The untold story of the hole in Bitcoin's heart
I finally got around to reading this awesome post, and typed up a long reply, which turned out to be too long to post here. So I posted it on my blog instead: https://ebuchman.github.io/posts/filling-the-hole-in-bitcoins-heart/
This is excellent :
"A vast network structure, at the centre of which lies three sets of issuers issuing out three chained layers of legal IOUs – in physical and digital form – which will later return to the issuers to be destroyed, but which in the interim entrench themselves as economic network access tokens that circulate around an interdependent web of people who cannot mobilise each other’s labour without them. These tokens are activated in the context of legal systems set within political systems set within social systems set within ecological systems, and this mesh structure underpins modern capitalism and is etched into the very fabric of our being."
- thank you!
Thanks for another excellent article, Brett! One that nicely builds upon previous articles you wrote.
In terms of education, I think that your thesis about the structure of money deserves a place in (economics?) books, as the functions of money theory are not insightful, they are hiding more than they reveal. Thank you for enlightening.
There's no concept as "conceptual" as money, is there?
I read your article, and I must say that's post was a large part of my curiosity about Bitcoin and thats economical mechanism.
Bitcoin, like capitalism, provides us a large screen of ambiguity and lies and censorship.
Thank you for your wonderful post
A very interesting and thought-provoking article. I have a feeling that your article could be summed up by "bitcoin has no intrinsic value" - or am I misunderstanding it?
I also think that your description of bitcoin as a token misses out on the greater perspective of the system as an effective network for transferring value. This network, greatly emphasized by the fast-growing Lightning Network, has tremendous potential and will probably redefine how we move money around.
I agree that the narrative of Bitcoin is somehow trapped in the same ontological mess of money in general while presenting it as an antithesis of our current monetary system.
However, the question in the end is: so what?
I’m curious, what do you think of Bitcoins possible utility beyond the token?
Say for example as a basis for futarchy or distributed dns?
I don’t understand why a unit of account needs to have any intrinsic properties. Surely anything can function as a unit of account if enough people agree to treat it as such? It’s that agreement rather than the thing itself that creates the unit of account, surely?
Excellent post. You're doing a good job building on your previous work and linking it all together.
I do have a couple of issues though:
First, when you say Bitcoin "points too nothing" I think that's not quite true (although it is very close). Bitcoins are the only object that can be used to pay for Bitcoin block space natively through the Bitcoin network. Now you might rightfully ask "why would I want to buy block space?" which can be answered with "well, you can use it to create Bitcoin transactions: which can send Bitcoin or store small amounts arbitrary data across all of the nodes in the Bitcoin network". Now they might not find that particularly valuable, but its not nothing.
Secondly, I'm surprised you talk so much about countertrading without talking about why someone might want to countertrade with Bitcoin (or any permissionless cryptocurrency). The answer mostly being that it routes around the global KYC/AML regime. I think you're absolutely right that BTC itself doesn't threaten the USD regime, but it does threaten the global KYC/AML regime (despite the relatively weak privacy protections of BTC, it's radically stronger then giving everything up on a silver platter). If you want to route around that regime, you need to access the rails of the Bitcoin (or again, any permissionless crypto) network; and, as I mentioned above, the only way to access these rails is to use BTC.
Of course, the BTC collectable is reasonably good at countertrade, but it isn't the best medium of exchange if all you want to do is route around the regime. What you really want is a dollar that rides the crypto rails. Hence, Tether's popularity despite it's fraudulent nature.
My guess is this article will age poorly. Money and state will separate within 50 years and Bitcoin adoption will continue to grow faster and faster. 1 billion users by 2025
Reading the comments it seems most people don't understand what the definition of money being a legal contract is all about, I don't know what part of coercive network they don't get
Excellent article, thank you. I like to know your perspective in Ethereum as a protocol, and the price attached to it Ether .
I see another way to relate it to NFTs. Instead of having a separate hash on the chain for each NFT of the same media file, Bitcoin has a hash for a bundle of NFTs (Satoshis) of the Bitcoin Core protocol on the Bitcoin network. Instead of a person disassociating their key from an NFT to associate it with someone else's key, on the Bitcoin network a person can disassociate their key from some bundles of NFTs (Satoshis) and create associations between other people's keys and some new bundles of NFTs, as long as the total of the numbers out is less than the total of the numbers in. Satoshis are NFTs for the Bitcoin Core protocol, but instead of being managed individually, they are managed in bundles (utxo's).
Now do it for dollars and pounds.
Or is your point that the ineffable value of those things is good and meaningful and the ineffable value of other things, which while the exact same concept, has a different level of "this is what I value" that makes it such that your argument is unchallengeable.
You have a lot of good analogies which get your point across. However you do go in circles a lot and could use a good editor. Please get an editor and you could be the preeminent thought leader in the Bitcoin space.
James Buchan's definition of money is the best: money is frozen desire.
Your definition of “chair” seems to rule out meta chairs, folding chairs, chairs in dollhouses, etc. Is there any way of fixing this definition that doesn’t ultimately rely on a functional approach?