
How Bitcoin dies - pavel_lishin
http://unqualified-reservations.blogspot.com/2013/01/how-bitcoin-dies.html
======
fatbird
This is by Mencius Moldbug, a coder who made off with enough options money
just prior to the dot-com crash to basically be retired in the Bay Area,
reading and writing. He's been bringing the wordy essays for almost a decade
now on a wide variety of topics, but I'll save you some time: He's crazy. He's
the very definition of Umberto Eco's lunatic, who says things with a certain
superficial plausibility, but you know something is wrong with it, but it
takes so much work to dig through the mess and find it out that you'll find
you feel it was a waste of time to do so. His prolixity is a direct attempt to
enhance this quality of this prose.

He's got some weird definition of an ideal state based on corporate
governance, he thinks black people are a social class defined by welfare
queens and petty criminals, he thinks he eviscerated Dawkins by somehow
agreeing with him. The length of his work is actually a subtle trap: If you
read enough to understand what he's going on about, you're subtly invested in
not rejecting it because then you'll have wasted all that time understanding
him.

~~~
spindritf
That is a very superficial critique, lacking in actual arguments and
references. While I generally don't agree with the guy, he makes sense. His
articles are coherent and insightful, if sometimes unpleasant and generally
long-winded.

If anyone's interested, here's a summary of his writing[1] with links to most
important articles. His posts are also a goldmine of one-liners[2].

BTW He used to have an account here[3] but was banned, unfortunately.

[1] <http://moldbuggery.blogspot.com/>

[2] <https://twitter.com/moldbuggery>

[3] <https://news.ycombinator.com/threads?id=moldbug>

~~~
fatbird
Interestingly, this is another way in which MM's verbosity is a defense
mechanism: It's virtually impossible to make a detailed critique without
engaging him at equal length.

I'll mention one specific critique, which is what originally twigged me that
something was off: MM constantly introduces special definitions that are
close, but not quite, what's commonly meant, and then proceeds to use those
definitions for 5 or 10,000 words. This is a form of rhetorical sleight of
hand that's suspicious in an of itself, and MM demonstrates this in the linked
essay:

 _"But here at UR, we are operating under our own special theory of money,
which I have modestly dubbed MoMT (Moldbug Monetary Theory). If you know and
believe MoMT, the leap is obvious. In the conventional wisdom, it's not
obvious at all."_

He does this sort of thing constantly. Besides investing a lot of time in
reading even one of his essays, you must spend a lot of mental energy tracking
all his off-by-one definitions of slightly uncommon terms. Again, you have to
buy into Moldbugism to even start judging it, which is part of the trap.

Edit 1: I've upvoted you because I think yours is a fair response to my
attack, while Tav's cry of "ad hominem" below is mistaken.

Edit 2: Moldbug's comment history here is interesting, in part because it
demonstrates that he's very capable of making a concise point. Why was he
banned? His karma looked okay.

~~~
dmm
At least he defines his terms. Words like "government" can mean a multitude of
things and these meaning change over time.

In general I have found that arguments are often not really about the points
of an essay but about the definitions used, ie one person uses definition 1
and the other uses definition 2 and they just argue past each other.

For example if I say "Bitcoin is money", I don't think that statement is
meaningful without defining what I mean by "money" and perhaps "bitcoin".

I don't think understanding the linked essay really depends on knowing what he
means by "MoMT", he defines it just fine for us.

"Basically, MoMT tells us that money has anomalous value only because economic
agents rationally speculate in it, whereas conventional thought (whether
Austrian or orthodox) holds that money's price is explained primarily by its
use in trade."

To me that's an interesting idea. Why not debate that? Instead all of the
comments here are about a bunch of superficial bullshit (yours excluded).

~~~
fatbird
I agree that much arguing is really about definitions, and that a clear
definition at the start is worthwhile. However, definitions can also be used
to covertly get the reader to agree to something. Back when I actually read up
on his "neo-cameralism", I remember stopping and thinking "I didn't agree with
that", and realizing that his argument depended on a definition that was pages
and pages ago, and that I now had to take a thousand steps back and re-read,
keeping in mind my disagreement with a small facet of something he specially
defined. That's pretty much when I gave up.

Edit 1: "That's an interesting idea. Why not debate it?" Because MM doesn't
offer _bon mots_ like this for debate, he piles a hundreds bricks made out of
these special definitions and then offers a controversial thesis on top of it.
If you stopped to debate all these interesting facets, you'd never get to the
meat of the essay--so you just accept them and move on. Again, a rhetorical
technique to get you to covertly agree to premises that let him define the
battlefield.

~~~
dmm
OK yeah I can see where you're coming from. Man... that is tricky.

------
diego_moita
> the defendants knew that BTC were used for organized criminal activity

[Irony]And since everybody knows that criminals never use dollars, guns, cars,
phones and computers then it is ok to use them.[/Irony]

> The BTC/USD price falls to 0 and remains there

Its price already fell down close to it on Dec/2011. And it rebound back
because people need it.

This article is a truckload of bullshit. Yes, most governments in the planet
will try to control BitCoin. And most will fail simply because BitCoin is
useful, decentralized and is already working.

------
dreen
How exactly are they going to do that? I want to know how are they going to
obtain a list of names from websites that do not operate from US or EU, or
from those who do not require you to hold a balance account with them (which
is what I would recommend to anyone wanting to buy bitcoins anyway). You fail
to explain that.

Plus, those who think Bitcoin is just used to buy drugs on Silkroad has
probably only a very passive interest in the currency anyway. It is used for
much more. Many people, like myself for instance, use it for cheap
international transfers. Just like Bittorrent which is used for more than
piracy, but despite a massive campaign lasting what 10 years now? which is
funded by basically most of the richest entities on the planet, has failed to
even decline in use.

~~~
wmf
The Man doesn't need any list of names (whatever that is). He seizes the
exchanges' domain names and their "fiat" bank accounts and the damage is done.
Once the exchange rate hits zero there's really no need to bring anyone to
trial. (I have no idea whether any government _will_ go after Bitcoin, but
they certainly _could_ if they want to.)

 _...cheap international transfers..._

Aka illegal money laundering.

------
jobigoud
"A DOJ indictment is unsealed which names everyone on Planet Three…"

Since when the US government has jurisdiction in other countries ?

"The evidence: the defendants knew that BTC were used for organized criminal
activity."

What ? Aren't dollars used for criminal activities too ? Shouldn't we close
all banks then ?

~~~
gst
I just wanted to post a similar comment. Yes - the US might outlaw Bitcoin in
its own jurisdiction. But there's a considerable amount of trade going on in
other jurisdictions (see <http://bitcoincharts.com/charts/volumepie/>).

If Bitcoin is outlawed in the US there will be a price drop, but the remainder
of the world will continue trading the same way as before. And even in the US
the market won't be fully killed. Already nowadays people violate lots of laws
to be able to gamble in offshore casinos. In the future the same people
possibly will find an (illegal) way to sell and buy Bitcoins, and use Bitcoin
casinos instead ([http://www.forbes.com/sites/jonmatonis/2013/01/22/bitcoin-
ca...](http://www.forbes.com/sites/jonmatonis/2013/01/22/bitcoin-casinos-
release-2012-earnings/)).

I don't want to judge if Bitcoin and everything related is a good thing or
not. But I think the chances of killing it are about the same as the chances
of killing P2P software.

------
DennisP
Meanwhile, a Bitcoin currency exchange has been officially approved by the
French government. [https://wealthcycles.com/blog/2013/01/11/digital-currency-
bi...](https://wealthcycles.com/blog/2013/01/11/digital-currency-bitcoin-
accepted-as-payment-service-provider-by-french-government)

~~~
MacsHeadroom
There are dozens of exchanges operating fully within the law of their
jurisdictions all over the world.

A U.S. exchange take down would only be good for the smaller foreign exchanges
and their extended network of established Bitcoin businesses and new Bitcoin
start-ups.

Decentralized peer-to-peer networks are like hydra. Cut off one head and two
more grow in its place.

As far as government agencies can intervene, it's only a matter of time before
global Bitcoin adoption reaches escape velocity--if it hasn't already.

------
mseebach
This article assumes that Bitcoins will primarily be a passive asset, but
converted back into USD (or other regular currency) for usage. If Bitcoin
becomes popular, that won't be the case - Bitcoins will be bartered directly
for products and services. So I think the article rather describes step 2 and
3, with step 1 being "Bitcoin fails to become popular".

~~~
kaonashi
You can't pay income taxes with bitcoins. If you make income in bitcoins, if
you are an American at least, you will need to pay taxes on that income. In
this way, bitcoins cannot replace the dollar for American citizens. The most
it can ever do is be a stable exchange currency.

~~~
yuvadam
You don't have to pay income taxes on bitcoin.

~~~
brian_cloutier
That is exactly the kind of thinking that will potentially get us into this
trouble in the first place. If you have an income you pay taxes on it, end of
story. If you think some income is exempt just because it's a little harder to
trace and don't declare it, you are committing tax evasion.

~~~
yuvadam
I'm not at all advocating tax evasion, rather pointing to the fact that
bitcoin is currently _terra incognita_ which the government does not know how
to handle.

As far a the country I pay taxes in is concerned, if I told them I'd like to
declare an income of 100BTC, they'd have no fucking clue what weird funny
money I'm talking about.

Governmental recognition and adoption of BTC alongside existing currency is
the best case scenario for everyone, governments and BTC community alike.

~~~
brian_cloutier
In America, at least, you should denominate your earnings in USD, even if they
are held in a foreign currency.

"If you receive all or part of your income or pay some or all of your expenses
in foreign currency, you must translate the foreign currency into U.S.
dollars."

[http://www.irs.gov/publications/p54/ch01.html#en_US_2012_pub...](http://www.irs.gov/publications/p54/ch01.html#en_US_2012_publink100047340)

------
quasque
"Imagine also that there are two types of BTC users: Jews [...] and Aryans"

What is this Nazi-era shit doing here.

It's hard to take the article at all seriously when the author frames it in
terms like this.

~~~
schoper
Moldbug is Jewish. You can't say it, but he can.

~~~
oleganza
Is it a moral rule or opinion? Other jews must be super happy about it.

------
dmix
The pressure will come soon no doubt.

"Bitcoin-based casino: More than $500,000 profit in six months"

<http://news.ycombinator.com/item?id=5100697>

~~~
nwh
That's the issue really. SatoshiDICE seems to make up the vast majority of
transactions on the bitcoin network, thousands every hour. There's probably a
lot of eyes on the bitcoin network because of that one service.

------
egypturnash
> The connotations of "speculators" are so negative that I always want to say,
> "speculators and Jews." > If your bond portfolio returned 6% last year, but
> gold went up 9%, you have speculated incorrectly; if you could go back in
> time and speculate again, you would speculate instead in gold. (It's hard
> out there for a Jew.)

Because casual ethnic slurs _always_ add weight to an argument.

~~~
dmm
It's a joke. The author is jewish.

~~~
DiabloD3
I don't find the joke very funny.

~~~
dmm
Thanks for sharing.

------
nextstep
tl;dr someone who is clearly not a lawyer makes bold and unsubstantiated
claims about bitcoin and the DOJ, loosely tying the issue into other pop-law
flavor-of-the-month topics such as broad computer hacking laws.

~~~
sixbrx
Which is unfortunately similar to the thought processes of some judges and
juries.

------
ColinDabritz
I thought this was going to be a cryptography article. I believe the concern
has been raised before and goes something like this:

1\. The Bitcoin cryptosystem is shown to be weak in some way, and might be
breakable. There is no migration strategy to a new, stronger system, so people
are stuck using it.

2\. The weakness turns into a full exploit, and anyone with a desktop computer
can forge Bitcoin transactions all they like. Bitcoins lose their trust and no
one will exchange them for other currencies, goods, or services.

Has any progress been made on this issue?

~~~
kbaker
What issue? Please cite your sources...

The best part of Bitcoin is that when a problem is found, people can upgrade
the software and move past it. Even if there was a weakness in certain cipher,
the way Bitcoin is constructed it would take multiple serious vulnerabilities
in ECDSA, RIPEMD160 and SHA256 _at the same time_ to have any effect on the
security for the end user.

Bitcoin itself has been around for 4 years with some serious attackers already
on the core protocol, and it is still pretty much unchanged. It is
unfortunately much more rewarding and much easier (sadly, but that is
improving) attacking services that use Bitcoin.

~~~
ColinDabritz
[http://bitcoin.stackexchange.com/questions/88/is-bitcoin-
fut...](http://bitcoin.stackexchange.com/questions/88/is-bitcoin-future-proof)

I saw the questions raised on discussion threads so I can't recall the
original context. The triple protocol I wasn't aware of, and is what provides
the transition buffer if one of the protocols is broken. Neat.

------
smokeyj
Do bitcoin users _care_ if it's legal? Sure, some would. I doubt the
underground economy would.

~~~
wmf
If the exchange rate goes to zero or undefined then you need infinite Bitcoins
to buy a bag of weed. People who are doing trade in BTC are relying on the
exchanges to set an exchange rate.

~~~
smokeyj
> If the exchange rate goes to zero

Users would switch to an exchange in a different jurisdiction before the price
ever hit zero.

~~~
wmf
The theory is that the top N exchanges would be taken out in a simultaneous
raid (and the US can reach many jurisdictions, just ask Kim Dotcom) and the
remaining tiny exchanges would either voluntarily shut down to avoid
prosecution or would collapse under the volume. If the raid was on a Friday
people would be unable to transfer money into exchanges until Monday, giving
time for the price to drop.

~~~
MacsHeadroom
There are 30+ exchanges in two dozen countries that would benefit indirectly
from other exchanges being taken down.

The notion that these exchanges would shut down voluntarily just when things
are looking up for them is ridiculous.

------
mistercow
>The evidence: the defendants knew that BTC were used for organized criminal
activity. Therefore, they knew they were transferring money for criminals.

That would apply to _any_ currency exchange. Considering the amount of money
we're talking about here, I think the defendants could afford a lawyer to
explain that to a judge.

------
conroe64
The US government doesn't usually directly attack something without putting up
a straw man to blame first. Examples would be WMD's to masquerade the purpose
of the invasion of Iraq, the drug war, terrorists, etc.

I don't see any big media push to demonize something so a war against bitcoin
would then become politically palatable. Not that this won't happen in the
future, but for now, it seems just too quiet for them to spring a trap on BTC
holders.

------
jere
A while back I would probably think the whole premise that government would go
after people who buy/sell a product sometimes associated with criminal
activity is flawed. Articles such as the following have made me think
otherwise:

[http://www.boston.com/news/local/massachusetts/articles/2011...](http://www.boston.com/news/local/massachusetts/articles/2011/12/29/mass_budget_motel_fights_forfeiture_by_feds/)

------
Claudus
I've thought about "investing" in Bitcoins, but when thinking about the risks
I always consider what would happen if it ever became really successful.

It would take power away from governments of the world, and I think they would
fight that in every way they could.

------
Vinnix
DOJ/USGov't could bring the system to a halt, but I see that it hasn't found a
solid use case to do so.

Ideally, BTC could defend themselves and saying that it is a virtual product
that the exchange is just coincidence, but holds no merit in the 'real world'

tl;dr le'sigh

------
nanoscopic
As long as you only generate bitcoins, and then use those online, I think it
would be hard to say that is money laundering of any sort. Many many many
people do that, including myself, so bitcoins will never die.

------
DiabloD3
I have flagged this post. This is a flamebaity post that does not impart
relevant content to the HN community.

------
happywolf
Anybody please provide a summary? After a long day of work I just can't finish
this long post. Yes I know the main conclusion is bitcoin is gonna die. Please
fill me in. Thx

~~~
elux
Summary:

1: A DOJ indictment is unsealed which names everyone [involved in] BTC/USD
exchange, as a criminal defendant.

2: The BTC/USD price falls to 0 and remains there. BTC are permanently
worthless.

~~~
zby
The crux seems to be: "the defendants knew that BTC were used for organized
criminal activity. Therefore, they knew they were transferring money for
criminals."

He also claims that: 'Government control (excuse me, "public oversight") of
all major monetary transactions is one of the basic attributes of sovereignty
in the modern world.' - this also sounds dubious - the money laundering laws
are not that old and I don't believe they became 'basic' in that short time
span - also a government controlling all transactions is a very totalitarian
design.

------
LatvjuAvs
Well, there is no easy way for me to buy heavy drugs using any other currency
and online.

