[P2P-F] Fwd: saw your tweet, here is a update on bitcoin

Mon Aug 18 17:44:50 CEST 2014

fyi

---------- Forwarded message ----------
From: Michel Bauwens <michel at p2pfoundation.net>
Date: Fri, Aug 8, 2014 at 12:04 AM
Subject: saw your tweet, here is a update on bitcoin
To: Hilary Wainwright <wainwright.hilary at gmail.com>

Moving beyond Bitcoin

 Bitcoin is a complex phenomenom, and it is a landmark development, even a
technological singularity, for good or ill. At the P2P Foundation, we also
have complicated feelings about it.

 The Positive Aspects of Bitcoin

 Let us first summarize why Bitcoin is indeed such a singularity.

   1.

   *Bitcoin is the first globally scaleable, social-sovereign,
   post-Westphalian currency*

 This is not trivial. Before the Treaty of Westphalia, local currencies
where the norm, many with negative interest rates, and they bolstered local
independence, but the scaling effects of the printing press, which led to a
Europe-wide religious civil war, made necessary a re-organization of the
political space around the emerging nation-states. These nation-states
outlawed local currencies, destroyed local autonomy, and also relied on
sovereign currency to establish their power. While local currencies have a
periodic resurgence in times of crisis, none of the complementary
currencies scaled. Local currencies can therefore never be the expression
of global commons power, i.e. the power of global virtual communities.
Bitcoin has no intrinsic value, it is a hyper-fiat currency, i.e. it only
exists because of the trust and political will of the international
libertarian hacker segments of the population, in the particular algorithm.

   1.

   *Bitcoin is a weapon of last resort for activist communities*

 The mainstream monetary and payment system is at the service of a
particular world order, and can be mobilized against opposition to it, as
became very clear around the Wikileaks affair, where banks, VISA and Paypal
collaborated with various authorities to block the fundraising for
Wikileaks. In such times, access to alternatives like Bitcoin is vital for
activist groups, it becomes their lifeline to funding outside of the
control of the central authorities.

   1.

   *The potential of the Bitcoin ledger as a tool for human
   self-organization*

 Apart from being a currency, the underlying universal ledger technology of
Bitcoin has potential to usher in a new era of more easy self-organisation,
by enabling the possibility of smart contracts and software-driven
'distributed autonomous organisation, as expressed by initiatives like
Ethereum, Common Accord, and the crypto-equity experiment of Swarm. Though
these developments and possibilities are not without danger, and though
most of the current enthusiasm is utopian and mostly based on hopes and
just a few budding experiments, this technology is potentially a game
changer by bringing down the transaction cost for self-organization.

 The Negative Aspects of Bitcoin

 Notwithstanding the above, Bitcoin's development comes with a potentially
very high and anti-social price tag.

   1.

   *Bitcoin is not a true peer to peer currency but leads to more extreme
   inequality*

 It is sometimes asserted that Bitcoin is a peer to peer currency because
any computer with mining software can create the currency, but not everyone
has access to the same number of computers and not everyone has computers,
hence, the design of Bitcoin, which favours early entrants and those with
investing power, is an engine of inequality. Bitcoin's Gini coefficient, a
metric of inequality, is a whopping 0.87709  and according to Bitcoinica,
1% of the players own 50% of the coins.1 <#147b16dc948e447d_sdfootnote1sym>
That inequality is not diminishing, but rising: according to Bitcoin
Trader, for a given period, “the top 100 have gone from holding 1,776,434
coins to holding 2,254,634 Bitcoins, a whopping 27% increase!”2
<#147b16dc948e447d_sdfootnote2sym> The mining capacity is also already
concentrated.

   1.

   *Bitcoin can't lead on its own to a disintermediated society*

 We live in an epoch of techno-utopianism with a strong drive for
techno-cracy. The former means that many believe that technology alone
determines certain outcomes, while the latter believes it is a good thing
that flawed human processes are replaced by 'clean' technological
processes. Both attitudes are very dangerous. First, distributed
technologies do not necessarily lead to distributed outcomes. We have seen
this historically with the effect of the invention of printing, which led
to a democratisation of knowledge and literacy, but also in time replaced
the local autonomy of free medieval cities with much stronger and
controlling nation-states, i.e. more political centralization, not less.
Networks which have no counter-measures to maintain equality inevitably
lead in time to a new concentration of resources. Hence, in Amazon and
iTunes, the so-called long tail of culture consumption predicted by Chris
Anderson is no longer operative, and in p2p social lending, 80% of loans
are provided by big bangs and institutions, the very forces the technology
was supposed to disintermediate. Again and again, we see that the potential
disintermediation of power, which may affect established powers, creates
new intermediaries, such as the platform monopolies. Technologies are
indeed, used by social forces, who inflect technologies for their own
needs. The inequality of bitcoin ownership will inevitably further affect
the structures that make bitcoin operational, leading to new kinds of
monopolies. Technologies are always infused with human values, no
programming or infrastructure is truly neutral in that respect.

   1.

   *Bitcoin funds a dangerous ideology*

 The big danger to the social movements of the industrial era were fascism
and stalinism, both forms in which the power of the state became extreme.
But what fascism is to the state, propertarian libertarians are to the
markets: they aim for the realization of a total market, where every aspect
of human life is commodified. The design of Bitcoin is anarcho-capitalist,
i.e. it is designed to favour the freedom of property owners, and the more
you own, the freeer you are. Because such propertarians do not want to see
the existing inequalities in society, decreeing them to be the result of
free choice, they inevitably ally themselves with oligarchic forces and
support their political programs of the dismantling of social solidarity
mechanism, and any regulation which limits the freedom of powerful
corporate forces. The valuation of Bitcoin means an important transfer of
social wealth to this political tendency, which allied with venture capital
and the oligarchies that invest in Bitcoin, alters the balance of power
away from emancipatory and progressive political forces. Early libertarian
investors in Bitcoin, can sell their bitcoins at a premium to new entrants,
thereby capturing substantial speculative value. So while the claim that
Bitcoin is a pyramid scheme is obviously false, it does institute a rent
from new entrants to existing owners. In this sense, Bitcoin, far from
being a tool of distribued equality, which is already a false empirical
claim at present, is an ideal tool for the development of hyper-capitalist
economic models. In this sense, Bitcoin is an ideal tool for netarchical
capitalism, the hierarchies that enable, but also control the networks, and
capture value from it.

 In Conclusion

 Despite all the drawbacks mentioned, Bitcoin remains a landmark and
pivotal development, showing that globally scaleable currencies are
technically feasible. It sets the stage for potential commons-based
p2p-driven currency systems and the Bitcoin ledger can become a tool for
self-organizing communities.

1 <#147b16dc948e447d_sdfootnote1anc>http://ow.ly/trKoy

2 <#147b16dc948e447d_sdfootnote2anc>
http://www.thebitcointrader.com/2011/10/is-it-time-to-occupy-bitcoin-street.html

-- 
*Please note an intrusion wiped out my inbox on February 8; I have no
record of previous communication, proposals, etc ..*

P2P Foundation: http://p2pfoundation.net  - http://blog.p2pfoundation.net

<http://lists.ourproject.org/cgi-bin/mailman/listinfo/p2p-foundation>Updates:
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#82 on the (En)Rich list: http://enrichlist.org/the-complete-list/

-- 
Check out the Commons Transition Plan here at:
http://en.wiki.floksociety.org/w/Research_Plan

P2P Foundation: http://p2pfoundation.net  - http://blog.p2pfoundation.net

<http://lists.ourproject.org/cgi-bin/mailman/listinfo/p2p-foundation>Updates:
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#82 on the (En)Rich list: http://enrichlist.org/the-complete-list/
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