The problems with the banking industry go beyond parallels with feudalism, I think. The king was beholden to powerful landowners. The whole thing, really, was based on land ownership, in fact. Tangible assets. Gold is a bit of a red herring. But if a bank wants to create an asset — power — now, they do so just by entering numbers into a ledger. One positive number and one equal and opposite negative number. That issue is a problem independent of the supposed benefits of bitcoin, though. In a way, bitcoin is doing the same thing, in fact. The hypothecation of value from nothing of worth.
Bitcoin discussion and news
- Thread starter camouflage
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Also, the point of a pyramid is that your stake grows by selling on inflated amounts of the nothing to the next layer of people. That’s what is happening here too. “Buy now or buy later for twice the price”.
littlebabyjesus
one of Maxwell's demons
Yes, indeed. I edited to add a similar point. And it's not even zero-sum, like most corrupt pyramid schemes. The energy consumption makes it much worse than that.
camouflage
gaslit at scale.
Private banks can create obligations called loans because they are licensed to operate in a state and have a deposit at the central bank. The state is the one with Power (capitalized as in- a thing), the Power that protects property rights or even to define property rights, the power to levy taxes, the power to issue licences, the power to control land and resources and say what can and cannot be bought to market, to resolve disputes, even to clobber troublemakers as per the terms set out by law, the power to create laws etc.
states didn't bother themselves asking what gave gold value back when they used gold as money, and they didn't need to ask what gave gold value when they chose to stop using it as the base layer (plus Ceasars profil) as currency. States created currency in the first place, super-novas created gold, if people like and value the shiny yellow metal then ok that's something the state may or may not choose to involve itself in on the level of policy and using gold (depending on what other states think I guess- maybe after a big war they'll get together and have some big conference where they all decide that from now on they'll all recognize the use of one particular states currency to trade in commodities with).
Bitcoin's out there being valued by people, whether other people like it or not and whether they see the point or are in any way interested or not. For now... that really is all there is to bitcoin re value.
littlebabyjesus
one of Maxwell's demons
Point is, though, that gold's value was only ever symbolic. Taking that away from use as a basis for currency merely removed a symbol, not anything of actual value. In a thought experiment, if Fort Knox had disappeared into a hole when the dollar was using the gold standard, what would have happened? If the government could hide the fact they'd lost their gold, nothing would have happened at all. As soon as it is found out that the gold's gone, there would no doubt be all kinds of panicked responses. None of this is rational behaviour, and imo it is mistaking the symbol for that which it symbolises. I actually think fiat money, underwritten as you say by state power, is a more rational way to do things. Bitcoin is underwritten by nothing. It doesn't even have an equivalent symbolic store to Fort Knox. Its symbolic power is far more akin to that of a tulip bulb, and as likely to disappear in an instant.
The first and second sentences form a non-sequitur. Yes, banks are licensed to operate in a state. But no, beyond this there is no inherent requirement that the bank have a deposit in order to make the system work. Our central bank makes that requirement, because it sees this as good governance. You could have a system with no deposit, though.
In particular, it is worth noting that in the absence of a state, there would be nothing preventing private banks operating exactly as they currently do, only with knobs on. A totally deregulated banking sector (deregulated because there is no regulator) would make those loans in exactly the same way as they currently do. It's not the state that controls the money supply, it's the banking system. An awful lot of people on the libertarian side in particular don't seem to understand this.
If anything, the state acts as a brake on this ability of banks to create money. No state, the whole thing accelerates. Look at what was happening with payday loans, for example, before it got heavily regulated.
And this is basically what is happening with bitcoin. A deregulated bank has started printing money in the absence of state activity.
But what happens next? That is addressed by considering your next argument...
You're too hung up on the valuation of gold. The value of money has nothing to do with the appeal of shiny metal, which is why states could abandon gold and see the wealth of nations increase rather than decrease. Again, this is a common libertarian mistake (not that I am making an accusation, just stating a fact).
The value of money is that it stands in for the collective power of and trust in the state. It has that because the state collects taxes, which it uses to pay its citizens for the activities they do in the name of the state. It also has that because private enterprise that operates within and using the infrastructure of the state operate by using the local money as its unit of account. Anything could be used as that unit of account -- gold, conch shells or just numbers on a computer -- and the value would be the same because it derives from the activities of the society run by the state.
And that's why (a) it's not money; and (b) it's a pyramid scheme that will eventually burst. It's not pegged to anything and it doesn't derive its value from tangible economic activity. Nothing is holding it up other than sentiment.
camouflage
gaslit at scale.
littlebabyjesus
one of Maxwell's demons
This is absolutely true, but the institutional backing of the central bank is crucial to the confidence of the system as a whole. There is still a place for symbolism in money, to give people the confidence to use it.
Yes, and that is what I was addressing in the second half of my reply to camouflage.
littlebabyjesus
one of Maxwell's demons
By 'actual real-world value', I mean use value. bc's use value is to facilitate about 15,000 transactions per hour, ie it's absolutely tiny.
I'm happy to define my terms because I mean something very specific by them.
butchersapron
Bring back hanging
Openly marginalist now. Why not - you've been through every other right wing libertarian variant.
littlebabyjesus
one of Maxwell's demons
Sorry, yes. Just read it all now.
camouflage
gaslit at scale.
The deposit requirement is a matter of law isn't it, which means it's state power that sez "you'll need at least x percent of what you can loan out in your account", and yes there is no requirement for a deposit at all but there will always be a requirement for a banking licence (Terms and Conditions apply).
and yes, re shinny metal- that's my point. Tally Sticks are really fascinating for me, they have to be the earliest forms of an authenticated ledger system... just bits of wood- only the information matters, the medium is just a medium. Perhaps golds particular properties made it useful in the absence of a state or between states or when states just didn't have the technology to do much of the stuff they do now as far as information and accounting or international relations etc is concerned. But really money is not a form of matter, it's a social convention.
In the absence of a state to enforce contracts or levy taxes etc who needs to bother with any kind of money. Guns backed by bullets, cans of beans backed by the need to eat at that point, the "perfect competition" of all against all, not because people can't have social relations with each other without a state, but because some people will just choose bandit strategies and just take what they want- fuck your gold, your daughter's coming with me.
newbie
undisambiguated
this.
Trouble is 'climate change' is abstract, despite world scientific consensus being that it's the most important threat facing humanity.
Sure you can. Thing is, using imprecise but consistent maths to estimate energy consumption yields useful analogies, but it's the rate of change that's so important.
Sure, it's a tiny fraction of the US consumption, number 2 in the world (out of 219). But just 5 weeks ago the same energy use as the whole of Nigeria, number 67, now the same as Denmark, number 59. Or, to put it another way, it's gone up from 24 to 32 billion kWh per year in 5 weeks.
As I write this there are 16 transactions per second. Just 16 buyers and 16 sellers use the same electricity per second as all the people in Denmark.
What definition of insanity do you use?
camouflage
gaslit at scale.
Your attitude to "value" that you use to define what a bubble is strikes me as sloppy, and doesn't account for human beings and the wacky far out billion-dollar-industry things we're into. Your consternation at what other people are prepared to value does not make much of an argument. And if people want to buy a thing merely because they believe it will grow in "value" over time... so fucking what? People can value all sorts of stuff, they can value petroleum for its many practical uses, they can value wood, rice, marble, steel, a doctorate- and they can value a Picasso, or a napkin with a signature on it written by some guy from the 50's whose job was to pretend to be people in stories. But somehow for you, people valuing a belief in an economicly enhanced future (in an increase of wealth) this is verboten and not legitimate, "Stop buying something because you value it for your belief that it will be valuable later you fiends, you value of the belief of increasing value is not legitimate and is against nature". so far that's all your telling me. Meanwhile bitcoins value will continue to increase until it reaches physical limitations, and by the way those need not be defined by energy use- energy use is a matter of technology (pretty much the central characteristic of technological development actually) but that limit isn't going to be bitcoin running out of decimal places against which to measure the price of a dollar or whatever.
butchersapron
Bring back hanging
Yep, sci-fi for sure.
camouflage
gaslit at scale.
sigh. what are you talking about apron?
You're begging the question. It's a requirement of our law. But so what? That doesn't make it a law of nature. Here is a massive history of regulations that used to exist in the banking sector that have been taken away. In most of those cases, people would originally have said that regulating those activities was an inherent part of that activity.
No. Money is not just a social convention, at least in the way you mean it. It's not built out of an arbitrary assignation of value (like bitcoin is). It's the reification of the national balance sheet, and that is not just some agreed illusion.
Again, you have ignored the difference between money and currency. In the absence of a state, it is hard to imagine money alright. This is nothing to do with enforcing contracts, though, and everything to do with the lack of a unified set of social activity. There would still be some form of currency, though. Exchange existed long before nation states, as did commonly accepted standardisation of value for things like gold.
camouflage
gaslit at scale.
No- I am saying it is a law set down by the state.
littlebabyjesus
one of Maxwell's demons
Use value, exchange value, and the way the one can in certain circumstances become detached from the other - in the case of speculative bubbles, basically. Sorry, but I'm not being sloppy and this post makes me think that you haven't fully understood what I meant when I called this a pyramid scheme.
camouflage
gaslit at scale.
I don't consider social conventions as illusions, they are real things in human life, we are nothing without each other (well, a crazy old hermit maybe) and therefore the way we relate and communicate with each other is real and important. There's a myth that sez before money we bartered... I'm convinced by the argument in Graebers book (Debt: The First 5000 Years) that before we had money we had other social conventions, in some places we still do. Luckily the relationship between parent and child for example hasn't been monitized yet... or we can all expect a bill from our parents for services rendered as an obvious example. Wasn't feudalism also an example (though crappy) of social arrangements outside of market systems? Money isn't everything man. again, you not valuing bitcoin or seeing the point of it or thinking it's not a good idea amounts to zero-fucks given by those that do, and that want to buy or sell it. You can't say bitcoin has no value but at the same time enjoy fretting about the scarily ballooning energy demand of this now multi-billion industry. Something isn't valuable just because you like it and consider it ecologically sustainable, something can have value and be a bad or destructive thing at the same time you know, look at the nuclear weapons industry (no war can ever be won with nukes) look at the coke industry (friday night thrills? Really? Billions spent on nose-bleeds and an increased though temporary bump in good times and a sense of self-worth?) Maybe "value" isn't necessarily a moral position.
littlebabyjesus
one of Maxwell's demons
You've totally missed the point. As you are part of a pyramid scheme, if you buy and sell bitcoin at a profit, that profit comes from those who lose everything at the end. It comes from nowhere else.
camouflage
gaslit at scale.
So does the value of a Picasso, some paint on a canvas? How's that worth millions? Subject doesn't even look like a lady, one eye bigger than the other.... don't see the point to be honest. Now Bob Ross... that is art I'd pay a tenner for. (joke)
You're bitcoin bubble has no resources to exhaust, it's limit is planet Earth and the global economy, so that theoretically there needn't be a "pop" just than a paradigm shift (like the collapse of society because the Libertards succeeded in using bitcoin to kill government (doubtful) or because bitcoin sucked up all the available energy and filled the world with the waste products. But there's nothing here to suggest Bitcoin will eventually implode in price (leaving only a multi-million Euro flower industry that's still a major sector of the Dutch economy today) because of a "change in sentiment".
If bitcoin was going to pop because of sentiment it would have died hundreds of times by now. Falls in bitcoin price merely distribute it further and help fuel further growth.
littlebabyjesus
one of Maxwell's demons
A graph for you. I think it's relevant because collective delusions all have certain things in common.
The index zoomed upwards in a crazy manner, just as bitcoin has done in the last few months, then around December, the increase slowed down considerably, but kept creeping up into the start of February, as appears to be happening now with bitcoin. Then boom. Within a month, it was bust. (There are no figures for between Feb 9 and May 1, but we can assume the price crashed back to its pre-boom level long before May 1, probably in February.)
And when the price collapse causes mining operations to cease? What happens then? How are the new blocks unlocked? The whole thing could end in a catastrophic system failure over a matter of minutes.
The index zoomed upwards in a crazy manner, just as bitcoin has done in the last few months, then around December, the increase slowed down considerably, but kept creeping up into the start of February, as appears to be happening now with bitcoin. Then boom. Within a month, it was bust. (There are no figures for between Feb 9 and May 1, but we can assume the price crashed back to its pre-boom level long before May 1, probably in February.)
And when the price collapse causes mining operations to cease? What happens then? How are the new blocks unlocked? The whole thing could end in a catastrophic system failure over a matter of minutes.
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camouflage
gaslit at scale.
A graph for you. I think it's relevant because collective delusions all have certain things in common.
The index zoomed upwards in a crazy manner, just as bitcoin has done in the last few months, then around December, the increase slowed down considerably, but kept creeping up into the start of February, as appears to be happening now with bitcoin. Then boom. Within a month, it was bust. (There are no figures for between Feb 9 and May 1, but we can assume the price crashed back to its pre-boom level long before May 1, probably in February.)
And when the price collapse causes mining operations to cease? What happens then? How are the new blocks unlocked? The whole thing could end in a catastrophic system failure over a matter of minutes.
heheh, you and your tulips. I think you need to read more about bitcoin so that you can criticize it more effectively. godago for now.
littlebabyjesus
one of Maxwell's demons
When you come back, perhaps you can explain your workings here. Sounds an awful lot like magical thinking to me.
camouflage
gaslit at scale.
Bitcoin is something of a fever, and it's contagious. One of the symptoms of Bitcoin Fever is that you actually want the bitcoins, you're still looking at bitcoin enthusiasts as if it's all just a scheme for them to acquire more dollars for example, such a participant certainly adds the capacity for the sort of bubble-behaviour you expect and there are plenty of people that way inclined. but you're not getting that the increasingly deep-pocked drivers at the heart of the bitcoin community, the holders, the zealots, the fixed-eyed crypto-maniacs and hardcore adherants... for them bitcoins themselves are the objective, and they're serious ernest bitleivers in this. consider the images below:
Yes, I know... and furthermore...
These Matrix-memes actually do reflect the mindset of what I think of as Hodl-Culture and it's creed the Bitcoin Religion, very much a "from my cold dead hands" attitude to bitcoin. And it's not even just libertarian crazies out in their bunkers that have somehow managed to make the leap from understanding lumps of shinny yellow metal being real to knowing that pure information in an immutable decentralized ledger as also "real". When the price falls- the bitleivers see it as a flash sale, it's Black Friday for them, and of course all along they're evangelizing about it bringing in others (both up and down by the way), paying for stuff with it- not just drugs and guns and those oppressed markets but countless small vendors selling hand made wooden unicorns on their websites or whatever (hey, it can be sold for dollars right).
If you're looking for the basic elements that form bubble-behaviour in the driving core of this community- rational economic actors, then you'll only predict like 80% of the market or something using Pareto's Principal (80/20) as a thumb-guide. New entrants flake and flee all the time having acquired the dollars or euros or pounds etc that they're really interested in but the driving core that kept the flame alive even through the two years of bitcoin prices sideways-down to oblivion, you're not properly accounting for them and that's a mistake if you want to understand how this crypto market will behave in my opinion. And I don't see a shortage in the supply of such people any time soon. Cheap prices just send them into a feeding frenzy and once they load up they exert even more outward pressure to involve new people in various ways (not to mention that their own commitment is now even more involved).
You think everyone flakes and flees after a drop because bitcoin is just a scammy pyramid scheme scam, but that's because you've not yet grasped that to a great deal of eager money bitcoin is itself the objective. It's dificult for a bubble to pop when serious entrants look at the "bubble" as their natural home (again- the first image). This market can remain 'irrational' (subjective) for longer than Earth can remain solvent. gulp.
Chilli.s
mingling jets and statuettes
Did this money show up? or does the crash start here.
LDC
On est tous des pangolins
It did finally, took ten days.
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