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{{a|book review|{{image|bitcoin is venice|jpg|}}}}This is a massive, magnificent, learned contrarian work and, like that other massive, magnificent, learned contrarian work {{author|David Graeber}}’s {{br|Debt: The First 5,000 Years}}, few practitioners in modern financial services would not benefit from reading it, just for the challenge it presents. | {{a|book review|{{image|bitcoin is venice|jpg|}}}}This is a massive, magnificent, learned, contrarian work and, like that other massive, magnificent, learned contrarian work {{author|David Graeber}}’s {{br|Debt: The First 5,000 Years}}, few practitioners in modern financial services would not benefit from reading it, just for the challenge it presents. | ||
Like any communal activity in which there are things to be gained and lost — i.e., ''any'' communal activity — “[[financial services]]” is a [[paradigm]]: an intellectual structure with its own rules, hierarchies, defeat devices and articles of faith, usually encrusted in so much obscurant detail that it is impossible for non-initiates to get near it without being swatted away on ground of ''detail'' — insufficient grasp of buried, esoteric intellectual constructs that only the truly learned can know. | Like any communal activity in which there are things to be gained and lost — i.e., ''any'' communal activity — “[[financial services]]” is a [[paradigm]]: an intellectual structure with its own rules, hierarchies, defeat devices and articles of faith, usually encrusted in so much obscurant detail that it is impossible for non-initiates to get near it without being swatted away on ground of ''detail'' — insufficient grasp of buried, esoteric intellectual constructs that only the truly learned can know. | ||
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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 — ”}} | ||
Farrington believes that bitcoin is an asset, not a ''just'' a currency , and as it is not tethered to the existence of a bank or a central bank, and has independent existence, can exist without them and need not degenerate due to central bank monetary policies or investment bank grift. Bitcoin is pure abstract, tokenised capital. It is to capital what a [[non-fungible token]] is to art. But not any particular item of capital: just “capital” in the abstract, as a shared community resource, before it is transmogrified into a particular form. This is sort of like a platonic essence, or a midichlorian life force. You know, like the ''force''. | |||
This is certainly quite a different thing to a currency. As Farrington describes it, currency implies indebtedness, to the extent you need it it therefore implies banks as a necessary agency for creating indebtedness. It centralises everything, makes everyone dependent on the [[power structure]] that is [[fractional reserve banking]]. It compels ''trust'', whether you like it or not. The bitcoin ethos is, of course, not to ''trust'' trust — not ''compulsory'' trust, anyway — and to decentralise and disintermediate where possible to remove any need for voluntary trust. A permissionless decentralised ledger functions well without trust. | |||
This view of bitcoin as a [[non-fungible token]] for capital is, I think, fundamental to getting a purchase on where bitcoin maximalists are coming from. | |||
Bitcoin is capital, therefore holds its value, and can be held away from banks and intermediators. | |||
This is where I think I part company with Farrington, though it may be one of those “agree to disagree” scenarios. | This is where I think I part company with Farrington, though it may be one of those “agree to disagree” scenarios. | ||
Perhaps this is the [[nocoiner]]’s fundamental misapprehension: have we been slating Bitcoin for lacking qualities it isn’t even ''meant'' to have? If it is not a currency, then criticisms that it isn’t very good at the sort of things currencies are meant to be good at fail, defeated by the simple objection, ''so what?'' | Perhaps this is the [[nocoiner]]’s fundamental misapprehension: have we been slating Bitcoin for lacking qualities it isn’t even ''meant'' to have? If it is not a currency, then criticisms that it isn’t very good at the sort of things currencies are meant to be good at fail, defeated by the simple objection, ''so what?'' | ||
Farrington correctly sees a “fiat currency” as necessarily an instrument of indebtedness: a person who holds it has a promise for value from someone else. It is, on this view, not an asset, but an ''anti-asset'': something that is no good in and of itself, but which you can only generate value with ''when you give it away''. | Farrington correctly sees a “fiat currency” as necessarily an instrument of [[indebtedness]]: a person who holds it has a promise for value from someone else. He doesn’t say it but he may say regard indebtedness as a form of compulsory trust and therefore intrinsically undesirable. | ||
It is, on this view, not an asset, but an ''anti-asset'': something that is no good in and of itself, but which you can only generate value with ''when you give it away''. | |||
There is an important distinction here between ''holding'' currency and ''putting it in the bank''. When, and while, you hold it, for all intents and purposes money is not there. It is meaningless. Worthless. Valueless. (If you are robbed it only creates a (negative) value when it is taken away. Holding currency in person is taking actual capital off the table; completely withdrawing it from the market. Since capital’s value is a function of time, you would expect a capital instrument you have disengaged from the capital market to waste away, and so it does. Cash in your wallet attracts no interest so, relative to the value of any particular thing, it depreciates over time. That is the consequence of inflation. | There is an important distinction here between ''holding'' currency and ''putting it in the bank''. When, and while, you hold it, for all intents and purposes money is not there. It is meaningless. Worthless. Valueless. (If you are robbed it only creates a (negative) value when it is taken away. Holding currency in person is taking actual capital off the table; completely withdrawing it from the market. Since capital’s value is a function of time, you would expect a capital instrument you have disengaged from the capital market to waste away, and so it does. Cash in your wallet attracts no interest so, relative to the value of any particular thing, it depreciates over time. That is the consequence of inflation. | ||