Bitcoin is the Sewer Rat of Currencies
Mark Frauenfelder of Boing Boing fame has a really interesting interview with computer scientist and Bitcoin advocate Andreas Antonopoulos, who makes a use case for the virtual currency I haven't quite seen before: As a means of bringing the billions of impoverished people without access to the mainstream financial system into the global economy. Sample:
If you look at the statistics, financial inclusion is getting worse. That doesn’t make any sense unless you consider that, in the meantime, the traditional currencies and digital finance systems have been getting more and more prone to surveillance and tied to identity where everything is tracked. They’re closing in on themselves in order to maintain this ironclad control over who sends money to who, all in the name of terrorist prevention and anti-money laundering, which is bullshit because HSBC could money-launder billions...
You cannot create global finance and economic inclusion on the back of a carefully controlled show-us-your-papers identity-based system where everything is tracked. What you create is a global surveillance dystopia. Our entire financial system is heading into this thing where everything is surveilled. Bitcoin is heading in exact opposite direction. No identity by default, from weak pseudonymity to a stronger and stronger anonymity as time goes by. As a result, it doesn’t do borders. It doesn’t care about borders. It doesn’t do Know Your Customer. It doesn’t do Anti-Money Laundering. It doesn’t do those things because those things are bourgeois concepts of the privileged financial elite. Those bourgeois concepts have a four-billion-people-in-poverty price tag.
Bitcoin, of course, is also a bourgeois concept par excellence, a libertarian conceit largely supported by the wealthy (and mostly white) tech elite. That somewhat unfair snark aside, Antonopoulos is very right that the unbanked majority of the world need a scalable financial solution.
Does that mean Bitcoin is the answer? Three facts spring to mind which make me think otherwise:
- Hardly anyone. Anywhere. Is using Bitcoin. As actual. Money. Usually, technology is first broadly adopted by the "first world" and matriculates down to everyone else. But not even the wealthy are actually using Bitcoin for actual money to any significant degree.
- The poor of the world are already developing more tangible, practical alternatives to mainstream currency. In Africa, for instance, it's long been common, to use mobile phone minutes as virtual currency. Bitcoin, by contrast, is a non-tangible solution without any immediate means to convert currency into something as readily valuable.
- Chinese-made smartphones are already spreading through the developing world. And those smartphones come integrated with Chinese-made products and apps. So I'd say it's more likely that billions of new smartphone owners will come to use something like AliPay (the PayPal of China), than Bitcoin.
Maybe I'm missing something, but the idea of Bitcoin as the poor's savior mainly seems like an appealing story Bitcoin enthusiasts tell themselves to add a humanitarian veneer to their laissez faire dreams.
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Bitcoin is the currency of choice for criminal activity.
With each passing story of a criminal operation funded through bitcoin, its ability to stay out of the arm of legal action will diminish.
It is only a matter of time until the purchase, possession, or transfer of bitcoin itself becomes a crime.
Posted by: pussycat catnap | Wednesday, February 24, 2016 at 12:18 AM
A) Bitcoin is by design outside mainstream finance
B) poor people don't have computers in impoverished lands.
C) even the poorest goat herder in goombastan gets a few coins for a goat. Thus he's part of the system. He won't make what a CEO makes, but he is in the system for the country he is in. Bitcoin is not going to be accepted by him for the same reason he won't accept Monopoly money - he can't spend it
Bitcoin ignores a fact about money - it is nothing but a unit of change. It's value comes either from the money itself like a gold coin, or from what people are willing to give it like paper money. today you can find a gold coin from mid 1800s and still use it. But a box with a million confederate dollars will be worthless. Unless Bitcoin replaces all currency in all countries nobody will care about it. And since that would mean govt around the world losing control of their economies, you know how well that will be received.
Posted by: Shockwave Yareach | Wednesday, February 24, 2016 at 05:52 AM
I agree with your points about bitcoin not being widely used to buy anything, but I don't think it follows that, therefore, it will fail.
Traditionally, money is thought to have two uses. One is as a means of exchange and the other is as a store of value. You're right that it sucks right now if you want to get a hot dog and all you have are bitcoins. But as a store of value, bitcoin has a lot going for it. The exchange rate volatility seems to be decreasing over time. Also, the supply of bitcoin is perfectly predictable and limited, which makes it a great inflation hedge.
Historically, gold and real estate are the most stable ways to store value. At least theoretically, bitcoin is better.
Posted by: Brookston Holiday | Thursday, February 25, 2016 at 08:58 AM
For something to function as a currency it must be:
Durable,
Portable,
Divisible,
Fungible.
For something to function as money it must have the above plus one extra: It must be a store of value. Although most people don't distinguish between money and curreny there really is a difference between the two. Currency leaks value over time and money retains it.
Posted by: Extropia DaSilva | Saturday, February 27, 2016 at 02:32 AM