Monero is an also-ran cryptocurrency, in the same proof-of-work family as Bitcoin and Etherium.

Monero.town is a Lemmy instance whose main communities are: Monero, privacy, Monero Memes, Meta, and Monero Mining.

Enough has been written on the negative ecological effects of proof-of-work based cryptocurrency that I think itā€™s not controversial to say it is incompatible with the Solarpunk vision.

Pictured inciting incident is a person advertising the crypto-capitalist Lemmy competitor ā€œNostrā€ in the anarchism community.

I donā€™t personally mind a debate about Nostr, but like most of the content from Monero.town, it doesnā€™t belong here. More sales pitches from a crypto-currency hype instance are going to be tedious, and crowd out the kind of progressive politics and human interactions weā€™re looking to nurture here. Redditā€™s /r/anarchism had to constantly repel assholes trying to pass off their edgy capitalism as anarchist, Lemmy gives us the unique opportunity to send a strong message and nip this in the bud.

Fediverse sites that have already blocked Monero.town ā€“

reject (10): solarpunk.moe, polyglot.city, freethought.online, icosahedron.website, sunbeam.city, vtuber.house, fruef.social, cutie.city, fuckcars.social, karas.social

followers_only (3): toot.cat, orbsafe.masto.host, partyparrot.social

Image Description

[Image description: Screenshot of an exchange between user [email protected] and Five containing the following text

[email protected]

Yea, thatā€™s just not how Nostr works. Take a look here: https://github.com/nostr-protocol/nips These are implementation possibilities that the protocol enables. Every client must implement NIP-01. All of the other NIPs are optional so every client that you use (an app for example) has decided to implement different NIPs. You decide which client you use and how Nostr should feel like. Almost no client prioritizes content that received bitcoin.

Your ā€œlogin mechanismā€ (private cryptographic key) has nothing to do with cryptocurrency. If you want to send btc to people you have to set that up yourself, manually linking a wallet to your key.

Five

Iā€™m confused why youā€™re downplaying Nostrā€™s primary selling point - its close integration with Bitcoin. Itā€™s clearly a cryptocurrency capitalist con job.

Almost no client prioritizes content that received bitcoin.

Thatā€™s not what I was saying, but Iā€™m fascinated that youā€™re implying itā€™s much worse than I anticipated. Which clients have their priority linked to received bitcoin? ]

  • cacheson@kbin.social
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    1 year ago

    ā€œItā€™s a Scamā€

    Iā€™m not sure if this point is being directed at Bitcoin specifically, or just at cryptocurrencies in general in this thread and in the article that poVoq linked. Iā€™ll address it briefly anyway. (The previous two sections are the more important ones.)

    Many Bitcoin skeptics have described it as a Ponzi scheme or pyramid scheme. If you read about what these schemes actually are, and read about what Bitcoin is, it should be obvious that itā€™s not a match. Bitcoin isnā€™t centrally controlled, so there canā€™t be anyone filling the role of Ponzi or of the directors, at least not for the entire system. Itā€™s certainly possible to run such a scheme using bitcoins, but thatā€™s true of any currency.

    When pressed, these skeptics will usually say something about how everyone invested in Bitcoin is just looking for some group of ā€œgreater foolsā€ to pump the price up so that they can make their exit. Like, sure, maybe some people are like that, but to claim that itā€™s some coordinated scam across all of Bitcoin just sounds like a ridiculous conspiracy theory. There are plenty of people that have had ample opportunity to exit profitably and justā€¦ havenā€™t?

    Being more charitable, these folks largely see Bitcoin as having no future (ā€œitā€™s a bubbleā€). If everyone is eventually going to get tired of Bitcoin and give up on it, that does make it a really bad investment. That doesnā€™t make it a scam, though.

    Anyway thatā€™s enough words, I need to sleep. -_-

    I may or may not respond if people want to argue over this. Not something I have a ton of patience for these days. If youā€™re genuinely curious and want to pick my brains though, feel free.

    • Five@slrpnk.netOPM
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      1 year ago

      I appreciate the effort you put into this post. I welcome this kind of discussion, and I hope this will contrast with the kind of bad-faith hucksterism that typically comes from grassroots cryptocurrency sales initiatives.

      Iā€™ve also watched bitcoin and cryptocurrency with interest since the days it cost thousands to buy a pizza. I suspect you may be able to teach me some things, but I also think there are some things you are missing.

      Many Bitcoin skeptics have described it as a Ponzi scheme or pyramid scheme. If you read about what these schemes actually are, and read about what Bitcoin is, it should be obvious that itā€™s not a match. Bitcoin isnā€™t centrally controlled, so there canā€™t be anyone filling the role of Ponzi or of the directors, at least not for the entire system. Itā€™s certainly possible to run such a scheme using bitcoins, but thatā€™s true of any currency.

      Pre-mining Scams

      The structure of bitcoin-style cryptocurrencies is perfect for Ponzi schemes. The first aspect of these schemes is the concept of pre-mining; Before a new currency, bit it Monero, Ethereum, or Shitcoin#02314 is released to the public, its founders create a large cache of currency with little work because they own all of the mining rigs at that point and arenā€™t competing with anyone. They then hype the fuck out of their coin, usually advertising that people buying the coin that theyā€™ve mined are getting in at the ground level. Once theyā€™ve sold all their coin, the value flatlines, the scammers disappear with their fiat currency, and then start another scheme with a new name. 99% of altcoins donā€™t survive this phase.

      Even Bitcoin started out with a significant portion of the total cache pre-mined by Satoshi Nakamoto. The halving of bitcoin awards privileges early adopters, and Nakamoto was the earliest. He hardly spent any of it before he stopped participating in Bitcoin development in mid-2010. It is widely speculated that he is dead, but rumors that he might have moved 50 of the 750,000 to 1,100,000 bitcoins held in his wallets are blamed for the crash in May 2020. The uncertainty lead to a $6.5-billion drop in Bitcoinā€™s market capitalization.

      Pump and Dump Scams

      You rightly identified bitcoin as deflationary - that in addition to market forces that can raise or lower its value, the money supply is designed to grow at a diminishing rate, halving roughly every four years. For comparison, the dollar is printed with the intention to match the demand for bills in circulation, plus inflate at a slow and predictable rate. This encourages re-investment and discourages money hoarding. The principles behind this are based on the lessons learned from economic mistakes during the great depression.

      This makes bitcoin attractive as a store of wealth, but its value derives from its use as currency. While there are over 19 million bitcoins minted, only a small portion of those are ever in circulation. This allows people or cartels with large amounts of bitcoin to have extremely large influence in the supply available and thus the price. This is a weakness that plagued the early stock market, and lead to the formation of regulations and the FTC. No such institution exists for cryptocurrency, making all deflationary crypto a choice medium for pump and dump scams.

      • cacheson@kbin.social
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        1 year ago

        Iā€™m going to reply to both of your replies in this part of the thread, because I donā€™t want to split this up 3 ways. 5000 character limit is really annoying here. -_-

        I appreciate the effort you put into this post. I welcome this kind of discussion, and I hope this will contrast with the kind of bad-faith hucksterism that typically comes from grassroots cryptocurrency sales initiatives.

        Iā€™m down to discuss a bit more, though I may also wander off because very ADD.

        Iā€™ve also watched bitcoin and cryptocurrency with interest since the days it cost thousands to buy a pizza.

        This is good to hear. I find that a lot of times, people that are skeptical of {thing} tend to also not be particularly informed about {thing}, due to a relative lack of interest. I also just donā€™t like to see stuff that I consider promising abandoned to the right. Iā€™m glad youā€™re still keeping track of it even if youā€™re skeptical.

        I suspect you may be able to teach me some things, but I also think there are some things you are missing.

        In terms of what youā€™ve brought up, I think itā€™s more that we weigh things differently. I also tend to be biased more towards optimism than pessimism.

        Trying to objectively evaluate the gaps in my knowledge here: Iā€™m a software developer, and Iā€™ve dug through Bitcoin Coreā€™s code a little bit, but not extensively. Iā€™m not particularly well informed about more recent developments, like the Taproot upgrade. My deep dives into Bitcoin stuff tend to correlate with price rises and overall excitement in/around the Bitcoin community (because ADD). During the doldrums I tend to drift off. I was heavily involved in the ā€œBlock Warsā€, so Iā€™ve got a pretty decent understanding of the Segwit upgrade and the debate and events surrounding it. My understanding of the internals of the Lightning Network is weaker than Iā€™d like. I kind of get the HTLC stuff, but I have no fucking idea how payment routing actually happens. ā€œEconomicā€ arguments tend to make sense to me, though I have basically zero formal education in the subject.

        I also have a definite ā€œbecause itā€™s coolā€ bias.

        Pre-mining Scams

        I would definitely categorize pre-mining as shady, though not necessarily an outright scam. I know that a number of altcoins do disclose ahead of time the amount by which theyā€™re pre-mined and what purposes those funds will be used for. I dislike these arrangements, and think theyā€™re yet another good reason to stay away from those altcoins, but it doesnā€™t qualify them as a scam. It becomes a scam if the pre-mine isnā€™t disclosed, or if the pre-mined funds are spent in a manner contrary to what buyers had been led to believe.

        Pre-mining is also not a Ponzi scheme. A Ponzi scheme involves a scammer holding money on behalf of investors, drawing from the held funds to make payouts that give the appearance of productive returns whiling lying about the actual balances held, and then running away with the money once theyā€™ve tricked enough investors.

        When you buy cryptocurrency tokens, itā€™s an exchange. The dollars you pay are not held in your name by the creator of the cryptocurrency. Those dollars are not yours anymore. Instead, you have the tokens, which may rise or fall in value. You are not being promised any returns. If the cryptocurrency you bought is part of a pre-mining scam, at some point the creator will sell their stake, reducing the value of your tokens. You were scammed by being lied to about the properties of the thing you bought, but that is not the same thing as a Ponzi scheme.

        As for Bitcoin, Satoshi did everything right in this regard that they realistically could. They released the design on a public mailing list in advance of launching the system. They embedded a recent newspaper headline in the first block to prove that it couldnā€™t have been created before that headline was written. So in that sense, Bitcoin isnā€™t pre-mined.

        However, as you allude to, they were ā€œshouting into the voidā€ by themselves for a while, and amassed a sizeable number of coins. There is debate about how much of the early coins actually belong to them. Hal Finney was also known to be involved fairly early on. In any case, whoever created Bitcoin almost certainly has a large number of coins. Itā€™s not unreasonable to be concerned about, but I donā€™t think itā€™s right to lump it in with pre-mined altcoins, and calling it a scam is too much of a stretch.

        • cacheson@kbin.social
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          1 year ago

          Pump and Dump Scams

          Being deflationary doesnā€™t make an asset a good target for a pump-and-dump scam. PnDs are best executed on assets that are low-valued enough that you can easily force the price up or down using the funds that you have available to you. Being deflationary causes an asset to leave this territory sooner.

          Bitcoin is not a good target compared to altcoins, and as far as Iā€™m aware PnD scammers have largely moved on to those. Bitcoin also has a culture around it that is resistant to the PnD scams. The general advice given to people that are new to Bitcoin (after ā€œonly invest what you can afford to loseā€) is to dollar-cost-average by investing fixed amounts at fixed intervals, to avoid trying to time the market, and not to panic about large price movements. Following those rules makes one immune to the PnD scam. Newer people are less disciplined about following them, but over time the group of ā€œcore holdersā€ continues to grow.

          This makes bitcoin attractive as a store of wealth, but its value derives from its use as currency.

          ā€œStore of wealthā€ is one of the uses of currency. People tend to get worried that Bitcoin isnā€™t being used as a medium of exchange as much as they think it should, but there isnā€™t actually a problem there. As Bitcoinā€™s value grows, itā€™s price will become more stable. This gradually makes it a worse growth investment, but a better medium of exchange and unit of account.

          While there are over 19 million bitcoins minted, only a small portion of those are ever in circulation.

          Nearly all of them can potentially enter circulation though, and with very little advance notice. If the order books on the exchanges get wiped out and the price starts spiking wildly upward as a result, those non-circulating coins will start to move.

          The principles behind this are based on the lessons learned from economic mistakes during the great depression.

          I donā€™t think we should value the lessons of mainstream economic analysis too highly, as they take the existence of the state for granted. Maybe this one is a point in favor of the communists, but Iā€™m not ready to concede it just yet.

          Society advances through infrastructure, and while the Solarpunk project requires different infrastructure than what is currently planned, it still requires resources.

          Fair point, I wasnā€™t thinking about the infrastructural retooling aspect.

          I do think ā€œmore savingā€ is a point in favor on the anti-capitalist side, though. People that have savings are less inclined to tolerate shitty employment arrangements, and more able to go on strike or start their own ventures.

          Bitcoin hucksters would prefer they spend it on Bitcoin, with the promise that it might make them more money for less effort by sitting in the blockchain doing nothing.

          As I touched on in my other reply, Bitcoin wonā€™t be a growth investment forever. Once it reaches the point of maximum adoption, any further increase in value should be relatively slow. Going from slightly inflationary to slightly deflationary will have some effect, but I donā€™t think itā€™ll be as severe as youā€™re implying.

          Popularity -> Energy -> Scarcity

          The income from fees is something that can we can change by adjusting the block size. Doing so requires broad consensus among Bitcoinā€™s users, but it can be done. The main question is how much mining is needed to keep the network secure against a 51% attack.

          If things were to get dire, we could even end the block subsidy early through the same mechanism. While consensus between users is needed, such changes can actually be pushed through against the will of the majority of miners.

          • Five@slrpnk.netOPM
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            1 year ago

            It sounds like you have more technical experience with cryptocurrency than I do. I think I understand the economics side a little better, though I admit Iā€™m not an expert. Iā€™m sure a more professional economist would have a conniption based on how Iā€™m using some terminology and concepts.

            Why is Deflation Bad for Currency?

            ā€˜Inflationaryā€™ and ā€˜deflationaryā€™ as adjectives are usually applied by economists to government fiscal policy, not to currency itself. Since cryptocurrency fiscal policy is usually set in code when it is released, and reaching consensus required to change it is rare, I think itā€™s kind of appropriate to label cryptocurrency with these adjectives, but I realize itā€™s also confusing. Iā€™ll do a better job of explaining it, because our differing understandings of this concept are going to be a problem if I donā€™t.

            Money, like all commodities purchased with money, responds to supply and demand. The more money available in an economy, the less that money is worth with regard to other commodities. When the value of money with regard to other commodities goes down (more dollars, less eggs) this is called inflation. When the opposite happens, (less dollars, more eggs) this is called deflation.

            During most of history, money was linked to precious ore. There wasnā€™t a lot of academic economics going on back then, but this meant that the rate at which ore was mined and minted determined the base of a civilizationā€™s currency supply. Argentarii, Priests, and Metalsmiths offered credit, usually some multiple of the actual amount of precious metals they had on hand. Rulers debased their printed coins with non-precious metals. But these methods of increasing supply had drawbacks, so available ore was king.

            The policy of letting the availability of precious metals have a direct influence on the money supply continued until very recently. I want to be clear - granting government (I use the term loosely here because the FED, Bank of England, and most other national analogues are technically not a branch of government, but are so intertwined to make the distinction irrelevant) control of the money supply gives it another tool of power, and Iā€™m not happy about that. But giving control of the money supply to the rate of strip mining, conquest, and trade policy is still government-involved, and in many ways worse.

            I bring this up because the same economic thinkers who championed Bitcoin are the ones who think a return to the days when money was pegged to the gold standard is a good thing. Theyā€™re wrong. Even without the other problems associated with using precious metal as currency, having a money supply that does not adapt to market conditions creates forces that re-enforce hierarchical structures, and privilege the capitalist class over the working class. It gives power to bankers, and removes power from debtors.

            The primary use of money is as a medium of exchange. In cases where money retains its value with regards to other commodities or increases in value over time, it can be used as a store of wealth. But money that is a good store of wealth is bad for use as a medium of exchange. ā€œGood moneyā€ slowly loses value over time; slow enough not to cause a panic to spend it, but enough to encourage spending it rather than hoarding it. In order to save money, it must be placed in a bank with an interest rate higher than the rate of inflation. The bank then uses that money to issue debt, and it goes back into the economy.

            Inflation takes some of the edge off of debt - interest rates are decreased when the inflation rate is factored in. Consider what happens when the opposite is true; not only does the total debt increase over time, but the money to pay the debt becomes more and more scarce, both increasing the value of what is owed and making it difficult to pay in a reasonable time. While inflation has an effect on real wages, raising the minimum wage and negotiating salary increases compensate for this effect. It is difficult for banks to renegotiate contractual agreements on long-term loans in the same way.

            Being able to save wealth without banks might be considered a benefit of deflation, but something much worse happens. Working people generally need to spend most of the money they earn, and only a small fraction of a rich personā€™s income is needed for lifeā€™s necessities. When it becomes beneficial to hold on to money, the capital class can easily reduce spending, but those with less money are forced to continue to spend, leading to a pattern that collects more and more of the money supply in the hands of the rich. Because banks and the wealthy are incentivized to hold on to money, less infrastructure is built, loans are harder to get, and the amount of jobs available and total economic activity decreases. This is called a contraction, and a period of economic retraction is called a recession. When a recession becomes really bad, itā€™s called an economic depression.

            It is no mistake that decoupling the dollar from precious metals coincided with the lessons of the great depression. People lost faith in the political order, revolutions occurred in Russia and Germany, and many turned to fascism. The tight coupling of banks and government is no mistake, as they rely on each other for stability. If we built a society based on a fiscal policy that allowed the currency of exchange to significantly deflate, it would fall into economic depression and revolution also.

            Bitcoin is Bad Exchange Currency

            Bitcoin, unlike precious metals, derives its value from its ability to be used as an exchange currency. Iā€™ve explained why itā€™s a terrible candidate for that use. Like starving people during the gilded age, the primary people using bitcoin for exchange when it is more valuable to hold are the ones who have little choice in the matter - people with no safer way to get illicit items and victims of ransomware gangs.

            I call Bitcoin deflationary because it was designed from the start to encourage deflation, but even cryptocurrency like Dogecoin, where the monetary supply is designed to increase exponentially, can increase in value if demand for it is high enough. Cryptocurrency will never replace government money so long as it doesnā€™t improve on its ability to avoid periods of deflation or hyperinflation. In order to do this it needs to respond to market conditions, scaling the money supply when population and economic activity changes.

            As it stands, the monetary supply of bitcoin may be increasing with each minted block, but it is also tempered by the amount of bitcoin ā€˜burnedā€™ - people losing their keys, or dying with no-one inheriting access to their account. This is the best scenario for Satoshiā€™s million, for example. Itā€™s difficult to gauge the amount of bitcoin that can come into play even when it is in highest demand due to this ambiguity.

            Since 19 of the 21 million coins have already been minted, and the rate of minting new coins is slow and predictable, the independent variable for Bitcoinā€™s value is not supply, but demand. Ending the minting of new coins will not cause stability in the price - its price will still fluctuate with demand. Population is projected to grow long past 2040, when Bitcoin will stop minting. Take an absurd and simple model of the world where the entire population uses bitcoin: an increase in the population means the same amount of coins for more people, resulting in deflation, a predictable economic depression, and the collapse of that society unless it adopts a better monetary system.

            • cacheson@kbin.social
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              1 year ago

              I think I understand the economics side a little better, though I admit Iā€™m not an expert.

              Possibly. I do have some familiarity, though itā€™s more with ā€œpolitical economyā€ than economics proper. I donā€™t usually have much patience for dry nonfiction books, though articles and long essays are fine. As a result, my knowledge here is less coherent and more shallow.

              Why is Deflation Bad for Currency?

              I broadly acknowledge your points here, and I donā€™t have a full rebuttal, though Iā€™m not yet prepared to change my mind on the issue. Iā€™m just going to respond to the points where I have something to say.

              ā€˜Inflationaryā€™ and ā€˜deflationaryā€™

              I do understand inflation and deflation, and it doesnā€™t seem like thereā€™s been any misunderstanding thus far. Thereā€™s supply inflation and price inflation. Central banks use supply inflation and deflation to influence the economy. Increase supply to encourage investment when the economy gets sluggish, decrease supply to rein in price inflation.

              While inflation has an effect on real wages, raising the minimum wage and negotiating salary increases compensate for this effect.

              Wages havenā€™t actually kept up with productivity, though. Arguably it would be better to have real wages increase by default through deflation, and make employers deal with negotiating pay cuts. That way inaction favors the (hopefully unionized) workers and squeezes the employer, instead of the other way around. This may give worker co-ops a competitive advantage in retaining experienced workers, whereas employers may be inclined to fire workers when pay cut negotiations fail.

              Your claim about the US having abandoned the gold standard around the great depression didnā€™t sound quite right to me, as I remembered we were on the Bretton Woods system until 1971. It turns out there was indeed a gap in the 30s though.

              In looking at the chart on the Bretton Woods article, I remembered that the decoupling of real wages from productivity (article) also started in the 70s. I wonder if thereā€™s any connection. I know that Reaganomics was a thing, but that would have started in the 80s. (I promise Iā€™m not doing a conspiracy theorist ā€œah ha!ā€ thing here, the correlation may be entirely coincidental, but may also be worth further investigation.)

              Because banks and the wealthy are incentivized to hold on to money, less infrastructure is built, loans are harder to get, and the amount of jobs available and total economic activity decreases.

              This is a result of the credit monopoly. If we can break that, then the supply of credit should expand as needed, and the effects of deflation of the unit of account should be limited.

              As one way to help with that, Iā€™ve got some ideas for a friend-to-friend credit network inspired by the Lightning Network and the original (pre-shitcoin) RipplePay. (No blockchains involved, itā€™s not a cryptocurrency.) The core of it would be a simple app for tracking lending among friends (for example, Alice pays for lunch for her and Bob, and they note this in the app instead of exchanging cash). It would also allow routing in order to make ā€œIOUā€ payments to friends-of-friends(-of-friends, etc) where no direct trust relationship exists. This could then be used as a sort of community currency. My ideas are still kind of half-formed, I need to look more into the details of how the Lightning Network works, as well as how the shitcoin version of Ripple works to see if they have any ideas worth stealing.

              The one thing that does bother me that I canā€™t answer in a satisfactory fashion is that compared to an inflationary currency, deflation imposes a hard floor on the effective interest rate of lending. If the currency deflates at a rate of 2%, and you get a zero-interest loan, the real value of your debt is still increasing by 2% per year. I assume thereā€™s some level of need for actual hard currency thatā€™s relatively stable in the long term, and that people canā€™t just use credit exclusively. ā€œMy friends owe me moneyā€ is not a great way to store oneā€™s life savings, after all.

              • cacheson@kbin.social
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                1 year ago

                Cryptocurrency will never replace government money so long as it doesnā€™t improve on its ability to avoid periods of deflation or hyperinflation.

                Quibble: Hyperinflation typically only happens due to government mismanagement of their currency, and not as a result of regular market forces.

                As it stands, the monetary supply of bitcoin may be increasing with each minted block, but it is also tempered by the amount of bitcoin ā€˜burnedā€™ - people losing their keys, or dying with no-one inheriting access to their account.

                The effect of this should be minimal once infrastructure around and knowledge of Bitcoin becomes more fully developed.

                Ending the minting of new coins will not cause stability in the price - its price will still fluctuate with demand.

                My point was that the current level of instability, with 2000% increases and 80% drops, is only a result of the low current level of adoption, combined with uncertainty over whether Bitcoin is going to be the global currency to replace all others, or a fad that is going to die out. Once the ā€œfinalā€ level of adoption is reached, you wouldnā€™t leave your money ā€œsitting in the blockchainā€ in hopes of a big return. Itā€™d be more like having your money in treasury bonds. Some return, sure, but fairly unexciting.

                Take an absurd and simple model of the world where the entire population uses bitcoin: an increase in the population means the same amount of coins for more people

                Annual population growth from 1950 to the present (the era for which we have good numbers, I assume?) topped out at 2.24% in 1964. Weā€™re currently at 0.88%, and projected to go negative in the 2080s. I assume it wonā€™t be negative forever, but figure maybe 1-2% annual price deflation over the long run?

                What do?

                Shifting gears a bit. Letā€™s say for the sake of argument that the deflation thing is actually very bad. Maybe not catastrophically bad, but at least bad enough that we should prefer that Bitcoin does not succeed.

                What alternative do we, as anarchists, offer to the world? Besides anarcho-communism, that is. Iā€™m skeptical of it as a totalizing vision, and a lot of people just wonā€™t go for it.

                I assume that in a post-state society:

                • There will be some kind of hard currency that is widely but maybe not exclusively used
                • The world will standardize on a single unit of account, probably the aforementioned hard currency
                • People will remain at least moderately self-interested

                Letā€™s say that all of the other altcoins were obliterated, and that only Bitcoin and Dogecoin remain. Dogecoin would be the better option for society as a whole, due to the supply inflation. However, for individuals itā€™s preferable to only accept Bitcoin and refuse to accept Dogecoin (Thiersā€™ law). Dogecoin is unlikely to catch on because of this, even if we ignore Bitcoinā€™s first-mover advantage.

                What other good alternatives are there? I donā€™t think ā€œanarcho central bankingā€ would be viable.

                • Five@slrpnk.netOPM
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                  1 year ago

                  Your claim about the US having abandoned the gold standard around the great depression didnā€™t sound quite right to me, as I remembered we were on the Bretton Woods system until 1971. It turns out there was indeed a gap in the 30s though.

                  Your memory is correct - though I did mean to communicate that it was the lessons learned during the great depression that lead to the end of the gold standard, not that those lessons were immediately absorbed. Constraining the money supply is so good for the rich, naturally theyā€™d argue that the societal collapse it correlated with was just a fluke, and use their considerable political power to bring it back. But when black people organized militias and poli-sci students demonstrated considerable organic chemistry knowledge, visions of a return to the revolutionary chaos of the last cycle weighed heavier on the scales than even the economic demands of the war.

                  McCarthy, Nixon, and the Vietnam War

                  In looking at the chart on the Bretton Woods article, I remembered that the decoupling of real wages from productivity (article) also started in the 70s. I wonder if thereā€™s any connection. I know that Reaganomics was a thing, but that would have started in the 80s. (I promise Iā€™m not doing a conspiracy theorist ā€œah ha!ā€ thing here, the correlation may be entirely coincidental, but may also be worth further investigation.)

                  Thatā€™s an interesting hypothesis. You could test it by finding the data during the period the dollar was first allowed to float after the great depression, and see if a similar decoupling happened. My suspicion is that it has more to do with McCarthyā€™s witch trials of labor radicals during the JFK era and Nixonā€™s subsequent war on unions and unionization.

                  The Bretton Woods break and the decoupling of wages to productivity are possibly related in the form of the Vietnam war though. Itā€™s difficult to fund an ever escalating war when your monetary supply is constrained (1971); and once a war ends (1973), thereā€™s a shock to wage negotiating power as tens of thousands of former soldiers return to the labor market. The already hollowed-out union movement explains the inability of workers to recover from the shock and the rest of the graph.

                  Ranumā€™s Law

                  Wage stagnation is a social problem which requires a social solution: organizing labor. Any technical solution that is not directly supportive of the social project is unlikely to be effective at resolving this specific problem. For example, some governments have done away with political minimum wage struggles by legislating regular recalculations based on inflation data. But this encourages labor complacency and wages in these countries have also not scaled with the vast increases in productivity. As Iā€™ve claimed earlier, the benefit of constraining the money supply for the rich outweighs any benefit it could have for the poor and middle class.

                  Hyperinflation Quibble Quibble

                  Iā€™ve used arguments based on very simple models, because its easier to use them to illustrate points that remain true when more complex models are applied. Economics as a science is deeply criticized for its lack of predictive power, and part of this is due to the tendency to treat it as the mathematical discipline of the analysis of rational actors. It is germane that the greatest recent advancements in economic theory come from outside the discipline, like Daniel Kahneman in psychology or David Graeber in anthropology.

                  Hyperinflation is usually associated with government mismanagement of their currency, but its important to remember the real reason is peopleā€™s lack of faith in the government management of their currency. Since currency functions on irrational human trust, any hyperinflation event is a product of both psychology and mathematics. Hyperinflation in the Weimar Republic was caused by taking enormous debt meant to be paid by winning a war, and then dramatically losing that war. Overprinting money acerbated the situation, but I believe it was a primitive attempt by government to actively manage the situation using the economic tools as they understood them, rather than self-interested corruption as is often the case. Nothing they could have done in the treasury could change the fact that the war department had very publicly gone all-in on a losing bet. Calling this economic mismanagement ignores that Germany had earlier followed this sequence of events in the previous conflict in which it ended the victor, with predictably positive results for German ledgers. The subprime mortgage crisis, on the other hand, was clearly a result of private self-interest and corruption. It could have lead to much worse results, but I contend that preserving confidence in the governmentā€™s willingness and ability to maintain the stability of the market, more than any actual solution the government provided, prevented a larger financial catastrophe. Bitcoin is subject to this vulerability also, for example the price collapse I mentioned earlier that occurred over rumors that Nakamoto was finally going to pull the rug.

                  WanderingDuck(x) = y

                  Having confidence that the market will never act to stabilize itself is not the same as market confidence. My example using growing population and fixed currency proves a point, but things are obviously more complicated than that, and in ways that make the problem even more intractable than the simple example implies. Looking at stock price history and forex graphs, it is obvious that market trends have so many inputs that the resulting output is impossible to model mathematically. Wars, natural disasters, crop failures, disease outbreaks, economic bubbles, and other large sources of economic uncertainty will not suddenly cease once the last Bitcoin is minted. A worldwide currency of exchange that canā€™t adapt to market changes will only acerbate the problems caused by the unpredictable.

                  Retiring on ā€œMy friends owe me moneyā€

                  A soldier stationed in Hong Kong during the British mandate learned a fascinating truth about money from Cantonese merchants. Used to writing checks on his account in England, he was shocked to see another patron paying for supplies using a check he had written six months prior to pay a bar tab. It had been covered in Chinese writing indicating dozens of other merchants had endorsed the check, each using it as a medium of exchange in turn. He had accidentally minted his own hard currency.

                  It it useful to frame money as a commodity, but it is also possible to frame it as tokens of debt. An IOU from cacheson may be a less attractive source of exchange than a proper US dollar amount, but fortunes change, and an IOU from a trusted friend is more useful than a Dogecoin or a Biafran Pound. According to the credit theory of money, people can just use credit exclusively, because thatā€™s what most people are already doing when they use fiat currency.

                  Thereā€™s an aspirational and infrapolitical argument against traditional cryptocurrency here: retirement savings are a relatively recent invention. In pre-banking societies, people relied on their community to look after them in their old age. The social debt wasnā€™t precisely quantified, but the implied communal economy relied just as much on trust. The capitalist system thrives by atomizing individuals and consolidating corporations. Trust between banks is subsidized, and trust between people is undermined. Bitcoin in its idealized form is a tool for a market based on competition rather than collaboration. Its zero-trust architecture mirrors a zero-trust vision of society. I feel the same as you in that I wouldnā€™t retire with the expectation that gratitude from the people I have helped would meet my needs either, but if society evolved to the point where that was a realistic option, that would be an anarchist achievement.

                  • Five@slrpnk.netOPM
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                    1 year ago

                    What do indeed

                    I donā€™t think criticisms need to be coupled with solutions, but eventually solutions are necessary. I think your question is sincere, but you may be more qualified than I am to answer it. I can only offer you some of my half-baked thoughts on the subject.

                    One notion that I donā€™t totally endorse, but think might be interesting as a point of reference is Duniter. In southwest France a small community built an implementation pronounced ā€œJuneā€ and written Ğ1. It still technically operates on Proof-of-Work, but most of the devices minting coins are old laptops and raspberry pis. Thereā€™s little incentive to mine besides communal spirit, and its nerf version of mint competition removes the energy escalation usually associated with that consensus mechanism. Instead of awarding newly minted coin to the victor of the algorithmic contest, coin is distributed to every wallet individually in a process similar to a Universal Basic Income scheme that they call ā€œUniversal Dividend.ā€

                    It has survived for over five years without a single 51% attack due to the true basis of consensus security, their web of trust. Each new wallet must be authorized by at least two other wallets. Using technology designed for cryptographic email authentication, they are able to enforce personhood of each wallet and prune branches of bad actors. They implemented a craigslist style digital market from the start, and though it seemed more vibrant when I investigated it several years ago, you can still find garage-sale classics like homemade jam, second-hand clothing, and used books on offer.

                    Some of my criticisms still apply here. While the minting mechanism is designed to grow with the community, I donā€™t think any algorithmic function can be complex enough to match the irrational forces that drive serious markets. It has never grown past a digital flea market, and with such low stakes itā€™s difficult to draw any compelling lessons from its survival. It does seem to have inspired another universal basic income style digital currency started for pedal-powered delivery collectives in Germany called Circles which I know even less about. In addition to my crypto-based concerns, I tend to view UBI schemes as last-ditch efforts by the capitalist class to preserve capitalism, and messages like the following donā€™t inspire confidence in these solutions to create anarchy.

                    Despite my reservations, Iā€™m significantly less concerned about anarchists experimenting with this kind of currency, given its cooperative intentions and community-oriented architecture. Since thereā€™s less incentive to expand, if they had a presence on the Fediverse, I suspect their members would be much more tolerable too.