Why Charles Stross Wants Bitcoin To Die In a Fire 691
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.""
Boo hoo. (Score:1, Interesting)
Too bad you can't just have bitcoin killed like the last 4* out of 5 presidents who made any attempt at ending the fed.
*Andrew Jackson was just too stubborn and mean to die by being assassinated.
It is all those things and more ! (Score:5, Interesting)
It's also a commodity. There is nothing to stop someone else from starting their own currency, just as there was nothing to stop BtC from appearing out of nowhere its own line of "value" . As BtC get more expensive and mining get harder we can expect to see "me too" currencies whose "selling" point is to early adopters you can get in on the ground floor and whose "trading / accepting" point is, it hasn't hit its deflationary peak yet, so accept it, it will be worth more tomorrow than it is today.
What's good for the goose is good for the gander. This is the real fundamental flaw in all unregulated fiat currencies. Fiat currencies are worth something because , by law, there is a governed amount of money and no other competing monies which themselves are not also so governed.
With Bitcoin, not so much. The exodus to "other" Bitcoiny type currencies hasn't happened yet, but there's no reason to think it won't and ever reason to think it will.
Oh wait, I spoke too soon. Or not soon enough. Or something.
http://www.coindesk.com/litecoin-silver-bitcoins-gold/ [coindesk.com]
Now a review without reading TFA? (Score:4, Interesting)
So the above poster doesn't even know Charles Stross is a writer - that's a pretty HUGE sign that they didn't read the thing that is being suggested as full of holes.
Re:Pay for Laundry jobs with it (Score:4, Interesting)
I don't understand this at all. I've never heard of Charles Stross and after skimming the Wikipedia article about him I fail to see why his opinion on Bitcoin is relevant.
To me this seems like the articles where some psychology professor bitches about why engineers should program robots with morality without understanding jack shit about automation and the precautions taken to make sure that failure happens in a controlled fashion.
In what way is Charles Stross opinion about Bitcoin more relevant than any other dudebro that doesn't know anything about economy, cryptography or anything else that would be relevant in understanding Bitcoins?
Seems to me that he have just heard someone who also doesn't know anything talk about it and formed an opinion from that.
Re:OMFG (Score:3, Interesting)
The amount of mining done is irrelevant to transaction loads, it essentially controls the risk ratios for any given specific transaction that might be reversed. You get the same level of security for the same amount of mining regardless of whether that mining protects 100,000 transactions or 10 million.
Bitcoin can fairly easily scale to loads experienced by existing payment networks. PayPal only handles about 40-50 transactions per second, it's not very much. Visa does more like 10,000 per second, which a solid multi-core server could easily chew through with good optimisation of the software: processing a Bitcoin transaction is a lot cheaper than rendering your average PHP-driven, complicated database backed webpage. You can read a back of the envelope analysis of how Bitcoin scales here [bitcoin.it].
I think it's rather sad (not hilarious) how its detractors have zero understanding about how the system actually works, but decide to trash it anyway.
Re:OMFG (Score:4, Interesting)
Hoarding a currency is natural when its purchasing power is increasing and there's nothing worth spending it on. Deflation makes people wiser spenders. Businesses and governments don't like this because they need cash flowing, and would rather devalue the currency to incent spending than produce products that people really want enough to spend their money.
We may have a philosophical difference here, so there's not a whole lot of point in going on at length.
Re:Dune (Score:5, Interesting)
One of the most blatant examples of foolish political ideas by science fiction authors is Gene Roddenberry's idea that advanced civilizations would have no money.
I'm not so sure Gene was that far off the mark. If you think about it money is basically a bartering tool to assist with the distribution of scarce resources. If you reach a point where resources are no longer scarce (sometimes called a post-scarcity society) then what would be the point of money? You want a mansion, order it up! You want a rocket ship to fly to Mars? Submit the requisition and the machines build it out for you. Too crowded on Earth? Grab a new residence on the ring-world being built around Alpha Centauri. And on and on. The Culture series of novels by Iain Banks envisions such a society, and I have to say it makes a lot of sense.
The part where Roddenberry's idealism got ahead of reason was in thinking it would happen that soon. I get the sense that we're still at least 1000+ years away from getting rid of money entirely. But if we don't blow ourselves up and we keep on developing tech at the current breakneck pace, I would say we will definitely eventually reach a point where money is no longer a necessary concept.
Re:Pay for Laundry jobs with it (Score:5, Interesting)
The reason Stross' opinion might be worth paying attention to is his writing often revolves around economics, and people like Economics Nobellist Paul Krugman think he's solid on it: http://boingboing.net/2009/08/11/charlie-stross-and-p.html [boingboing.net]
Re:Pay for Laundry jobs with it (Score:2, Interesting)
"It's not. From skimming the same article about him I see no reason that his opinion on bitcoins should carry any more weight than mine, or anyone elses. An we all know how much my opinion on bitcoins mean, jack and shit."
He is also hopelessly naive about both economics and politics.
Just for example, he missed these points (although he is correct that Libartarians love this stuff):
First: yes, Bitcoin is deflationary, but deflation is not the bugaboo mainstream economists make it out to be. U.S. (proto-United States, that is, and even after the revolution) survived quite successfully without significant inflation for 300 years. Objective data show the current "inflation is good" policy to be economically destructive. (But politicians, bankers, and Wall Street love it because it gives THEM more money and power.) Healthy markets do not need inflation. Just look at computers for example. More bang for your buck every year. (Hint: that's a "deflationary" market.)
Second: no, it is not "designed for tax evasion". It is designed to make income tax impractical. Two very different things, and from Stross' viewpoint the latter is worse than the former. But he missed it completely.
Third: I think it's stupidly funny that he used the old "child pornography" . Jesus Christ, hasn't anybody had enough of that bullshit yet? "It's for the children!" Yeah, right. [/sarcasm] Well, guess what, Sherlock Stross? CASH can be used for those things too. I don't see you railing against cash.
Stross' rant is motivated by politics. Plain and simple.
Re:Pay for Laundry jobs with it (Score:4, Interesting)
It's definitely worth considering, and if you haven't read the original article, you should. I don't agree with ALL of his points. E.g., I'm not at all convinced that an untraceable currency is a bad idea. Other of his points, however, are plausible. And one reason I came here was to see if anyone had and counters.
E.g., an inherently deflationary currency (becoming arbitrarily expensive to generate new values as the easy ones are computed) does seem like a bad idea. What would be better would be a currency where each new value required a fixed amount of effort, and where it would slowly decay in value if it weren't being transferred. (A half-life of 20 years seems about right, if the original creation of the value isn't too difficult.) But actual radio-isotopes aren't desirable, because you don't want it to be dangerous. Also it would be nice if trading it increased it's value.
N.B.: I don't say that such a currency is any ideal. Or has any plausibility. But I have my doubts about a currency with a fixed number of tokens of value.
It's also true that malware that mints bitcoins has already been discovered. So that worry about them isn't a hypothesis. One might wonder just how common such malware would become, but if they increase in value, one can expect that it will become more common. So that point of his is plausible.
Etc.
Re:Dune (Score:4, Interesting)
Except that some things will remain scarce.
There's limited amounts of land to put mansions on. There's limited amounts of mass to work with. There's limited numbers of other people to work with.
In Star Trek (TOS), there were a very limited number of starships, suggesting that they weren't free. (I never did understand the difference between a starship, like the Enterprise, and a spaceship capable of interstellar travel, usually offscreen.) The Enterprise was constantly running into people who didn't have unlimited material wealth. Cyrano Jones was negotiating tribble prices in "The Trouble with Tribbles", and seemed anxious to get free drinks, suggesting that alcohol was at least treated as a scarce resource. No Enterprise crew member worried about money, but they had demanding jobs that took them anywhere in the galaxy whether they wanted to or not, and could (and sometimes did) get them killed.
Moreover, we are in what would look like a post-scarcity economy to previous eras. If we had the political will, and wanted it so, we could easily provide everybody with shelter, food, medical care, etc., that would look almost miraculous to anybody from the Renaissance. We could give everybody a sword as good as anything a king had in those days, no problem. Most of our poor people live much better than 99% of medieval people. About the only advantage a 14th-century king would have over me was the ability to boss people around.
The only way we could have a true post-scarcity economy would be if we were able to manufacture robots for any need (including therapy, sex, and general companionship), and rationed out scarce things like land without money.