Why Charles Stross Wants Bitcoin To Die In a Fire

Hugh Pickens DOT Com writes "SF writer Charles Stross writes on his blog that like all currency systems, Bitcoin comes with an implicit political agenda attached and although our current global system is pretty crap, Bitcoin is worse. For starters, BtC is inherently deflationary. There is an upper limit on the number of bitcoins that can ever be created so the cost of generating new Bitcoins rises over time, and the value of Bitcoins rise relative to the available goods and services in the market. 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. However there are a number of huge down-sides to Bitcoin says Stross: Mining BtC has a carbon footprint from hell as they get more computationally expensive to generate, electricity consumption soars; 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's utter lack of regulation permits really hideous markets to emerge, in commodities like assassination and drugs and child pornography; and finally Bitcoin is inherently damaging to the fabric of civil society because it is pretty much designed for tax evasion. "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," concludes Stross. "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.""

Summary is a troll

[Anonymous Coward]

The link to Fourier's gangrene on Wikipedia is totally unnecessary, and the article includes an image that is decidedly not safe for work.

Captcha: unclean

Bigger than Jesus?

[tepples]

BitCoin is bigger than Jesus.

How so? Google returns 124 million results for Jesus Christ and 40 million for Bitcoin.

Bitcoin is not anonymous

[Engeekneer]

I agree with some points, but in general he seems to be only somewhat correct.

First of all, BitCoin is not anonymous. BitCoin is pseudonymous. Once mining dies out (which also solves a lot of his other qualms), you need to trade bitcoins some way. You have to exchange your real money to bitcoins. ALL transactions are public which means it's really easy to start profiling people. In the future it's probably easier to trace a person's bitcoin transactions than normal ones.

Re:Where Internet Libertarians come from

[Anonymous Coward]

That quote perfectly describes Democrats and Republicans, not Libertarians. Ron Paul was the only person in the debates who made any real sense and was America's last hope. And no I'm not a basement dweller, I make above average pay and own a penthouse.

The Republicans committed open election fraud and also changed election rules where necessary to prevent Ron Paul from winning.

https://www.youtube.com/watch?v=wIm3FTivtEM

Re:Anyone Who Talks About Deflation......

[hawkinspeter]

An ex-software developer turned sci-fi/horror author.

I personally love his Laundry series (modern day Lovecraftian/spy horror stories) and haven't read too much of his other stuff.

You should really hand in your geek card if you haven't heard of him.

the more corrupt the Govt becomes

[FudRucker]

the more popular alternatives like BitCoin become, because people will want to divorce themselves from the monetary system the Govt has in place, who wants to pay tax to a corrupted government that does things like arm criminals like mexican drug smugglers and islamic rebels that could potentially be terrorists, or bailing out banks when they gambled away other people's money on bad investments and the banks did it with the blessings of the Govt when they repealed the Glass-Steagall Act, and Barney Frank & Chris Dodd helped too with their bad financial policies, who wants to pay taxes to a bunch if corrupted incompetent criminals that try to pass themselves off as a legitimate government,

i hope i win the lottery because i would use the money to leave the USA quicker than you can say Jackie Robinson

Re:Pay for Laundry jobs with it

[Githaron]

http://xkcd.com/1022/ [xkcd.com]

Re:OMFG

[mrchaotica]

Blame government for treating Bitcoin as a commodity instead of as a currency, subject to the same laws as cash. Oh, wait, it basically is subject to the same laws as cash, except it's a whole lot easier to carry and the government can't create more of it out of thin air (which is a good thing, if you want your money to have the same or better purchasing power tomorrow as it did today).

Don't you realize that the latter argument invalidates the former?

Since Bitcoin is deflationary, it makes more sense to stockpile (or hoard) it than to spend it. That is also what makes it more like a commodity than a currency.

Re:Pay for Laundry jobs with it

[Lord Apathy]

0) Bitcoin transactions aren't magically anonymous.

What is more anonymous than bitcoins? Paying an assassin a wad of cash. That is how these things have been done for centuries.

Bitcoins are harder to trace than say a wire transfer or a bankdraft but they are not perfectly anonymous. A fist full of cash is far more anonymous.

The only reason that bogeyman was brought up was because The Silk Road moron tried to pay for one with bitcoins. As for the rest of it, traditional means of payment have bought more assassins and child porn than all the bitcoin transactions, period.

Re:OMFG

[mrchaotica]

Hoarding a currency is natural when its purchasing power is increasing and there's nothing worth spending it on.

If the purchasing power is increasing by more than the risk-adjusted return on investment for all the things you might spend it on, then it's never worth it.

Let me give an example: say the real rate of return on US dollars is assumed to be -3%, with zero risk. It is easy to find investments whose risk-adjusted rates of return exceed that (e.g. US treasuries risk-free at 0%, stocks with risk at 7%, venture capital with a lot of risk at (some big number)%, etc.). And the key thing about all of these is that they're investments, not commodities -- i.e., paying people to create something, rather than stockpiling something that already exists.

In contrast, if the real rate of return on Bitcoins is +3% with zero risk, then it's a lot harder to find an alternative investment worth making. Therefore, much less investment gets done (i.e., much fewer new things get created) and economic and technical progress is stifled.

Read the "Neptune's Brood"

[Cyberax]

Read the "Neptune's Brood" - it's about as close to a treatise on interstellar economics as you can get in science fiction. He definitely knows what BTC is and he provides a rational critique of it. I happen to agree with him, btw.

Re:Ending tax evasion

[alva_edison]

The US federal government is constitutionally restricted from anything that can't be interpreted as an income tax (so my VAT suggestion fails as well). The US constitution is fairly short, but mentions twice that any taxes collected by the federal government must be given to the states (proportion to population). Income taxes are specifically exempted from that requirement by the 16th amendment, but it remains for any other tax.

Only direct taxes [wikipedia.org] must be apportioned. Indirect taxes (things like tariffs, income tax, VAT) are allowed under Article I, Section 8, Clause 1 [wikipedia.org]. The Fuller [wikipedia.org] court did cause some complexity when they ruled that some income tax (specifically that derived from property) was a direct tax (previous understanding was that it was indirect). The 16th Amendment specifically patches the issue created by the Pollock case [wikipedia.org].