Skip to main content

Weathering With You: An Agorist Perspective

If someone asked you what your favorite emotion was, how do you think you’d answer? For many people, I suspect they would answer “Happiness”, “Joy'', or some variant of exclusively positive emotion. Someone may think more meticulously and answer with “Contentment”, which while a positive emotion has a lot of nuance attached to it. However my answer to that question is what I feel others would consider more orthodox: Bittersweet. Pleasure accompanied by suffering, not exactly most people’s first pick but from my perspective pain is necessary in order to enjoy the pleasure that life gives you. Perhaps I'm over-romanticizing but there’s something to desire from looking back fondly at times where you were hurting and seeing yourself in a better place in the present. Perhaps you finally have moved on from “The one who got away” and can look back on those times with fondness. Perhaps you are sharing stories of a friend or family member at their funeral and though they may never w

Four Cornerstones of Bitcoin






Some time ago I wrote a short piece that I called "Notes on Bitcoin as a Reserve Currency" where I laid out some basic thoughts on the concept of becoming your own bank, and one of the possible side effects of that (spelled out in the title of the blog post). I then sent a link to it to Sal, because I knew I would get some great feedback on it. I was right.

Sal sent me a great reply and it helped me to further flesh out the idea and this blog entry is basically that. I tried to, foolishly, jump over the fundamentals and Sal pulled me back down to the trenches.




"Intrinsic" Value

"To a naive observer, money made out of precious metal was 'sound money' because the piece of precious metal was an 'intrinsically' valuable object, while paper money was 'bad money' because its value was only 'artificial'. But even the layman who holds this opinion accepts the money in the course of business transactions, not for the sake of its industrial use-value, but for the sake of its objective exchange-value, which depends largely upon its monetary employment. He values a gold coin not merely for the sake of its industrial use-value, say because of the possibility of using it as jewelry, but chiefly on account of its monetary utility." - Ludwig Von Mises, Theory of Money and Credit.

One of my favorite economists, if not my absolute favorite, is Ludwig von Mises (I wouldn't call myself 'An Austrian', as the cool kids say, but that's for another time). Sal is a big fan too and we both agree on the fundamentals, but we split in the weeds.

If we trace the value of Bitcoin back to its root, to try and find out where its value comes from and what makes its money (in the Misesian sense), we can boil it down to four things: Electricity, Hardware, Code, Network.

There is a lot of ways to produce electricity, the heartbeat of our civilization. How and, perhaps more importantly, where you produce Electricity is the baseline for a potential floor on price on bitcoin through the competition on what to do with the electricity. You can do a lot of things with energy and when you chose to use it for Bitcoin, you do it with the idea that it is better, or more valuable, than the other alternatives[1]. 





Even if environmentalists like to call bitcoin a waste of energy production, or misuse, we who understand subjective value theory (hopefully) knows better: Even in places where energy costs are high and catch premium prices, there's innovation in capturing left-over energy "spills" and to convert it into Bitcoin network power. 

Just as with electricity, the Hardware used for supporting the Bitcoin network could be disconnected from the network and used for something completely different. Or the machines could scale down their hardware usage for bitcoin and gets other uses scaled up as they see fit. Just as electricity has competition for its use, hardware does too. A "mining rig" can be repurposed for a myriad of tasks, but when you chose to use it for bitcoin you do it because you think it's more valuable than the others.

The last piece of the puzzle, and the thing that ties everything together, is the Code. Without being too philosophical about it, it's the code that's the core of it all. But it needs the other two to function, of course. Just as gold needs to be dug up, filtered, and made presentable via some forms of hardware and energy, the same is true for Bitcoin. 

The blockchain code is a remarkable piece of literature: It's trustless accounting features are revolutionary. The Network, that is all the machines working together to keep the integrity of the blockchain ledger intact, is perhaps the most valuable piece in the puzzle - To me at least, and it seems many people agree with me. Without the security of the network, Bitcoin wouldn't be catching the same price as it does today. 



The price for 51% attacking[2] the Bitcoin network is staggering, not even counting all the hardware you need to collect. This is because of the size of the network - To attack it, you need to outsize the entire network. There are other different types of attacks too, but many of them are nipped in the bud because of the Network (or code). JW Weatherman made an excellent piece on the different threats to bitcoin, bitcoin holders, and the network - Free to download on GitHub - called Bitcoin Security Threat Model if you are interested in reading about these sorts of things.

To be secure enough to a future reserve currency you need, well, security. The smaller blockchains are easily disrupted; Attacking LBRY for an afternoon with rented hash power would cost pocket change. You can change the code and tighten the screws, but building a network the size of Bitcoin (and continue expanding upon it) takes time. Nobody is even close to Bitcoin, which is partially reflected in the price for a coin. Or at least I'd like to think so.

What I've illustrated here is something people like Peter Schiff miss when they talk about "gold having intrinsic value, but bitcoin not". A global ledger that can not be maliciously manipulated by bad actors that don't follow the rules is valuable in itself. In fact, we can even ignore the pieces on the road there (code, hardware, and electricity) and just focus on the Network.

To reconnect with the Mises quote at the beginning: The monetary utility of Bitcoin is undeniable. It might not be in the form of P2P, in a sense, because of how the blockchain is coded. But, being a potential reserve currency is very valuable too, and perhaps even more magical than Satoshi Nakamoto intended for his project. 

Peace and Profit

- Alex Utopium

----------------













Comments

  1. Can't you see that Bitcoin is a trap? It keeps a leger of every transaction you make, it is not a cryptocurrency at all, but an indoctrination towards a one world digital currency. Cash is the true "crypto currency".

    ReplyDelete

Post a Comment

Popular posts from this blog

The Truth About Global Warming

Libertarians who deny the existence of global warming run the risk of making us all look like a bunch of illiterate fools. Much like economics, being ignorant of planetology or climate science isn't a crime, but having a "loud and vociferous" opinion on the subject while remaining in a state of ignorance can be a dangerous thing. And frankly, the science behind climate change is elementary. Sunlight enters our atmosphere and warms our planet. Earth then gives off that heat in the form of infrared radiation (this is the same principle behind those cool goggles our collapsitarian friends have). However, and this is a crucial point - the CO₂ molecules in our atmosphere do not allow IR to easily escape back into space. This is known as the greenhouse effect. As the temperature of the planet increases, polar ice caps melt and eventually surface water will begin to evaporate. Since H₂0 also prevents IR from escaping our atmosphere, the additional water vapor only compound

The Counter-Economics of COVID

In March 2020 - some say earlier, but by March 2020 at latest - the banking had sector collapsed. In response, coronavirus was manufactured as a scapegoat to justify the liquidity injection necessary to keep the Federal Reserve’s ponzi scheme alive. The State’s narrative would henceforth be: ‘Since all businesses were shut down, an unprecedented amount of money must be printed and distributed to the public.’ Milton Friedman’s helicopter money had come to fruition. But like a junkie chasing his initial high, the Fed had become immune to the effects of monetary stimulus. Each injection requiring a stronger, more potent dose of cheap & easy money. Less than two years later, and the effects of that stimulus have now waned & the banksters are poised to pull off another heist. As the business cycle continues to ebb and flow until the day of final reckoning, the State can be expected to behave in an increasingly erratic fashion. Like a cornered cat, or a fish out of water, the State

The Trouble With Dave Smith

  On the issues, Dave & most agorists can find agreement 99 out of 100 times, but as libertarians we have a habit, a pastime - a duty even, to seek out & argue over the 1% of things we don’t agree on. In keeping with that tradition friends, I've got to tell you, when it comes to strategy, Dave Smith seriously fumbles the ball. The fundamental issue is that @comicdavesmith is interested in creating libertarians, whereas agorists are interested in creating liberty. Dave has a classic case of @perbylund ’s Savior Complex - the irrational desire of individualists to save the collective whole of society. There are lots of problems with this, but even if creating libertarians is a worthy goal, does that mean the Libertarian Party is the best vehicle to accomplish this task? Has anything the Libertarian Party ever done caused even a slight retreat of statism? Dave rightly points to his own success at spreading the message of liberty. It's true, no one - save Ron Paul or Tom