Refactoring: The Ethics of Money and Bitcoin

Writing code very often help you to restructure your thoughts in such way that once you are finished, you suddenly realize that you can achieve the same features with less code and in a way easier to understand.

We call this refactoring. And actually, after reading your comments, and sleeping on what I published, I also noticed some bugs in my reasoning, so I need to refactor some parts.

So this article is about changes to my previous previous article about The Ethics of Money and Bitcoin.

Mining fees are impacting the divisibility of Bitcoin

I actually mentioned in the Nature of Money that mining fees was impacting the divisibility of Bitcoin.

The reason is that high fees impact the minimum value of the good against which Bitcoin can be exchanged.

But then I mistakenly continued talking about how mining fee impact portability in the rest of the article. (Kudos to Giacomo Zucco to have noticed that)

A case can be made that portability is impacted by fee, as you can’t transfer your bitcoins if fees are infinitely high.

But at the end of the day, long arm chair discussion about the specific characteristic to which high fee maps is not so important, the only important thing is that we recognize that higher fee impact the Nature of Money and thus any action which specifically increase those fees should be considered immoral.

Also, I think the concept of censorship maps better to the concept of portability of money.

About the Nature of Bitcoin

I talked about the Nature of Bitcoin. But I now doubt about the pertinence of this term.

As explained, in the article, about Human nature:

Rothbard states that human nature should be based on characteristic proper to humans.

Characteristics which only humans depend on for their survival as opposed to other species.

By extension, talking about the Nature of Money, is talking about the specific characteristic proper to money, characteristics without which money could not exist.

But what about the Nature of Bitcoin?
The characteristics proper to Bitcoin, characteristics without which Bitcoin could not exist.

I said:

Bitcoin can travel across political boundaries (I will call this characteristic “free expatriation”)

But this concept is very limiting and some readers saw it in the narrow sense of tax evasion. But really, this concept is broader than this and is actually a characteristic of Money: Defensibility. (term I borrowed from @parallelind on twitter)

That is, the ability of its owner to defend it.
It is easy to demonstrate that this is a characteristic of every money, and not only Bitcoin.
If a money could not be defended, any thief could take it as soon as you get it, making it impossible to exchange it later, thus defensibility is a characteristic of money, not of Bitcoin.

I thus completely scrapped the term “free expatriation” and replaced it with defensibility.

So what is the nature of Bitcoin?
What characteristics are proper to Bitcoin, characteristics without which Bitcoin could not exist?
I advanced that another characteristic is enforcement of ownership via software.
However, I must say that I think this point a bit weak.

If Bitcoin ownership was suddenly enforced by a judge instead (via multisig enforcement), sure we would lose all interest, defensibility would be critically wounded, but it could perfectly well continue to function as money under the name Bitcoin.

So finally, I am still wondering if it makes sense to talk about the Nature of Bitcoin at all. Bitcoin’s Nature is money and I think this cover everything and nothing need to be added to this.

I ended up removing completely the Nature of Bitcoin paragraph and reformulating the next paragraph, Ethics of Bitcoin. Maybe it makes sense to talk about the Nature of Bitcoin, but I can’t find any pertinent characteristic proper to bitcoin without which Bitcoin would cease to exist.

Even self validation, is nothing but a technical mechanism to increase defensibility.

Parallels of Bitcoin terminology with Money

Added one paragraph about terms that we talk often but are actually mapping to very specific properties of money:

In Bitcoin we talk:

• Mining fee instead of Divisibility
• Censorship instead of Portability
• Privacy and self-validation instead of Defensibility
• Fixed supply instead of Durability
• But those terms are really the two faces of the same coin.