http://www.quora.com/Bitcoin/Is-the-cryptocurrency-Bitcoin-a-good-idea Hi Sepp, this is a very good summary by Adam Cohen of main critiques, well argued, I didn't succeed in copy-pasting this, can you give it a go, from "No matter what your reasoning, Bitcoin is a ridiculous idea that will not accomplish what you want." onwards to the end, and add it to our wiki page on bitcoin? see http://p2pfoundation.net/Bitcoin I will then also copy it as a blog article, Michel -- P2P Foundation: http://p2pfoundation.net - http://blog.p2pfoundation.net Connect: http://p2pfoundation.ning.com; Discuss: http://lists.ourproject.org/cgi-bin/mailman/listinfo/p2p-foundation Updates: http://del.icio.us/mbauwens; http://friendfeed.com/mbauwens; http://twitter.com/mbauwens; http://www.facebook.com/mbauwens
I don't see how the alternative currency experiments like Bitcoin do anything to help us move to a more egalitarian, steady-state economy. An economist will tell you that "price is information", but I'm not sure how they justify that. An ounce of crack, a few hours of music lessons, a lawn mower, or a couple hours of labor might all be $100. None of these can remotely be considered the same, but yet the dollar value is identical. Any mechanism which equates these is an absurd abstraction which eliminates a great deal of useful information. This dearth of relational data is a fundamental feature of money which turns the economy into a valuation game. Over time, the wealth gap between those who game the system well and those that don't becomes so great that a jubilee or a revolution is needed. I see open source production and modern information technology as powerful tools which allow us to more fully value things. They are important because they help make money (just a primitive form of information technology, IMO) obsolete. I just don't understand why people want to continue to treat the economy as a game. -Karl
I think this is a very concise and valuable criticism of money as we know it. Jack On Fri, May 20, 2011 at 8:06 AM, Karl Robillard <[email protected]>wrote:
I don't see how the alternative currency experiments like Bitcoin do anything to help us move to a more egalitarian, steady-state economy.
An economist will tell you that "price is information", but I'm not sure how they justify that. An ounce of crack, a few hours of music lessons, a lawn mower, or a couple hours of labor might all be $100. None of these can remotely be considered the same, but yet the dollar value is identical. Any mechanism which equates these is an absurd abstraction which eliminates a great deal of useful information. This dearth of relational data is a fundamental feature of money which turns the economy into a valuation game. Over time, the wealth gap between those who game the system well and those that don't becomes so great that a jubilee or a revolution is needed.
I see open source production and modern information technology as powerful tools which allow us to more fully value things. They are important because they help make money (just a primitive form of information technology, IMO) obsolete. I just don't understand why people want to continue to treat the economy as a game.
-Karl
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Hello All, One way to distill this critique further would be to suggest that conventional exchange systems (i.e. money) are measured in one-dimension (quantity) whereas value is a multi-dimensional concept. At Access Space we work with (at least) three value dimensions: Exchange Value (which maps onto money value) Symbolic Value (how cool it is, or what it means in symbolic terms) and Utility Value (how useful it is). (Arguably, we also work with a fourth value metric: Time). One value dimension can sometimes be traded for another, but not always at a constant rate. In some cases value exchange between systems is impossible. You can see examples of business models which exploit these other value dimensions. For example, Harley Davidson produce and sell aftershave to exchange some of their symbolic value (Harleys are cool!) for Exchange Value. However, if they over exploit the exchange, they'll cease to be cool, because people will realise that they're an aftershave manufacturer, with a bike-orientated publicity strategy - which isn't cool at all. In our media lab we exploit discontinuities between value systems - we recycle computers for use in the lab and the community. Three or four year old computers are not cool - they're in a trough of low value. Inefficient software gives the false impression that they have low utility value. Users are generally insufficiently skilled to optimise their functions, so they appear to have low utility value. We refurbish the computers, optimising their utility value, and rebrand them as "green" and "anti-corporate" technology, which increases symbolic value in niche markets. (Although notice that "mainstream" symbolic and exchange value is still very low, as greenness is eclipsed by a marketing push to misinform users about utility value). We also re-value participants themselves. Unemployed people may have low exchange capacity (i.e. no money) and low symbolic value (it ain't cool to be kicking your heels). But thye have high utility value - they have available time which can be exchanged for skill-acquisition and creative activity. Notice the way that throughout history people who are disempowered by mainstream valuation systems have used the creative, symbolic value axis as a route to increased valuation. (Born in the ghetto? Got no cash, no useful skills? Maybe - but the way he walks has style!) Notice also how value along many axes is a slippery concept - keep something unfashionable long enough and it regains value (e.g. old computers lose utility but gain retro-chic). Sometimes exchange rates across value axes are proportional, but in other cases they may be unrelated, or even inversely proportional. As small elites becomes increasingly (and unjustifiably) super rich, they cannot help but become less free (lowered utility value) and less cool (lower symbolic value). If their symbolic value bottoms out, revolution happens and people end up hanging from lamp posts. (c.f. The Arab World, 2011.) Let's hope that re-understanding of valuation occurs before negative-sum unpleasantness. Best Regards, James ===== On 20/05/11 10:43, Jack Marxer wrote:
I think this is a very concise and valuable criticism of money as we know it.
Jack
On Fri, May 20, 2011 at 8:06 AM, Karl Robillard <[email protected] <mailto:[email protected]>> wrote:
I don't see how the alternative currency experiments like Bitcoin do anything to help us move to a more egalitarian, steady-state economy.
An economist will tell you that "price is information", but I'm not sure how they justify that. An ounce of crack, a few hours of music lessons, a lawn mower, or a couple hours of labor might all be $100. None of these can remotely be considered the same, but yet the dollar value is identical. Any mechanism which equates these is an absurd abstraction which eliminates a great deal of useful information. This dearth of relational data is a fundamental feature of money which turns the economy into a valuation game. Over time, the wealth gap between those who game the system well and those that don't becomes so great that a jubilee or a revolution is needed.
I see open source production and modern information technology as powerful tools which allow us to more fully value things. They are important because they help make money (just a primitive form of information technology, IMO) obsolete. I just don't understand why people want to continue to treat the economy as a game.
-Karl
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-- James Wallbank CEO, Access Space Network Ltd. Access Space, Unit 1, AVEC Building, 3-7 Sidney St, Sheffield S1 4RG Access Space is UK Registered Charity: #1103837 Tel: +44 (0)114 2495522 Fax: +44 (0)114 2495533 Web: http://access-space.org
On Fri, May 20, 2011 at 2:06 AM, Karl Robillard <[email protected]>wrote:
I don't see how the alternative currency experiments like Bitcoin do anything to help us move to a more egalitarian, steady-state economy.
Right now we're suffering from a lack of currency competition. Central bank fiat currency dominates the world but we could be using a myriad of currency systems - IOUs, time, commodities, tokens, etc. We want a healthy, diverse marketplace of accessible currencies just like we want a healthy, diverse marketplace for wheat.
An economist will tell you that "price is information", but I'm not sure how they justify that.
The 'information' is where supply and demand intersect, creating the context for trade. This is remarkable information because market participants are motivated by self-interest to share this information and, in doing so, create efficient transactions.
An ounce of crack, a few hours of music lessons, a lawn mower, or a couple hours of labor might all be $100. None of these can remotely be considered the same, but yet the dollar value is identical.
If we had more currency systems pricing would be different and more efficient. For example, you might buy music lessons in time hours, crack in bitcoins, a lawn mower in dollars and labor in an IOUs. Arbitrage opportunities would be plentiful and accessible, drastically increasing our capacity to create wealth.
Any mechanism which equates these is an absurd abstraction which eliminates a great deal of useful information.
This abstraction is only absurd in some contexts. If you're participating in global trade with massive supply chains, this abstraction is extremely useful. But the UD$ and the central banking fiat currency system of which it's a part is great for global trade but horrible for local trade. That's why we need more currencies.
This dearth of relational data is a fundamental feature of money which turns the economy into a valuation game. Over time, the wealth gap between those who game the system well and those that don't becomes so great that a jubilee or a revolution is needed.
... or the emergence of alternative systems.
I see open source production and modern information technology as powerful tools which allow us to more fully value things. They are important because they help make money (just a primitive form of information technology, IMO) obsolete.
"Money" is extremely sophisticated information technology - from the materials and processes used to create 'paper' currency to the massive networks of hardware, software, data and knowledge technologies that makes it possible for people around the world to transact with each other in real time. This technology is - however - highly proprietary. When the technologies of money are open sourced we're going to achieve great wealth.
I just don't understand why people want to continue to treat the economy as a game.
Your closing statement is interesting. If the economy isn't a game, what is it?
-Karl
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On Fri, May 20, 2011 at 8:06 AM, Karl Robillard <[email protected]> wrote:
I don't see how the alternative currency experiments like Bitcoin do anything to help us move to a more egalitarian, steady-state economy.
I don't think so either - because of the way it is designed (as a global and conventional currency). BUT bitcoin does do something else: it shows that it is possible to use p2p technology to actually run a currency. That's a pretty mean thing - and as an experiment it proves pretty succesfull so far. It is pretty wicked to see how I as a participant owe my own wallet for example and can make any bitcoin-payment without commission, and at the same time fully transparant (and if you want anonymous). That's unique, and as such the technology could maybe also be used in different ways, by smaller communities even? This technology might open up a tremendous amounts of options in the future for your own steady-state economies. Today though we see Bitcoin being used for an overwhelming amount of speculation, as more and more people step in and supply is limited. 800% increase in just one month is tremendous by the way. Interesting to see what comes next! http://d2o7bfz2il9cb7.cloudfront.net/main-qimg-61d8b2b4ff677206fd8b5d5288191... See also http://forum.bitcoin.org/index.php?topic=9098.msg131690#msg131690 The critique in the article quoted by Michel is interesting to read but is argued from a pretty conventional economic perspective. And why would it be a scam if it is pretty clear from the start that it benefits early adapters? And also, why would there not be banks who would start backing it up? As soon as institutions start having a vested interest, they will back it up. And does it actually need any? Only future can tell. And yes, I do agree that one day bitcoin will go down. But that's only natural. Any currency eventually falls. Some just sooner than others. And maybe one day even a state will start issuing this type of p2p-based currencies. Robin.
Another discussion about bitcoin, which is more about the technology: http://forum.bitcoin.org/index.php?topic=8766.0 Original Article that forms the basis of that discussion: http://www.pds.ewi.tudelft.nl/~victor/bitcoin.html Bitcoin is a “peer-to-peer electronic cash system” that gained certain acceptance as of early 2011. I review the system, mostly based on its description in the original article and the project's wiki. To the best of my understanding, the sentiment about this particular system is mostly groundless. The key three features of the system, namely (1) peer-to-peer architecture, (2) anonymousness, and (3) cryptographic security are only met if their definitions are somewhat relaxed. The key point of Bitcoin is eliminating double spending without resorting to trusted third parties. An actual system, if only any popular, will have de-facto third parties, but it is unclear, how reliably double-spending is eliminated. One of the responses: http://forum.bitcoin.org/index.php?topic=8766.msg127005#msg127005 * No, Bitcoin is not perfectly democratic but it doesn't need to be. In fact, that would be detrimental because casual users are more vulnerable to being tricked into using a fraudulent client than expert miners. * No, Bitcoin is not perfectly anonymous but most users don't need perfect anonymity. The few ones that do can approach perfect anonymity arbitrarily at a relatively low cost. * No, Bitcoin is not perfectly secure but nothing in this world is. On top of its technical security, Bitcoin is also secured by the social aspect. Above all, Bitcoin is a social convention, not just a piece of software. * No, Bitcoin is not safe against every conceivable DoS attack but neither is the internet itself. Conclusion: Bitcoin is far from perfect but it still beats any money that was ever invented, by far.
I agree with Robin that bitcoin is great as proof of concept that peer-designed and peer-adopted currencies are workable, but, they're conventional design also makes them compatible and not so transformative, but I believe this is a necessary first step ... crowdfunding, social lending are not dissimilar, they distribute and extend the pool, but still work within the existing paradigms; they're only one step forward, not the end-game, Michel On Fri, May 20, 2011 at 10:20 PM, robin <[email protected]> wrote:
On Fri, May 20, 2011 at 8:06 AM, Karl Robillard <[email protected]> wrote:
I don't see how the alternative currency experiments like Bitcoin do anything to help us move to a more egalitarian, steady-state economy.
I don't think so either - because of the way it is designed (as a global and conventional currency). BUT bitcoin does do something else: it shows that it is possible to use p2p technology to actually run a currency. That's a pretty mean thing - and as an experiment it proves pretty succesfull so far. It is pretty wicked to see how I as a participant owe my own wallet for example and can make any bitcoin-payment without commission, and at the same time fully transparant (and if you want anonymous).
That's unique, and as such the technology could maybe also be used in different ways, by smaller communities even? This technology might open up a tremendous amounts of options in the future for your own steady-state economies.
Today though we see Bitcoin being used for an overwhelming amount of speculation, as more and more people step in and supply is limited. 800% increase in just one month is tremendous by the way. Interesting to see what comes next!
http://d2o7bfz2il9cb7.cloudfront.net/main-qimg-61d8b2b4ff677206fd8b5d5288191... See also http://forum.bitcoin.org/index.php?topic=9098.msg131690#msg131690
The critique in the article quoted by Michel is interesting to read but is argued from a pretty conventional economic perspective. And why would it be a scam if it is pretty clear from the start that it benefits early adapters? And also, why would there not be banks who would start backing it up? As soon as institutions start having a vested interest, they will back it up. And does it actually need any? Only future can tell.
And yes, I do agree that one day bitcoin will go down. But that's only natural. Any currency eventually falls. Some just sooner than others. And maybe one day even a state will start issuing this type of p2p-based currencies.
Robin.
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On Fri, May 20, 2011 at 2:06 AM, Karl Robillard <[email protected]> wrote:
I don't see how the alternative currency experiments like Bitcoin do anything to help us move to a more egalitarian, steady-state economy.
An economist will tell you that "price is information", but I'm not sure how they justify that. An ounce of crack, a few hours of music lessons, a lawn mower, or a couple hours of labor might all be $100. None of these can remotely be considered the same, but yet the dollar value is identical. Any mechanism which equates these is an absurd abstraction which eliminates a great deal of useful information. This dearth of relational data is a fundamental feature of money which turns the economy into a valuation game. Over time, the wealth gap between those who game the system well and those that don't becomes so great that a jubilee or a revolution is needed.
Karl, this indeed is a great criticism. I think that "price" is one systemic way to work in human systems. But it should not be applied to everything. Janine Beynus has some useful thoughts about the pace of systems in her book "Biomimicry". She talks about how comparatively more homogeneous and fast growing natural ecologies respond after a forest fire, then over time "stocks and flows" in the system diversify, and so do species. We need a diversification in how we deal with wealth in our societies. We need systems that afford sharing, at least.
I see open source production and modern information technology as powerful tools which allow us to more fully value things. They are important because they help make money (just a primitive form of information technology, IMO) obsolete. I just don't understand why people want to continue to treat the economy as a game.
-Karl
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participants (7)
-
Devin Balkind -
Jack Marxer -
James Wallbank -
Karl Robillard -
Michel Bauwens -
robin -
Samuel Rose