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Why Charles Stross Wants Bitcoin To Die In a Fire
Hugh Pickens DOT Com writes "SF writer Charles Stross writes on his blog that like all currency systems, Bitcoin comes with an implicit political agenda attached and although our current global system is pretty crap, Bitcoin is worse. For starters, BtC is inherently deflationary. There is an upper limit on the number of bitcoins that can ever be created so the cost of generating new Bitcoins rises over time, and the value of Bitcoins rise relative to the available goods and services in the market. Libertarians love it because it pushes the same buttons as their gold fetish and it doesn't look like a "Fiat currency". You can visualize it as some kind of scarce precious data resource, sort of a digital equivalent of gold. However there are a number of huge down-sides to Bitcoin says Stross: Mining BtC has a carbon footprint from hell as they get more computationally expensive to generate, electricity consumption soars; Bitcoin mining software is now being distributed as malware because using someone else's computer to mine BitCoins is easier than buying a farm of your own mining hardware; Bitcoin's utter lack of regulation permits really hideous markets to emerge, in commodities like assassination and drugs and child pornography; and finally Bitcoin is inherently damaging to the fabric of civil society because it is pretty much designed for tax evasion. "BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states ability to collect tax and monitor their citizens financial transactions," concludes Stross. "The current banking industry and late-period capitalism may suck, but replacing it with Bitcoin would be like swapping out a hangnail for Fournier's gangrene.""
The link to Fourier's gangrene on Wikipedia is totally unnecessary, and the article includes an image that is decidedly not safe for work.
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BitCoin is bigger than Jesus.
How so? Google returns 124 million results for Jesus Christ and 40 million for Bitcoin.
I agree with some points, but in general he seems to be only somewhat correct.
First of all, BitCoin is not anonymous. BitCoin is pseudonymous. Once mining dies out (which also solves a lot of his other qualms), you need to trade bitcoins some way. You have to exchange your real money to bitcoins. ALL transactions are public which means it's really easy to start profiling people. In the future it's probably easier to trace a person's bitcoin transactions than normal ones.
http://xkcd.com/1022/
0) Bitcoin transactions aren't magically anonymous.
What is more anonymous than bitcoins? Paying an assassin a wad of cash. That is how these things have been done for centuries.
Bitcoins are harder to trace than say a wire transfer or a bankdraft but they are not perfectly anonymous. A fist full of cash is far more anonymous.
The only reason that bogeyman was brought up was because The Silk Road moron tried to pay for one with bitcoins. As for the rest of it, traditional means of payment have bought more assassins and child porn than all the bitcoin transactions, period.
Supporting World Peace Through Nuclear Pacification
If the purchasing power is increasing by more than the risk-adjusted return on investment for all the things you might spend it on, then it's never worth it.
Let me give an example: say the real rate of return on US dollars is assumed to be -3%, with zero risk. It is easy to find investments whose risk-adjusted rates of return exceed that (e.g. US treasuries risk-free at 0%, stocks with risk at 7%, venture capital with a lot of risk at (some big number)%, etc.). And the key thing about all of these is that they're investments, not commodities -- i.e., paying people to create something, rather than stockpiling something that already exists.
In contrast, if the real rate of return on Bitcoins is +3% with zero risk, then it's a lot harder to find an alternative investment worth making. Therefore, much less investment gets done (i.e., much fewer new things get created) and economic and technical progress is stifled.
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
Read the "Neptune's Brood" - it's about as close to a treatise on interstellar economics as you can get in science fiction. He definitely knows what BTC is and he provides a rational critique of it. I happen to agree with him, btw.
The US federal government is constitutionally restricted from anything that can't be interpreted as an income tax (so my VAT suggestion fails as well). The US constitution is fairly short, but mentions twice that any taxes collected by the federal government must be given to the states (proportion to population). Income taxes are specifically exempted from that requirement by the 16th amendment, but it remains for any other tax.
Only direct taxes must be apportioned. Indirect taxes (things like tariffs, income tax, VAT) are allowed under Article I, Section 8, Clause 1. The Fuller court did cause some complexity when they ruled that some income tax (specifically that derived from property) was a direct tax (previous understanding was that it was indirect). The 16th Amendment specifically patches the issue created by the Pollock case.
He effected a bored affect.