The Bitcoin Problem
“All major currencies have proven to be independent of politics.” Anon
The Bitcoin problem is apparently simple to convey: it’s anomalous to the current economic paradigm which remits stability by inflation targeting.
The suggestion Bitcoin could sit within Central Bank reserves as part of an inter relational strategy at the sovereign level is equally incongruous: there is no exchange rate policy, but a free floating currency.
It would also be difficult for sovereign Central Banks to target Bitcoin’s pre-determined supply schedule without seemingly repeat the problems of the Gold standard in relation to sating demand for money.
The Politics Problem
The President of the United States was recently scolded by a former Central Bank administrator in respect of one these aspects:
“Well, I doubt that he would even be able to say that the Fed’s goals are maximum employment and price stability, which is the goals that Congress have assigned to the Fed. He’s made comments about the Fed having an exchange-rate objective in order to support his trade plans, or possibly targeting the U.S. balance of trade. And, you know, I think comments like that shows a lack of understanding of the impact of the Fed on the economy, and appropriate policy goals…” Janet Yellen
Basket Case
The inclusion of Bitcoin in a consumer price index by which price stability is targeted, could only happen if Bitcoin achieved some kind of real life utility: at the moment, it doesn’t have a use other than hodl — and in this aspect, Bitcoin is currently in its longest bear market ever.
The Language Problem
The question of what is Bitcoin? is not the same as what is the weather? It forms such bones of contention, that Bitcoin is seemingly impossible and not easily observable beyond price action: its creator called it a peer-to-peer electronic cash system, which by literal standards appears as nonsense; it’s not transmitted or transacted in traditional cash forms — and has network limitations at the computational base layer which affects capacity.
Village People
It’s probable Satoshi Nakamoto realised economic terminology causally morphs our histories.
“If we look historically, trade takes place in two kinds of spheres, trusted and trustless…local and external…local has relied on verbal commitments, debt arrangements and scriptural money…external has largely relied on commodity money, on tokens both parties recognise…” Anon
It is conjectured Satoshi may have wanted to trust optimise the proxy between villages (peers) on a world trading basis.
Further Meditations on Cash
The cypherpunk method will cite trusted third parties as security holes and influences one [of, the] most prominent Bitcoin mantras [of] decentralisation.
However, there is a counter view that decentralisation is only an essential feature of Bitcoin because of its self adjusting difficulty algorithm which regulates and makes stable Bitcoin issuance in a way gold was never totally free of production gluts and shocks.
In this light, notions of political independence and stability start to coincide in both the Bitcoin world and in the legacy banking world even if they’re yet to explicitly converge.
Broadly Speaking
This brings into play the wider trend of deconstructing the language employed within Bitcoin, for example an elucidation [of] decentralisation:
“I’d observe that definitions of decentralisation converge towards an equilibrium of tensions between all possible meanings of the term. It means what it needs to mean, when it needs to mean it. The arrangement over what constitutes decentralisation is itself decentralisation in action.” Anon
In this sense Bitcoin is considered sound money, but we can’t listen to it; it’s considered hard money, but we can’t touch it — but as an Ideal, the imagining of a timeless (and classic) like standard is possible and redolent of imaginative folds to which we may tend.
The problem being Bitcoin itself is not an answer: a reorientation and figurative step to honesty which morphs cash into a trustworthiness [so] peers can take each other at their word, will one day render it benign.
All Bitcoin need do now is find a purpose.
