Bitcoin is Venice: Difference between revisions

Paradigms can go into “crisis” and may collapse, but necessarily not from within. Some exterior impetus is required to change the landscape so the paradigm’s explanations — and its questions — are no longer satisfying. Kuhn’s book was about this revolutionary process.

{{Drop|T|his is not}} to say contrarians cannot be popular or correct — [[Gerd Gigerenzer|Gigerenzer]], [[Nassim Nicholas Taleb|Taleb]], [[Benoit Mandelbrot|Mandelbrot]], [[Kathleen Stock|Stock]], [[David Graeber|Graeber]], [[James C. Scott|Scott]], [[Jane Jacobs|Jacobs]], [[Rory Sutherland|Sutherland]] and others ply a healthy trade damning the manifest absurdities of our institutions — but our institutions blithely carry on, regardless.

Well, at least until real-world facts intrude, they do: only when it becomes clear a paradigm not only ''should'' not work [[Paradigm failure|but, in practice, ''does'' not]], does it go into “crisis”. In the worst case, it cannot recover and a wholesale redrawing of the intellectual landscape is on the cards: a new paradigm must be born, that accounts for the changed practical facts, with new rules, new elders and a new mandate. This is not a simple matter of changing theories but a deep social disruption: the extant education system must be rebuilt, its undermined credentialising institutions may collapse — what counts as a valid question worthy of answer changes. This is a dangerous period: the new structure is supple and new but not strong, and untested against the range of vicissitudes the old regime had evolved to withstand . This is the lesson of ''Animal Farm'': the best laid plans of — well, pigs and sheep— gang aft agley — and, upon a few meaty slaps to the chops, the new boss begins to ''devolve'' into the old one.  

But that is to presume the old paradigm lays down its arms first. But old [[paradigm|paradigms]], for exactly the same reason, have a habit of shapeshifting, reframing anomalies around their fringes and boxing on. You cannot defeat a paradigm with a purely theoretical argument: you must ''punch it in the mouth''. In this way [[Karl Popper]]’s idea of [[falsification]] doesn’t really describe the way science progresses in practice.  

{{Drop|S|o we should}} listen to the theoretical arguments of outsiders like [[David Graeber]] and [[Allen Farrington,]] but not be surprised if they don’t carry much water with the leaders of the status quo. They can still, in their way, shape and direct the way even experts think about the world.  

[[Bitcoin]] is by no means a spent force: it may not yet have thrown a telling punch, but this is not to say it won’t. [[Allen Farrington]] is clear: soon enough, it will.  

[[David Graeber]] was, properly, an outsider: an anarchist anthropologist and one of the leading conceivers of the ''Occupy Wall Street'' movement.<ref>https://novaramedia.com/2021/09/04/david-graebers-real-contribution-to-occupy-wall-street-wasnt-a-phrase-it-was-a-process/</ref> Allen Farrington is, in one sense, not — he is a well-read industry insider. He would not tear it all to the ground, but would rather “make finance great again” by restoring capitalism to its “Venetian apex”. In another sense, though, he ''is'', because his means of doing so would be with [[bitcoin]], and by destroying what he sees as the “strip-mining” mentality of the capitalism yielded by [[fiat currency]].   

Yet Farrington cautions against excessively theoretical approaches which, he says, got us to where we are — this may be an attempt to disarm the elders as aforesaid — but it arrives with some irony, for his own defence and exegesis of Bitcoin is intensely theoretical — to the point of being ideological — and where it stretches to its potential, charmingly, but hopelessly, [[utopia]]n.  

What he has on his side, for now, is Bitcoin’s sustained defiance of the elders of finance who have predicted seventeen of its last two implosions. At the time of writing, despite [[FTX]]’s collapse, [[Sam Bankman-Fried|Chauncey Gardiner]]’s conviction and with Binance at least on the defensive, Bitcoin is surging back toward historical highs. This, perhaps is the proof of the pudding: you can’t, as fellow contrarian, but Bitcoin antagonist, [[Nassim Taleb]] would say, “lecture birds how to fly”.

{{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.  

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.