A couple of you have said you’re sick of the whole Bitcoin story, but I’m still intrigued by the Rashomon aspects of Newsweek‘s “big reveal“. Felix Salmon had two long, informative posts this weekend. The first explains why he thought Newsweek‘s claim it had ‘outed’ Dorian Satoshi Nakamoto as Bitcoin’s inventor was “ill-advised“:
… Newsweek didn’t want a theory, it wanted a scoop. And so, faced with what was ultimately only circumstantial evidence, it went ahead and claimed that it had uncovered Satoshi — that, basically, it was 100% certain.
That decision was ill-advised. Newsweek certainly got lots of buzz for its return to print — but it’s now getting just as much buzz for going to press with what is looking increasingly like a half-baked theory. Personally, I don’t know whether Dorian is Satoshi — but I think I can be pretty safe in saying that the probability is somewhere in the range of, say, 10% to 90%. In other words, it’s possible; it might even be probable; but it’s not certain. And anybody who says that it is certain is wrong…
Salmon’s second post explained how, and why, reporter Leah Goodman and her editor’s old-media bias collided so vividly with Bitcoin’s primary defenders.
Kevin Roose, at NYMag, had a thoughtful post on “the hijacking of Satoshi Nakamoto”:
… While the is-he-or-isn’t-he debate was swirling around Nakamoto yesterday, I took a minute to go back and review the original white paper [PDF] in which the creator (or creators) of Bitcoin first described the concept. It was a good reminder of just how far removed the current Bitcoin ideology is from the original vision, and how badly the Bitcoin community has screwed up the plan that Nakamoto – whoever it/they is/are – laid out six years ago.
The Bitcoin system Satoshi Nakamoto described in 2008 didn’t come attached to a chest-puffing manifesto, an end-the-Fed jeremiad, or a desire to rid the world of government-backed currency. It was a beautifully simple idea: a system that would allow people to send payments to each other without having to go through a bank, using a system of algorithmic matching called a “block” to make sure that people actually got paid the amounts they were owed.
In the five years since the white paper, Nakamoto has gone underground, and his idea has been taken up by a group of zealous dorks. These people call each other “brothers,” wax rhapsodic about their devotion to Bitcoin, and make no bones about their prediction that their beloved crypto-currency will change the world in the same way the Internet did. Their politics tend to be, if not straight-up libertarian, then at least suspicious of government – they see Bitcoin as a tool with which to pry the global monetary system away from political officials and put it in the hands of a decentralized, mathematical grid…
Nakamoto does seemed to have grasped the political implications Bitcoin might have – he’s quoted frequently as having said, “[Bitcoin is] very attractive to the libertarian viewpoint if we can explain it properly” – but if you look through his early writings, what sticks out is that the politics of Bitcoin were very much secondary to the technology. Bitcoin was never meant to be the cornerstone of a new world order, and it’s only when it began to spread that it picked up the goofy connotations it has now….
I’m not competent to judge whether Dorian Satoshi is the Nakamoto responsible for Bitcoin, but I can understand why the guy who came up with an elegant crypto-currency would be appalled by both Newsweek and his more devoted defenders. Imagine how Professor Tolkien would have felt about being pestered to rate Liv Tyler’s “importance” to his epic… or asked to critique the literary merits of Orlando Bloom/John Rhys-Davies fanfic…
Hal
Am I the only one who doesn’t know what bitcoin is exactly? For some reason I’ve just never invested time to check in on it, but for some reason I always associated bitcoin with the same people always trying to get you to buy gold.
comrade nimrod humperdink
Just saw this and immediately thought of Schrodinger, though she may have already seen it
Jurassic Kittehs attack!
OzarkHillbilly
Schadenfreude never gets old. I wonder if any of these Bitcoin fans have ever studied history? Any history? At all? OK, no I don’t. It is pretty obvious.
Wag
Bitcoin, like many intriguing libertarian concepts, is probably best kept as a thought exercise rather than a reality. Once the fanbois get ahold of it and twist it to meet their fascist goals, all beauty is drained from the idea, and the elegance turns ugly.
dmsilev
@OzarkHillbilly: Some of them probably have, and will insist that this time it’s different because Internet.
The history they’ve studied doesn’t include the bursting of the 90s-era tech bubble.
maximiliano furtive, formerly known as dr. bloor
@Ozarkhillbilly: They can cite the entire history of Middle Earth, chapter and verse, so there.
NotMax
Bitcoins are to coins as Facebook friends are to friends.
But if we all just close our eyes and click our mousies really, really hard, bitcoin will revive and sprinkle us all with pixel dust.
Schlemizel
Maybe I need help (Oh hell, I know I need help but in this case I meant with this particular path of the story) Why, exactly, am I expected to give a fat flying Philadelphia fornicate who invented bitcoin?
SiubhanDuinne
From today’s email of WaPo headlines:
I’m not dignifying it with a link or a click, but “Bitcoin ‘creator’ sympathy fund” made me laugh. Especially the scarequotes.
raven
@NotMax: Facebook is great for me.
lol
Bitcoin is so 2013. The future is Dogecoin.
Lee
I think Dorian Satoshi is the Nakamoto responsible for Bitcoin. I think he freaked out once he saw that he was going to have to face the fanbois of Bitcoin.
Bjacques
Technically, it’s not blogwhoring, since I don’t have a blog…
http://m.flickr.com/#/photos/bjacques/3097566905/in/search_QM_q_IS_harlequin_AND_ss_IS_2_AND_prefs_photos_IS_1_AND_prefs_screenshots_IS_1_AND_prefs_other_IS_1_AND_mt_IS_all_AND_w_IS_91255378@N00
RSA
@OzarkHillbilly:
I know. There’s a strong undercurrent (often also visible on the surface) in libertarian talking and writing that casts everyone else as a dupe, a mark, a patsy. But we’re not the ones who’ve lost a fortune on Bitcoin…
jayackroyd
@Wag: This is kinda mixed up. Crypto currency isn’t inherently “libertarian” any more than it is inherently “gold-buggy.” But it’s gonna appeal to gold bugs and libertarians.
It’s an interesting question whether money can be created by any entity other than the state. Modern monetary theorists would say no, that money is ultimately something that is used to pay taxes. To me, it looks like bitcoin is proving their point; it’s of little value if it can’t be converted to an instrument that can be used to pay taxes.
But that’s an open question, because there is so much speculative get rich quick and fraud gas in bitcoin markets. Ultimately, it only works if you can choose bitcoin, or some other crypto currency, the same way you choose paypal to pay for the stuff in your shopping cart, or you choose euros or dollars to pay your skype subscription fee.
Then the question arises whether governments will permit this to happen. Because it weakens their ability to collect taxes.
Paul in KY
Professor Tolkien probably would have been appalled at having to critique the movies.
Anton Sirius
@jayackroyd:
That’s an issue most bitcoin zealots refuse the face at the moment – it’s fairly useless as a common currency if it has the volatility of a commodity.
Imagine what would happen if the US dollar lost a quarter of its value over a two week period.
Sublime33
Conspiracy theorists were so afraid Obama was going to adopt the Amero as the new US currency that they glommed on to the Bitcoin as a better alternative.
ericblair
@jayackroyd:
My understanding is that libertarians are attracted to gold or bitcoins, but not both. Goldbugs are big on INHERENT VALUE, because by some sort of divine mandate a small chunk of yellow metal is worth two weeks or more of a person’s labor. Bitcoins are obviously just bits, not shiny rocks, so are for suckers.
Bitcoin-bugs have no intention of hiding in a bunker with their gold and Glenn-Beck-approved dehydrated beans and six bazillion rounds of ammo waiting out the race war, but are the Internet-savvy gods of the future, you see. So no gooooooooolllllllllddd for them; they’ll be waiting out the collapse of the corrupt surveillance states from their comfortable one-bedroom condos with pizza delivery and 100 Mbps download speeds while their bitcoins appreciate until they can buy cities.
I’m thinking the bitcoin model is fundamentally flawed economically, not technically. You essentially can’t have an adaptive monetary policy because there’s no entity that is concerned more with the health and operation of the currency more than the entity’s own private holdings (which in normal currencies is obviously the state). Even if bitcoin had a mechanism for distributed monetary policy that was voted on by bitcoin holders, I don’t see a situation where they would voluntarily enact any sort of inflationary policy, so would get stuck in the deflationary trap they’re going into by default.
C.V. Danes
If any of you guys want to get rid of your bitcoins, I have some land in the Everglades I’d be willing to sell…
C.V. Danes
@ericblair:
I’ve always been amazed at the amount of resources we have spent as a species to dig up this shiny metal out of a cave in the earth, just so we could hide it in another man-made cave somewhere else.
ericblair
@C.V. Danes:
Also, we put in in a man-made cave where the owners of the metal have never seen or touched it and let it sit there for decades, until the owners wish to transact with someone else, in which case a worker takes the metal from one numbered cage to another numbered cage in the same cave, where the new owners will never see or touch the metal and let it sit there for decades.
jon
Anti-libertarian thought exercise: What would happen to bitcoin if the US government set a trade value of one bitcoin to a dollar?
jayackroyd
@Anton Sirius: Right. The goldbuggy bitcoin zealots are getting in the way. But if bitcoin is a viable model, then this distraction will pass.
Mnemosyne
@jayackroyd:
PayPal isn’t a currency, though — it’s just a different way to transfer money from place to place. This is like saying that your credit card is a unique currency separate from the US dollar (or whatever currency you currently use most).
Fair Economist
Bitcoin is just another pyramid scheme. Verifying the transactions requires a lot of computational work, and that’s paid for by people earning bitcoins for doing the work. In Bitcoin’s case, there’s a limit to the number of coins that will be created, so once that’s used up there won’t be any more verification, and the system will collapse.
Theoretically you could run a similar system without a coin cap, and that could run a long time (until you hit mathematical limits; probably effectively forever with the right design.) But, it would be a system with inflation built in, which is of course anathema to the goldbugs who make up the core of the Bitcoin proselytizers.
I expect eventually government fiat currencies will move to a bitcoinish system. Perfectly traceable money is the dream of most governments and governments have the stability, power, and computing capability to back up a computational currency. But it will be a while.
jayackroyd
@ericblair: The libertarian/gold bug Venn diagram http://www.louisianavoices.org/images/edu_venn_diagram_blank.gif. Some gold bugs are libertarians, while some libertarians are gold bugs but there are members of each set who do not belong to the other. There plenty of gold bugs who believe in authoritarian governments.
You could argue bitcoiners are all anti-government, all, if you like, Crytponomiconists. They’d prefer that exchange systems operate independently of government. Or at least that people should have such an alternative, and technology permits the creation of such an alternative.
It’s useful to have these guys around, because just like the proponents of the 2 trillion dollar coin (I’m one of those, by the way) they focus attention on fiat currency and how fiat currency works. That’s something most people don’t understand, because they’ve got a gold standard deeply embedded in their understanding of money. They think it’s real in a sense that it isn’t.
Stephanie Kelton and I have talked about this. http://www.blogtalkradio.com/virtuallyspeaking/2013/02/08/economist-stephanie-kelton-virtually-speaking-w-jay-ackroyd
Paul in KY
@Fair Economist: Interesting comments. Governments would certainly like completely traceable currencies (for me, not for them).
jayackroyd
@Mnemosyne: I’m not saying paypal is a currency. I’m saying that bitcoin isn’t working until it’s a payment alternative as widely used as paypal. So yes, you’re right. It’s a flawed analogy.
jayackroyd
@Fair Economist: Hah! Interesting idea. Eliminate physical tokens entirely. That would enhance the demand for a bitcoin-like untraceable currency. Cash serves for most anonymous transactions now.
Caravelle
@jon: It doesn’t sound like a stable system. The most obvious first step would be that everyone would spend their dollars to buy bitcoins that they would then sell in euros and make a fortune. And the most obvious long-term effect is that it would be the same as coming back on the gold standard, with deflation around the horizon because there is a maximum number of bitcoins that can ever exist.
This suggests that the medium-term effect would be for the value of the dollar to skyrocket, thus destroying US exports. I don’t think many people would be happy with that.
Roger Moore
@jayackroyd:
Crypto currency as a general category isn’t necessarily libertarian or gold buggy, but Bitcoin specifically is both of those things. It’s designed to bypass government control and to have a strictly limited supply that can’t be inflated away. Those features appeal very strongly to libertarian goldbugs, whether by design or coincidence.
Roger Moore
@C.V. Danes:
That’s nothing. My friend in Nigeria has $43 million in actual currency that he needs to get out of the country, and your savvy with Bitcoins is just what he needs to make his plan work…
C.V. Danes
@Roger Moore: Are there any exchanges still open that haven’t been hacked? He might be better off using the old suitcase method :-)
C.V. Danes
@ericblair:
Of course, since nobody is actually allowed in the cave, who knows if anything is even there to be transferred ;-)
Origuy
Since nobody has said it yet: Newsweek is still around?
gorram
@ericblair: I’m seeing shades of the people-who-hate-the-poor-because-they’re-often-Black vs people-who-hate-Black-people-because-they’re-often-poor distinction people have been talking about here? Obviously it doesn’t perfectly map to the crypto-fascist libertarian vs techno-futurist libertarian distinction, but it seems relevant.
The Raven on the Hill
Circumstantial evidence is usually more reliable than eyewitness evidence. DNA tests are circumstantial evidence.
See Tim May’s Crypto Anarchist Manifesto, from 1992. It seems likely that Nakamoto’s software design was an effort to provide a technical base for crypto-anarchism, not something that came out of left field.
The Raven on the Hill
Me, I think the smart cipherpunks took over the global banking system, and the wannabes are Bitcoin advocates.
I wrote two posts on this, a few months back: Bitcoin—Troll’s Gold and Bitcoin and the unregulated economy or wtf, libertarians, again?
Part of the political agenda of Bitcoin and other crypto-currencies is an effort to make Keynesian economic management impossible, and I wish that concerned us more; the neo-liberal theories which Tim May used as a basis for his advocacy have been exploded.
Villago Delenda Est
@jayackroyd:
If only they’d read The Wealth of Nations, in which Adam Smith demonstrates that all currency is fiat currency. Even gold.
But then again, the Spanish Hapsburgs knew that. All the gold of the Aztecs and the Incas could not stop them from going bankrupt.