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Bitcoin is Venice: Difference between revisions
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===On debt and assets=== | ===On debt and assets=== | ||
{{Quote|“Since bitcoin is a digital bearer asset and not a debt instrument — ”}} | {{Quote|“Since bitcoin is a digital bearer asset and not a debt instrument — ”}} | ||
{{Drop|F|arrington believes that}} [[Bitcoin]] is an asset, not | {{Drop|F|arrington believes that}} [[Bitcoin]] is an asset, not “just” a [[currency]]. As it has independent existence, it is not “tethered to” or dependent on a bank or a central bank for its existence. It need not, therefore , “degenerate” the way fiat currencies do thanks to — cough — central bank monetary policies and investment bank grift. | ||
Whereas fiat currency implies indebtedness, [[Bitcoin]] is pure abstract, tokenised ''capital''. It is the ''inverse'' of fiat currency. It is to ''actual'' capital what a [[non-fungible token]] is to art. Only ''generalised'': whereas an [[NFT]] is a token for a specific cultural artefact, [[Bitcoin]] is a token for ''generalised'' “capital” in the abstract sense of value — a shared community resource, before being transmogrified into any particular form. | Whereas fiat currency implies [[indebtedness]], [[Bitcoin]] is pure abstract, tokenised ''capital''. It is the ''inverse'' of fiat currency. It is to ''actual'' capital what a [[non-fungible token]] is to art. Only ''generalised'': whereas an [[NFT]] is a token for a specific cultural artefact, [[Bitcoin]] is a token for ''generalised'' “capital” in the abstract sense of value — a shared community resource, before being transmogrified into any particular form. | ||
If this is what bitcoin has achieved, it is something wondrous. Alchemical, almost. | If this is what bitcoin has achieved, it is indeed something wondrous. Alchemical, almost. This is “capital” as a [[Platonic form|platonic essence]]: a Midichlorian life force. You know, like the ''Force''. | ||
Of course, we have [[financial instrument]]s representing abstract capital already: [[share]]s. They reflect the ''net'' capital of a given undertaking, and take only after all the debt is accounted for, so perhaps that is not what Farrington has in mind. Perhaps it is too contingent on the grubby, fiat realities of everyday business. Perhaps it is not abstract enough. | |||
This conceptualisation of bitcoin as ''capital'' is certainly quite a different thing to a [[fiat currency]]. Fiat currency implies [[indebtedness]]. It needs the agency of banks to create and discharge that indebtedness. It ''centralises'' everything, and makes everyone dependent on the centre: the [[power structure]] that is [[fractional reserve banking]]. It ''compels'' “trust”, whether you want it or not. | |||
''Compelled'' trust, as David Graeber might say, is ''violent extortion''. | ''Compelled'' trust, as [[David Graeber]] might say, is ''violent extortion''. | ||
By contrast, the [[bitcoin]] ethos is, of course, not to ''trust'' trust — not ''compelled'' trust, anyway — and to decentralise and disintermediate where possible to remove any need for even voluntary trust. This was the problem a [[Permissionless blockchain|permissionless]] decentralised ledger was devised to solve | By contrast, the [[bitcoin]] ethos is, of course, not to ''trust'' trust — not ''compelled'' trust, anyway — and to decentralise and disintermediate where possible to remove any need for even ''voluntary trust''. This was the problem a [[Permissionless blockchain|permissionless]] [[decentralised ledger]] was devised to solve: how to construct a financial system does not rely on trust in a central permissioning authority, or the need for trust between participants. That is its basic use-case. | ||
Bitcoin maximalists might not trust their government, but in western economies, for the time being, the majority of tax-paying citizens do — at least with a government there is notionally someone to complain to. | |||
And trust in each other is a feature, not a big. This is the feature, in fact, on which the whole edifice of civilisation is based. Farrington would have done well to read Graeber here. Currency has its antecedents not in barter between strangers, as is commonly supposed, but in ''[[credit]]'' amongst friends. It would not work between strangers because of that very lack of trust in an abstract symbol. I will not hand over my rifles for your printed paper unless you and I share a mutual faith and consensus in the value of your paper. | |||
Bitcoin does ''not'' fix this. It is utterly axiomatic to bitcoin ’s viability that people believe in it as a token of value whilst knowing it has absolutely no intrinsic value. It is not even a lawful means of discharging debts to the government. | |||
That an artefact with no intrinsic worth can nonetheless keep one is not an impossible scenario: that is, near enough, the trick that fiat currency has pulled off. Bitcoiners do not tire of reminding us of this. Currencies generate their own momentum and when enough systematically important institutions have enough vested interest in maintaining the currency as a viable thing — if they are making enough money out of it — the currency will generally carry on. Bitcoin seems now to have this: brokers, exchanges, exchange -traded funds and their authorized participants and clearers and market makers. This is another importance of intermediation: these intermediaries all take their skim and preserving that income compels them to support the narrative. | |||
Yet another irony in a phenomenon apparently constructed out of them: the thing that vouchsafes this decentralised platform’s viability may be exactly the sort of institutions it is meant to undermine. | |||
[trust as bug and trust as feature] | [trust as bug and trust as feature] | ||