Gold collapsing. Bitcoin UP.

[cypherdoc]

remember Yamana Gold? how touted this small miner was by gold bugs worldwide? what devastation. the losses are astounding:

 

[cypherdoc]

Barrick Gold. Ouch:

 

[Justus Ranvier]

In a world of sound money (I'm assuming that's the type of money that will emerge to be used if people are left to make their own decisions (or just take that power back)) people have to suffer the consequences of their actions as should be. Risks are real and hence the concentration of wealth (supposedly happening by lending/borrowing for interest) is kept in check and made more careful by the possibility of default with no lender of last resort or taxpayer to do bailouts in cases of black (or even just gray) swans. Money will flow from those who spend to those who offer products and services. It will flow from the rich to the productive. At least that's what I'm trying to convince myself of and I know it's rather easy to argue against that (in the form of "xyz will still be the case", e.g: "means of production still in the hands of the elite" and so on)

I think the effect you're describing is an application of the Coase theorem:

https://en.wikipedia.org/wiki/Coase_theorem

 

[AdrianX]

Those are big questions worth discussing.

Regarding the bolded one about concentration of wealth, I'm usually arguing the opposite: with sound money being in prevalent use, wealth (and hence power) would tend to disperse rather than concentrate. I would like to argue the concentration of power is a more-or-less direct result of the type of monetary system we use (think bailouts, corruption, deficit spending, misallocations of capital, hidden inflation tax moving wealth from the 99 to the 0.01 percent, privatization of gains, socialization of risks and so on).

A world where debt is money that is created out of thin air by a small elite and their institutions is very different from a world where money is allowed to emerge privately. Quite fundamentally different and I'm guessing we probably got used to take some things for granted that are actually a result of that type of system being used (like "the rich get richer, the poor get poorer").

In a world of sound money (I'm assuming that's the type of money that will emerge to be used if people are left to make their own decisions (or just take that power back)) people have to suffer the consequences of their actions as should be. Risks are real and hence the concentration of wealth (supposedly happening by lending/borrowing for interest) is kept in check and made more careful by the possibility of default with no lender of last resort or taxpayer to do bailouts in cases of black (or even just gray) swans. Money will flow from those who spend to those who offer products and services. It will flow from the rich to the productive. At least that's what I'm trying to convince myself of and I know it's rather easy to argue against that (in the form of "xyz will still be the case", e.g: "means of production still in the hands of the elite" and so on)

Now for the other question wether a series of jubilees by adoption of yet other cryptocurrencies by the people would be the norm... well, maybe. Seems to me if this first 'revolution' works out and a 'jubilee by Bitcoin' happens, there's nothing holding back the people from doing it again should the need arise for some reason, right? Maybe a new type of "check and balance" can emerge here?

With all the questions not clearly answered it seems to me that the separation of money and state should in aggregate be good for society (the people). I draw that conclusion (invalidly, I know) simply by looking at all the bad that is produced by the state-sponsored fiat system.

There are macro money cycles that span millenia. The first notable one leading to the creation of the Roman empire with hard money and then it's collapse with fiat.

The next being the monarchies that emerged during the start of a hard money expansion it resulted in the concentration of land ownership with borders we still have today this power was disrupted by innovation debt and fiat leading to the situation today.

We are now in a state of charge where multiple cycles are are in transition.

This all repeats with some adjustment that resonate at different frequency.

We have this one opportunity to address the negative externalities that will disrupt the macro cycle we are in.

Hard money (moreover Bitcoin money ledger) is a key. I'm a firm believer that wealth distribution is not a problem as long wealth inequality is not a feature of the overall system not just the money system.

Bitcoin is the catalyst for the cycle that plays over the next fiew millennia. But without looking at imbalances memes will allow monopolies to exist and so the cycle will continue.

 

[DDDGGG]

Great post!

Regarding whether the Jubilee would be a single event though, I think probably not. The first Jubilee (the abandonment of fiat) would remind us that money only has value if we agree that it has value. It only has power over us if we as humanity allow it to have that power. If bitcoin concentrates to such an extent that the resulting distribution of wealth hurts humanity more than it helps, then this just presents the conditions necessary for the abandonment of the "Bitcoin ledger" into a new cryptocurrency ledger. The productive people of the world can always abandon any currency system if that currency system is no longer useful to those people.



Agreed. How about: "What would a Biblical-style Jubilee look like in our modern age?

Yes, broadly I could imagine this being a cyclical process that continues on ad infinitum - when things are bad enough, some sort of revolution will occur. Perhaps the real question is: How does this technology change the dynamic? Will there be more or less peak inequality, if that's the measure we're even interested in? Or does it change the frequency? Etc.

I'd also like to know what the "productive people of the world" means

 

[DDDGGG]

@DDDGGG

Da, Da, David, Gra, Gra, Graber?

Hahaha... you'll quickly discover that

a) I'm clearly not David Graeber, or
b) David Graeber is very good at acting like someone who doesn't really know anything about anthropology, history, economics, etc. in order to draw on a conversation on an obscure bitcoin forum

...In a way wealth accumulation will manifest in revenue generating asset accumulation. (not a problem if we had a free market) That wealth eventually concentrates in the hands of super minority facilitated by memes that allow monopolies to exist. The Jubilee is just a reset that keeps the order and prevents unrest.

I'm curious to know what you mean when you say "not a problem if we had a free market".

@DDDGGG

Thinking a bit more, if mankind moves forward with cryptocurrency, it would probably be easier to guard against great abuses that result from dysfunctional distributions of wealth. The reason it would be easier is because the possibility of the abandonment of a cryptocurrency's ledger is ever present.[1] I don't really know how to explain it, but the fact that cryptocurrency is just bits in a blockchain would seem to reduce obstacles associated with "ledger abandonment," compared to the entire world abandoning the "gold ledger" in favour of platinum in ancient times.

[1] I'm certainly not against wealth inequality in general…I believe that some people are better stewards of capital than others.

Interesting. I'll have to read up on the Au -> Pt switch. Anything in particular I should check out?

 

[DDDGGG]

Money will flow from those who spend to those who offer products and services. It will flow from the rich to the productive. At least that's what I'm trying to convince myself of and I know it's rather easy to argue against that (in the form of "xyz will still be the case", e.g: "means of production still in the hands of the elite" and so on)

...

With all the questions not clearly answered it seems to me that the separation of money and state should in aggregate be good for society (the people). I draw that conclusion (invalidly, I know) simply by looking at all the bad that is produced by the state-sponsored fiat system.

I don't think I'm as optimistic as you. I agree to some extent that our present centralized methods of money supply management are problematic, but I'm not confident that there aren't deeper structural issues. I suppose we're both asking to what extent the material characteristics of the monetary system introduce new problems or exacerbate existing ones.

I can vaguely picture a situation, far into the future, where new monetary systems pop in and out of existence with such fluidity that they become, in a way, transparent. What is left, then, in terms of the underlying dynamics? Do we have a situation where some set of 'naked' forces are clearly revealed, unobscured by the dynamics of our money system? And if this is the case, what comes next? Will this be some sort of optimum, or will there still be a need (for some, anyway) to address the BIG questions?

I'd also like to hear Graeber's thoughts on how technological development in general will play a role in this kind of evolution -> concentration of wealth, etc.

 

[Peter R]

Interesting. I'll have to read up on the Au -> Pt switch. Anything in particular I should check out?

Sorry. I didn't mean to imply that there was a point in history where we switched from Au -> Pt. I was just trying to imagine what it would have taken to "abandon the gold ledger" in favour of, for example, platinum, back in ancient times. The conclusion I came to (without really any good arguments) is that there would be less friction to overcome in dropping the Bitcoin ledger for a new crypto ledger if wealth inequality became unhealthy, than what would have been required in the past to globally de-monetize gold.

 

[Fatman3002]

@BldSwtTrs not sure, someone on reddit suggested they might've added the worth of assets other than bitcoin to get to $20 bn.

I am choosing to believe that this means XBT is undervalued at the moment. Which means the price should be $1365.

 

[Zarathustra]

It is a waste of time. (Read half his book). He is more of an anthropologist, not an economist. Read Ludwig von Mises and Murray Rothbard in stead.

Forget it. Austrianism is science fiction (the barter fairytale). The homo economicus is the result of organized violence. Organized violence created the first debt (tribute). Either you are self-sufficient (=not trading with aliens on markets) or you are collectivized (indebted); then you have to create a market to produce surplus. The surplus is the tribute to the war lords (state). Mises and Rothbard knew nothing about anthropology.

 

[molecular]

In other words, Bitcoin is secession.

See: http://archive.freecapitalists.org/forums/t/8550.aspx

Interesting piece from 2009. Almost visionary.

The guy talks about how the internet is 'already starting to replace' core functionalities of governments.

Allow me to quote 2 parts for better visibility here that strangely seem to soft-link to a future bitco.in forum

Fed, IRS, SEC, COMEX, etc.: Digital gold currency in combination with public-key cryptography may soon make it impossible for any government to monitor transactions at all. Even if searched by totalitarian police forces, technologies like perfect forward secrecy would make it physically impossible to obtain evidence to find out how much money anyone possesses or has used to buy particular goods or services. Digital gold currency is already being offered by several firms, although some of them ended up being scams (fractional/fictional reserves - go figure).On the other hand, this may encourage fraud, extortion, etc.

For more info, check out the Wikipedia article on crypto-anarchism. I hope no one thinks this is something we should advocate (wrong image and doesn't help us anyway, since probably none of us are in the field), but I think it's important strategically to realize that these things are on the technological horizon whether anyone wants them or not.

 

[molecular]

Bitcoin does not have a monopoly position, and if it behaves as one then some alternative will rapidly replace it. Everyone taking a fee pressure view is openly assuming that Bitcoin has won and has cemented it's position forever, and thus they can dictate terms to the world. Such a position is simply laughable.

Not just laughable. The existence of something like it (the banking cartel) is pretty much exactly what has enabled Bitcoin in the first place.

To essentially become what something was created to offer an alternative to is a very shameful kind of defeat.

When putting myself in the position of someone who set out to destroy bitcoin or make it obsolete, the most promising strategies I was able to come up with were "divide an conquer" type attacks on the community. I have to say at times I feel that brainwashing a couple of core devs (into some kind of perversion of their own ideals) seems almost too easy. I'm not suggesting that is what happened, just that sometimes I'm having such thoughts.

 

[AdrianX]

I'm curious to know what you mean when you say "not a problem if we had a free market".

In a free market competition keeps wealth imbalances in check. Monopolies on wealth generating assets are too costly to maintain. There is always competition that erodes the wealth generating asset.

To maintain a monopoly you need a feedback loop to regenerate the source. In our current system the monopoly is fiat managed with inflation deflation and interest.

In a hard money system it will be the accumulation of land as Adam Smith points out all progress goes to the land lord who tax producrivity gains.

That's not a fault in free markets it's a human meme, that land is property, that undermines free markets.

Managing (more of the things we want and less of the ones we don't) ie. wealth is not something everyone is capable of doing with an optimal efficiency. It's dependent on past and present and future knowledge. Some take the time to analyze it all and make more optimal choices. So wealth inequality is somewhat natural.

The consequence of this is wealth accumulates in so called "strong hands" where it is the competent who manage more.

The problem is not that this happens. The problem is wealth generating assets beget more wealth generating assets if those assets fall outside of the free market. Those assets then span multiple generation and go unchecked or challenged.

In Biblical times the challenges were obviously more frequent, the jubilee allowed the status quo of wealth generating assets to span generations, as they gave back.

 

[cypherdoc]

So if f2pool can create a complex single tx 1MB block that takes 25 sec to validate, why haven't they consistently repeated that strategy over an extended period of time to create a race attack so as to gain a progressive advantage over the rest of the mining network?

 

[yrral86]

Because if they act in an adversarial manner other miners will start to ignore them.

 

[cypherdoc]

@yrral86

Thank you.

It's called Governing Dynamics.

 

[humanitee]

Because if they act in an adversarial manner other miners will start to ignore them.

Don't forget that it would also tank the price, so they would be hurting their own profits.

 

[cypherdoc]

XT blocks picking up again. This should continue as the smaller pools have an incentive to lure hashers away from the bigger pools:

https://www.reddit.com/r/bitcoinxt/comments/3mktb4/bip_101_block_376338_by_p2pool_31000/

 

[cypherdoc]

These maps are very encouraging:

http://bravenewcoin.com/assets/Uploads/_resampled/ResizedImage600744-Brazil-Bitcoin-Penetration.png

http://bravenewcoin.com/news/bitcoin-fever-spreads-across-brazil/

 

[Justus Ranvier]

http://motherboard.vice.com/read/variety-jones-a-corrupt-fbi-agent-is-hunting-me-so-im-turning-myself-in