I said I wasn’t going to post any more about cryptocurrencies, but I’m also trying to repost any Twitter threads that someone has asked to unroll (I’ve got “@threadreaderapp” blocked), so here’s my thread commenting on an essay describing Bitcoin as a fungus intertwined with humanity, The Mycelium of Money.
There’s a link to this essay, PoW is Efficient, which I’ve already read. The problem with these claims is their estimates are too high for things that aren’t comparable (to make PoW look artificially good), and also exponential growth ends at some point.
If you’re not taking into account where the energy is going to come from, and just assume Bitcoin will soak it up and lead to us finding more and better energy, you believe in an infantile fantasy. Energy doesn’t work that way. “Work” isn’t a physical property: it’s human-based. What money measures is what’s valued by society as a whole, and what’s valued by individual humans. Macro- and microeconomics.
The belief that you can put electricity into the magic money-making machine and get “hard” money from the trinkets that it spits out is something I can’t mock hard enough. It’s “Jack and the Beanstalk”, except that the seeds grow into a beanstalk that goes up into the clouds and stops.
It’s a bit futile for me to try to explain some concepts to people who appear to have never held down jobs in the corporate world, where your pay is based, not on your exact performance in terms of value creation, and certainly not on how much energy you expend in terms of metabolism while doing your job (at least if you hold down an office job).
My pay is based on how well I do the work, and also how well my boss thinks of me, and his boss, and her boss, all the way up the chain. Probably 30–40% of my job is meetings and managing expectations. None of these are laws of physics. They’re imperfect business systems. They’re the best we’ve come up with so far.
There’s a book, Corporate Confidential: 50 Secrets Your Company Doesn’t Want You to Know—and What to Do About Them, that I would highly recommend to anyone who hasn’t been taught “the game” of corporate life, and also to anyone who thinks they have.
There’s an infographic in the mushroom essay which is wrong:
- No confiscations (someone can physically confiscate your wallet)
- No censorship (more or less true)
- No inflation (wrong: inflation is based on demand and supply)
- Anyone can verify 1–3
And another funny claim, “Religious Fanatic Behavior is an Indicator of Future Success?” I was an Amiga computer fan, and being a religious fanatic about it didn’t save Commodore, so I’m going to go ahead and say that this claim is false, at least if you’re not talking about actual religions.
Another false claim: “Countries around the world are seeking to eliminate physical cash.” I have seen zero evidence of this. The Fed knows there’s $1.9 trillion in currency and they intend to keep it that way. I’ll quote from The Fed Explained (PDF), an excellent resource:
Currency stood at $1.9 trillion. U.S. currency is an important medium of exchange and store of value, both domestically and abroad. Despite the increasing use of electronic means of payment, currency remains widely used in retail transactions.The Fed Explained; 11th edition, August 2021
See also: India’s banknote demonetization in 2016:
On 8 November 2016, the Government of India announced the demonetisation of all ₹500 and ₹1,000 banknotes of the Mahatma Gandhi Series. It also announced the issuance of new ₹500 and ₹2,000 banknotes in exchange for the demonetised banknotes.Wikipedia
We know now that this move damaged their economy: India’s Demonetization Reduced Employment and Economic Activity. And this was just a temporary removal of two large-denomination banknotes to replace them with newer ones.
In part because of this failed experiment, I believe that the USA and other large countries would never dare get rid of their cash. It’s an old New World Order conspiracy theory that never went away.
These guys love to talk about how fiat money is crooked because those closest to the banks get access to it first (before inflation hits), called the Cantillon effect, which didn’t make sense to me since inflation is low. I do know that “trickle down” doesn’t work.
I recently learned a new term, biflation. From Investopedia:
- Biflation is the apparent simultaneous occurrence of inflation and deflation in an economy.
- It is a type of Cantillon effect that tends to occur when a monetary stimulus is applied to revive an economy.
- Biflation involves the simultaneous decline in prices for debt-based assets such as home mortgages and related securities along with an increasing trend in commodity-based assets.
I believe biflation describes what we’re seeing now: stagnant wages, stock market and crypto bubbles, rising costs on some goods but not others. I didn’t have anything more to say about the Bitcoin essay in the Twitter thread, so I’ll end here.
Thanks for reading! My next post will probably be about how I set up my blog on a Raspberry Pi 400, with SSL and IPv6.