thing is the real question.

I'm not happy about payments to wikileaks being blocked by governments leaning on credit card agencies and Paypal. But I am totally cool with governments not allowing markets in anonymous assassination to emerge. Note that this is an essentially political issue.

The key problem with bitcoin is that it erodes the power of states to regulate. Which might look nice at first wrt. being able to help those nice wikileaks freedom-of-speech folks out, but begins to look a bit different when the tax revenue base implodes and takes down the social security net, medicare/medicaid/the NHS, pensions, police/fire/ambulance provisions, road repairs, and so on.


Bitcoin is currently being used as part of the ransom payment scheme in the CryptoLocker Malware scam, and directed at lawyers in British Columbia, Canada.

The scheme eventually requires a money-laundering vendor, and so brings bitcoin onto the radar of folks who worry about money laundering. Said people in BC are, of course, inclined to listen to enraged members of the Bar (;-))

Thus: technologies which are designed to be attractive nuisances are also attractive to the nuisance-removal people. If the nuisance starts being life- or wealth-threatening, then it becomes "interesting" to crown attorneys and police forces.



Wow ! This is an ignorant rant.

Almost every point made is totally incorrect.

It is central planning (e.g. central banking) that relies on a gross oversimplification of society NOT libertarianism. Do you even have a definition of libertarianism ?

Do you hate left and right libertarians equally ? What about anarcho-capitalists ? Or maybe geo-libertarians are the true evil ? Competition IS NOT EVIL. Force from the top is evil.


Bitcoin strikes me as useful in confronting libertarians with the consequences of their theories. It turns out that a truly unregulated market in money is epically boom-and-bust, intensely unequal, full of crooks, a means to make crime pay, and a quick way to lose your shirt. Who'da thunk.


With regard to the criminal mining (use of malware to mine bitcoins) I think this will this will almost completely disappear in the near term.
Due to the changing nature of the complexity of the bitcoin mining process, the ability of commodity hardware to mine a dollar value of bitcoins in a week is so low that mining bitcoins is likely not an efficient use of a compromised computer.
If I were a cyber criminal and I had a couple hundred computers I would likely be able to make more money with the computer sending spam or engaged some other type of fraud (click fraud comes to mind but it could be whatever) That I think you will see very little of that criminal misuse going forward.

With regard to bitcoins being investment currency.
There seams to be an endless legions of investors in the bitcoin thrall and they are all missing the point. The value of bitcoin is going to go up and down but in an unpredictable manner making it a poor investment. However, as a transaction currency it can work very well. as a transaction currency its volatility is problmatic. If the volatility issue moderates it will have a huge impact in micro transactions and other types of web transactions. I see it as a potential PayPal killer.


"Bitcoin is pretty much designed for tax evasion."

So is cash (Bitcoin is basically digital cash), are you going to ban cash transactions too?


And we have a clear winner in the frothing crank competition!

Roll up! Roll up! The freak show is coming to town!

(NB: The comment this is a reply to is borderline for a yellow card. I'd appreciate it if the visitors would take time out to review the moderation policy; it might save us some annoyance later ...)


Oh also, it would be *really interesting* to see who's been shorting BTC just before the big busts.

Do they use credit cards?
Usually more like money orders.

One of the thing you need to understand when trying to use "untraceables bitcoins" is that every amount is fully traced. Someone paying with bitcoin a shady site full of child porn will have the transaction from a wallet he uses to a wallet the porn operator uses visible for essentially the entire existence of Bitcoin.

Once the Feds unwrap something like Silkroad, they get the number of the wallet where your bitcoin ended, and can trace back all people who sent bitcoins. At the other end, you probably got your bitcoins by going to a marketplace, putting down some € there, and getting bitcoins transferred from the marketplace account to yours. So the police notices that the transaction chain goes from Silkroad to Kraken, they send a subpoena to Kraken to identify who did the transaction crediting your initial wallet, and you're done.

(you can attempt to obfuscate the path leading from purchase to spending using intermediate wallets, splitting and combining amounts, but unless you manage to implicate "mules", i.e. wallets of people unrelated to you thru which the amount flows, you don't have a Caiman Island banking trust to hide any of the transactions).


This is kind of a "money spent on space exploration could have been better spent on more worthwhile things" kind of logical fallacy argument, but... I read that the raw computation power used for mining bitcoins is now exa-obscene (and, granted, we already waste a lot of monies on video games and horrible movies). Couldn't we expend that computing power on more worthwhile projects? Anyone have an idea how many protein folding solutions, or controlled fusion simulations, or BEC spin resonance scenarios, etc., bitcoin processing could have done so far?


You should probably get more acquainted with the concept of "Level 3 Assets" since we taxpayers have assumed such a large stake in them.

A Level 3 Asset is priced indirectly by a model, which can be proprietary. That is, the value of a Level 3 Asset can be pretty much whatever the binary black-box code I wrote say is is, all this is legal and fine with GAAP!

Now, during the financial crisis, banks could deposit these things with central banks as a collateral for new loans - which effectively means turning these things into real money. Knowing how the banks operate it is logical that they would hurry up and produce as much as these things that they possibly could while the going was good. Then deposit at the FED, in return they get proper bonds, that trade on a real exchange, and they are "capitalised" again.

If one checks with ISDA, who keeps a sort-of check on the unregulated derivatives market, indeed the "value" of the derivatives increased during and after the financial crisis.

Modern Finance is like "Fraud all the way down"!


My current theory is that bitcoin is designed to cull libertarians from the herd. Get them using a fiat currency, then show them the power of deflation.


Your argument makes two claims: (1) Bitcoin makes it harder for governments to control where people spend their money, (2) Bitcoin makes it harder for governments to tax their citizens.

Claim 1 is probably true, as long as the purchases are not illegal (donating to wikileaks was not illegal but merely blocked). The US government has been fairly effective at tracing Bitcoins used in illegal transactions. That is, they know you donated to wikileaks, but they can't prevent you without charging you with a crime after the fact.

Claim 1 does not imply Claim 2. I've talked to some US banking regulators and they don't think taxing Bitcoin is a serious problem. In fact when compared with cash or valuable objects such as gold, Bitcoin is far easier to trace and tax. Everything would be easier for the IRS if tax dodgers switched to Bitcoin.

The question is not if you can tax Bitcoin, clearly you can, the question is at what point does it make sense to tax Bitcoin. Do you tax each time bitcoins move from one wallet to another? If so at what exchange rate. My personal view is that Bitcoins will probably be taxed, like stocks, when you cash them into local currency and/or when you purchase something with them (sales tax).

I worry that you may be confusing the political ambitions of Nakamoto with the actual realities of Bitcoin.


About black market online payments now, here's an interesting overview from Brian Krebs from back in May.

He points out how Bitcoin's volatility makes it undesirable as a payment mechanism.

Before LibertyMarket, there was eGold.

For discussions of dark payments in the physical world, take a look at Loretta Napoleoni's Rogue Economics - For example, one direct effect of the Patriot Act was greater difficulty hiding large transfers of cash in USD. The first order unintended consequence was a drive by the Colombian drug cartels into the Euro. The second-order consequence was new business relationships between the cartels and the 'ndrangheta. The third-order consequence was increased distribution of cocaine across Europe.

The Krebs article is an illustration of Napoleoni's core argument: underground/illegal economies move faster than nation-states can react.


You're being more tolerant than I would with a drive-by who's being actively personally insulting.


Let's try to refute your points one by one:

"Mining BtC has a carbon footprint from hell (as they get more computationally expensive to generate, electricity consumption soars)"

Bitcoin is not not necessarily going to be more computationally expensive to generate. The difficulty could also decrease in the future or it could remain the same as it is now. Also, the electricity is not wasted, it provides integrity and security for the entire bitcoin payment network. How much resources do you think banks spend to keep their deposits safe from hacking and physical theft? Do you also consider those resources wasted?

"Bitcoin mining software is now being distributed as malware because using someone else's computer to mine BitCoins is easier than buying a farm of your own mining hardware."

It's not easier (otherwise, everyone would do it). It's maybe cheaper, but it's also illegal and can land you in jail. Mining BTC's on stock computer is also not very effective and the profits will decrease in the future if the difficulty of mining would rise.

"Bitcoin violates Gresham's law: Stolen electricity will drive out honest mining. (So the greatest benefits accrue to the most ruthless criminals.)"

Botnets make very small portion of the mining market. As stated above, cpu mining is very ineffective and can in no serious way compete with mining on specialized hardware (ASIC chips). See for current stats. Botnets would be some portion of the "unknown", in other words - less then 14%.

"Bitcoin's utter lack of regulation permits really hideous markets to emerge, in commodities like assassination (and drugs and child pornography)."

Bitcoin lack of regulation is a myth. You write about china regulating bitcoin in this very article. Other existing regulations (KYC/AML laws, MSB licences, income/capital gain taxes etc.) already apply to bitcoin. Bitcoin lacks central authority but this in no way means that it is somehow extempt from our legal framework. Drugs should be legal anyway so i consider drug markets one of the good things bitcoin enabled. Assassination/child pornography/weapons are different matter but those markets already existed before bitcoin and i don't think bitcoin had any effect on their size. Ever tried to ship some illegal weapons via mail service over borders?

"It's also inherently damaging to the fabric of civil society. You think our wonderful investment bankers aren't paying their fair share of taxes? Bitcoin is pretty much designed for tax evasion."

Bitcoin is like cash. I agree with you that it is (relatively) easy to avoid paying taxes using cash or bitcoins. There are two solutions:
1) ban financial privacy, make reporting of every transaction mandatory so it can be taxed properly. Bitcoin actualy helps with this solution as every transaction is already public in blockchain. The only step remaining is to enforce proper registration of bitcoin addresses with their owners (and ban transactions from/to unregistered addresses)
2) reform tax laws so we actually tax the things that make sense - land and physical property. there is no reason to tax income, financial transactions, sales, gifts, inheritance, capital gain, alcohol/tobacco consumption, gambling, import and export etc. (you name it). It makes no sense. If people did more of those activities, there would be no harm as those activities are not limited resources. Taxing land/properties and other limited resources on the other hand makes sense. They are limited so we want them to be utilized effectively. We don't want rich people to squat large areas of land or lucrative buildings in city centers without using them properly. As a bonus, with limited resources you can easily keep track who owns them and who should pay taxes on them. You also keep the financial privacy. This would be my preffered solution.


Maybe the NSA created bitcoins simply to root out people that they can later squeeze - or bust to meet KPI's?

Bitcoins are created by smart people and there is a sort-of inverted NSA-ish logick in creating anonymous money that has the path the money took embedded into it every time it is "spent". Like placing a GPS chip with memory in every dollar bill, but much cheaper and less prone to whining from the people who support potential terrorists by being against surveillance.


To be honest, I rather think our gracious host may be missing the positive side of experimental currencies, and of tax avoidance measures of all kinds. Experimental currencies are good because they keep the idealists poor and the libertarians are kept thinking.

Tax havens or tax dodges are similarly a good thing because they limit how much tax a government can extort. France is currently re-discovering the Laffer Curve; the UK is a net beneficiary here as quite a few rich French businessmen are decamping to these shores to avoid excessively stupid and greedy taxation.

All Bitcoin does is gives the over-taxed a greater plurality of ways of avoiding tax, whilst remaining rich. If you remove these ways, then two things happen. The aspiring rich quite often simply give up on the idea, and the government then loses these potential tax revenues entirely. Other more criminally minded people go into politics, and the political sphere then starts to resemble modern Russia, where politics, money and criminality are inextricably linked.

It all really comes down to how you keep a government honest, and the only way thus discovered is to allow citizens to legally escape taxation if they but expend some effort to do so. Any other path seems to lead to eventual ruin.


OGH said

"And we have a clear winner in the first-libertarian-to-show-up sweepstakes!"

and also

"And we have a clear winner in the frothing crank competition!"

I think OGH is getting a tad bored with writing non-stop, and decided to take a break and see what he can flush out of the woodwork. And boy, is it working.


This isn't quite the answer to your question, but addresses pieces of it. In fact, "how do we deal with the money from our completely illegal enterprise" is a huge issue, and back in the 1990s the U.S. government started a fake bank, laundered money for drug dealers for a while, and then arrested hundreds of people using the information they got:

(It's a really fascinating piece, about 20 minutes long.)


Bitcoin is ideal tool for a task like this because despite the fact that it is "anonymous", as soon as one account become "dirty", all the related accounts can be easily tracked and if some of them is associated with real person somehow then bah!


Oh, yes, please explain to me how tax evasion is a moral good. Oh yes, the poor overtaxed rich.

Which may be the same guys that evade around 79 billion € per year in Spain while we cut all social services for the ones that pay they taxes religiously because you cant evade your pitiful paycheck.

But really, lets give the poor wealth creators a break.


The power figure you are quoting is wrong by a factor of at least 100. It's based on the data on this page:

Note in their assumptions they say:

"Electricity consumption is estimated based on power consumption of 650 Watts per gigahash and electricity price of 15 cent per kilowatt hour. In reality some miners will be more or less efficient."

This is based on GPU mining, which hardly anyone is doing any more. Most people are using ASICs and a more realistic power figure is 2-3 Watts per gigahash, and the most efficient units are 0.6 Watts per gigahash.

Take note that on that page it also states that miners are *losing* nearly $19M per day on electricity spending based on their power estimate.


The Laffer curve is of course unrelated to the matter of tax dodging and tax avoidance. Moreover, last I read, if you ran the maths (something libertarians and their ilk are loath to do) you end up with the top rate tax level somewhere north of 50%.


I've been following the Bitcoin saga on and off for over two years now. (started June 2011 or so) I keep expecting it to go down in flames, and it keeps rebounding. I have no idea how it keeps going. I remember when $30 per Bitcoin was the astounding high it would never hit again before a terrible crash. Now it hit $1000 and crashed again? Geez.

All the points brought up in the article are the same things I've been seeing sensible people say about Bitcoin from the beginning. And yet it keeps gaining an odd form of legitimacy. Someone's going to write a hell of a dissertation about it in a decade or two, I think.

I don't think it's a deliberate operation to bring down the banks, though. Before the first craze hit it was just a cryptographic toy, a "hey look at this" program. Then the libertarians got a hold of it and made a community around it. It's about then that Bitcoin goes nuts and starts on the boom and bust cycle we see today.

As for the future...I'd like it to go down in flames, but every time it has so far it rises again a few months later, like a phoenix born from neckbeards and fedoras. I've given up trying to predict when the inherent problems are going to catch up with it. Now I'm just hoping my dad doesn't get was bad enough when he was obsessed with buying gold.


Actually, it looks like I may be mistaken, they appear to be basing this on bitcarbon, which says:

"...the carbon footprint of the Bitcoin mining network will be proportional to the exchange rate of Bitcoin assuming that 90% of the dollar value of Bitcoin is spent on electricity."

but I think based on more reasonable power usage estimates that number should be somewhere around 10% not 90%.


Seems to be rebounding now. Or at least got to 600$

I think the yoyo is very profitable and somebody figured out that no ammount of reality is going to make the true believers go away... for now at least. So every crash is an investment opportunity...


"Going Gault"...I still wonder - who mowed John Gault's lawn? Objectivist immigrants?


Of course that may end up being a game of chicken...


Even the bankers issuing subprime loans and bundling them as CDOs and similar instruments tried to kid themselves they were helping people buy their homes.

Hahahaha! I just snorted my(dumb brewed)tea. You haven't worked on/dealt with Wall Street, have you?

Bitcoin may well not be the answer, but I would very much like a transaction mechanism that is anonymous and not vulnerable to simple theft. I am personally sick and tired of stores collecting my purchasing information. I don't want to have to go to ATMs to get cash that could be stolen. I don't trust S/W companies to offer no strings attached electronic wallets.

I want convenience and anonymity. Is that too much to ask for?


Those criticising Bitcoin for its 21 million max property have missed a few things. If your design criteria for a currency is a p2p system with no central authority, then the way to bootstrap it leaves you with few options. Halving the reward every four years is a very elegant option, and in some ways the only one that really works.

But this is such a complex system that I just don't have the energy to elaborate on it here, since I think I came to this party way too late for anyone to listen.

I have studied Bitcoin extensively for over three years, and I believe it will be as big as the internet in how it will change things.

Of course it will bring out scary things, such as assassination markets, but the genie is out of the box, and the benefits are huge compared to the drawbacks. Again, compare it to what people said about the internet when it hit mainstream! "But it will be filled with porn and violence".

So, the Gini coefficient is high. It has been out in the open for FIVE FUCKING YEARS. It is not OUR fault that you guys didn't pay attention until now. But the whole discussion is stupid. Bitcoin is a niche currency, why does it matter if it isn't evenly spread over the land to everyone?


Now, whether you think this is a bad thing or a good thing is the real question.

I think this will boil down to what the primary terror was for each person in their formative years. If you grow up with weak and ineffectual government, you want someone to come in and protect you from the bandits and corporations that are abusing you. If you grow up with strong government, you may see them as the problem and want the free market to come in and save you.

We'll always be familiar with the failings of the current system and only see the marketing brochure for the new system, not yet knowing what the shortfalls will be until we make the switch.


Bitcoin is also a major Economics 101 fail. With a mildly inflationary currency, there is a really good incentive to invest in new business, expansion, etc - if you just sit on the money, it slowly loses value, but if you invest, you may be able to make money, or at least stay ahead of the inflation curve.

With a deflationary currency, there's no longer the incentive to build that new factory, launch that startup, buy shares in a company, take a risk - just sit on the currency and it becomes more valuable (for loose definitions of valuable, in the case of Bitcoin)

At least with gold, mining more gold creates some jobs, and the increase in difficulty is probably closer to linear... think of gold as an O(n) currency, bitcoin is closer to O(n^2).

(Having said that, starting a competitor is tempting. Just make sure to mine the easy stuff for yourself first, then sell it off as the suckers move in)


It's really only the techno-libertarian types that are interested in bitcoin. As a group libertarians tend to be rather conservative when it comes to ways of storing wealth. You'd find gold and land is much more popular. Or ammunition, with the survivalist types. :)


And while civilization crumbles under the death
rays of the evil bitcoin empire.. Mark Zuckerberg
alone still holds more money in his piggybank
than the peak bitcoin market cap.

Anyway. Don't let minor factoids like that get in the way of a perfectly fine frothing...


(Having said that, starting a competitor is tempting. Just make sure to mine the easy stuff for yourself first, then sell it off as the suckers move in)

All altcoins are traded against each other, so it doesn't matter.

Me, I regret I missed the dogecoin train. Wow. So crypto. Much value.


I haven't seen anyone mention my favorite nickname for Bitcoin, courtesy the commentariat (or possibly the host, Yves Smith) at Naked Capitalism: prosecution futures.


France is currently re-discovering the Laffer Curve;

Ding! You said "Laffer curve". I say "crank". Put it another way: we've had 30 years of "trickle down" and I have yet to see any sign of the Gini coefficient diminishing.

This may be a feature, not a bug, in your weltanschauung, but I for one would prefer to be an average citizen in a social-democratic utopia than a billionaire cowering behind barbed wire in a hellish kleptocracy.


The BitCoin pattern of repeating peak-and-crash has some interesting implications. Let's say there's two types of buyers: True Believers and Speculators. The True Believers plan to buy and hold until the crypto-currency utopia comes true; the Speculators plan to sell as close to the top as they can.

We start with low-value BitCoins, and assume both types drift in at equal rates. As more people invest, the value starts to climb, drawing in more people in the usual bubble pattern. Then it bursts -- bad news, random fluctuation downward, whatever. The price starts dropping. At this point, the Speculators start to sell, but the True Believers see only cheap coins, and buy instead. The price bottoms out when all the Speculators have left the market, and the cycle repeats.

The net effect is that the Speculators end up with all the USD, and the True Believers with all the BitCoins. The whole system acts as a mechanism for the Speculators to extract value.


My unique-visits-per-day metric was dropping.

Also, today's a no-writing-novel day (I've cranked out 44% of a novel in 23 days; I need some recharge time). Finally, the Bitcoin buzz has been getting on my tits all week; it was time to strike out.


My hypothesis: when the social elevators are thin enough, capillary forces prevail and wealth actually flows up.


The Invisible Hand of the Market mowed John Galt's Lawn. With tweezers.


The lawns of true Objectivists don't need to be mowed.


If one did computation in a building requiring heating, and if the power was nuclear, then it might be a reasonable way to keep warm at low carbon cost.

As to the rest, I'm still not sure bit coin is money rather than commodity (and alarmed at the idea that money is a commodity).


Well yes, that would appear to describe Disaster Capitalism as currently practiced in the western world quite cogently. (We're in the midst of the biggest transfer of wealth from the poor to the rich since the 1930s. Probably since the 19th century.)


Guessing the CIA released bitcoin to distract bugs like me from gold and silver - get us to sell our metals to keep prices down and replenish gov't stockpiles so they can pay back Germany's gold, then crush the bitcoiners in a burst bubble.


This nerd deleted my comment, and is against free and open source software? I bet you use a mac, fascist. I was just providing the people any easy way to dispose of their coins to fuel the fire that bitcoin can die in. - 1CJfPXHMtwdqoJGHyBkuaJ3Q14N9TiYrzV

Bitcoin wasn't created with a political agenda, it was created as an easier way to send money online. That's like saying that SMS or Email was created with a political agenda.

So are you going to be a wiener and delete this comment again, or try to make actual disscussion?

Love and peace,
S. Nakamoto


What are your thoughts on dogecoin? doge have no political agendas. shibe just want to go to the moon.



I keep seeing "a computer is not very efficient in mining BitCoins" as an argument against malware mining. The authors seem to be conveniently forgetting that malware ideally does not target "a" computer. It targets "every possible computer accessible". If you get thousands or millions of machines to do something inefficiently, it starts to get much more efficient. Case in point: Google uses thousands upon thousands of relatively cheap rackmounts to do supercomputer-style parallel calculations. Malware mining is a fabulous deal for the perpetrators: they invest in building the engine, and let all the owners of infected machines pay the bill for it.


Yellow card

Please read the moderation policy before you comment again, S. Nakamoto.

Hint: this is not the United States, I'm not the government, and you have no absolute right of free speech on this private blog which I pay for out of my own money and run for my own amusement. If you want to exercise your free speech rights, go get your own blog.

Yes, I'm using a Mac. (And I wear black. JUST LIKE HITLER.)

All technologies come with an implied political agenda, if only because they rely on infrastructure that has logistic prerequisites -- pipes or wires in the ground/overhead, folks in uniform to run around delivering those telegrams, whatever.


Charlie, you really should consider switching from a mac to a computer that respects your freedoms. Use of proprietary technologies like those that come from apple restrict your freedom and don't really allow you to use your device to the fullest.

I suggest checking out some operation systems listed here -

and perhaps switching from a mac to a lemote - with open hardware.

Thanks and have a nice day,
S. Nakamoto


Yes Charlie, definitely switch to one of those distros if you want to spend all your time tuning the operating system and not working...


I think we reached the Poe's Law point.


While it's true that these operating systems are not the childrens toy equivalent of computers like macs are, most people with at least a fifth of a brain can use one. I would reccomend trisquel to the more "simple minded"

Hugs and kisses,
Satoshi N.


Dude, I spent quite a few years as Linux/software libre columnist for the second best selling monthly newsstand computer magazine in the UK. I quit a decade ago; found I prefer an environment that helps me Get Stuff Done, rather than endlessly recompiling kernel modules.

In my prehistory I got a CS degree and worked for a UNIX house.

Grandmother, eggs, sucking thereof: if granny chooses not to suck eggs because they taste bad and smell rotten, you might consider respecting her choice.

(I am now off to the pub to drink warm beer that smells faintly of rotten eggs. Because I can.)


Charlie, why would you ever quit doing gods work?
Did they nsa pay you to stop fighting for electronic freedom?

Enjoy your beer,
S. Nakamoto


Nah, no way this is a real person.


I suppose the only way to prove this would be to add captcha support to the comment box, but i promise that I am as human as you.


love and kiss.
s. nakamoto


Clarification: it's a troll.


(S)he is funny though; perhaps we should keep them as a pet?


If you grow up with strong government, you may see them as the problem and want the free market to come in and save you.

And if you grow up in your parent's basement, then you are shaped by an environment where the fundamental constraints on what you want to do are shaped neither by scarcity nor malignance, but _by genuine good intent_. Your relatives probably don't wan't you to spend all day smoking pot and playing video games; in some cases they will over-estimate just how much of a bad thing that is. And even if they _are_ right, it's not like anyone facing such hectoring is going to admit it.

Pretty much every libertarian position can be understood in that frame of restrictive but benevolent authority being the root of all 'real' problems. It's a rare parent who literally tortures their kids, so torture is, at best, not a 'real' issue, not a priority. But many make them do stuff for their health, so mandatory health insurance is a big deal. Pretty much no parents kill their child with drones, many read their diaries. And so on.

So to libertarians, Bitcoin is like wages from a fast food job as opposed to an allowance; lets you buy what you want without someone else having a veto. Only money that doesn't judge you can be considered entirely yours...


"Let's say there's two types of buyers: True Believers and Speculators..."

My sense was that the earlier spike (early this year) was driven by speculators. But this one appears to have been *neither* -- rather, people in China using it pragmatically as a way to move currency around without the government noticing. Thus the impact of Chinese regulation.

The "deflation" argument only bites if there's a full-on bitcoin economy, and I don't think we're any closer to that than we were on bitcoin's first day.

One model of "bitcoin success" is as low-friction cash, accepted as alternative currency more or less everywhere. In this form the fixed supply doesn't matter, because most users are buy-here-sell-there-immediately. The people who are holding big pools are one-time winners, much like anybody who got in on the ground floor of something. (People who bought Apple stock in 2005, etc.)

(Then there's the argument over how untraceable people *really* want their cash to be -- see the Sheep Marketplace story from a couple weeks back.)

I guess the point is that the value of the system is very dependent on external factors. Bitcoin is not going to break banks, or nation-states, or the world, because it's not *that* different from anything that currently exists: it's not absolutely untraceable, it's not absolutely unregulateable, it doesn't have exactly zero transaction costs. It will wind up fitting in somewhere. This is a boring position to take in a political argument, I know.

(On the other hand, the unbounded capital cost of mining is pretty damning. Regardless of whether that one carbon article was accurate, it is still true that there's an arms race to burn money on mining.)


Well, Bitcoin is volatile, at least partly because there aren't many people trading it. I'm sure there will be many more ups and downs. It will be more interesting to see what it does long term. I think the main problem for it will be that states are likely to outlaw exchange between it and their currencies, like China did.

Other than that you're mainly blaming Bitcoin for crimes commited using it, as they wouldn't otherwise occur.

The policy of central banks maintaining a low rate of inflation is not so great if you're not clever enough to do trading in high return, high risk investments. As it is, it is currently very difficult to save money as savings accounts do not pay enough to beat inflation.

In theory a currency with a fixed supply would deflate at exactly the rate of economic growth, which would be harmless and beneficial for savers.


Charlie @ 23
Libertarianism, like Leninism, is an attractive, internally consistent
ideology which provides a prescription for achieving a utopian society
populated entirely by frictionless perfectly spherical human beings.
Or so it is said ....


osmosis @ 29
What, pray is a "free" market?
They are all rigged, in favour of the biggest & most corrupt.
BitCoin is even MORE rigged in favour of the ....
That is the problem, as stated by OGH.
Now what?


Looking at your classification of what should and should not be taxed, I am not sure that I want to find out the consequences of your proposals.

reform tax laws so we actually tax the things that make sense - land and physical property. there is no reason to tax income, financial transactions, sales, gifts, inheritance, capital gain, alcohol/tobacco consumption, gambling, import and export etc. (you name it). It makes no sense. Yes, you're correct that land and physical property are a different sort of resource, but I have heard enough stories of the ills arising from a dependence on land taxes.

I'm not sure just what you mean by "property". Is it limited to assets fixed to the land, such as a house, or does it (at the other extreme) include the pen in my pocket? Are they to be taxed on acquisition, or is there an annual payment?

Frankly, having had to deal with some of this sort of thing at the bookkeeping level, I'd rather have an income tax system, as a matter of practical administration. How do you even assess the value of real estate, just as a starting question.

There's quite a few points you make which don't sound crazy. They can be argued about. But when you play your final card, you suddenly look as honest as the poker player who produces five aces.


The "miners" are physically situated inside the USA's domains. Even of they are now, they won't be if what you suggest looks like happening .../.


My hats off to you for having the vast brass stones to fight libertarians on the internet. I agree completely that BitCoin is ridiculous. I especially wonder if the whole thing is funded on a myopic nerd-boy assumption that people are ready to (and should) trust algorithms rather than governments.

I can't really expand any of my substanitial thoughts now, but let me leave my favorite literary-bitcoin conundrum here:

Was Ellen Ullman's cypherpunk boyfriend described in her amazing memoir "Close to the Machine," a proto-bitcoin guy? She describes him working on crypto-currency...


@ 40
I think OGH won't like you when he returns - also, please read my quote # 100 on Libertarianism?


@ 53
Your loony-libertarianism is showing:
2) reform tax laws so we actually tax the things that make sense - land and physical property. there is no reason to tax ...
Some of us would disagree, profoundly with that statement.
I would have to leave my home of 65 years, because I could not afford the tx. You know what you can do with your suggestion.
Also, income tax is PROGRESSIVE - the more you earn the more you pay.


I actually don't have any particular issue with the underlying concept behind Bitcoin; in fact I think at least two of Charlie's points (the underlying ideological basis being dubious at best and the mechanism for determining its worth making no sense whatsoever) could be just as fairly applied to the twenty-pound note I just exchanged for some Christmas spirit. (From the off-license.)

But where it's gone wrong, I feel, is that nearly everyone doing anything serious with it appear to be using it as a get-rich-quick cheme instead of an actual currency. See the ridiculously unpredictable exchange rate.


The point about power consumption may be true. The difference seems rather too large to be plausible, but I'm no expert. And I have no idea if you are. So, cite please.

And what does a suitable ASIC cost? I know, in a general sense, what you're talking about. And, when I Googled on ASIC, the top of the list was an advert for a company offering to do the work for you at $10.18 per gigahash. Which is a heck of a lot of kWh. (Watts oer gigahash is a useless number to quote.)

60 kWh per gigahash is crazy (and how many gigahashes per BtC?), so we can assume the energy cost is much less than $10. Allow for profit, too. But that company offers deals of up to 1000 gigahashes per second.

(If it were joules per gigahash I could get somewhere with your figures.)



Maybe they won’t be in the US, but they have to be _somewhere_. It would be an unusual government that wouldn’t want its cut.


"when the tax revenue base implodes and takes down the social security net, medicare/medicaid/the NHS, pensions, police/fire/ambulance provisions, road repairs, and so on."

It also takes down the state's ability to wage illegal wars and spy on its citizens. This would be a good thing.


How about a pure purchase tax? The only way I've come up with of fiddling that is to pay actual cash for part of $item, and sooner or later the fact that someone's got more money than their profit on sales explains has got to show up.


Which implies that you see a certain equivalence or perhaps prioritise the spying and war thing. Of course the biggest country to engage in such also has the lease social safety nets...


Sataoshi / nakamoto
What is this "god" of which you speak?
Undetectable by any means, IIRC.
Charlie reminded you that : WE ARE NOT IN THE USSA, okay?
Please try to remember this - that your parochial state's rules are not universal.

Unless, of course, you are just trolling, in which case - have a nice day!


@ 110
"A good thing"
Really - no spying, no illegal wars, & no state at all, merely what Hobbes referred to as "And in that state of Nature..."

Like Charlie said, excanging a hangnail for, euw....

I suggest your priorities are skewed


The linked article does not measure the Gini coefficient for the Bitcoin economy. It looks at the distribution of Bitcoin amongst wallets. There is not a one-to-one mapping of wallets to humans. One large wallet may serve thousands of people, for instance - a trading exchange with thousands of clients. And multiple wallets may be owned by an individual, as a method of reducing the risk of loss.

I know of no study that measures the real Gini coefficient of the Bitcoin economy. I have no doubt that there are individuals with great personal Bitcoin fortunes, but have no way of knowing how that compares with the traditional economy. I am also sure that there are a multitude of Bitpaupers, folks who, wanting to see what it was all about, went to a Bitcoin faucet and solved captchas for a pittance.

Just to say where I come from on the Bitcoin issue: I'm a practical, selfish American lefty, that is, I prefer some collective social welfare to the idea of having to defend the homestead myself against the hungry masses. I generally favor Bitcoin. I can find nothing in Bitcoin that is incompatible with modern finance and governance except that it removes the capacity of a government to print more money. And it provides a benefit of a fully transparent ledger of all transactions everywhere.

There is a significant segment of the Bitcoin _culture_ that runs libertarian, but that doesn't make _Bitcoin_ a libertarian tool. For comparison consider the substantial intersection between libertarians and proponents of Universal Basic Income.


I think you are heading into a spherical economist mode of thinking. A limited supply of digital tokens would only work if they were used for every transaction, so that the value of everything could be counted. And that would mean it would have to be the only medium of exchange. No barter, and no gifts. No unwanted Christmas presents may be sold on eBay.

No arbitrage.

Which means no financial markets.

Your idea depends on perpetually perfect knowledge, which is impossible, as we understand physics today.


If I may derail the conversation for a moment, I'd like to point out that OGH has refuted Godwin's Law with that comment, to the point that he has won the argument (as Mr. Satoshi subsequent posts clearly show) while mentioning a certain Charlie Chaplin lookalike from Austria.


But, without the other elements, how many of us would be alive to experience the good thing?


Full disclosure: I'm a card-carrying Libertarian.

I thought BitCoin was a bad idea. I did think it was a form of cognitive dissonance for my fellow libertarians to blast fiat currency as worthless paper, then embrace money that consists of nothing more than 1's and 0's. And what is to stop other private entities from designing their own currency systems at will? If BitCoin "works" today, somebody else would develop "ByteBuck" tomorrow, and perhaps "GigaCash" after that. Money ceases to have value when it is no longer scarce.


Doesn't make much less sense than embracing currency that consists of rare, aesthetically pleasing but not ultimately very useful metal, though. Not if you're deluding yourself it's any less of a fiat currency, anyway.


Did they nsa pay you to stop fighting for electronic freedom?

You could always ask my co-author Cory Doctorow ...


Okay, time for a little thought experiment.

A little over half of all possible BTC have been mined so far. Imagine those who currently hold those BTC just hold onto them until all BTC have been mined, and don't do any further mining. They just sit on their massively deflationary asset, like you DO when you have a massively deflationary asset.

Now imagine that everyone, every single person on Earth, simultaneously decides to go with BtC for their transactions. Since the people holding the current half are just sitting on them, the rest of the world has to mine, distribute, and then use the remaining half of the BTC space, to run the world's economy.

Let's ignore the USD-BTC or whatever other conversion rate for the moment. Assume that by the time the BTC space is mined out, the entire world economy is being denominated entirely in BTC itself.

Now, at this point, the holders of the first half of the BTC supply wake up from their hibernation, and realize that their dream has come true: They own half of the ENTIRE WORLD'S money supply.

In this sense, BTC bugs and goldbugs are pretty much hoping for the same thing. If their little pet boutique currency becomes a dominant currency, then the demand for the currency goes WAY up, making it massively deflationary even beyond any internal deflationary nature the currency may have baked in. They are hoping for everyone else to get suckered into the market they have already stockpiled.

This hasn't really happened with BTC. If you think the BTC price trajectory has been stratospheric so far, imagine what it would look like if it was actually taken seriously and it turned into a real currency, thus requiring tens/hundreds/thousands of millions of people to buy into it, in order to have some to use as currency. Imagine what that kind of buying pressure would do to the USD (or whatever) to BTC conversion price.

It's the hope of roping in those tens/hundreds/thousands-of-millions of suckers that is keeping BTC-bugs warm at night.


I do have an O-level in economics.

I reckon it puts me several steps ahead of some of the unfamiliar comment writers here.

What I learned about statistics and probability also puts me ahead of some politicians. And remember, a Smith & Wesson beats five aces.


Pretty much all currency has no real value in itself, the value comes from other people being willing to trade things for it. It problem comes with money supply, and the ability to increase it by fiat. Libertarians have concerns with governments being able to create money at will, and feel that gold is more reliable since it is difficult to increase the supply rapidly. Though that has problems of its own, which we saw in the US in the 19th century with the whole gold vs. silver debate.


I suggest to you that the people of Iraq and Afghanistan, not to mention the families of all the western combatants who dies or were maimed, would be more than happy to make that trade.


I'm a libertarian, and I'm one of those who thinks the hype around bitcoin is silly. I'm all for private currencies, but the price of bitcoin is nonsense - pure speculation.

And since you mention basic income, I'm one of the libertarians who supports that too, for various reasons. Though I know others who think it is the worst idea ever.


One interesting angle is that the time required to confirm a Bitcoin transaction as part of the blockchain imposes a time limit on transactions of the kind envisaged by a Tobin tax - I wonder about the ratio of wasteful computation used in bitcoin mining compared to high speed trading in conventional stock and currency markets.
Looking at Coinbase, the VC-backed bitcoin to dollars exchange company, they make it about as easy to sign up as etrade - somewhat cumbersome, and requiring bank and credit card details, as well as a US SSN. They also have a $5 spiff for getting others to sign up, following the original Paypal idea. Thing is, both the spiff and the trading threshold for winning it ($100) are denominated in US dollars, so they aren't even using Bitcoin as a currency of account themselves.


Possibly more than are alive today, if we allow for the millions slaughtered in the 20th century by governments.


Well, they will run out of coins to mine in the foreseeable future, correct? And I think the inherently deflationary nature of bitcoins will kill them off as anything other than an exchange medium, and that will also keep them volatile. And it seems that they can be tracked.

What I would worry about is the next one, something that isn't inherently deflationary (perhaps mildly inflationary?), is anonymous (as long as you don't spend the same unit twice (worked out so long ago the patents are probably expired by now), etc.

Frankly, I expect a better grade of rant from you, even if I think you are wrong. Or will the current trilogy put you into an even darker mood? :-) Please keep up the good *interesting* work!


The problem is that the banks create money by fiat too, so which is to be master? So far it's the banks most of the time, which doesn't help normal people much.


Bitcoin is a piece of software which tries to implement a particular SFnal future. One in which the world currency is de-centralized, deflationary, and all early bitcoin adopters own their own planetoids, and all visitors are automatically charged for the air they breath.

Thing is, the real world is more complicated than that. Assuming Bitcoin did manage to become an important currency, countries would naturally try to regulate it. In 30 years, by the time bitcoin mining has slowed right down the legal system will be fully caught up to the internet.

Bitcoin tries to make its code the law (as Lessig used to say), but the law can certainly affect its code.

The law could, for example, require that bitcoin be changed to stop increasing the difficulty of mining new blocks. Then bitcoin is suddenly an inflationary currency. This would be a hard fork in the block
chain, but one enforced by financial regulators. Miners would be tracked down and forced to comply. Some would perhaps go underground and run the deflationary bitcoin network on TOR hidden services. Lots of possible ways
it could play out.

That's only one scenario, covering one of the many problems with Bitcoin. So it seems to me that Bitcoin should be a gold mine for Science Fiction
authors, if nothing else..


Beanie babies.


If BitCoin "works" today, somebody else would develop "ByteBuck" tomorrow, and perhaps "GigaCash" after that.

You won't believe me...


So it seems to me that Bitcoin should be a gold mine for Science Fiction
authors, if nothing else..

Not read "Neptune's Brood" yet, have you?

(It's not Bitcoin; it's a different type of cryptocurrency, designed to promote a different political agenda -- intsterstellar colonization in a no-FTL, no-relativistic-travel universe.)


Fair question.

First let me say that i'm no expert on taxes and related laws so consider this as my amateur opinion derived from the current state of affairs and i'm open to constructive critique.

Also let me apologize to other readers for this slightly offtopic comment as i thing it is only remotely related to bitcoin.

When thinking about how to make a good tax system i consider several points: 1) what is the purpose of taxes, 2) how much should we pay and 3) how to best collect them.

ad 1) The main purpose of tax system should be IMO to prevent few people from monopolizing scarce resources such as land, natural resources, air frequencies etc. If you own such resources, you should utilize them for the benefit of the whole society, earn money for the services you provide using them and pay taxes. If you fail to earn enough you should sell the resources to someone else as it means that you are not using them effectively enough.
Second purpose is to fund government and services it provides. This can also be accomplished by other means (state owned companies come to mind)
Third purpose is to (to some extent) help decrease differences in wealth distribution among people.

ad 2) From the purposes above it follows that i support progressive tax. But how high should it be exactly? I can't answer that. I'd like effective government which provides socialized education, healthcare, welfare, which supports culture and sport activities and other more basic services like infrastructure building, law enforcement, justice system, defense etc. All of this costs something but with the economic growth of the last decades (before the 2008 crisis) i think we could afford reasonable levels of those services with 25%-35% income tax. The problem today is that there is no tax limit. Governments are constantly increasing taxes and introducing new taxes to compensate for their own inefficiencies, the lack of economic growth and their inability to properly collect taxes. I think that government fiscal responsibility should be part of the constitution. If government fails to reach balanced budget it should decrease its own spending and not increase taxes.

ad 3) There should be simple way to determine how much taxes everyone needs to pay. System we have today is far from that. It basically depends on the honesty of every citizen to report his income and tax it. Of course the tax office do some checks so if you buy a house with no reported income they'll probably go after you. But generally for large companies it is very easy to avoid paying taxes using tax heavens, shell companies, hollywood accounting, paying for bogus consultant services, using bitcoin etc. This is IMO not sustainable and fair system.
Also there are too many taxes. From ethical point of view taxes are very questionable. I can agree to pay honest tax from my income or property, but taxing my habits like smoking or drinking? Or money transactions and sales? Or whatever random activity someone in the government dislikes? This is IMO too much.
I talked about scarce resources - the good thing about them is that they are scarce. Some central authority can keep track of them and their owners. If we payed taxes from them, they would be hard or impossible to avoid. The payment should be annual and progressive. Tax from land needed for personal living should be very low or even zero, but if you own big industrial complex you should pay much more. There could be other factors to determine the correct amount - for example how lucrative the resource is (land in countryside is cheaper than in city center etc.) But again, don't expect exact amounts from me, there are many things that must be considered and i don't imagine that i know them all.
Also i mentioned houses and other property in my previous post. That was probably a mistake as houses are no scarce resources, the land below them is. So the houses and other physical property (like the pen in your pocket you mentioned) don't fit well in my tax scheme and should be extempt:)


I like my money slow, and my post-human women fast.


Off-topic: Charlie, please bring Freya back. She was way funnier than Neptune's Brood protagonists.


Curiously history does NOT support the assertion that the modern nation state is more violent; today you are far less likely to die by violence (state-administered or otherwise) than you were in the 18th century. The difference appears to be the ubiquity of violence in those days, arguably from the absence of a state enforcing its monopoly on the legitimate use of force. (Thank you, Herr Weber.)

It would appear then that a stateless society does not reduce violence but rather shifts violence from a relatively few incidents of mass-produced tragedies to many more artisanal, bespoke, hand-crafted tragedies. #HipsterCrime

-- Steve


You must like stirring up the hornets nest. Between this and your comments on space colonization, I'm surprised the Promethean awards even list your books. Or are you setting this up as a honeypot/tar-baby for the libertarians, crypto currency folks and space colonization types?

Anyway, to all those that said bitcoin mining via malware isn't that profitable (comments 16, 28, 42 and 53), have you ever heard the phrase "stolen goods are never sold at a loss?" Because comment 86 got it right - they may make pennies, but its free to the malware director and they're working on a large scale.


I agree with you mostly, but want to point out that there is no need to change the modern western taxation process in any way to accommodate the use of Bitcoin in place of government issued currency.

Imagine if Bitcoin were "The Coin of the Realm", that is, you are paid in it and you use it for most of your purchases. My government would simply require my employer to withhold a percentage prior to the delivery of my pay and to provide accurate payroll books to the revenue service on pain of legal action. Far easier for a government to regulate a thousand companies than audit a million taxpayers.

This is exactly as it is done today with government-issued currency.

And for the minority that work "off the books", a system of self-reporting, audits and penalties for tax cheats will suffice.

Exactly as it is done today with cash-only workers.


I've had reservations about Bitcoin, mostly related to the long term issues of deflationary currency as medium of exchange, however, it may actually make sense as a store of value. I am interested in the development of demurrage currencies like Freicoin, although I think the problematic thing would would be in mass adoption. Bitcoin may have enough advantages (first mover, transaction cost, non-fiat) to offset its theoretical structural disadvantage. I guess we'll have to see.

Regarding the energy costs of mining, the current lowest-economically-feasible (calculated by the ability to breakeven from mining) ASIC is 1.5W/GH and the current best is 0.6W/GH - the calculations you link are based on 650W/GH so off by a factor of 400-1000+. It's probably not that hard and I don't think anyone has really plugged in the numbers into figuring out power costs / transaction, but as mentioned in a previous comment, it's *probably* less carbon intensive than how money is currently shipped around.

The flip side of all this mining compute power is that it's economically undesirable to use zombie networks for mining vs other more profitable ventures.

A bunch of your issues against Bitcoin revolve around anonymity/lack of regulation, but I think the reality of the situation is very different from what you lay out.

It's almost impossible to get anonymous bitcoins: mining connected to a mining pool on Tor, or exchanging cash via LocalBitcoins, again w/ Tor. These are dependent mostly on the (questionably) anonymous properties of Tor and cash. If you are acquiring Bitcoin via an exchange like Coinbase, Bitstamp, etc you are pretty much required to hook up your bank account/provide identification, and reported to FinCEN or whatever your local regulatory agency is. What we're seeing now (like the China regulation you started out with!) is increasing regulation of BTC/local currency exchange.

Bitcoin-to-Bitcoin transactions, by protocol, are completely traceable as every single transaction is stored in the blockchain forever. As we've seen, once there are known addresses or transactions it's trivial to unwind or do network analysis to identify wallets, especially for government/regulatory agencies (or those engaging in huge dragnet surveillance/digital intrusion operations, *ahem*).

The same techniques used to bring down something like Silk Road and things like existing CP operations will be just as effective against other illegal markets. These techniques are actually aided by the aforementioned traceability aspects of Bitcoin and probably one of the reasons that LE/govt is supportive of Bitcoin adoption vs truly anonymous P2P cryptocurrencies like Zerocoin.

I suppose that Bitcoin could be used for large scale international money laundering, assuming one can easily spend BTC or convert BTC into currency sans regulation (again, unlikely anywhere except where currency conversion wouldn't be a problem in the first place) but you'd already need to have an infrastructure for moving/distributing a lot of off-the-books cash and the wherewithal to create a huge mining operation (which would still be traceable without a lot of opsec) and I don't think Bitcoin is any more conducive to that than any other global digital currency would be.

To me, Bitcoin-like (P2P cryptocurrencies) do have issues - can Proof of Stake work better than Proof of work? (ppcoin) Can PoW be useful computation? (see primecoin, but imagine if mining/transaction verification was linked to say Folding at Home/protein discovery) Can cryptocurrency be linked in a way that's internal and resistant-to-gaming to something like energy input or usage or can it otherwise be stabilized when bootstrapped?

I think the positive thing about Bitcoin is both in driving a big interest in analysis of the fundamental qualities people want in a currency, and providing a huge-step-up in terms of a platform/framework for creating/testing out different cryptocurrencies.

To me, Dogecoin points to the future - a world where it's ridiculously easy to instantiate and use semi-private Rushkoffian barter currencies, which nicely sidesteps a lot of the unsolved macro-economic issues.


@110 You appear to be assuming a sudden transition to a flat rate property tax system. Start with a low rate tax on real estate owned plus a large allowance (a few million or so) applicable only to your primary residence and associated farmland. Every year raise the real estate tax rate and the income tax personal allowance. Lower the allowance for your personal residence as property prices fall.

While income tax is in theory progressive it is also much easier to game than a property tax. Beyond a certain point tax avoidance turns it regressive.


More to the point, it's fundamentally wrong. The basic purpose of taxation is to fund government expenditure, so any equitable system of taxation should raise no more than is required to balance the budget (after allowing for interest and repayments on borrowings).


While bitcoin supporters tend to hate the idea of inflation, there are others coins that have inflation built in to encourage spending -- a kind of progressive version of bitcoin.

Here's a random example of a coin designed around a specific economic philosophy:

>Unlike Bitcoin, Freicoin has a demurrage fee that ensures its circulation and bearers of the currency pay this fee automatically. This demurrage fee was proposed by Silvio Gesell to eliminate the privileged position held by money compared with capital goods, which is the underlying cause of the boom/bust business cycle and the entrenchment of the financial elite, and has been tested several times with positive results.

(no idea if that has merit but it was the one that stuck in my head because it was so clearly articulated on their homepage)


My two cents -

There's something fundamentally wrong in using an object of speculation as the exchange currency, in that when it's going deflationary the velocity slows or stops as people start speculating rather than spending it.

For a *speculative item* that's great behavior. As the exchange unit in a real economic system, where the value *to the system and its participants* is in the velocity of value and not its static value, it's a horrible mistake.

I've had this argument with people who are serious Libertarian to the Extropian extreme, and most don't get it, and the ones that do tend to be more concerned with the political agenda Bitcoin was aimed at (I think, and Charlie is suggesting). I think this makes that set of people incompetent to plan an economy 2.0.

There may well be deeper economist-capable serious L's out there. Szabo and May aren't on the list of those I've had this discussion with.


... this seems to be an even better troll bait than "cult of justice"!

Thanks for this rant. Up to now I was open-minded and mildly curious about Bitcoin; after reading this I think Bitcoin is obsolete. Main point that did it for me is that Bitcoin appears to promote hoarding instead of getting things done. IMHO money should undergo inflation at the same rate as society produces goods.


I'm not convinced by that argument either. I can't find the original source now :-( but I've seen it argued that, since the invention of income tax, inflation is a mechanism whereby governments take more of your money, whilst pretending to take less. See also "fiscal drag" in this context.


The basic purpose of taxation is to fund government expenditure

I don't think so. The purpose of taxation is suppress certain economic behavior and favor other. That's way it's called "Steuer" in German, which means "steer". It's also a way to redistribute wealth.


Not according to the entire history of taxation of the UK, what with medieval parliaments voting kings the money to keep him in the correct style and defend the nation, through to income taxes being introduced to fight Napoleon. The idea of using taxes to change behaviour is comparatively new, although I think it was probably so used for some spirits back in the 18/19th centuries.
But anyway, both definitions are not mutually exclusive. The UK government currently collects taxes so that it can spend it on people's pensions, for instance.


Growing and selling narcotics is economic activity. By your argument any sensible government should allow and regulate this activity since only by doing so can they tax, and hence direct it.

Also, by your argument, there is nothing wrong with a government running a budget/taxation surplus simply in order to build up reserves of capital.



remember your bad dream about the "The Ruling Party" ?

Do you think one of them will give a shit (redact if you like) about the carbon footprint of bitcoin mining, contemplating this amusing fact on the wooden planks on his yacht near St.Tropez ? Do you think the nsa/gchq is concerned about mining botnets while hacking your BT routers ? In another corner some traders from a shadow bank, wondering about a "utter lack of regulation". And of course our corrupt governments, always longing for "stable governance". All of them feasting on money backed by seven billion happy believers...

I don't get it - is your rant an appeal to the greater good ?



Andreas Vox writes:
I don't think so. The purpose of taxation is suppress certain economic behavior and favor other. That's way it's called "Steuer" in German, which means "steer". It's also a way to redistribute wealth.

It has many, many possible purposes, and people tend to see the ones they disagree with when they're objecting to it. Liberals scream about wars funded, and tax breaks for oil companies; conservatives, about wealth transfer to the poor etc.

Until the recent medicare increases, California was roughly 4 parts school funding, 1 part prison funding, 1 part roads funding, 1 part medicare, 1 part everything else. One can have detail arguments across the liberal-conservative-libertarian spectra about any parts of those, but those are all widely acknowledged to be legitimate things the government should fund.


Methinks thou dost protest a wee bit too much.

Several of the contentions seem to fit just as well with cash. It has long been preferable to do dubious things like tax evasion and paying for immoral things (whether pornography, sexual favours or hit-people) using cash. I kind of doubt that Bitcoin is, in practice, as anonymous as cash.

The complaints about energy footprint don't seem to fit well with what's actually going on. It would be illogical for people to be paying for hardware (ASICs and FPGAs) for Bitcoin mining if they were paying more for electricity than they were collecting from selling Bitcoin. So it appears to me that something's off with the numbers here. The ASIC-based miners seem to get several orders of magnitude of improved hash rates, which seems like it isn't being accounted for.

Further, I don't think that the "stolen computing infrastructure" part is of much ongoing relevance. The escalation of ASIC/FPGA-based mining makes botnets decreasingly effective. They might be collecting a few cents per day per bot, but they can't be getting more than a few Mhashes/second per bot, and the ASIC-based systems get enough orders of magnitude more hashes that I suspect that the aggregations aren't going to be terribly effective. If Bitcoin difficulty rates go up further, that drops the profitability from pennies per day to pennies per year, and will make a botnet builder look for activities with higher payoffs. At some point, forwarding spam is more worthwhile.


My thoughts can be summed up as:

1) Developments towards untraceable/untaxable/etc. mediums of exchange are generally a good thing - in the tug of war that is society. Governments, the powerful, and the rich (which tend to end up being the same people) tend towards draconian control and oversight which both stifles any real freedom and turns everyone into practical slaves. Anything that unsettles them helps to slow that process; maybe even reverse. This is a good thing, no matter the strawman of OGH as to what might happen if it went all the way in the other direction.

2) Because of constrained nature of bitcoins, the people who 'mined' early gained value that now is out of all proportion to the 'work' they did. Since they tended to be techies, and the people piling in now tend to be libtards, that constitutes a transfer of cold hard cash from the libtards to the techies. Eventually either the government will screw up bitcoins, or people will realise there is no inherent value (tulips) and the libtards will end up holding nothing. Thus I approve of them giving the techies their money in exchange for nothing.

Here's hoping for a new bitcoin replacement, but one that is actually connected to the *creation* of value (OGH played with it as 'reputation') rather than the con which is money creation by banks and government fiat. Now THAT would be disruptive - unseating bankers from their place wallowing in the trough...


Growing and selling narcotics is economic activity. By your argument any sensible government should allow and regulate this activity since only by doing so can they tax, and hence direct it.

I think there are other good reasons why it's a good idea to legalize narcotics and regulate the market. I would use a more direct regulation though (licensed sellers, procedures to bring medical help to users), not through taxes.

Also, by your argument, there is nothing wrong with a government running a budget/taxation surplus simply in order to build up reserves of capital.

Why would a democratic government want to have a budget surplus? Any gains in the public sector are balanced by losses in the private sector, and people who experience losses are poor voters. Government debt means private wealth. If you wish to level that, it's easier to allow inflation.

If you get thousands or millions of machines to do something inefficiently, it starts to get much more efficient.
Actually, it's plain economical theory.

At current hash/s difficulty, the average mom-n-pop desktop computer infected with malware should yield about a few cents month in average. And the computer would be pretty much visibly infected and locked up at full cycle, i.e. quickly diagnosed, brought to the nearest kid without a "I will not fix your computer" tee-shirt, and cleaned out.

The question becomes: will this botnet-controlled computer be worth more to me as a bitcoin miner or as a spambot?


Developments towards untraceable/untaxable/etc. mediums of exchange are generally a good thing - in the tug of war that is society.

I think your understanding of society is lacking. Societies tend to be a little more complex than a "tug of war". Also, why do you think taxes are evil? Are you against roads, schools and social security? What about laws? Do you want to see them enforced?


Not all heat is waisted. It's -10C in Montreal right now. A mining rig help to heat the house.


Oh there are so many many many many many problems with just property taxes... not least of which you stop owning property, crash the property market and do everything with long term leases...

Plus not everybody owns property, and it makes owning property in retirement practically impossible.

Taxes should be on economic activity, anything else is really bollocks.

I'm with Charlie - it's a shiny techno form of gold buggery and just as stupid.


Also, by your argument, there is nothing wrong with a government running a budget/taxation surplus simply in order to build up reserves of capital.

If you're stupid enough to have a system whereby the government can't borrow or print money itself, then the prudent thing to do is for a government to run up reserves of capital so they can deal with emergencies. Anything else would be a potential problem.

One of the problems we're facing is we're in a recession after decades of imbecilic fiscal management during which trillions of dollars have been transferred to smaller and smaller numbers of private citizens all while reducing the ability of the governments to deal with collapses in demand.


After a bit of thought:-
1) Agreed, but I think the argument about taxes still stands (actually, making it a source of tax revenue rather than a cost in terms of police time etc works for both our arguments).

2) I'm not suggesting that a democratic government necessarily wants to have a budget surplus; I'm saying that if your argument holds then they may be forced to run one in order to direct the economy the way they want even though they acknowledge the negatives of them doing so.


Wait, aren't the reliance on property taxes in local government in the USA causing problems with stuff, e.g. school funding because the recession means property is worth less or people have less money to pay, and various other things, basically you end up with cratering funding for schools.


Since you're quoting me, you're "preaching at the choir"; Andreas is the one who's arguing for a system where taxation is used as a means of "punishing bad activity" rather than of funding spending programmes. That's not to say hat I believe that accumulating more and more when you atlready have more than you can ever spend short of giving it away is a moral thing to do.


Well, I'm actually ok with both. Imposing high taxes on things you want to stop people doing does work. Tobacco, alcohol, etc...

But then my libertarian (with a very tiny tiny l) side comes out and I think it would make sense to prohibit less things and tax and regulate them instead.


RE:It's not Bitcoin; it's a different type of cryptocurrency, designed to promote a different political agenda -- intsterstellar colonization in a no-FTL, no-relativistic-travel universe.

I think you're wrong about your own book Charlie, I am 99% certain that the word bitcoin is used in Neptunes Brood(but in a generic sense, as in "a bitcoin", not Bitcoin.

I only have the dead tree edition so I can't just do a string search, but maybe you can do it.

Also I've recently heard of an(maybe dodgy depending on your opinion of Foreign exchange controls)interesting use-case for Bitcoin. A friend invited me to come with him to a Bitcoin Meetup and there I met a guy who said that he used Bitcoin to bypass his countries exchange controls to get all his money out after he emigrated and just put it into a bank right here(apparently the bank just asked him for proof that it was legitimately earned and after that was established, said "OK, it's not our job to enforce other countries export controls". I'm still a bit skeptical, but looking a the policies of the various Bitcoin exchanges, there don't appear to be any show-stoppers. Anyone care to comment?


The real fun with bitcoins is once you get over the whole "it's a new currency!" sham and get to the meat of it: it's a commodity.

Made of a hash-string.

That can only be "sold" and converted to actual money by selling to someone else who believes the "bitcoin dream".

Which means it's functionally no different from a ponzi scheme at the moment.

The hope bitcoiners seem to harbour is that one day bitcoin will be usuable for all the things they want to buy aside from all the child prostitute drug-mule assassins they're (presumably) currently buying the stuff, which paints the most hilarious picture coming out of the concept of bitcoins.

You see, the people in this thread saying "it's about time buttcoiners learned" are ignorant of the way that bitcoin crashes about once or so a month - back in april it bottomed out at $10 from a high of a few hundred, and this halving of its total "price" is in that trend; by the end of the week it'll probably spike up to 75% of its old price, then crash even harder, as new suckers buy into bitcoins after this "crash", which in turn will send up the price of buying bitcoins AGAIN, then people will try to cash out, find it hard to do so because everyone's waiting for a low to hop onboard the bitcoin wagon, and the price will drop further than it is now due to that lack of demand and all the burnt investors will start slowly selling out to new suckers so as to divest themselves of the sudden exposure to risk their bitcoin wallet represents.

So try to imagine a real currency that was that volatile; You get up on sunday with a wallet with 5 bitcoins in it and can buy a car for 2 bitcoins, by friday the car dealer pays the salesman who sold the car his 50% commission of 1 bitcoin, and on saturday the salesman who sold the car is made homeless because 1 bitcoin can't buy a cup of tea in a cheap cafe let alone pay his backrent.


Did the bank BUY the bitcoins off him or something? The problem, from an investor's standpoint, with bitcoins is that you can only "turn" it into real money by convincing someone to buy your bitcoins FOR real money.

It's why a lot of bitcoiners are such fervent evangelists, they NEED you to buy bitcoins off them to make any money, otherwise they're just people with a load of useless hash-strings and less money than they started with.


Mistress, deliver us from popular etymologies...

Actually, the German term for steering would be "das Steuer", e.g. a neutral substantive, while taxations is "die Steuer", a feminine. Though there might be variantly gendered variants of both I'm not aware of.

If you follow some of the links in this article, you arrive at Grimm's dictionary, where both have seperate entries, e.g. "die Steuer";=Vernetzung&lemid;=GS46092

and "das Steuer";=Vernetzung&lemid;=GS46093

Actually, both go back to the Old High German stiurna, which meant something like "help, buttress, carrying structure, pale, support". You have some remnants of this in the German verb "beisteuern", e.g. "contribute".

So the German term "die Steuer" is more about giving financial support to someone.

And as already said, may the mistress deliver us from wrong but "eingängigen"[1] etymologies.

[1] Sorry to say, Grimm's doesn't say if this is related to "der Eingang", e.g. "intrance", or "ein Gang", e.g. "one Way", e.g. somewhat stubborn, simple...


Honestly BtC was somewhat acceptable to me when I started hearing the "it's a commodity" retort from the BtC zealots. Problem is: they use that argument (or imply it) and then a mere few minutes later tout Coinbase as the economical messiah - which treats BtC as a currency.

The problem with us computer nerds is that we have this false belief that being a nerd in this industry qualifies you as one in another. Sadly, it doesn't.

After acknowledging my general ignorance, the bare basics I learnt in high school told me that one thing a currency should strive to be is representative of the volume of an economy ("volume" basically means "number of transactions" for the uneducated). BtC is too volatile to represent any form of transaction; in fact the only volume I believe it is representing is that of our greed.

Either way I have seen more people agreeing with you in the comments than bigots (I am sure more bigots will be arriving shortly though), which gives me some hope in the human race.


For fun, calculate what the inflation rate has to be for a currency to lose half it's value in a 24-hour period. Lets just say that Zimbabwe and the Weimar Republic should no longer be the (ahem) gold standards for runaway inflation.

I dono. I have two 500,000,000 dollar Zimbabwe notes pinned above my desk. They came with expiration dates. :)


A significant issue with BtC is that the transfer points between the Bitcoin world and the 'regular economy' are extremely susceptible to DDOS (and associated manipulation) due to their small size and lack of government sanction (while people can and have attempted to DDOS the NYSE, they piss off a lot of economically and politically powerful people when they do so, plus the NYSE has way more resources than a typical BtC exchange to mitigate attacks).

This means that the barrier to entry for market manipulation is way lower than it is to manipulate, say, the international copper market.


I'm not sure bitcoin is deflationary in the way you state. Sure, the number of bitcoins is limited. But there's nothing to stop anyone from setting up a similar new virtual currency, called say bitcojn_1. Once this exists, the only advantage bitcoin has over bitcoin_1 is that bitcoin was there first. But since one would be able to trade bitcoin_1s for bitcoins, the new bitcoin_1s can be used for anything that bitcoins can be used for. The only parameter would be the bitcoin/bitcoin_1 exchange rate, and since the 2 currencies are identical (in terms of total number that can exist etc) why should this not ultimately tend to 1:1? But then the same holds for bitcoin_2....

I wrote the above before I read #134 by finagi... At the moment I see bitcoin is at $522 while Junkcoin stands at one $0.0083. Maybe the latter should have chosen a more appealing name.


Did the bank BUY the bitcoins off him or something? The problem, from an investor's standpoint, with bitcoins is that you can only "turn" it into real money by convincing someone to buy your bitcoins FOR real money.
He sold it at a Bitcoin exchange of course, but when the money was deposited into his bank account, it automatically triggered a laundering investigation because it was over $10000. Apparently he just told them that it was his money that he got out of the country via Bitcoin and provided proof(via bank statements, etc.) and they were fine with it. This is the bit that I find worthy of skepticism, but on the other hand, as far as I can tell, Western banks have no duty to enforce third world exchange controls


This is a problem, but it goes way deeper than this. The BitCoin network itself is vulnerable to DDoS when it computes transactions. Bad mining nodes can insert spurious or incorrect transactions into the system; while they'll be caught and rolled back, a fairly small number of nodes could slow transaction confirmation down to a crawl. Any reasonably sized botnet could make BitCoin essentially unusable for everyone.


Is Usenet archived properly anywhere? I know Google Groups bought out Deja, but every time I look there for old stuff I remember posting there are huge holes.

Me, I first got online in 1996 & gravitated fairly rapidly to alt.anarchism, where I promptly found myself embroiled in an argument with... Jim Bell, author of "Assassination Politics", referenced in one of the creepier links above. Well, I say 'argument' - my side of it consisted mainly of polite variations on "are you fucking kidding?" and "look at yourself!". It made an interesting introduction to the wide world of anarchists, or at least people who play them on the Internet.


2) I'm not suggesting that a democratic government necessarily wants to have a budget surplus; I'm saying that if your argument holds then they may be forced to run one in order to direct the economy the way they want

Err, down? Budget surplus *drains* wealth from the private sector, unless you have a trade surplus that covers both state surplus and private sector gains.


Strawman, Andreas Vox.

I never said I was against taxation, I said that those in governments/with money/in positions of power tend to reduce freedom and shift taxes onto the prols over time.

Imperfect though they are, bitcoins tend to pull in the other direction.

Since I consider it a dynamic equilibrium, I consider them a good thing - although a functioning democracy where the GMP couldn't get away with those tricks would be preferable. We don't live in that world.


I guess you're right. I admit I just repeated something a teacher said once and didn't look it up :-)


I said that those in governments/with money/in positions of power tend to reduce freedom and shift taxes onto the prols over time.

Imperfect though they are, bitcoins tend to pull in the other direction.

How would that happen? I doubt very much that Bitcoin will ever reduce the tax burden for Joe Worker; instead it's just another way for the rich&powerful; to avoid taxes and launder money.


'drains wealth' - that rather assumes that government activity is something of a zero sum game, and that a surplus isn't available to do things with that.

The logic of the Bush II tax cuts was the surplus was money belonging to the people that had to be paid back, except, there was a debt that needed paying down and then Bush II went on a spending spree that would make a drunken sailor blush.

The fact is the private sector can't handle collapses in demand as well as a government and having access to emergency funds above and beyond the cost of running a government can be useful.

Not to mention, there are multiplier effects of government spending that I've come to believe are, in fact, better than leaving it *all* up to the private sector.


I agree completely here. I think we're arguing the same points but your quotes are better to link through :)


My two favourite things about bitcoin -

+ MtGox apparently stands for Magic the Gathering online exchange

+ google results for selling bitcoin

Also I like the triffid/tulip thing. That's third.

But, you know, I thinks fans of bitcoin should keep buying them. Knock yersells out.


Whenever I read anarchically minded people taking about how the victims of state violence around the world would of course much prefer some anarcho-capitalist world of ubiquitous firepower and all, I think of things like this picture of Kabul, Afghanistan, in 1972.

I grew up knowing a lot of refugees: boat people from Vietnam, the families of judges and administrators targeted by the big drug gangs in Columbia and Venezuela, the families of Chilean academicians targeted by Sendero Luminoso, fascists, or both, and so on. That Kabul scene is what they pretty much all wanted. The women aren't packing heat; they're unarmed and confident. The scene is clean. Everybody has clothes that fit and are in good condition. And in practice, this is the fruit of good government and a pretty strong measure of social order. The desired opposite, for lots of people, isn't the state removed but the state improved.


I think pro-bitcoin and anti-bitcoin sentiments predicated on the idea that it will destroy governments by tax starvation are mistaken. The government doesn't need to track down your crypto-identity and unmask your transactions to get you for tax evasion, just show that your spending is inconsistent with declared income and savings. How can you pay for life's necessities and niceties with a large quantity of bitcoin? Surely no more easily than you can do so with cash in the local currency.

If you're renting housing the revenue service can bust you if you're not declaring the source of your ability to pay that rent. If you're buying real estate you have to pax property taxes in local currency and there's a public record of you owning it, so again they can make sure you are paying taxes annually and declaring the income that went to the original purchase.

Travel by train or plane creates records.

Buying, leasing, or renting a motor vehicle creates records.

Buying and maintaining insurance policies creates records.

Paying tuition creates records.

Paying for cable TV, internet access, phone service water, sewer, electricity, and natural gas utilities creates records.

Buying or selling stocks and bonds creates records.

Paying for medical services and prescription drugs creates records (if you are so unfortunate to live in a place where this is how things are done).

How much tax can a middle class or richer household dodge after we've placed housing, transportation, education, utilities, insurance, and investment in the normal economy as off limits for anonymous spending opportunities? All of life's major expenses leave records that can show you are spending more than you've declared in income. I'm left with comparatively minor expenses like groceries, gasoline, appliances, and clothing as opportunities to spend undeclared income. I'll still be paying sales tax on those things -- the only dodge is the payroll, income, or investment taxes that should have been paid on the money used to purchase the goods.

To get the undeclared buying power in the first place you either have to be a successful bitcoin speculator or conduct business in bitcoin with another tax dodger, aware that you will have no recourse to the law if the arrangement goes sour. Oh, and you have to get the BTC converted to your local currency without raising money laundering alerts, since most walk-in businesses don't accept BTC directly. That sounds like a large increase in risk and effort for a very modest reduction in taxation. I don't think it's a problem that should keep revenue officials awake at night.


Wait, aren't the reliance on property taxes in local government in the USA causing problems with stuff, e.g. school funding because the recession means property is worth less or people have less money to pay, and various other things, basically you end up with cratering funding for schools.

Yes. But it's a bit more than that. Income taxes also go down. And local and state governments can't really print money. Yes they can issue bonds but if you are already in deep dodo then the bonds come at a high price and are a tough sell.

Which is why some will argue that the federal government should finance schools country wide. Which gives heart burn to some and at least pause to me. Refer back to CS's comment about trading a system with problems for one that appears all nice and shiny but not yet implemented.

Which leads others to say maybe we should break up the country. :) :(

Many in Texas are all for it. Many outside of California are all for them leaving. But they really don't get it.

Oh, well.


I think you've got the realities of bitcoin right, but I think you've got the motivations of the creator(s) wrong. I don't think bitcoin was designed out of some Libertarian ideal. I think it was designed to appeal to those sensibilities, to make it easy to create some particularly zealous advocates, but I'm convinced the whole thing is a cynical money-making scheme at its heart. That's the only explanation for the extreme deflationary nature of bitcoins that makes sense to me. The creator(s) must have known that it would make it a terrible currency; it's a pretty huge disincentive to spend your money when you know it's going to be worth substantially more tomorrow. But moreover, bitcoins are going to fade out of existence entirely in not that long. Their intangible nature makes bitcoins really easy to entirely destroy, and since there's a cap on the number of bitcoins that will ever exist, they'll just dwindle away as they're lost in hard drive crashes or forgotten and destroyed in computer upgrades.

Meanwhile, the creator and very early adopters are swimming in the things from the early days when they were trivial to create and no one else was doing it. They were banking on enough suckers buying into the promises of their broken system to make them rich; sadly, they were right.


The Bitcoin network collects a small fee for each transaction, paid to the miners that maintain the network. Bring plenty of money if you are planning on a DDoS attack.


Nope. It's just that everytime an purported etymology is used as an argument, my spider sense goes. Having some close family members into the teaching persuasion going off about some plain or social pedagogue chanting words or purporting etymologies and thinking it explains something about their hidden meaning makes for us thinking it as a practice little above dancing your name. Barely.

Oh, it also makes for "pedagogue" itself becoming something of an insult with said talks.

And, BTW, shit, it seems like Eurythmy somewhat looks like my EBM dance style. Damn.


Charlie, while I think your rant/analysis/whatever is quite on-target, I guess I'd make some qualifiers.

BTW, I have to get some more informations about the fundamentals of bitcoins to make some comments, e.g. if all bitcoins are created equal or if there is some way to differentiate old, "easily computed" bitcoins from the newer, "more tricky" ones, which might translate into different values. Another factor is the resilience concerning advances in new algorithms and hardware. People thinking bitcoins are going to bring down $BIG_GOVERMINT financially might remember some of us think the first to have a quantum computer is likely to be one of the TLAs...

For the carbon foot-print, it depends somewhat on the type of electricity generation used, and this is likely to reflect pricing somewhat. For a similar example, look at aluminium production,

where the amount of hydroelectricity used quite factors into emissions:

Historically, there has been a tendency to use cheap energy sources for processes like this, including exporting said processes to regions with cheap energy. For a breaakup of costs of electricity generation by type, see:

As we see, one of the cheapest kinds of electricity is natural gas, where the advent of fracking might play into the price of natural gas. If fracking is curtailed, that'd mean natural gas generated electricity becoming more expensive, making other ways of generating electricity competitive.

On another note, producing and exporting bitcoins needs little infrastructure, e.g. you need no power lines, or roads, rails and like to transport energy intensive goods, just an internet uplink. So maybe some of the unpractical renewable scenarios we're talking about, e.g. photovoltaics in the Sahara, might work, even without of, say, an aluminium industry. Yes, I know that one has a host of other problems, but it's just as a starting point. Or we could get India to finally build its thorium fuelled reactors. Come on, I'm approaching middle age, leave me some dreams, OK? Actually, later on other energy-intensive industries could follow suit BTW.

For the unsupervised markets, as I guess most of us here, I'm in favour of decriminalization and legalization of all drugs, though I'd prefer some supervision, e.g. sale only to people above a certain age. Also, there might be some problems with nefarious uses of potent pharmaceuticals, e.g. using said substances on unwilling participants, alcohol is still the date-rape drugs No.1, but I guess it's still more easy to get a few mgs of flunitrazepam into somebody than a few ten ml ethanol, and sedating your children with drugs is not that unheard of[1].

Looking at the screenshots from SilkRoad et al., some of the drugs seem to be diverted from prescriptions; you might argue which on is more toxic, feigning symptoms to get medications to trade, thus sowing distrust between physician and patient and likely deriving some sufferers from medications, or stealing medications from granny and thus leaving her in pain...

On the child pornography market, going after the news section, many of those seem to use a mixture of barter and gift economy, e.g. "You show me yours, I show you mine". And there is a quite sick idea of getting media to barter, though according to some of the discussions on the relation of the persecution of child pornography to the curtailing of child sexual abuse, little of the media coming up with said sharing is new, most is quite old, with some showing no minors at all and quite some exploiting some grey areas[2]:

AFAIR there were cases of child pornography produced for the internet, but this was, again IIRC, more a case of narcisissm than barter[3].

Still, we might argue that with the alternative of motivating further child sexual abuse to produce child pornography to share, it would be preferable to not outlaw all alternative ways of paying for it. Of course still persecuting it with full force.

For the assasination market, well, theoretically there is also the barter economy alternative, though I'm not aware of that one happening outside Books by Patricia Highsmith and adaptations.

BTW I guess most of the guys involved don't know what they are playing with, it seems like they think it's a way to scare of politicians; now the politicians in question already are on quite some hitlists, and we didn't need bitcoins to motivate one Lee Harvey Oswald to shoot Kennedy. So politicians are already somewhat hardened targets, with bodyguards and tight security.

OTOH, there is nothing inherently dissuading people from going after the usual Right Libertarian poster guys. Plus they are much softer targets.

Then again, Right Libertarians and thinking things through is a complicated matter...

OK, just some musings.

[1] E.g. with clonidine like with Rebecca Riley,
where it likely lead to death:

Afaik clonidine has quite a therapeutic index, but 32 mg a day, with maximum dosage for adults 1,2 mg?

[2]As I always say to my pharmacist when speaking about why only retarded MPh not fit for injection or intranasal use is official for adults in Germany, or what might happen with loperamide interacting with my other mediations and crossing my BBB, or whatever, there are things I'm not proud of knowing about...

[3] The guy was caught because he was identifiable on
the photos, even though he used a Photoshop filter.
Speaking about Dunning-Kruger...


Charlie, there's an odd emphasis here on the destructive power of having each Bitcoin acquire an increasingly high nominal dollar value. Deflation *can* be a problem when it's fast enough to screw over debtors and transfer their real income to creditors, but with Bitcoin any deflation comes from natural growth in the global value of real goods (or in the fraction of goods that people want to pay for with Bitcoin rather than with paper currency). It's hard to imagine that happening fast enough to really be a problem for debtors. It's also a self-correcting problem as long as there are competing currencies -- if you need to borrow money, but you worry that Bitcoin deflates too fast to be safe for you to borrow in, then don't borrow in Bitcoins -- borrow in dollars, and repay your loans in dollars, and then (if you wish) convert your dollars to bitcoins when you actually go and buy something.

The gardeviance piece you link to as evidence of a threat to stable governance reads almost as if gardeviance believes that the more a currency deflates, the more it tends to push out competing currencies and make them less relevant. However, this is simply untrue -- when people speak of a currency "increasing in value," they simply mean that one unit of the currency can be exchanged for a larger volume of goods than before -- they do not mean that the currency will be more useful, popular, high-traffic, or trusted than it was before. I cannot think of any reason why deflation (in and of itself) would actually tend to help an electronic currency supplant paper currencies.


- Petrocurrency wars propping up fiat currencies have a carbon footprint from hell.

- Exporting inflation (and making brown people shoulder the brunt of fiat) is easier than taxing your population into responsible activities.

- Fiat violates its own utility because of Gresham's law - rapidly depreciating currency gets spent while real assets of value get hoarded and kept out of rotation

- No blacker market exists than the one that is powered by the "highy regulated" fiat currency of today (drugs, child porn, slavery, human experimentation, warfare, etc)

- Every single transaction regarding bitcoin is logged and is publicly available, unlike fiat currency today. (Perhaps one should stop thinking of taxation in terms of the peak nationalism of the 1950s and more in terms of social yields from frictionless markets)


Maybe so, though whether that's necessarily a disadvantage is up for debate. But the fact remains that the main reason gold has any value is because a large group of people have made a collective decision to assign one to it based on... Well, I don't really know; force of habit probably.


One aspect — both the original article and the bulk of the discussion are based on what might be called the official bitcoin narrative. However, it's not the truth — it's more of a cover story, really...

I'm pretty sure that in pretty much every important way, the official bitcoin story is false.

* The decreasing rate at which bitcoins are produced is not some intrinsic mathematical property of the algorithm, but a deliberate design choice. Worse, it's hard to come up with any reason for this design choice, other than the obvious one of allocating big chunks of wealth to early adopters, as #187 suggested. The standard story glosses over this to an astonishing degree.

* There is, in fact, a central bank, or rather half a dozen entities which between them control the majority (~85%) of the supposedly-distributed decision-making power. These "mining pools" can and do make decisions to manage the currency, for instance when a new release of the software inadvertently causes problems. Other parties, such as the authors of the standard client, are also pretty powerful and have also publicly used their power to manage the currency.

* The anonymity of bitcoin transactions is highly doubtful. So far I've only heard of motivated individuals tracking single exceptionally large transfers, but bulk statistical deanonymisation should be pretty successful if anyone can be bothered.

So, what's left?

A pyramid scheme designed to appeal to libertarians is the most likely explanation. As such schemes go it was clever and wildly successful, but hardly a civilisation-level threat.


Wow I can't believe that the author of this article is really the one and only Charlie that is Charles Stross.
There is not one point in this rant that has some value every point and I mean every point has been addressed a millions times over. Clearly Charles was just reading what he wanted to hear about bitcoin the same bullshit about tulips and bubble etc. Ohhh God I' ve seen that like million times already nothing new there Charles !!!!

Basically what Charles saying is the same misinformed bullshit in the line of : Microwave it is kill you!!!!

I suspect that he chose bitcoin for this rant because it is something new and everybody is talking about all over AND it is, somehow, in line with his writings.
The problem is that clearly he didn't not take the time to understand how bitcoin works. Didn't you Charles ? By the way the tulip thing that every antibitcoiners and he's dog is talking about, it is not new and not cool anymore.But really did you even tried to understand how this thing works?
Tell you what, how about solving this problem : Malfred wants to send Annette who's living on planet Mars one dollar, but you know how Malfred is!! He wants to make sure that no bank or any kind of centralized system (Bank, Visa,Paypal,Money Gram etc.)interfere on that transaction. On the other side Annette who's a bit skeptic she wants to make sure that she's really getting the money alright.
Well now if you solve this, it will be brilliant we may have Bitcoin 2.0 in our hands.
If you don't solve it then how about try to understand how bitcoins works ?
Tell you what I guarantee you'll be impressed and that is because this bitcoin thing is the kind of stuff you are usually writing about !!!!!!!
Bitcoin is not a currency bitcoins it is a protocol it is the foundation of the future of baking in the line with what the real Charles Stross imagined.
Bitcoin may die in fire but something else build on that foundation will change the financial world anyway and this is what you are missing badly.
Bitcoin white paper:


This is a good post about how badly bitcoin misses the point of what make up the majority of the world's problems with banking.

My own takeaway is that bitcoin vs. postal banking is the big cyberfantasy vs. meatspace political fight we ought to be having right now.


The 3 Billion POOREST people on the planet will be the ones who benefit most from Bitcoin. Alas, your ideology denies you from seeing this.

Libertarianism was designed to work with real messy humans and to correct the problems of idealism that have utterly failed us so far- for instance, the travesty that is "governance" in "democracies" like the USA. In fact, libertarianism, properly understood, is the one weapon against poverty that has actually worked with "messy" humans.

Unlike, for instance, Marxism, Libertarianism is based on science, specifically the science of economics... and this is why libertarianism has worked so well historically, to the extent that it has tried... very libertarian countries, like the USA have succeeded while countries that pursued marxism have failed.

In 20 years, when bitcoin is as successful as the internet has been, your essay will long be forgotten.

But your marxism will still be threatening to impoverish people.

Ironically, the first people who will be helped by bitcoin are not the drug peddlers and "evil" tax evaders that have your nickers in a bunch....

No, the people most helped by bitcoin will be the poor peasants in countries ruined by Marxism which inevitably results in currency controls. Venezuelans will be able to protect their income. Argentinians will be able to trade for dollars at a real exchange rate. Chinese will be able to preserve their money. Indians who have long been forced to use gold jewelry due to currency controls, and have paid a high cost for doing so, will be able to save even more of their money.

At some point, constantly seeing socialists rail against every technology that gives humans more freedom, you have to ask.

At what point do we admit that socialists are really just evil people who hate the poor?

Why do you hate the poor, Charlie?

Why do you want the poor to "die in a fire"?


Libertarianism was designed



@160: In the long run I see crashing the property market as a feature not a bug. I proposed replacing income tax graually to prevent people being caught in negative equity. The large allowance for your personal residence I proposed should prevent most of the other problems you suggest. Own your own home pay no tax. Rent it and your landlord has to pay the full amount and pass the cost on to you.


Engineer -

You are apparently not sufficiently educated on economics or how Bitcoin works - and doesn't - to understand the nature of the criticism.

Let us put the libertarianism / liberal/socialist control/taxation issue completely aside for the moment. We must of necessity turn to the degree to which Bitcoin fails utterly at the design and implementation level at being a viable currency within a functioning economic system.

Its limited nature and discovery mechanism, inflexibility, and deflationary structural tendency are *almost exactly* what's wrong with gold as a medium of exchange. It fulfills all the characteristics of a speculative commodity, not a currency. Its velocity tendency is regressive; the entire POINT of a currency is that the value of the economy is money supply times velocity. Deflation, due both to speculative behavior and the limiting nature, is absolutely the worst thing you can do for velocity. This aspect of Bitcoin's design - or anti-design - makes it a horrible awful viciously self-destructive thing to try and use as a currency.

It's so bad that it brings to mind the question of whether that was an intentional design feature of a malign designer, cloaked in extropian libertarianism, or merely an incomplete understanding of the use case and needed features (or, possibly, the best solution they could come up with at the time, intending that it be a 1.0-ish bridge to a 2.0-ish future with another solution).

Please don't go all slavishly libertarian on us. I'm libertarian, but I understand economy. I'm libertarian, but I understand the value of an organized society and rule of law in stabilizing and growing economies, societies, and individual liberty. Out-libertarianing me is kicking yourself in the balls.


I'm a libertarian and I don't really see Bitcoin as an issue at all. It is just one more competing commodity in a huge marketplace. Bitcoin is no more likely to create a libertarian utopia (or enable the collapse of civilization into roving gangs of heavily-armed child pornographers/drug lords) than pork belly futures, Google stock, 1 ounce bars of platinum, or General Motors bonds.

Personally, I suspect Mr. Stross is having a bit of fun with the people he anticipates showing up for this post.


Unlike, for instance, Marxism, Libertarianism is based on science, specifically the science of economics...

ROFL: "science of economics"... which one?


COUNT - you can count?
How many dead?
Yes, each indicidual one may be a tragedy, but what proportion of the country or world population?
Now compare with previous times.
Sorry, but this is an old, tired & fundamentally WRONG argument.
Please don't do it again, huh?


paws @ 151
An excellent idea!
Legalise & regulate & tax all drugs.
Distribution through your local pharmacies.
Drug dealers cut off at the knees, drug-related deaths & injuries plummett (Since most of siad events come from impure, unregulated uncontrolled substances that are NOT waht they claim to be) crime gors down, police can chase real violent criminals & tax e=returns go up.
What's not to like?


Ian S @ 155
Here's hoping for a new bitcoin replacement, but one that is actually connected to the *creation* of value (OGH played with it as 'reputation')

I wonder, oh yes, of course, here it is:

Who steals my purse steals trash; 'tis something, nothing;
'Twas mine, 'tis his, and has been slave to thousands;
But he that filches from me my good name
Robs me of that which not enriches him,
And makes me poor indeed.
"Othello" Act III, Sc3.


Regardning hoarding and money as a store of value:

Currently we save for pension or our next car by buying and saving/hoarding gold, stocks, bonds, property or shares in funds. Then we need to sell some of that to live as a pensioner or to buy a car, since we use money (SEK, USD, EUR, GBP) for that. But this split is artificial. There is no real reason why we can't buy a coffee at Starbucks with 0.005 of a GOOG stock, or with a credit card backed by my stash of gold. This is just a software and legal problem.

With Bitcoin, this artificial split is removed. I can save for pension with Bitcoin, AND buy an ice cream with it. Same same.

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This page contains a single entry by Charlie Stross published on December 18, 2013 1:53 PM.

Trust Me (I'm a kettle) was the previous entry in this blog.

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