Wednesday, January 15, 2014

Barbarous Relic 2.0

Fred Wilson lays out the path he sees for Bitcoin:

1) Bitcoin emerges, community develops, mining, wallets 2) Bitcoin vice, silk road, etc
3) Speculation, trading, collecting, price spike
4) Commerce - real people buying real stuff with Bitcoin 5) Bitcoin as infrastructure
I think there will be a step 3.5 where Bitcoin will crash in value as a the speculative phase comes to its predictable end and the Feds start to wrap some regulation around it. This means there will be no step 4.

That does not mean that Bitcoin as infrastructure may not come about though. The irony, if I may use that term, with bitcoin is that it uses a lot of software to re-create the metallic nature of money and create a sort of digital gold standard (or barbarous relic 2.0 if you prefer). But money is not so much a medium of exchange nor a store of value, as economists argue, but a means to tallying and tracking indebtedness or obligations.

As outlined in Graeber's Debt, and is also clear upon a few moments reflection, indebtedness, the asking for and returning of favors, long predated money which merely abstracted and made portable that fundamental owed/owing dynamic. I still owe, but whether I owe my bank or a different bank or a bond holder depends on a secondary market that is independent of me. When a Government declares I owe them taxes, and those taxes must be denominated in a specific currency, it is a fulcrum that the entire economy will then turn on.

By losing focus on the tally, which is the important part, and focusing on the token, Bitcoin has developed an interesting and powerful technology for a use which is besides the point. Like Fred, I am eager to see what use it finds next.

2 Comments:

Blogger John Carney said...

" But money is not so much a medium of exchange nor a store of value, as economists argue, but a means to tallying and tracking indebtedness or obligations."

This is a good and clear way of putting it. It also lines up nicely with my thinking that the historical roots of money are not taxes but tithes.

2:22 PM  
Blogger Greg said...

Hey John,

Don't you think that calling it tithes is mostly a semantic point. In early societies religious leaders were the govt. for the most part. Tithing was a tax that was justified as appeasing the gods it could be argued I think.

Whether it was "taxes" or "tithes" I think its pretty safe to say that the metallists story of money simply evolving as a way to solve the difficulty of barter is............. bunk.

Your story still involves an authority deciding what and how much they will accept.

2:43 PM  

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