Bloody shovel

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Bitcoin 1984

I confess I knew little about bitcoin, and had little interest, until I saw Nick Land call it “essentially an experiment in Austrian monetary theory”. Cool idea. I got excited too. No inflation! Then I recalled that I didn’t believe in Austrian economics anymore.  I’m a Mannian.  I believe everything is politics. And I also believe in Jim A. Donald, that ever greater leftism is the fundamental arrow of political time.

Somebody put it more succinctly, decades ago.

First law of O’Sullivan: Any institution that is not explicitly right wing will become left wing over time.

Now let me check… is the Bitcoin Foundation explicitly right wing?

No, it is not. So it surely follows that, with enough time, the Bitcoin Foundation will be swallowed by the ever growing Cathedral behemoth, and bitcoin itself will eventually be found a use to promote Cathedral causes.

A commenter at Nick Land’s spells it out:

I don’t think this is true. My disagreement with Moldbug’s thesis is twofold:
1. I don’t think it is totally implausible that a bitcoin changer might implement satisfactory Know Your Customer procedures and thus be a legitimate ‘money transmitter’ under FINCAN regs.
1a. The bitcoin community may voluntarily do this themselves. The nature of bitcoin — transactions are secure because they are publically broadcast — lends itself to bitcoin users voluntarily maintaining a blacklist of bitcoins known to have passed through wallets known to be owned by e.g. child pornographers.

I am not very aware of how bitcoin works, but another commenter, at Moldbug’s, explains it further:

> These requirements will increase and expand to other parties over time, until bitcoin, not actually being anonymous in the first place due to an extremely naive cryptographic design, becomes the most non-anonymous currency around.

This. This is what will happen. The government already hates 100$ bills and 20$ bills. The government will be able to issue “bitcoin-backed” “fractional reserve” loans, and confiscate bitcoins if needed; maybe they’ll force people to use bitcoin software that accepts new issues of bitcoins. But they certainly won’t make bitcoins actually anonymous.

Bitcoins are like 20$ bills whose serial numbers are recorded at almost every transaction. You get bitcoin #1234 from your employer it’s later confiscated from a drug dealer, so the police ask you where you spent it. If you had spent it at the laundromat or the donut shop or the train station, that would be a matter of public record. If you had given it to your buddy for fixing your bike, where it went from him would be a matter of public record.

Suddenly piracy really does fund the drug trade: anyone who buys an unlicensed DVD from a street vendor runs the risk of having to explain where they spent that bitcoin when it reaches a drug dealer, because no one wants to give bitcoins that can be traced to them to drug dealers.

So I take it bitcoin’s can be reliably traced back to their users. So first you blacklist child pornographers, then drug dealers, then wife beaters, then racists, then misogynists, then homophobes, and eventually all heterosexual white men.

People are getting reeled up about the USG shutting down bitcoin, and whether that would succeed, or the backslash from the uber-smart hacker heroes would eventually expose the USG incompetence and cause the collapse of fiat money. Cool story bro.

May I ask why would the USG want to shut it down, risking a hacker backslash, when it can just co-opt it? Bitcoin can be nationalized and put to use to the benefit of the Cathedral. In the name of fighting discrimination and all things nasty. “Alternative, non-traceble virtual currencies will arise!” you might say. Oh but then the USG will really shut them down. Crash them mercilessly. You surely can’t tolerate a currency used by child pornographers, can you?! There you go.

The common people, now willfully ignorant of what bitcoin is and means, will be made to known about it, and mobilized to have an opinion on why bitcoin is superior, why all moral people must use government bitcoin, and why we have always been at war with Eastasia. For details on how they’ll do so, check out Moldbug’s latest.

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23 responses to “Bitcoin 1984

  1. Steve Johnson March 21, 2013 at 08:02

    Even if the USG could perfectly track a currency it would rather that no non-inflating currencies exist.

    That’s my gut notion of the matter anyway.

    • spandrell March 21, 2013 at 13:53

      They’ll find a way to inflate it.
      They probably can’t ban it outright.

      • Nick Land March 21, 2013 at 14:39

        “They’ll find a way to inflate it.”
        — that would be seriously impressive. Your commentary here is bringing out the truly fascinating thing about Bitcoin: it’s a test of what the state can (and cannot) do.

  2. Anonymous March 21, 2013 at 11:46

    I don’t know if they are smart enough to co-opt it. They’re puritans. They see something they don’t like, they want to ban it.

    • spandrell March 21, 2013 at 13:48

      “It is yet another reason that the Wars on Drugs and Terror cannot end soon enough.”

      Good luck with that.

      • Nick Land March 21, 2013 at 14:45

        Yes, that’s stupid, and — given the argument of the article — simply bizarre. The reason I thought it would be helpful to you here is the ‘mixer’ stuff. Bitcoin is an extremely robust algorithm, but its intrinsic anonymity protection is limited. Supplementing it with Mixer services completes the anonymization. Dourado (?) thinks the FinCEN guidelines are really aimed at preventing that.

        • spandrell March 21, 2013 at 14:58

          Well as you say it all ends up as a test on what the state can do. The optimist argument is that the state isn’t “smart enough”.
          I wonder.

          • Handle March 22, 2013 at 12:19

            The state is still rich enough to hire the people who are smart enough and buy from other smart people to equip them to the task.

  3. Candide III March 22, 2013 at 05:54

    There are bitcoin mixers currently which prevent deanonymization by mixing together (duh) bitcoins from many, many users and splitting them back again. It can be made next to impossible to trace bitcoin flow across mixers. Of course these are barely legal right now and can be blacklisted etc. As Moldbug noted years ago, money is a political product and its problems are political problems. Bitcoin being money, the same principle applies.

    PS. what’s a Mannian?
    PPS. sent you the article on representation of numbers in teh brainz.

    • spandrell March 22, 2013 at 08:17

      Well if Mixers can be hunted and shut down they might as well not exist.

      PS: Google “everything is politics”.
      PPS: Couldn’t you just attach the damn file? I’m starting to think you work for the NSA or somethin’

      • Candide III March 22, 2013 at 09:17

        That’s a bit extreme. If reaction can be hunted and shut down it might as well not exist.
        PS: Oh, Thomas Mann!
        PPS: Just paranoid. Got me an account at mail.com today, will see if that works.

        • spandrell March 22, 2013 at 09:51

          We are not a threat to Wall Street’s deep pockets. Bitcoin on the other hand…

          My point was that Bitcoin not being anonymous might cause some better designed (anonymous )competitor to appear. USG has no power to stop it outright, but they could nationalize Bitcoin, push its traceability as a moral imperative, and rally popular support to 1. support Bitcoin 2. crush anonymous currencies.
          If they can make currency traceability a new moral tenet of Cathedralism, they don’t even need to crush it. No moral person would ever push it. How many nerds would support Bitcoin if the Bitcoin foundation were against gay marriage?

          Paper’s pretty neat btw, thx.

          PPS: You should run your own reactionary mail server farm in some central asian country. I’d pay.

          • Candide III March 22, 2013 at 10:18

            Enough anonymity fans, I think, to prevent this from happening. Bitcoin is not traced or really traceable now (with mixers), people know it’s used for illicit purposes and they still use it. Well, time will tell.

            You think Central Asian countries are immune to pressure? Ha. Anyway, so far we are not worth a real suppression effort. The internet is awash in garbage information and everyone’s gone to the feelies. OTOH if there really was a reactionary library/Resartus/Uberfact site, it would become a target as soon as it got big enough (one criterion of big enough). I thought about setting one up, but where? Russia is probably the best bet, what with the semi-official hatred of State Department etc. Maybe China/HK is an option too. What do you think?

            • spandrell March 22, 2013 at 10:45

              I’ve thought about it too, but *everything* is monitored here. You need to present your ID card to set up a local website.
              There is some hatred of the State Department but I figure they’d rather use you as a bargaining token than give long term support.
              So yeah I’d say Russia.
              I have an old commenter who used to talk a lot about the darknet, freenet and others. What’s the deal with that?

              • Candide III March 22, 2013 at 11:09

                I see. Well, at least HK is useful for domain names — the Russian Futaba clones use it.

                Freenet is an overlay network with shared storage. Usability near zero, excruciatingly slow, must install and manage freenet software, used by child pornographers (they crop up everywhere, don’t they?) Darknet is a general term for non-public nets. You have to be invited to participate, so the whole question is who you invite and how, and how to prevent access leaks. Overkill. I suppose we could manage with regular hosting provided we had something to manage.

          • ntk March 30, 2013 at 04:27

            “If they can make currency traceability a new moral tenet of Cathedralism, they don’t even need to crush it. No moral person would ever push it.”

            That would possibly make sense if Bitcoin were still nascent, but it’s too big by now. The genie’s out of the bottle.

            And even if the cathedral had intercepted Bitcoin in time, it wouldn’t work on everyone – not everyone is a cathedralist. The key cathedral foot soldiers (ie. the demographic that provides the numbers) are unmarried people (particularly women) under ~35 or so, and even if the cathedral manages to turn them against Bitcoin, I doubt the actual Bitcoin target demographic would care.

  4. Federico March 22, 2013 at 19:43

    What is the conflict between Austrian economics and “everything is politics”?

  5. Anomaly UK March 24, 2013 at 14:19

    Bitcoin cannot be inflated. It possibly can be regulated as you suggest.

    Because the transaction history is a public record, it would be possible to label bitcoins as “clean” or “dirty”, based on the (anonymous) identities that created and handled them, and write client software which would accept only clean bitcoins. As long as the registry of legitimate bitcoin identities is publicly available, the question of whether a bitcoin is clean or dirty is as straightforward to answer as the question of whether it is a bitcoin at all and not just a random number.

    To be a clean bitcoin user, you would have to (a) register the ids under which you would accept bitcoins, and (b) refuse to accept dirty bitcoins, A dirty bitcoin is one which has passed through an unregistered or blacklisted id, and clean bitcoin users would use software that automatically refuses to accept them.

    You could secretly accept dirty bitcoins with an additional unregistered id (or many such, as is the standard method today), but those would be unspendable through any legitimate channel.

    That is the same, of course, as would be the case if bitcoin were simply banned, and it is perfectly possible for an illegal bitcoin economy to continue. The only difference is that as well as evading the restrictions, dirty bitcoins would be in competition with clean bitcoins.

    • spandrell March 26, 2013 at 15:15

      Thanks, good to know.

      I totally see a moralistic regulation if Bitcoin gets bigger than desired. Hackers don’t have the moral fiber to openly resist the establishment.

  6. Anomaly UK March 24, 2013 at 15:43

    Slight error in the above, there’s no way to “refuse to accept” a bitcoin transfer as such: if someone publishes a transaction paying to your public key, then those bitcoins are yours.

    Your software could be written to refuse to spend dirty bitcoins. It comes to about the same thing.

    (The law could even require that you transfer any dirty bitcoins your registered id receives to the appropriate financial authority within a set period, on pain of having the id deregistered and all your bitcoins made dirty.)

  7. ashr March 30, 2013 at 10:21

    Bitcoin is, at heart, a consensus protocol.

    If you can convince a majority of users (or specifically, miners) to change how it behaves, its behaviour will change.

    That said, most people involved with bitcoin mining right now understand the benefit of the deflationary curve and wouldn’t want to change it. (Yet.)

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