
When Bitcoin Grows Up: What Is Money? - elorant
http://www.lrb.co.uk/v38/n08/john-lanchester/when-bitcoin-grows-up
======
jbmorgado
This seems quite an advertisement for bitcoin.

 _When?_ and _Growing Utility?_

Bitcoin has _decreasing utility_ since the initial hype.

1\. The few companies that accepted it are gradually stoping to support it
(Microsoft for instance).

2\. We have reached a standstill that shows every bit why highly unregulated
systems are difficult to maintain (the miners care only about short term
profit and are making bitcoin as a payment system unusable in order to secure
short term profit).

3\. Even great contributors for the project have come out against it lately
explaining the total dystopian mess that is the bitcoin core team and exiting
the project.[[http://uk.businessinsider.com/bitcoin-has-failed-says-
develo...](http://uk.businessinsider.com/bitcoin-has-failed-says-developer-
mike-hearn-xt-censorship-2016-1?op=1)]

4\. Bitcoins are in the hand of a very few people that own massive amounts of
them (see blockchain.info top wallets) that seem to be going around trying
their best to get a few remaining uninformed people to believe in the system
long enough so that they can offload their bitcoins.
[[http://www.bitcoinrichlist.com/top100](http://www.bitcoinrichlist.com/top100)]

I see very few people trying to get into bitcoin and a see a great deal of
somewhat high profile people trying to keep the hype going just a bit more so
that they can recover at least part of their investment in a failed
experiment.

Still, 2 good things came out of this in the end: the blockchain which is a
great tool for a lot of projects; and an eye opener of what can happen for
people that want the financial system to have even less regulation.

~~~
jhallenworld
Yeah, no mention of inflation... no explanation of bearer bonds...

I think a big problem of bitcoin is lack of inflation. Terry Pratchett makes
the point in Making Money that lack of inflation is stagnating. You tie the
entire society to the willingness of people with old money to spend it. Why
would we want that?

~~~
clarkmoody
Of course people with old money are willing to _lend it_ for a fee.

~~~
msellout
Lending does not necessarily encourage spending. During the housing price
collapse crisis, the US government lent money to banks at a cheap rate,
expecting to spur more consumer lending. Instead the banks just kept the money
under the mattress, so to speak.

~~~
clarkmoody
> Lending does not necessarily encourage spending.

And we're back to the old spending vs saving & investment view of economic
growth. I'm squarely in the Austrian camp on this, so I don't really care
about spending, especially if it's fueled by government intervention to "spur
aggregate demand".

I disagree that you have to have inflation, especially when we talking about
gold & bitcoin. The past 100 years of economics has been tuned to a fiat money
+ fractional reserve banking + debt + inflation paradigm. Considering bitcoin
within this framework doesn't even make sense, as it will (probably) not be
the currency of a whole economy.

Also, there is more to the story concerning the Fed's balance sheet [1] and
the link to inflation.

[1] file:///C:/Users/Clark/Downloads/market-outlook-2014-03-why-the-
feds-4-trillion-balance-sheet-isnt-creating-inflation.pdf

~~~
x1798DE
FYI that is a local link that will only work on your computer...

~~~
clarkmoody
Hahah, wow. Sorry about that. It auto-downloads the pdf, so the best I can do
is a search result link.

[https://duckduckgo.com/l/?kh=-1&uddg=https%3A%2F%2Fwww.ubs.c...](https://duckduckgo.com/l/?kh=-1&uddg=https%3A%2F%2Fwww.ubs.com%2Fus%2Fen%2Fwealth%2Fresearch%2FCIO-
WMR-Research-
Archives%2F_jcr_content%2Fpar%2Faccordionbox%2Flinklist_0%2Flink_33.1734866907.file%2FbGluay9wYXRoPS9jb250ZW50L2RhbS9XZWFsdGhNYW5hZ2VtZW50QW1lcmljYXMvZG9jdW1lbnRzL21hcmtldC1vdXRsb29rLTIwMTQtMDMtd2h5LXRoZS1mZWRzLTQtdHJpbGxpb24tYmFsYW5jZS1zaGVldC1pc250LWNyZWF0aW5nLWluZmxhdGlvbi5wZGY%3D%2Fmarket-
outlook-2014-03-why-the-feds-4-trillion-balance-sheet-isnt-creating-
inflation.pdf)

------
random28345
> it is impossible to factorize big numbers. For any number, there is no way
> of working out if a smaller number divides into it, short of actually doing
> the calculation.

Yeah, the author doesn't understand the difference between the difficulty of
factorizing large semi-primes and the elliptic curve discrete logarithm
problem.

It might be a little error, but lack of understanding of deep technical issues
lead directly to specious statements that bitcoin and the blockchain are going
to solve world poverty, privacy, fix the economy and neuter the surveillance
state.

It almost makes me wonder if Bitcoin was a "black-flag" operation to bring out
the crypto-anarchist nerds who can't look past the fact that Bitcoin is
innovative to see it doesn't work for most people.

~~~
retube
> It might be a little error, but lack of understanding of deep technical
> issues lead directly to specious statements that bitcoin and the blockchain
> are going to solve world poverty, privacy, fix the economy and neuter the
> surveillance state.

If people need to know or understand this stuff bitcoin will never work.
Success rests on the what not the how. The end user doesn't care if your
website was written in php or node. All he cares about is what it does.

~~~
random28345
> If people need to know or understand this stuff bitcoin will never work.
> Success rests on the what not the how.

Bitcoin is an inflationary private currency with $10 transaction fees that is
mostly used for illegal activity. Its value and success is predicated on the
ability to buy drugs and pay ransoms with Bitcoin.

> The end user doesn't care if your website was written in php or node.

The end user also gets their wallet stolen. So yeah, I'd say that not
understanding the basics is critical when dealing with crypto-currencies.

------
have_faith
A thought experiment I like to use when working on a new user interface is to
imagine if my mum could use it, or if I could easily explain it to her in a
way that made sense. (she represents the average non-technical person)

I like to use this thought experiment when imagining Bitcoin adoption. And
then I realise that after all the reading I've done and being fairly
technically literate I can barely explain Bitcoin to myself in a coherent way.

The conclusion I come to with this over-simplified view is that highly
technical people are creating a larger divide of Us and Them. This isn't
through malice, people are free to create and experiment intellectually as
they see fit. But it would be nice if the average persons use-case was
considered when planning your utopian money system that you have a head start
on in accumulating wealth.

~~~
brighton36
Bitcoin is for the undeserved. It's unbelievably clunkly, but when you have no
other choice - you'll learn to use it.

~~~
PeCaN
Exactly. Bitcoin is shit, but let me know when I can anonymously purchase an
offshore VPS with anything else.

I don't think Bitcoin is going anywhere, but it will perhaps regress to a
niche and often illegal market. Alternatively, black markets are very volatile
anyway, so moving to a better anonymous currency could happen if a worthy
competitor steps up.

~~~
brighton36
Bitcoin will grow to precisely as large as is the vacuum of service for those
that need it online. The size of that market might be very small (backpage,
gambling, and VPS) or very large (improperly licensed direct to consumer drugs
and capital flight) It depends entirely on the regulatory subsidy it receives
from federal governments, in the form of credit cards cutoffs.

------
unfunco
This almost seems lifted from the This American Life episode[1], but brought
into the newer context of Bitcoin and other virtual currencies.

[1] [http://www.thisamericanlife.org/radio-
archives/episode/423/t...](http://www.thisamericanlife.org/radio-
archives/episode/423/the-invention-of-money)

------
jbpetersen
At this point Bitcoin looks set in filling the role of the most standard
cryptocurrency for some years to come. Now it's more a social experiment than
a technological one.

Ethereum has stolen the throne when it comes to advancing blockchains as a
technology: Turing complete scripting, promising research into proof-of-stake
and exponential scaling, etc...

~~~
brighton36
No one needs turing complete smart contracts, proof of stake is a perpetual
motion pitch, and exponential scaling are just words on paper

------
mark_l_watson
That was a good write up. I am reading Vigna and Casey’s Cryptocurrency book
right now. I am actually more interested in block chain tech in general than
Bitcoin.

~~~
brighton36
No you're not. Blockchain tech is 100% snake oil.

~~~
mark_l_watson
May I ask why you think that? It seems to me that there are many good block
chain applications, for example, voting systems that are more honest and
transparent, virtual distributed (limited profit charter) corporations, etc.

------
ThomPete
But is it bitcoin that grows up or the blockhain?

I don't think Bitcoing growing up is going to change what money is which is
basically a trusted symbol of a certain value.

The blockchain on the other hand will change everything from what constitutes
a legal entity to how we deal with AI.

So basically the question is more, what is value.

~~~
brighton36
Blockchain without work is just a database, usually a really bad one, designed
to take money from vc's.

------
LAMike
Comparing Bitcoin to startups invented on the Web isn't the right comparison.
The Internet is a better comparison for the Bitcoin network.

