I haven't mentioned it recently, or at all, but a few months ago I spoke with a Bitcoin guy. He was my first, a tecky by trade who really believed in the Bit.
I asked him what the appeal was. For him, it was to take control of money in ways that separate it from people. Which for me, was weird.
Our money, after all, is created by lending. Take out a loan from Commercial Bank A, and they create that amount. You are on the hook for the entire principal, plus some interest. (Whether or not that interest has to be created as well, or—as Steve Keen maintains—whether the velocity of spending will create a flow of money sufficient to cover the interest, well, that's beyond my own understanding.)
And, I maintained, what's wrong with people? Money is just what people exchange through the medium of banking. People have always incurred debts to each other. It's how we bond. David Graeber debunked that whole "if there weren't any money, we would have to resort to barter" crap years ago in his book Debt.
This was a ticklish point to Bitcoin Guy. He didn't want to trust people.
I can't say I blame him, but if you aren't going to trust anyone, why buy things?
Things went back and forth a bit before I backed off. I wasn't set to gain a convert, just learn what the big deal was. In a nutshell, here's the problem I have with Bitcoin.
People hook up a decent sized computing machine to run an algorhythm. If they do it enough, they "mine" a Bitcoin. That coin is (cross fingers that your computer don't crash) permanent. The number of coins is to be fixed (I don't remember the number he mentioned).
Actual money, by contrast, is constantly flowing in (a loan is finalized) and out (a loan is paid off in full) of the economy. Since lending is generally for things of value, dollars roughly give a value to things purchased.
Right now, I doubt we will be able to lend too many new bucks into being simply because the conditions for profitable lending are fewer and getting worse with every erg of energy we fail to find. Those darned dinosaur grave yards are less full of tasty, tasty fossil fuels with every passing day.
So, discounting that reality with the aplomb that only an economist can muster, the banking gurus are propping up the banks, hoping things will return soon to hunky dory land. Reality will probably return with a built-up vengeance. We'll see. I'm not looking forward to that.
But Bitcoins? They are but a commodity, not a currency. They are traded like gold of yore.
Worse, just listening to Bitcoin Guy for as long as I did, I detected somethings I hadn't considered before. First, that whole notion of "freeing" money from people. That's just downright scary, when you think about it. Graeber was clear: gold money was good for doing the kind of deals in which strangers engage. Bitcoin seems the same. Gold and Bits are, to me, therefore the natural outgrowth of Government Suspicion.
I haven't transcribed it yet, but I got a good concept recently out of Henry Giroux's The Violence of Organized Forgetting. Essentially, people who want to dismantle the government—the wealthy behind the misinformation machines, mostly—instill this creeping fear that government officials cannot do a damned thing. Therefore, others must move in to save the Public from their elected officials and functionaries.
The danger here is that, far from being just a hidey-hole for people who can't get jobs elsewhere, "government" is actually a process by which the participants of the society can, well, participate. It is not a monolith (properly executed), it is a rough draft constantly being refined for the times.
To remove people from government, therefore, is to remove people from their only hope of achieving self-governance.
Which means Bitcoin is profoundly anti-democratic. And I mean "democratic" as in "found in a democracy," not as in the name of a partisan party within our current political system.
Of course, the Federal Reserve system that Bitcoin guy distrusts is also massively anti-democratic. That goes without saying.
My problem, as I told Bitcoin Guy, was that I felt Bitcoin is just as hackable as any other software. Sure, it looks pretty darned good right now. But what about a hack that no one has yet considered, or that has been considered only by an incredibly intelligent or lucky person/group? There is a chance that it could be hacked and nobody would notice, perhaps for years.
By contrast, we could open public banks and take the process of monetary creation out of private hands. Sure, it would still rely on people; but I don't pay my bills to just non-people. Machines take my money, machines might facilitate transfers; but I buy things from people.
And has anyone yet figured out a way to run any electronic asset transfer system if we get fucked again with another Carrington Event? We got lucky the last time simply because electronics didn't exist. Next time? Yikes.
Then again, when that happens again, it's very likely that money transfers will be the very least of our worries.
I've rambled enough. My sister was kind enough to hand me down an old computer of hers, which was an upgrade for me, so I thought I'd bang out an old fashioned rant.
Back to finding some dinner.
- Bitcoin Believers, Guzzling the Flavor-Aide