Bitcoin and the Tran$actionalization of Life, the Universe and Everything

A recent article entitled You Don’t Understand Bitcoin Because You Think Money Is Real went viral among the Bitcoin community. The author is seemingly promoting cryptocurrencies such as Bitcoin by using the argument that fiat and paper money aren’t real, so therefore it shouldn’t matter whether bitcoin is real. While the article brings up some interesting points, I think her arguments actually destroy the logic of Bitcoin as a monetary currency, and the logic of any type of monetary exchange system. I think it’s important to note that I have respect for the underlying blockchain technology and acknowledge that it could have revolutionary applications. My arguments are directed to the lunacy of monetary exchange systems and currencies themselves, of any type, whether crypto or paper or cowry shells. Honestly, I am not sure whether alternative currencies will be a great transitionary step to a better world; instead they might just be a huge distraction from what really needs to happen next.

So here are some quotes from the article and my responses to some of the author’s points:

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• “Bitcoin is an illusion, a mass hallucination, so one hears. It’s just numbers in cyberspace, a mirage, insubstantial as a soap bubble. Bitcoin is not backed by anything other than the faith of the fools who buy it and of the greater fools who buy it from these lesser fools. And you know? Fair enough. All this is true. What may be less easy to grasp is that U.S. dollars are likewise an illusion. They too consist mainly of numbers out there in cyberspace. Sometimes they’re stored in paper or coins, but while the paper and coins are material, the dollars they represent are not. U.S. dollars are not backed by anything other than the faith of the fools who accept it as payment and of other fools who agree in turn to accept it as payment from them.”

Agreed, bitcoin and any other form of monetary exchange is an illusion. But monetary exchanges have very real and tangible effects on people, our world and our resources, mostly in a negative way. Without going on a tangent about the negative effects of our perpetual growth-based monetary system, let’s just look at one negative externality of Bitcoin. The electricity used to mine bitcoin this year is bigger than the annual usage of 159 countries.Virtual “mining” of the elusive and illusory Bitcoin make this particular “mass hallucination” very real and very destructive.

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• “Charlatans and thieves will forever try to game the various structures put in place to control and/or account for any monetary system…And using any system of exchange — through fair means or foul — fortunes can and will be made and lost.”

This points to the inherent problem within any type of monetary exchange system, no matter if it’s paper, gold, or digits. The “more for me” incentive mechanism built into exchange models has led to horrid human behavior for the entire 5,000 year history of money and debt as documented by anthropologist David Graeber. Far from money being a neutral medium of exchange, Graeber argues that as far back as we can see in the historical and archaeological record, people with money (and the power money provides) have often established rules to benefit themselves and impoverish and enslave everyone else. Bitcoin, same as any money, has scarcity, inequality and preferential advantage built into it. Should we expect different behavior from Bitcoin millionaires?

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• “Money itself is an illusion, a mass hallucination. You’re working hard to make it, grow it, and keep it, but even so, the only real thing about it is its symbolic power…Money is only a shifting network of agreements made in and on behalf of the hive, and that’s all it has ever been — a fragile thread in a web of human trust.”

I would argue to the contrary, that monetary exchange of any sort creates a web of human “dis” trust. Distrust is built into any monetary system where “more for me is less for you”. Bitcoin, like all monetary exchange systems, is scarcity-based, thus incentivizing behaviors such as hoarding, theft and corruption, and instilling distrust and even fear from the greed-induced behaviors from others who are willing to do bad things to get more.

And even if the blockchain technology underneath cryptocurrencies supposedly has incorruptible trust mechanisms built into every transaction, is it such a good idea for us to relinquish our human trusting abilities to an algorithm? Do we risk turning every human interaction into a mere transaction and economic calculation? We have misplaced our trust in the wrong places before; perhaps we are about to do it again. In God we trusted. In money we trusted. In debt we trusted. In governments we trusted. In markets we trusted. In human institutions we trusted. Now, are we supposed to put our trust in a Bitcoin algorithm? Do we let Bitcoin do our trusting for us? Or is it time we start trusting in ourselves, for ourselves? Should we start trusting in the goodness of real humans outside our institutions? Should we once again start trusting in the inherent goodness of our human and nature relationships that exist outside of economic calculations? It is time to trust in our qualities…of each and all of us, not our quantities to be transactionalized by an algorithm. Life is NOT to be transactionalized, but instead to be titillated and tantalized with uncontrollable beauty and love.

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• “All the common arguments against cryptocurrencies such as bitcoin, and the blockchain technology working underneath them, invariably fail to take this fact — the provisional and fragile nature of ordinary money — into account. Cryptocurrencies cannot be understood even a little bit by anyone who thinks money is real, solid, or “backed by” anything other than human trust.”

Believe me, I fully understand the fact that money is neither real nor solid nor sustainable. I have dedicated an entire chapter of my book The Next Copernican Revolution to a brief history of Homo Sapien fiction. Some of the greatest and most damaging fictions we ever created — -a god in the sky, property, ownership, money, debt, nations, corporations — -do not really exist outside the common imagination of human beings. Now it appears we are creating yet another potentially massive, potentially disastrous human fiction — cryptocurrency.

Further, most people still don’t fully understand the inherently destructive nature of monetary exchange itself. Now we are being asked to wrap our heads around something called “cryptocurrency”. The cryptic name itself should be cause for concern. The literal definition of the word “cryptic” is “a meaning that is mysterious or obscure”, something that is confusing, mystifying, perplexing, puzzling. Most people of average and above average intelligence don’t understand what cryptocurrency is, or what the externalities are, and not because we “think money is real”. Yet we are being told we are missing the boat if we don’t invest in it, or stupid if we don’t understand it. In actuality, nobody really knows the long term implications for humanity if we go down this path of cryptofuckery, blindly and with distorted emotions fueled by the chance to “get rich”.

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“There can be no question that the prospect of instantaneous wealth, almost close enough to touch, can drive people insane. Note, however, that the propensity of greed to produce crime and insanity did not cause the value of gold to evaporate.”

The author gets the first sentence right regarding insanity, but then proceeds to put the cart before the horse. She implies that it is our human propensity, or human nature, to be greedy, which then causes insanity and crime. But it is our socio-economic system itself that causes the propensity for greed. Numerous studies show that we are not inherently self-interested, competitive and greedy creatures, but instead are products of our environment. In an entire monetary system that incentives “more for me” behavior, frankly, I’m surprised that we are as good as we are towards each other.

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“The truth is that money is tainted in its very nature.”

Enough said

:)

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• “The fight for stability in any currency is always in the process of being lost, because wherever there is a chance to game or forge a transaction, human nature is such that some will try to cheat.”

Again with the flawed human nature argument? This is the typical inaccurate understanding of our true human nature that is continually put forth by progressives and conservatives alike, that we are inherently corrupt, greedy, and self-interested. If we take a systems perspective, which we must, than we have to consider the perverse incentives that are everywhere. For example, do you really think we can have lasting peace and a for-profit military industrial complex at the same time? Do you really think we can can have great healthcare in a for-profit medical system at the same time, when, in said system, if people weren’t sick then the system would lose it’s profitability? Do you really think that in an entire monetary exchange system that perversely incentives selfish behavior, that we can ever collectively overcome greedy behavior?

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• “The struggle to preserve the illusion that money is real is never over, and it never can be.”

True, as long as we take the truncated, myopic perspective that we’ve always had money and therefore always will. Money is 5,000 years old; modern homo sapiens have been around for 200,000 years. So if we do the math, for well over 95% of our human existence we’ve had no monetary exchange and no barter economies (barter is a myth). We had gift economies where people just did things for each other, without any reciprocal exchange. This is our true human nature.

The bottom line is that the Bitcoin “mass hallucination” is pushing towards an exponential level of irrational exuberance. The concept of exponential growth means that the bigger a system is, the greater the increase. In everyday speech, exponential growth means runaway expansion, such as in population growth. While Bitcoin’s valuation and usage grows exponentially, the electricity consumption of mining Bitcoins, along with it’s resulting Carbon footprint, will also grow exponentially. Getting caught up in the exuberance of the Bitcoin bubble could have collectively suicidal effects. Some may get rich, but it will be at the expense of billions of people trying to survive on a burned out planet. And after all, what good is money on a dead planet. I’m sorry to say, Bitcoin is exponential insanity.

Originally published on December 8, 2017 at: https://www.facebook.com/notes/troy-wiley/bitcoin-and-the-tranactionalization-of-life-the-universe-and-everything/10212705214058306/