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Bitcoin is Venice: Difference between revisions
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====Trust as feature not bug==== | ====Trust as feature not bug==== | ||
{{Drop|A|nd trust in}} each other is a feature, not a | {{Drop|A|nd trust in}} each other is a feature of a community, not a bug, and not something that can or should be solved by [[technology]]. It is ''the'' feature, in fact, on which the whole edifice of civilisation is based. Farrington would have done well to read a bit more Graeber here. | ||
Currency has its antecedents not in [[barter]] between strangers, as is commonly supposed, but in ''[[credit]]'' amongst friends: currency would not work between hostile strangers because it is a personal promise of deferred satisfaction, and the a hostile stranger does not trust in promises or pieces of paper or bits of metal as abstract symbols. This is a matter almost of literary, and not financial, theory. Of shared meaning. I hand over my muskets for your blankets as their respective meanings to each of us is obvious, and does not depend on the other’s. Indeed it depends on a relative ''divergence'' in meaning: you must value muskets more than blankets, and I must value blankets more than muskets, or we have no deal. | |||
Given how fundamental this dissonance is to any market it is extraordinary how much hostility its necessary premise — there is no objective truth — generates. | |||
We can each arrive at our own values of guns and blankets and that is a fine thing. But it is not fine for tokens of abstract tokens of value such as printed promises to pay. Those we must agree about. | |||
In other words, for currency to work, there must be consensus as to its value. That is axiomatic. Hence, it is of no use between hostile strangers. | |||
===Bitcoin as metaphor=== | ===Bitcoin as metaphor=== | ||
[[Bitcoin]] does ''not'' fix this. It is axiomatic that bitcoin’s viability depends on community consensus in something that is, literally, not true. This is | {{Drop|[[Bitcoin|B]]|itcoin does ''not''}} fix this. It is axiomatic that bitcoin’s viability depends on community consensus in its value other than its intrinsic value. We must all believe something that is, literally, not true, and wilfully suspend of knowledge of what is true. This is how we use ''[[metaphor]]s'' — they are figurative ''tokens''. | ||
People must believe in Bitcoin as a ''token'' of value — in Farrington ’s view, of [[capital]] — whilst accepting it has absolutely no intrinsic value. | |||
As mentioned, this is also true of fiat currency. But here the prevailing paradigm, which currency plays a fundamental part, makes a difference. Within the “[[degenerate fiat currency]]” [[power structure]], fiat currency operates as a lawful means of discharging debts denominated in that currency. It necessarily has that value. If this feels circular, that’s because it is: the power structure defines both question and answer. By accepting The leap of faith has been made and completed: the economy works on the strength of promises calibrated by reference to that metaphor. to the government. Bitcoin only discharges debts denominated in bitcoin. | |||
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. | 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. | ||
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==== Bitcoin as a token capital ==== | ==== Bitcoin as a token capital ==== | ||
{{Drop|[[bitcoin|B]]|itcoin is ''capital'')), then, not ''currency'', at least not as we are used to thinking about it. [[Bitcoin]] is more like ''gold''. | |||
Its scarcity is more or less fixed, and it gets progressively harder to extract more of it from the earth. In this way the “mining” [[metaphor]] is correct. It holds its value wherever it is. It does not depend for viability or validity upon the “implied violence” of central banks, nor the indebtedness of investment banks nor the custody and connectivity of other [[Rent-seeking|rent-extracting]] intermediaries. You can take it, sort of, off the grid. | Its scarcity is more or less fixed, and it gets progressively harder to extract more of it from the earth. In this way the “mining” [[metaphor]] is correct. It holds its value wherever it is. It does not depend for viability or validity upon the “implied violence” of central banks, nor the indebtedness of investment banks nor the custody and connectivity of other [[Rent-seeking|rent-extracting]] intermediaries. You can take it, sort of, off the grid. | ||