Cryptocurrency

[stonefruit]

The year in cryptocurrency, an anarchist's perspective

In the heady days shortly after Bitcoin hit $19,783 in December of last year, Pieter Wuille was quoted in a New York Times article saying “the technology still needs time to evolve. This infusion of interest is bringing the wrong kind of attention. Some people believe Bitcoin can’t fail or this technology solves many more problems than it does. It can. And it does not.”

 

This even-handed approach remains relevant today, as we approach the first year anniversary of Bitcoin’s peak. A lot of people who bought BTC panicking on the way up, afraid they might be missing the Next Sure Thing, sold panicking on the way down, aghast at how much money they were losing how quickly.

While “irrational exuberance” may have propelled it up, the schadenfreude being displayed now by the latest so many August Personages is equally irrational. These pundits often note salient points of current market conditions. Start-ups once flush with capital are laying off workers or closing... ICO funding has largely dried up.  Many tokens launched with fanfare quickly flat line. They also fall back on many of the old criticisms that have been swirling around cryptocurrency since their inception. Scams abound. Technological security continues to be a challenge, notably in ICOs and cryptocurrency currency exchanges. Cryptocurrency is primarily useful for facilitating illicit activities.

 

November 15: [Claudio Borio, head of the Monetary and Economic Department of the Bank of International Settlements. Starting at 40:15, Borio said “The present system has central banks and the regulatory supervisory apparatus at its core. Now the system is by no means perfect. It can and must be improved but, for instance, cryptocurrencies with their promise of a fully decentralized trust are not the answer.”](https://www.cato.org/multimedia/events/36th-annual-monetary-confere...)

 

November 30: the Global Chief Economist for UBS Wealth Management Paul Donovan “I come to bury Bitcoin, not to praise it…These things were never going to be currencies. They’re not going to be currencies at any point in the future…Right from the start of the hike in late last year, it was fairly obvious that this was going to end badly, unfortunately, for some of the people who weren’t protected by any kind of regulation and got sucked into the process.”

 

November 28: Nobel laureate in economics Robert Merton “The only possible legal tender currency is one controlled by government…Fiat but legal tender currencies actually have intrinsic value because by law they can be used to settle all tax and other payments to the government and they MUST be accepted as payment for obligations denominated in that currency…who is responsible for the value of our currency if tomorrow morning all the Bitcoin screens go dark?

 

December 10: Kenneth Rogoff, Professor of Economics and Public Policy at Harvard... “The right way to think about cryptocurrency coins is as lottery tickets that pay off in a dystopian future where they are used in rogue and failed states, or perhaps in countries where citizens have already lost all semblance of privacy.” 

 

America is a rogue and failed state as William Blum (R.I.P.),  Alfred McCoy, Chris Hedges, Andrew Bacevich, Chalmers Johnson,Harold Pinter and many others have clearly documented. That its “citizens have already lost all semblance of privacy” is obvious from information provided by NSA whistleblowers like Bill Binney, Thomas Drake, Edward Snowdon  and many others. The article about Thomas Drake quoted Yale law professor Jack Balkin saying that the spate of whistleblower prosecutions indicates “we are witnessing the bipartisan normalization and legitimization of a national surveillance state.”

 

(As a representation of the state of the nation, consider this. All of the above-linked books have extremely disheartening Amazon sales ranks I assumed the first cat book would have a better sales rank than, say, William Blum’s (R.I.P.) Killing Hope. Indeed it did. Mr. Blum’s book was ranked 30,469. Francesco Marciuliano’s I Could Pee on This: And Other Poems by Cats was ranked 89. Marciuliano’s title was bested by 50 Ways to Eat Cock: Healthy Chicken Recipes with Balls! by Adrienne Hew at 32.)

 

However, the fact is that laws against financial fraud already exist and assumption of risk is settled concept of jurisprudence. In the quotes mentioned above, a recurring theme is that cryptocurrency can “never be a currency.” If something is a medium of exchange, a unit of account and a store of value it certainly exhibits the primary characteristics of currency. Many jurisdictions regulate cryptocurrency as a commodity. It shares aspects of both, although regulatory environments have a lot more evolution to go through.

 

Those analysts who make the distinction between currency and legal tender may have a point. Legendary investor and noted world traveler Jim Rogers is a long term bear on cryptocurrency. As he noted “the government has more guns than anybody else.” They are loath to give up control; certainly one of the most fundamental definitions of a nation-state is that they are the entities which have a monopoly on legal violence. Sovereign countries may simply outlaw cryptocurrency.

 

These proclamations from the Masters of the Universe hurled off of the commanding heights of the global economy are surely understandable given the ideological commitments that stem from institutional positions working with fiat currency, central banks and nation-states. Never having wanted to take Bitcoin seriously, they seem to think that this year’s market downturn has absolved them of any need to understand it. It has given them a remarkable confidence to displaying a rather profound ignorance of the fundamental premises of this emerging technology, asset class and market. A glorified “Excel spreadsheet” Nouriel Roubini? Really? Roubini is perhaps the best example of the backlash among the punditocracy. His [October 2018 testimony before the Senate banking committee](https://cryptovest.com/news/roubini-senate-testimony-sparks-outrage...) was ill informed. The incredible frequency of his tweets and the intensity of their vitriol can only be characterized as hysterical.

 

While one would think such intelligent people would be embarrassed to display such ignorance so publicly, does cryptocurrency deserve the dismissive contempt it has been receiving lately? Perhaps schadenfreude is the wrong word for the invective of the bloviating class. Disruption is a very trendy word, especially in contemporary fintech, and often used where it does not really apply. Cryptocurrency, however, is fundamentally disruptive of the conventional wisdom, the consensus reality itself. While legal tender, central banks, central monetary and regulatory authorities, fiat currency (which has value based on nothing more than the collective agreement that it has value), the nation-state: these concepts are relatively new. In spite of that, they are the bedrock of the conventional wisdom and the consensus reality that structures international economics and geopolitics – and therefore our lives – and the mandarins of respectability shouting the loudest against cryptocurrency are precisely those people who play such fundamental roles in creating the conventional wisdom and the consensus reality and policing its boundaries. Although this explains their consternation better than mere schadenfreude, a more thorough anarchist cultural studies of cryptocurrency in the context of modern fintech is perhaps best left for another time.

 

In April 2013, Bitcoin lost 60% of its value in a flash crash from $26... It would be reasonable to compare 2018 for Bitcoin to the great bubbles of history: the South Seas, Dutch tulip, dot com and housing bubbles, for instance. But for an asset class to go from $120 in April 2013 to $3,264 as I finish this piece on December 14, 2018 is an absolutely stunning result by any measure.

 

The Winklevoss brothers are not the only long-term bulls in a young and rapidly evolving ecosystem. So are those who distrust centralized authority: especially the cypherpunks, cryptoanarchists, anarcho-capitalists, libertarians and others who got the ball rolling just a few short years ago. The writing is on the wall for the transnational corporate kleptocracy that socializes the costs and privatizes the benefits while subjecting the citizenry to an omnipresent surveillance state and the spectacle, “the nightmare of imprisoned modern society which ultimately expresses nothing more than its desire to sleep. The spectacle is the guardian of sleep.” - Guy Debord, The Society of the Spectacle

 

Another faction who are long term bulls are the technologists who see the clear potential not only of cryptocurrency but of the enabling technology as well. Will blockchain have a social impact as important as computers? The internet? Smartphones? Time will tell, but it will probably be in that league.

 

Still another contingent are those who still know there is money to be made, in an ethical and interesting way, by sovereign individuals.

 

For that reason, the diverse and heterogeneous advocates don’t see the 2018 price dive as a bloodletting but rather part of the ongoing evolution of Bitcoin and cryptocurrency as a social form.

[waldopaper]

Meanwhile, the game goes on.  The chips vary.    

https://waldopaper.wordpress.com/2019/04/20/a-strategic-economy-of-...