[ZS] Bitcoin - A Means for Redistribution of Wealth

[Gary Mulder]

I sent this to the resident Pirate Party UK economist:

Hi Harry,


>    - why would the average person like me (who does not suffer restricted
>       access to the regular payment systems, as you suggest could be the case for
>       someone in Vietnam) want to use bitcoin other than a) to transfer money
>       abroad at low / no cost or b) to avoid official restrictions on payments to
>       (e.g.) Wikileaks through the mainstream bank network?
>
> You are right. You and your probable mortgage-owning neighbours have no
foreseeable need to ever use Bitcoins. Given that there are no charge-backs
and therefore absolutely no financial protection (caveat emptor), it is
unlikely it will be adopted by the mainstream for the majority of
transactions any time soon. For obvious reasons even I *currently *trust my
debit card more than my Bitcoin wallet. Of course the same could have been
said about making secure purchases online in the 90's.


>    - at the moment bitcoin seems to have no role as a store of value (as
>       opposed to medium of exchange), though perhaps this could change if its
>       market value could somehow be linked to precious metals (gold / silver)
>       rather than increasingly unstable / manipulated fiat currencies - see
>       youtube clip of Max Keiser in the following:
>       http://www.scoop.it/t/peer2politics?page=3 . Any comment?
>
> The backing for Bitcoin is through the not insignificant capital and
electricity costs expended to "mine" Bitcoins. The secure Bitcoin
transaction system is designed around a form of decentralised digital
signing of Bitcoin transactions through this Bitcoin mining operation. The
payment for mining is currently 50BTC per block of transactions
successfully signed. This Bitcoin inflation will half in about a month to
25BTC per block, and continue to reduce in the rate of inflation until 21M
Bitcoins are mined in 2020, or so. After all Bitcoins have been mined the
financial reward for mining will be very small per transaction fees, but
potentially still significant per block.

Due to this distributed digital backing there is no way to link issued
Bitcoins to a commodity such as gold, which would require some form of
centralised repository like GoldMoney.com. Another way to think of it is
that everyone who mines Bitcoins is part of the "decentral bank of
Bitcoin". I understand that most Austrian economists don't like Bitcoin, as
Austrian definitions of money require it to originate as a commodity. In my
not so humble opinion this is a philosophical economic question, as there
are things you can conveniently buy with Bitcoins that you can not buy with
gold, cash, or credit cards. However, for now the primary driver of Bitcoin
adoption is the black market and speculation.


>    - the point in the Forbes article you sent on bitcoin about it being a
>       threat to official monetary control (exchange control as well as tax
>       evasion, laundering) seems quite valid and is a major ultimate objection -
>       unless one comes from an anarchistic / extreme libertarian position, which
>       I definitely am not (nor the Pirates, I hope).
>
> http://falkvinge.net/2011/05/29/why-im-putting-all-my-savings-into-bitcoin/


Many Bitcoin enthusiasts currently range in attitudes from garden variety
nerds (like myself) to crypto-anarchists and anarcho-capitalists. This
group likely includes Assange, the various members of Anonymous, and quite
possibly the guy who fixed the problem that caused NatWest customers unable
to access their bank accounts for a week. Plenty of them are Pirates too as
both Bittorrent and Bitcoin have much in common both philosophically and
technically. The majority of enthusiasts are however very naive about
economics and the realities of politics.

> In summary Bitcoin only seems attractive for a limited function during the
> present global monetary chaos in which currency values are manipulated and
> legitimate financial transfers interfered with by authorities that are
> essentially dominated by one or more criminal syndicates. Rather than try
> and join these guys in the Wild West our aim should be to restore order and
> accountability to the system.
>
I guess history will decide whether it will be evolution or revolution of
the current system. I read enough contrarian commentary on the state of the
world economy to wonder when the current experiment with fiat currencies
will end, and I don't expect the end to be evolutionary. The UK was quite
graceful in its relinquishment of empire. The USA is unlikely to follow:

http://en.wikipedia.org/wiki/Executive_Order_6102

http://en.wikipedia.org/wiki/Habeas_corpus_in_the_United_States

http://news.yahoo.com/jullian-assange-enemy-state-023345613.html


>
>

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