
Unforeseen Consequences and that 1929 vibe - enkiv2
http://www.antipope.org/charlie/blog-static/2017/11/unforseen-consequences-and-tha.html
======
tom_mellior
I'm a bit disappointed by this. I knew that Charles Stross is fiercely against
Bitcoin, but I thought he understood the technology better. I'm surprised he
writes this:

> we're going to run out of new BTC to mine sooner or later

as it's not a question of "sooner or later", the supply schedule is fixed and
well-known. But even more:

> At that point, the incentive for mining (a process essential for reconciling
> the public ledgers) will disappear and the currency will ... will what?

... will be driven by mining fees. Or maybe it won't, which is also a
reasonable guess. But suggesting that we have no idea and no plan is
disingenious.

Also:

> if, as I think, BTC doesn't deliver, then the bubble will eventually burst.

It's not necessarily an all-or-nothing thing. Is 10'000 USD overvalued? Maybe,
but that wouldn't mean that the actual value is 0 USD, only that it's
somewhere between 0 and 10'000.

And:

> A working distributed cryptocurrency model is inimical to the interests of
> billionaire monopolists who want to get rich by imposing rent-seeking
> practices [...followed by regulatory phantasies]

I also think this argument is mistaken. The easiest way of rent-seeking for
billionaire monopolists would be to buy Bitcoin and just wait and reap the
rents.

~~~
nwah1
>will be driven by mining fees. Or maybe it won't

errm.

>The easiest way of rent-seeking for billionaire monopolists would be to buy
Bitcoin and just wait and reap the rents.

Pretty much all of them realize that the speculative bubble is built on
nothing.

~~~
tom_mellior
> errm.

Please elaborate your objection? I'm happy to reiterate that it's clear that
we can't predict the future, but that it's intellectually dishonest to suggest
that we don't have _plans_ when in fact we do. (It's fine to criticize the
plans, but that's not what Charlie did.)

> Pretty much all of them realize that the speculative bubble is built on
> nothing.

That's no reason not to profit from it while it lasts, if you're a rent-
seeking billionaire who can afford to lose their investment. It's strange to
suggest that greedy rent-seekers would not be greedy in this one specific
instance.

~~~
nwah1
>Please elaborate your objection?

I was just noting that you didn't seem to have an especially clearer picture
than Charlie did, while claiming he was wrong to say the future was unclear.

>It's strange to suggest that greedy rent-seekers would not be greedy in this
one specific instance.

You don't seem to understand what rent-seeking is. Rent-seeking is when you
seek out particular privileges that enable you to gain an advantage. A "sure
thing" if you will. By controlling asymmetric information, the levers of
government, cornering the market, or controlling exclusive rights over
naturally scarce opportunities.

They are greedy, but not stupid. A greedy person may play slot machines, but
would not be intelligently directing their avarice. This is ultimately what
you are suggesting they do.

~~~
tom_mellior
> I was just noting that you didn't seem to have an especially clearer picture
> than Charlie did

I'm not sure what to tell you if you don't see a difference between "there are
clear plans for the future, but of course plans are no guarantee for what will
happen in the year 2100" (my point) and "there is no plan for the future,
nobody has any idea how to incentivize mining, what a bunch of idiots"
(Charlie's statement). In fact, the plans do not only exist as plans. They are
implemented in software that is deployed on a huge network of machines.

------
sremani
He lost me with the overuse of word "neo-Nazi" and taking simple hoops from
libertarian to neo-Nazi using one persons/trolls comment.

Either put a cogent article without innuendo to make a point or nothing.

To quote a wise man, "this is not an argument, its a slur".

~~~
buttcoinslol
The unchecked greed of libertarian ideology is potentially as destructive as
fascism, luckily libertarian ideas will never be politically palatable.

~~~
VMG
How can an ideology based around property rights be greedy? Is it greedy to
keep what is yours?

~~~
buttcoinslol
Libertarianism advocates for the privatization of EVERYTHING and the
destruction of the social safety net. Have fun enforcing your property rights
when the guy with more capital can drain you dry in the private court system.
Most people who advocate libertarian ideas would be a serf/slave in a real
libertarian paradise. I would also be a serf/slave, I have no illusions about
that.

~~~
VMG
> Libertarianism advocates for the privatization of EVERYTHING and the
> destruction of the social safety net.

The privatization of everything including the social safety net.

> Have fun enforcing your property rights when the guy with more capital can
> drain you dry in the private court system

Users of the current court systems are having "fun" too, you know. What's the
benchmark here?

~~~
buttcoinslol
My point is that wealth stratification under a libertarian system would
rapidly approach the 1% owning 90+% instead of the 40% they now hold.

Robber Barons, Gilded Age. <\--- Read about this era before advocating for
libertarian ideas

It's hard to have discussions about the present if you don't understand the
past.

~~~
VMG
> Robber Barons, Gilded Age. <\--- Read about this era before advocating for
> libertarian ideas

The most rapid increase in prosperity in the history of mankind, where
millions of people were lifted out of abject poverty. Currently repeating in
other countries that embrace free-market capitalism. What's your point?

~~~
buttcoinslol
Class/wealth stratification is bad for everyone. The poor suffer, and if
things get bad enough, emperors and their families are gunned down, [1] and
the rich are beheaded. [2] Nobody wins. Striving towards a saner wage/wealth
gap will have more benefits for society than hyperbolic wealth stratification.

[1]
[https://en.wikipedia.org/wiki/Execution_of_the_Romanov_famil...](https://en.wikipedia.org/wiki/Execution_of_the_Romanov_family)

[2]
[https://en.wikipedia.org/wiki/Reign_of_Terror](https://en.wikipedia.org/wiki/Reign_of_Terror)

~~~
VMG
You're making good arguments against communism.

~~~
SauciestGNU
It's more fair to say he's making good arguments against wealth distribution
so bad for the majority that they're willing to kill their masters to have a
chance at improving things.

If the rich were interested in self-preservation they'd treat wealth
inequality as an existential issue.

------
IIAOPSW
I'm commenting because I can't downvote.

I don't want to downvote because I dislike what it says. I want to downvote
because its poorly researched and full of hyperbole.

~~~
Synaesthesia
But expand on your argument too. I think some of what he says is correct. Not
as anti-bitcoin as him but I do think it is due for a crash.

~~~
skgoa
Sure, bitcoin is going to become more or less worthless in the not too distant
future. But this article is just bad on so many levels.

------
agentultra
The Nazi connection is interesting and there do seem to be echoes of that
moment in the past in our current situation.

I'm anti-BTC. The energy consumption is increasing on a linear curve at best.
And we're at a point in our history where we need to reduce our atmospheric
carbon drastically... BTC is only increasing it based on the speculation of a
very small portion of Earth's population and provides little value to us in
any meaningful way.

Also I'm not a free-market libertarian so there's that.

------
Sir_Cmpwn
Good god! I'm sick of bitcoin, too, but this guy is way off his rocker. Maybe
while your opponents are taking "red" pills you could take a few chill pills.

------
jstanley
> At that point, the incentive for mining [...] will disappear

The intention is that by that point, the transaction fees alone will be
sufficiently high to incentivise mining.

~~~
saalweachter
So here is the problem.

The security of a Proof-of-Work network is proportional to the amount of work
you put into it. You can call the work electricity or computation, but
ultimately the work is money. And the money spent securing Bitcoin will be
basically the mining rewards. Right now, at $10,000 / BTC, that's about $6.5 B
/ year (10k$ / BTC * 12.5 BTC / block * 144 blocks / day * 365 days / year).

If you want to maintain the current level of security on the Bitcoin
blockchain, you need to continue to pump $6.5B / year into mining rewards. You
could spend less, but then you get less security. Right now BTC is pumping
that money in through inflation and investment in the currency through
exchanges. If you wanted to put that money in through transaction fees, then
you need to have $6.5B worth of transaction fees per year.

That is a lot.

VISA has a yearly revenue of $13B, and a lot of that is interest charges and
bullshit fees, not transaction costs. Mastercard and Paypal have yearly
revenues of $10B.

It's still not impossible. If Bitcoin processes a similar number of
transactions to one of the major credit card companies at a similar fee level,
that would probably work out. It would need to process significantly more
transactions to make a lower fee work, and if it can't match the transaction
volume, it needs a significantly higher fee.

If the fees are insufficient, the size and security of the Bitcoin network
will fall to match. How much security are you comfortable with? $1B / year?
$100M / year? $1M / year?

~~~
jstanley
Actually transaction fees already pay a significant part of the mining reward.
And with the development of 2nd-layer technology like Lightning Network, fees
for on-chain bitcoin transactions can go very high indeed without significant
adverse effects on bitcoin users.

~~~
saalweachter
Transaction fees are currently 11% of the mining reward, which isn't nothing.
If the non-transaction mining reward went away tomorrow, you'd expect the
mining power to decrease 10-fold, and the work securing the Bitcoin network to
be about $700M / year.

By itself, I'd say $1B / year might be enough security. Any malicious nation-
state wanting to attack the network through mining power would need to spend
on the order of a billion dollars, which is a lot even for a large government.
On the other hand, if you did have a sharp discontinuity, and not a gradual
turn-down in spare capacity over many years as the mining reward gradually
decreases, you would have a unique opportunity for attackers: a huge amount of
mining equipment would likely be dumped on the market at once, and an attacker
might be able to build up their own capacity quickly and cheaply.

The Lightning Network helps with scaling the number of transactions, but it
doesn't change the need for an adequate amount of work to be done to secure
the core network; you still need to spend a large number of dollars (or
Bitcoins, if you prefer) each year mining, so that attackers cannot afford to
attack the network through that venue. The Lightning Network gives you a
larger tax base for this security tax to be levied on, but it doesn't change
the fact that when you ask the question "How much money should we spend mining
Bitcoin?" the only secure answer is "As much as we possibly can.".

~~~
jstanley
100% agreed.

------
trynumber9
If you tweeted, in English, "ban imports from Japan" you'd get a swarm of
frog/kek avatars among all the anime girls. Does that mean that Japan is a
Nazi-aligned country?

~~~
lmm
Japan is largely ethnonationalist, a strong believer in traditional gender
roles, has a culture that individuals should be subservient to the system, has
close ties between corporations and government, is highly environmentalist,
has a powerful police with few checks on them... while I'd reserve the term
"Nazi" for those actually engaging in genocide, it's pretty fascist. There's a
reason those people see themselves as aligned with Japan.

~~~
rgrieselhuber
Environmentalism is fascist now?

------
beat
The bitcoin mining industry will end once the electricity (and hardware)
becomes more expensive than the value of mined bitcoins - it stops being
economically feasible. If we're already breaking .1% of the world's energy
consumption, then we're probably pretty close.

Bitcoins will continue to be valuable, short of some security flaw wrecking
them, simply because of scarcity and functionality. But if they can't be used
for a majority of (legal) financial transactions, the value will be limited.
And as long as the exchange rates are highly unstable and exchanges are
unreliable/untrustworthy, mainstream banking won't touch it with a ten foot
pole. They don't want the risk.

~~~
VMG
> The bitcoin mining industry will end once the electricity (and hardware)
> becomes more expensive than the value of mined bitcoins

You do not understand mining difficulty adjustment

~~~
beat
Apparently not. Care to enlighten me? Because seriously, .1% of global
electricity consumption, if that number is accurate, is _expensive_. Are we
going to go up from there, or down, and how does it relate to a _long-term
stable_ bitcoin exchange rate, relative to mainstream reserve currencies?

If we're in a speculative bubble (we are), it justifies the mining. But
bitcoin will never, ever be a viable global currency if it's deflating 500% a
year, like it is right now. Mainstream reserve currencies are _designed_ and
carefully regulated to inflate at 1-4% or so, slowly losing value - inflation
encourages investment, because sitting on cash hurts. What could someone
invest their bitcoins in that could justify giving up the possibility of a
500% annual return just for the techno-equivalent of stuffing them in a
mattress?

Bitcoin mining, apparently.

See where I'm going with this? Investing outrageous sums in bitcoin mining
makes sense when it's a massive deflationary bubble. It makes almost no sense
at all when it's slowly inflating like a grownup currency does.

~~~
Anderkent
> Apparently not. Care to enlighten me? Because seriously, .1% of global
> electricity consumption, if that number is accurate, is expensive. Are we
> going to go up from there, or down, and how does it relate to a long-term
> stable bitcoin exchange rate, relative to mainstream reserve currencies?

The electricity cost of mining bitcoin is directly related to the transaction
fees, once all bitcoins are mined. This is because if mining is very
profitable (transaction fees >> electricity cost), more people are
incentivised to mine, thus raising the hash rate and difficulty, thus making
mining more expensive. If mining is very unprofitable (transaction fees <<
electricity cost), people turn off their machines, hashpower and electricity
cost drop, and mining becomes easier.

Thus if successful BTC has ~300k on-chain transactions a day, transaction pays
average $1 in transaction fees, you expect ~$300k of electricity to be used a
day.

\--

No one expects BTC to keep deflating 500% once it reaches saturation.
Currently all of BTC value is speculative - based on the 0.1% change it'll
become successful and be worth $MOON, against the 99.9% change it'll fail and
be worth 0.

In the end-game scenario where it's an established global exchange network,
with all the coins available already mined, it's only as deflationary as other
currencies are inflationary.

The 'inflation causes investment' theory only applies to investment that has
expected return of 1-2%; given that the stock market return is estimated at
~7%, and yet people still hold cash, it seems hard to believe that inflation
has significant impact on investment.

~~~
beat
Holding cash is part of the risk/return/liquidity triangle. All investment
functions against this triangle - cash is extremely low risk, and maximally
liquid, at the cost of a slight negative return. (Contrast this to, say, angel
investment, which has near-maximum potential returns, but very high risk and
near-zero liquidity.)

And contrast the low risk / high liquidity / near zero return behavior of cash
with bitcoin. With bitcoin, you have very high risk (speculative bubble) /
limited liquidity (can't be used for most transactions, must exchange) /
absurdly high returns. It is in no way like cash. It's pure speculation.

A _medium of exchange_ needs to behave like cash. It needs to be highly stable
and highly liquid. Bitcoin is neither. So if the intent of bitcoin is to
replace cash (and cash-equivalents like credit cards), it's doing an
absolutely shitty job of it, and will continue to do so until the price
stabilizes.

As for inflation's impact on investment... read the WSJ or Forbes regularly
for what the mainstream financial industry thinks about that. They're
absolutely inflation-phobic. I'm old enough to remember late-1970s
stagflation, which made basic investments like real estate totally absurd and
nearly wrecked the economy. No one wants to go back to that. But if there's
one thing worse than high inflation, it's deflation - when cash actually
increases in value. It radically disincentivizes investment, when you can just
stuff cash in a mattress and make a real return doing so. Why take a risk if
you can make money without it?

------
Nokinside
Two comments on two follow-on questions about BTC.

1\. 'bitcoin delivering' and bitcoin value crashing are orthogonal concepts.
Store of value and hoard-speculative aspects of bitcoin are probably the worst
parts of bitcoin.

2\. Non regulated cryptocurrencies are not exactly anti-oligarchs. Absence of
regulation would set them free to prey the weak. Goldman Sachs and all of the
finance innovators who participate in disaster capitalism would love
cryptocurrensies if they take off.

------
Synaesthesia
I also feel that there will come a day of reckoning between the US and other
world governments and Bitcoin, will governments really tolerate an alternative
to their currency?

~~~
sdenton4
Most countries on earth tolerate the US dollar as an alternative currency
within their borders. It's not so unusual...

~~~
zabana
Fear of military invasion is a massive motivator in some cases.

------
VMG
> Bitcoin isn't just popular among libertarians, it's popular among folks with
> green frog/Kek user icons and anti-semitic views. ("Are you a Jew?" asked
> one egg.)

You have got to be kidding me. After druglord/pedo/(eco-)terrorist money, now
it's the Nazi currency.

Is there a Bitcoin smear left that we haven't used yet?

Edit: Somebody also alert Olaoluwa Osuntokun to what he's getting involved in.
He promptly should go back to `foo/bar` instead of `kek/kek`.

~~~
beat
Just because it's a smear doesn't mean it isn't true.

~~~
YouAreGreat
His argument boils down to "someone on the internet asked me if I'm a Jew,
therefore... I'm right!"

But we don't even have to follow him on his "BTC-->another Holocaust!!1!"
route to see he's nuts.

That's because "don't use BTC because it's less efficient than VISA" is
already nuts. BTC and VISA aren't performing equivalent functions, so he's
comparing apples to oranges. For those who prefer decentralization, the only
relevant comparison is between systems that deliver decentralization.

~~~
beat
I wouldn't say it means he's nuts. Even if you ditch the right-wing politics
commentary, there's a problem with decentralized currency - it's directly in
opposition to the interests of governments. Which makes it questionable
whether it will _ever_ succeed. That's not nuts.

That said, as I've pointed out elsewhere, bitcoin does not currently behave
even remotely like a useful medium of exchange. The price needs to be be rock-
solid stable, the way the dollar or the euro or the yen is stable, and it
needs to be extremely liquid, usable for most transactions. When bitcoins are
generating 500% annual returns relative to stable currencies simply by
existing, spending them is actually irrational (although unloading and getting
out while the getting is good might not be). Until it's stable, forget
government interference... the banking system won't accept bitcoin.

~~~
testvox
> spending them is actually irrational (although unloading and getting out
> while the getting is good might not be).

Can you expand on this thought? What is the difference between "spending"
bitcoin and selling it?

~~~
beat
You "sell" bitcoin for currency. You "spend" cash (or bitcoin) for goods and
services.

I wrote that comment while munching on a bagel and a diet coke, for which I
paid $5.26. The transaction took only a few seconds. I can do that partly
because I know the five bucks I spend today would still be worth about five
bucks six months from now, would still buy me a bagel and a diet coke. I spent
five bucks. I did not "sell" five bucks. That's not how a medium of exchange
works.

If I reasonably suspected that the five bucks I'm spending on the bagel would
be worth ten bucks in a few months, I'd be very hesitant to spend it.

On the way home from the bagel shop, I gave another five bucks to a homeless
woman. Could I have even done that with bitcoin?

~~~
jstanley
It doesn't matter how much your money will be worth in 6 months' time if you
need to eat. If it's the only money you have, you _must_ spend it, or go
hungry. It's the same reason people buy computers even though computers get
cheaper over time. If you need a computer now, it's no good waiting, even if
you know you'll get more for your money later.

And in fact it is much easier to send bitcoin to a homeless person than it is
to send them a bank transfer, as it is extremely difficult for a person
without an address to even get a bank account.

~~~
beat
Not as easy as handing them a $5 bill.

------
sp4ke
It's quite fascinating to observe disruption and fear in society at the age of
the internet. It most have felt the same for all the technologies the bitcoin
haters use everyday ( phones, cars, electricity, internet ... )

------
chroem-
Whether you agree with their content or not, it's a losing proposition to
fight a war against memes.

------
droopybuns
>>The longer BTC persists, the worse the eventual blowout—and the more angry
people there are going to be. Angry people who are currently being recruited
and radicalized by neo-Nazis.

How does anyone reach adulthood and clutch this kind of fear of Internet
assholes? Embarrassing.

------
jstewartmobile
Nazis! Anti-war nazis who would follow Milton Friedman and Thomas Sowell off
the bridge, into the lake, and to the ends of the earth...

Why the hell did this even make it to the front page???

------
GenericsMotors
> What I wasn't expecting was the alt-right/neo-Nazi connection. Bitcoin isn't
> just popular among libertarians, it's popular among folks with green
> frog/Kek user icons and anti-semitic views. ("Are you a Jew?" asked one
> egg.)

Garbage blogpost.

I dislike the bitcoin and cryptocurrency industry & communities in general,
but this is just ridiculous.

------
jerianasmith
Dystopic fiction where everybody is dead. YA cherish triangle described
completely in the subjunctive. No characters, despite the fact that there
unquestionably could have been.

------
rrggrr
This BTC indictment I found elsewhere. I'm not the author, but it spoke to me.

\-----------

Two friends, Bob and Satosh are sitting around after an evening of consuming
copious amounts of some especially wicked dank. Bob says to Satosh:

Hey Satosh... I have a genius idea Yeah, what is it? You know that app you
coded...the one that churns out the useless SHA algorithms? Yeah? LOL...lets
sell them as digital currencies! Dude...you are fucking wasted, here, have
another bong No, seriously. We get that graphic artist you know create a slick
image of a 'gold' coin, and then we can further confuse the rubes by telling
them their 'coins' have to be "mined", as if they were real, physical metals!
Dude... you are insane! What kind of moron would buy something like that? Bob:
Oh... I dont know. Remember that now worthless token you paid stupid money for
on WoW? They sit there and stare at each other for a moment, and then both
burst out into torrents of tear stained laughter They are still laughing
today. The rest is history

------
thanatropism
The first sentence of "Accelerando" is transcendentally beautiful, something
to be quoted for generations to come.

The rest of the first chapter is pretty interesting. The domme/sub
relationship thing is well written although the sex act depicted sounds
implausible. The second chapter also has an interesting scene where Macx is
rescued by Anette with the recording earrings. Not long after we have a rant
by an Italian politician that already showcases most of the Strossian School
of economics. Then the book gets muddled but that's arguably part of the
concept.

Basically people keep listening to Stross for this sublime sentence: "Manfred
is on the run, making strangers rich."

