Silk Road forums
Discussion => Philosophy, Economics and Justice => Topic started by: joywind on May 10, 2013, 10:22 pm
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I have seen the future of Bitcoin, and it is bleak.
The Promise of Bitcoin
If you were to peak into my bedroom at night (please don’t), there’s a good chance you would see my wife sleeping soundly while I stare at the ceiling, running thought experiments about where Bitcoin is going. Like many other people, I have come to the conclusion that distributed currencies like Bitcoin are going to eventually be recognized as the most important technological innovation of the decade, if not the century. It seems clear to me that the rise of distributed currencies presents the biggest (and riskiest) investment opportunity I am likely to see in my lifetime; perhaps in a thousand lifetimes. It is critically important to understand where Bitcoin is going, and I am determined to do so.
My hundreds of hours of thought experiments have been productive. I published a whitepaper about the future of Bitcoin, and because of that paper I’ll have the great privilege of sitting on the “Bitcoin in the Future” panel at the 2013 Bitcoin Conference in San Jose. Through these years of deliberation I have satisfied myself that the answer to the “Trillion Dollar Question” of whether any form of distributed currency can ever achieve a stable price, is “yes”. (There are three ways this will happen, as I have written elsewhere).
I have been predicting for years that the world’s first trillionaire by USD valuation will be an early investor in distributed currency — quite possibly Satoshi Nakamoto, whoever he/she/it/they may be. I own a few bitcoins, and I intend to keep them until I find a more attractive investment (that is, I want to invest in whatever replaces bitcoin or builds on top of it).
To many people, this sounds like an implausibly rosy future, and for early adopters that is true — it feels like winning the lottery every day. However, for most other people, the ascendancy of distributed currency systems will feel like a disaster. If you are involved in Bitcoin now, you should prepare to be almost universally hated someday.
In this article, we will examine a few simple thought experiments to show how the rise of distributed currencies such as bitcoin could create massive social upheaval due to governments’ rapidly degrading capability to fulfill their core functions of taxation and regulation of commerce. We’ll see how the end result could be extremely painful for common citizens due to previously unimaginable wealth disparities, hyperinflation of previously stable government-backed fiat currencies, and a greatly empowered criminal class.
The Bleak Future of Fiat Currencies
Anarchists and hardcore libertarians love Bitcoin, but most people outside those circles are not in favor of completely doing away with their government. If you aren’t part of a fringe political movement, chances are there is something the government does that you like, whether it’s handing out entitlement money, killing enemies, putting people in prison, building dams and roads, funding research, or any number of other things. The government can do these things because the government can collect taxes, which in turn they can do because the flows of money are highly regulated and tracked at every level. Whether you are collecting a paycheck, buying furniture, cashing out investments, or simply dying and leaving an inheritance, the government knows about it and takes a cut.
For our first thought experiment, let’s imagine a world where distributed currencies like bitcoin have become wildly successful due to technological advances which make them easy to use and completely stable. In this world government-issued money is as good as dead. It may take a few years for everyone to realize it, but there will come a point when the ever-increasing outflows of money from fiat money into untaxable, unseizable decentralized currency will reach a tipping point, and we’ll have a financial panic like the world has never seen. Frightened lawmakers and banks will try to stop people from cashing out, but that will just increase the panic. Those who don’t get out before the door closes will be in dire straits indeed. This is the ultimate bank run — the run on the world’s central banks, and who could possibly step in and restore order?
When people think of hyperinflation, they usually envision a Zimbabwean printing press running around the clock in the dark corner of a mud hut, putting ever more zeroes on cheap paper. Has it ever occurred to you that hyperinflation can happen while the printing presses are off? The value of the money in your pocket is not ultimately guaranteed by your government, but by simple supply and demand. The government controls the supply, and we control the demand. If demand falls precipitously, we have hyperinflation without ever needing to print another dollar or euro. If people start fleeing government currencies en masse, hyperinflation is the inevitable result.
The good news is that you don’t need to worry about current government debt in this scenario. If government currencies lose their value rapidly, debts which previously seemed overwhelming suddenly become much more manageable. Perhaps your debt-laden government will someday completely pay off it’s national debt by simply selling a few gold bars and a couple national parks.
The Bleak Future of Retirement
For our next thought experiment, let’s consider what will happen to Grandma. For her whole life, she has carefully saved her money, and now she is living in reasonable comfort. She gets money and health care from the government, and she has her own savings to fall back on. Grandma has done everything right, including taking her savings out of the stock market; most of her savings are now invested in the safest asset known to man: U.S. Treasury Bonds.
Rather suddenly, things start to go wrong. At the same time all her expenses start skyrocketing, the government has a liquidity crisis; they are having trouble collecting taxes and can no longer pay for her health care. Her savings are still “safe” in the sense that she will get U.S. Dollars out of them, but that is little comfort when those dollars which should have lasted years can barely pay her weekly grocery bill.
Grandma’s retirement has been sabotaged by the rise of a new kind of money that she can’t even begin to understand. All she knows is that she did everything right, and now she has nothing.
The Bleak Future Wealth Disparities
All the world’s wealth has essentially been stolen, but by whom? By you, dear reader.
We’ll be very lucky if we aren’t all rounded up and summarily executed. Thankfully, you’ll be able to use some of that money to purchase protection, but I’m not at all convinced that it will be enough. A wrathful government backed by an enraged population is a fearful enemy. Satoshi foresaw this long ago, and I doubt he/she/it/they will ever voluntarily come into the light.
If there are enough of us, and we are very careful and charming, we may be physically safe. However, the massive displacement of wealth will still have some awful consequences. People argue all the time about the societal benefits and drawbacks of wealth disparities, and the rise of distributed currencies will create disparities that previously did not seem possible. It seems clear that there will be a lot of jobs created by the new wealthy, but whether the average person is better off or not, one thing is sure to rise: resentment. What right do we have to take all the wealth of the world and put it in our pockets? Sure, a nifty new idea should pay off for early visionaries, but nobody ever expected a new idea to suck all the wealth out of the world like a financial black hole!
The Bleak Future of Law Enforcement
This is where things get really bleak. Currently distributed currencies facilitate money laundering, black market commerce (the Silk Road), and insider trading (TorBroker). These applications in their current form are just a snowflake on the tip of the iceberg. Not only will they get MUCH bigger, but we will see applications which are much less savory. Historically, the “Dark Net” accessible by Tor and private networks has been nothing more than a hidey-hole for illegal files and a hangout for paranoid schizophrenics, but it is quickly becoming the platform of choice for large-scale illegal commerce.
For this thought experiment, we will imagine that your child has been kidnapped and put up for sale on “TorSlaver”. Their business plan is to kidnap children and sell them to the highest bidder, whether parent or pedophile. The winning bidder is sent the location of the child, probably bound and gagged and dumped somewhere. As long as they don’t get caught doing the kidnapping, the kidnappers can do this again and again with complete impunity. Once someone proves it can be done, copycats will come out of the woodwork, and it won’t matter if the first mover gets caught.
As a parent of three small children, I cannot describe to you how awful this makes me feel. I have always been a very reluctant bitcoin investor, for this very reason. I don’t invest in bitcoin because I think it will bring about a happy utopian world. Quite the opposite. I invest in bitcoin because the rise of distributed currency is inevitable, and owning some bitcoins seems to be the best way to prepare for the chaos ahead. And just maybe, if I position myself correctly, I can make things a little less awful.
The Government Strikes Back
Does anyone really expect the government to sit back quietly and watch while their currency is debased, terrorism is funded, and children are kidnapped? The only question is when and how they will strike back against these forces. While the government does have a lot of options, ultimately those options only slow things down. At some point, we collectively with our governments face a difficult choice between trying to survive this deadly storm or attempting to destroy all decentralized computer networks (including the internet). The former seems unthinkable, the latter, impossible.
I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.
What Should We Do?
We need people thinking about this. I’ll admit that many of the things I wrote about may not happen at all, or may happen very differently than I imagine. However, there are lots of people touting the fantastic benefits that bitcoin and its children can give us, and I don’t see anybody talking about how bad things could potentially get.
We need solutions. When the government finally starts taking decentralized currency seriously, it will probably be doing so in a state of panic. We need to be advising governments now about how they can survive the storm and protect their populace. We need to think of ways the government can pay for its most critical operations, and what legislation makes sense to mitigate these new risks while preserving as much freedom as we can.
The Lifeboat Foundation is attempting to provide this thinking, advice, and solutions. They are already getting ready for a new advisory board, culled from computer scientists, economists, and bitcoin experts. If you make a fortune from your investments in decentralized currency, I urge you to consider how you can help all the people harmed by these rapid changes. Many bitcoin enthusiasts seem to think they will get to retire on a private island with a harem and a stable of Italian sports cars. This is wrong. Bitcoin investors need to someday become bitcoin philanthropists, and our giving needs to be targeted at helping all the people we have harmed. The Lifeboat Foundation is one option, but I’m sure there will be others.
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A very good read. Did you write this, or copy/paste?
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I think this is possible. I think it's a little far fetched, but possible none the less. I do like your conclusion though: that we need to help, not rule with an iron fist. Though I suppose the point is that some people think that *is* helping... or they just don't care. Well, that's something else entirely.
I'm not terribly worried about it. Frankly I think the environment will be the death of us before Bitcoin. Shall we bet on it -- 1 BTC? ;)
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very interesting young grasshopper
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A very good read. Did you write this, or copy/paste?
I was going to ask the same thing but I was beaten to it. The writing style is very... different... :-\ (C'mon, you saw that coming.)
Piece, Love, and Fuck Haters.
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A very good read. Did you write this, or copy/paste?
This text was originally posted a few weeks ago on /r/bitcoin **clearnet warning** http://www.reddit.com/r/Bitcoin/comments/1cos8x/bitcoins_dystopian_future/
Definitely well written and does have some valid points. Overall a really great read -- always good to consider more than one perspective at once methinks :)
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A very good read. Did you write this, or copy/paste?
This text was originally posted a few weeks ago on /r/bitcoin **clearnet warning** http://www.reddit.com/r/Bitcoin/comments/1cos8x/bitcoins_dystopian_future/
Definitely well written and does have some valid points. Overall a really great read -- always good to consider more than one perspective at once methinks :)
OoOooOOOo......... good ole reddit. Suddenly makes sense. Yeah, INT read. I liked the bit about the grandma waking up with nothing in the cookie jar. ::)
Piece, Love, and Fuck Haters.
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alright.. Im peaking into your bedroom. now what? ;D
Too much.... I didnt read it.....mayeb later!
subbed
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Ha...
No. Virtual currencies that are more reliable than credit card transactions and encourages intelligence and security--i.e. cryptocurrencies--are the most sensible option for a sophisticated, technical society. They aren't going anywhere. If anything, they will evolve into more sophisticated cryptocurrencies--in parallel with current technological trends--or until the Singularity occurs and the war against digital computers begins.
BTC. (ArigatogozaimasuNippon/SatoshiNakamoto)
Government retaliations? Certainly. That never stopped bootleggers during Prohibition... or for that matter--drugs have never gone away in the history of governments.
Whatever... this was an interesting post, but it was lame because it was not properly referenced to Reddit. That's called anonymous plagiarism.
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Whatever... this was an interesting post, but it was lame because it was not properly referenced to Reddit. That's called anonymous plagiarism.
Who do you think I am?
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A good thoughtful read. Well worth the time spent.
Regardless of authorship, prior posting reference should be made.
Also, if you were the OP on Reddit then you just surrendered your anonymity so don't try to bullshit a bullshitter. You don't get to be a full member on this forum with over 100 negative karma and then blow your cover.
Not a chance you wrote this but thanks for the post.
Modzi
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Modzi :)
+1.....Hugs & a Big Plate -0- Blueberry Muffins
:)
Peace,
ChemCat O0
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Modzi :)
+1.....Hugs & a Big Plate -0- Blueberry Muffins
:)
Yum!
Thanks ChemCat!
Modzi
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A good thoughtful read. Well worth the time spent.
Regardless of authorship, prior posting reference should be made.
Also, if you were the OP on Reddit then you just surrendered your anonymity so don't try to bullshit a bullshitter. You don't get to be a full member on this forum with over 100 negative karma and then blow your cover.
Not a chance you wrote this but thanks for the post.
Modzi
Maybe I did write it and I am being obfusctory so that there is still room for doubt, thus not blowing my cover. Maybe I didn't write it, and didn't post the link so that people would be more likely to read it, thinking that I wrote it. Or maybe I wrote it myself. Maybe I want to be anonymous and didn't post the link for that reason. Maybe I didn't want you guys blowing my cover like this. Or maybe I just forgot to post the link.
I won't be specific, because I don't want to blow my cover either.
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A good thoughtful read. Well worth the time spent.
Regardless of authorship, prior posting reference should be made.
Also, if you were the OP on Reddit then you just surrendered your anonymity so don't try to bullshit a bullshitter. You don't get to be a full member on this forum with over 100 negative karma and then blow your cover.
Not a chance you wrote this but thanks for the post.
Modzi
Maybe I did write it and I am being obfusctory so that there is still room for doubt, thus not blowing my cover. Maybe I didn't write it, and didn't post the link so that people would be more likely to read it, thinking that I wrote it. Or maybe I wrote it myself. Maybe I want to be anonymous and didn't post the link for that reason. Maybe I didn't want you guys blowing my cover like this. Or maybe I just forgot to post the link.
I won't be specific, because I don't want to blow my cover either.
Nah, you just didn't write it. The guy who wrote that is light-years smarter than you, admit it.
Modzi
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Maybe I did write it and I am being obfusctory so that there is still room for doubt, thus not blowing my cover. Maybe I didn't write it, and didn't post the link so that people would be more likely to read it, thinking that I wrote it. Or maybe I wrote it myself. Maybe I want to be anonymous and didn't post the link for that reason. Maybe I didn't want you guys blowing my cover like this. Or maybe I just forgot to post the link.
I won't be specific, because I don't want to blow my cover either.
In any case, the text you posted has some pretty neat points that people probably find worth chatting about! It's unfortunate that it got overshadowed by such a simple issue as citing resources.. I think it's pretty important to give proper credit as much as possible, esp. w/ thoughtful writing that's on the web.. If you had posted this as a "Hey guys, check out this interesting post I found [here] -- whadd'yall think??" it might have actually drawn in and engaged more readers.
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Whatever... this was an interesting post, but it was lame because it was not properly referenced to Reddit. That's called anonymous plagiarism.
Who do you think I am?
I think you are a valuable member to the forums. I think you're concern over the future of BTC was enough to drive you to re-post a worth-the-read article. I think you are a thoughtful person that deserves to be picked on, because we pick on our friends--even if we are all anonymous.
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Whatever... this was an interesting post, but it was lame because it was not properly referenced to Reddit. That's called anonymous plagiarism.
Who do you think I am?
I think you are a valuable member to the forums. I think you're concern over the future of BTC was enough to drive you to re-post a worth-the-read article. I think you are a thoughtful person that deserves to be picked on, because we pick on our friends--even if we are all anonymous.
You're so nice PerPETualMOtion. You're as nice as I am IRL. I am only a douche in the anonymous world LOL.
Modzi
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Whatever... this was an interesting post, but it was lame because it was not properly referenced to Reddit. That's called anonymous plagiarism.
Who do you think I am?
I think you are a valuable member to the forums. I think you're concern over the future of BTC was enough to drive you to re-post a worth-the-read article. I think you are a thoughtful person that deserves to be picked on, because we pick on our friends--even if we are all anonymous.
You're so nice PerPETualMOtion. You're as nice as I am IRL. I am only a douche in the anonymous world LOL.
Modzi
Yeah, my douche-victims are hit or miss. Sometimes I let 'em have it. I guess I was well rested and well caffeinated.
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Personally I think the OP is a load of alarmist horse-shit, for several reasons:
1. It assumes that somehow the rise of BTC will be sudden; 'For our next thought experiment, let’s consider what will happen to Grandma' - get a grip! It's not gonna happen so soon and so suddenly that my ol' Gran is going to have to get to grips with BTC! IF (and that is a big IF) any BTC-like currency does become ubiquitous in the way described then it will most likely be me that's the Granny! Probably not even my Mum will have to ever know what the block-chain is...
2. It completely ignores the possibility of other, more mainstream and commercial, distributed currencies, all competing. So why exactly does the author think BTC will 'make things a little less awful'? It could be LTC or some other currency that comes out on top. Or, more likely, all will work along side each other.
3. What exactly does the the 'thought experiment' about kidnapping children have to do with BTC - arseholes don't need BTC to do nasty shit like that you know! BTC just allow for one particular kind of anonymous currency transfer, it doesn't cause people to be evil - humans managed that for millennia before BTC... cash has always been used in the past.... but then most people are not evil cunts that want to buy children....
4. BTC will not kill fiat currencies dead for a couple of reasons; firstly, people will always need to borrow money and banks are the places to do that, which need to be backed by governments. Secondly, many businesses are never going to be trading in anarchic distributed currencies, will always prefer currencies backed by a government. Goes back to point 2, but with a government backed equivalent. Also, don't forget, businesses have a legal obligation to accept legal tender....
5. Sort of an addendum to point 4, but I thought it deserved individual highlighting; 'there will come a point when the ever-increasing outflows of money from fiat money into untaxable, unseizable decentralized currency will reach a tipping point' - oh really? And how will that work then? You have BTC, I have $$$. I want to buy your BTC, so exchange for $$$.... what do you do with the $$$? In fact, if by this point BTC is so awesome everyone wants a piece of that action, why would you even want $$$? I guess what you mean is that 'if a large enough section of the economy is being mediated by BTC it will reach a tipping point', but the economy will still be there. People will still be producing and trading. It would, in fact, be like a cash-economy.... sort of like what we had before computers - how did we ever cope?!
6. National infrastructure will not suddenly disappear from lack of funding due to lack of taxes. For starters, never doubt the governments ability to find ways to obtain taxes - they'll still be able to charge duty on all kinds of products, charge land-tax, property taxes, tolls, licences etc., they'll just need to accept BTC as taxes. Even if tax revenue fell off guess what? We'd still have all that stuff as we all want it, we would just have to pay for it directly out of our own pockets rather than through taxes.
I could probably go on a bit more, but cannot be bothered. Alarmist nonsense IMO....
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Interesting.... if not a little extreme.