(ORDO NEWS) — I am currently reconsidering my views on cryptocurrencies and what they bode well for the future. Like many people, I missed an easy opportunity to invest in cryptocurrencies many years ago – even small amounts invested then in Bitcoin or Ethereum would have made fantastic profits now. But I never sought financial gain for her own sake. This is due to innate idealism and communitarianism, which I do not regret even now.
In fact, I worry that cryptocurrencies are accelerating our trajectory towards a world in which economic relations dominate all other issues. Many of my acquaintances who start investing in cryptocurrencies spend a huge amount of their time and energy on it. This activity is highly abstract and intrusive. It hardly differs from currency speculation or day trading. Cryptocurrency remains hype volatile, so getting good returns from it requires tremendous vigilance and quick response.
I feel the need to achieve a meta-level understanding of what is happening with cryptocurrencies. I intend to develop it in this newsletter, in a series of essays. I currently find this to be a fascinating, controversial, hopeful and dangerous phenomenon. I understand why Hillary Clinton is concerned, as she recently stated in an interview with Bloomberg News, that cryptocurrencies threaten to undermine the legitimacy of national governments. I also keep asking myself where all this new crypto wealth comes from, as cryptocurrency alone does not create anything tangible, like food or energy.
In general, the rich continue to get richer (especially the super-rich), while the poor continue to get poorer. Cryptocurrencies do not seem to counter, but rather exacerbate this trend, while creating a small number of new wealth holders. In this sense, the cryptocurrency revolution appears to be primarily another mechanism by which a predominantly male, predominantly white, predominantly engineering-oriented elite is increasing its economic control over the rest of the world through financial witchcraft. I find it interesting that psychedelics, shamanism, and altered states of consciousness are associated with cryptocurrencies – as if psychedelic mysticism provides the necessary ideological support for this new magical form of money that seems to come out of nowhere. The same way,
When someone buys bitcoin, what is he actually buying? They buy the rights to a specific expression of mathematical code. But bitcoin is open source and anyone with technical knowledge can fork bitcoin and run a fresh copy of the source code (as happened with Bitcoin Cash and other forks). So, at some level, the only reason bitcoin retains its value is because of social trust. A group of people agreed that this particular iteration of the Bitcoin blockchain has value. They convinced others to join their faith. Doesn’t that make Bitcoin inherently a Ponzi scheme, since if faith evaporates and new people stop participating, value will dissolve? In other words, there is still the possibility that
Bitcoin believers would respond to this by noting that fiat currency is no different: ultimately, it is also a social convention or social relationship. While this is the case, the national currency is “underpinned” by all of this country’s institutions – its infrastructure, roads, education system, military, as well as its legal code and historical gravity. This is much more important than attributing value to the blockchain, whose source code is, in theory, infinitely reproducible. However, the financial elite manipulate money creation to their advantage. This is something that cannot be done with bitcoin, which is designed in such a way that only 21 million bitcoins can be mined in the world (I believe there are 18 million now).
The Gini coefficient measures the distribution of wealth among the population in different counties. The Gini coefficient of Bitcoin and other major cryptocurrencies is much worse than in countries with high levels of inequality such as North Korea. The early adapters “hold far more assets than will ever be available later. These” early adapters “are extremely interested in convincing everyone else that their particular speculative asset does have value. This is especially important because bitcoin is not a useful medium of exchange, nothing can be done with it, so it is advertised as “digital gold”.
When I wrote So Soon, So Now, I looked with hope at the potential of blockchain technology – in particular Ethereum, a decentralized “world computer” that still suffers from scalability problems – that will help us create system design solutions for our environmental and geopolitical crisis. Different blockchains can function simultaneously as currencies (or stores of value) and also as an internal governance system.
These control systems can be defined in any way, according to the contracts programmed in the code.
In theory, you could create a blockchain-based currency that accumulates value through ecologically and socially regenerative activities, or a currency that cannot be owned by any individual but circulates constantly between communities. You can do just about anything you can imagine using the underlying transparent ledger technology. But even if you create a blockchain-based sustainable, regenerative public currency that could save the world, you still have to figure out how to get other people to buy it. So far, the only sufficiently strong motive that can force people to adopt a new technology or cryptocurrency on a large scale is self-interest.
The integration of currency – exchange of values and storage of values - and management in various blockchains makes it clear what we see in our world in practice: Political and economic systems are never independent from each other. Together they constitute one political and economic system. For example, the US government and military are deeply intertwined with the fossil fuel industry, which has built the world’s largest infrastructure in the past two centuries. The US dollar retains its status as the world’s reserve currency because it is used as the “gasoline dollar” traded for fuel in the Middle East. That is why we cannot stop drilling, hydraulic fracturing and pipeline laying.
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