This is by Mencius Moldbug, a coder who made off with enough options money just prior to the dot-com crash to basically be retired in the Bay Area, reading and writing. He's been bringing the wordy essays for almost a decade now on a wide variety of topics, but I'll save you some time: He's crazy. He's the very definition of Umberto Eco's lunatic, who says things with a certain superficial plausibility, but you know something is wrong with it, but it takes so much work to dig through the mess and find it out that you'll find you feel it was a waste of time to do so. His prolixity is a direct attempt to enhance this quality of this prose.
He's got some weird definition of an ideal state based on corporate governance, he thinks black people are a social class defined by welfare queens and petty criminals, he thinks he eviscerated Dawkins by somehow agreeing with him. The length of his work is actually a subtle trap: If you read enough to understand what he's going on about, you're subtly invested in not rejecting it because then you'll have wasted all that time understanding him.
That is a very superficial critique, lacking in actual arguments and references. While I generally don't agree with the guy, he makes sense. His articles are coherent and insightful, if sometimes unpleasant and generally long-winded.
If anyone's interested, here's a summary of his writing[1] with links to most important articles. His posts are also a goldmine of one-liners[2].
BTW He used to have an account here[3] but was banned, unfortunately.
Interestingly, this is another way in which MM's verbosity is a defense mechanism: It's virtually impossible to make a detailed critique without engaging him at equal length.
I'll mention one specific critique, which is what originally twigged me that something was off: MM constantly introduces special definitions that are close, but not quite, what's commonly meant, and then proceeds to use those definitions for 5 or 10,000 words. This is a form of rhetorical sleight of hand that's suspicious in an of itself, and MM demonstrates this in the linked essay:
"But here at UR, we are operating under our own special theory of money, which I have modestly dubbed MoMT (Moldbug Monetary Theory). If you know and believe MoMT, the leap is obvious. In the conventional wisdom, it's not obvious at all."
He does this sort of thing constantly. Besides investing a lot of time in reading even one of his essays, you must spend a lot of mental energy tracking all his off-by-one definitions of slightly uncommon terms. Again, you have to buy into Moldbugism to even start judging it, which is part of the trap.
Edit 1: I've upvoted you because I think yours is a fair response to my attack, while Tav's cry of "ad hominem" below is mistaken.
Edit 2: Moldbug's comment history here is interesting, in part because it demonstrates that he's very capable of making a concise point. Why was he banned? His karma looked okay.
At least he defines his terms. Words like "government" can mean a multitude of things and these meaning change over time.
In general I have found that arguments are often not really about the points of an essay but about the definitions used, ie one person uses definition 1 and the other uses definition 2 and they just argue past each other.
For example if I say "Bitcoin is money", I don't think that statement is meaningful without defining what I mean by "money" and perhaps "bitcoin".
I don't think understanding the linked essay really depends on knowing what he means by "MoMT", he defines it just fine for us.
"Basically, MoMT tells us that money has anomalous value only because economic agents rationally speculate in it, whereas conventional thought (whether Austrian or orthodox) holds that money's price is explained primarily by its use in trade."
To me that's an interesting idea. Why not debate that? Instead all of the comments here are about a bunch of superficial bullshit (yours excluded).
I agree that much arguing is really about definitions, and that a clear definition at the start is worthwhile. However, definitions can also be used to covertly get the reader to agree to something. Back when I actually read up on his "neo-cameralism", I remember stopping and thinking "I didn't agree with that", and realizing that his argument depended on a definition that was pages and pages ago, and that I now had to take a thousand steps back and re-read, keeping in mind my disagreement with a small facet of something he specially defined. That's pretty much when I gave up.
Edit 1: "That's an interesting idea. Why not debate it?" Because MM doesn't offer bon mots like this for debate, he piles a hundreds bricks made out of these special definitions and then offers a controversial thesis on top of it. If you stopped to debate all these interesting facets, you'd never get to the meat of the essay--so you just accept them and move on. Again, a rhetorical technique to get you to covertly agree to premises that let him define the battlefield.
That's actually where I stopped reading and switched over to these comments. It seems obvious to me that according to "conventional thought" without the exchanges bitcoins would lose all value. Without the exchanges, you can only use bitcoins for a few things, mostly drugs and online services (hosting, usenet, vpn, etc). The thing is, these services will stop accepting bitcoins, because the operators will no longer be able to convert them into USD. Until you can buy food and gas and pay your bills with bitcoins, their value will rely on the existence of some kind of btc/"real currency" exchange.
I don't know anything about MM, but one runs across such people all too often on the mailing lists of public projects.
They write at great length, and seem... superficially reasonable... but there's always something vaguely wrong about their conclusions. However because of the huge length of everything they write, and their willingness to write much more in response (nothing they write is short), it's both hard to follow their arguments, and completely exhausting to argue with them; many reasonable people simply give up pretty quickly.
If you can just ignore them, that's fine, but this can end up being a real problem in loose communities that try to do things by consensus, because these people come in and essentially disrupt the mechanism through sheer volume...
[There's a wide spectrum of actual insight/ability, of course; some people are more or less reasonable, others are just completely nuts. Unfortunately the style of interaction that binds them both hides such differences, and is itself corrosive to normal discourse.]
Sorry, his articles are not coherent. They are rambling and full of passages calibrated to cause unease and uncertainty. Encountering one, you then read on in an effort to have the latest outrageous statement substantiated, but usually in vain.
The riddle or puzzle aspect of his writing kind of engages my intellect, but it's a time sink. Because of his self-regard and unconventional intellectual reference frame, you think there is something there, but there is not. (Unless you agree with him politically, which seems impossible, because he takes pride in being to the right of everyone.)
For example, "Naphta was [...] revolutionary in a reactionary sense: [...] fighting against the ideals of left-wing socialism, liberalism and enlightenment, but also detesting the lost Empire’s dull conservatism of the petty bourgeoisie and the aristocracy. [...] somewhat elusive, flirting with every radicalism against established views."
The subhed to his blog, of course, is "Reactionary Enlightenment."
In this scheme, the innocent HN reader plays Hans Castorp, the young German engineer, and the day you spend puzzling over the abstruse and impenetrable arguments within the sanitarium of the blog will pass by in what seems like an instant.
I have met MM. We had an extensive discussion, first in person and then via email, about a programming language he was (maybe still is) designing called Watt. He seemed to me to be reinventing many wheels, and doing it badly. But what struck me most was that he actually seemed to take pride in his ignorance. Here's a relevant excerpt from our correspondence:
"Therefore, the M-FCCN [metacircular functional content-centric
network - Ed] problem is if nothing else an interesting excuse
to revisit the foundations of programming languages with an extreme
emphasis on precision and simplicity. I felt it would be a big
mistake to start this effort by learning either a Lisp or one of the
"PL theory" languages, like Haskell, as it would sacrifice the
enormous advantage of not knowing either. I found it much more
interesting to recreate functional programming from scratch in more or
less a clean room."
I think he approaches economics and politics with the same philosophy. It kinda drives me nuts that he attracts so many followers.
Yeah. Recreating from first principles can be a fantastic exercise, but it's not the sort of thing that's supposed to pick up a lot of followers, because it's a thing that's usually more personally edifying for the experience than likely to result in something new and interesting.
This is what happens when you do not converse with enough people who are peers. He'd do much better if he had to actually work instead of pontificate nonsense that has no basis in what anyone else is thinking or doing.
1) The DOJ cannot shut down a global internet currency.
2) If they DO try to, it will push its value UP, NOT down. The black market effect at work.
3) He seems to not realize that cash itself can be used as an argument against "everyone who uses bitcoin is a knowing co-conspirator in money laundering". Every dollar bill has a trace of cocaine on it, does that mean we are all guilty of money laundering?
There's nothing 'ad hominem' about my attack. An ad hominem fallacy is an appeal to an irrelevant negative quality of the speaker; it's fallacious just because the negative is unrelated.
My attack is directly relevant: MM's larger body of work is a huge, dense construct of lunacy with low probability for any reader of being worthwhile; any portion of it is therefore suspect. If you want to buy a car, and I tell you that the company that makes that car has an absurdly high defect rate across all lines, I've given you some helpful information, haven't I?
Not the GP commenter, but I invite you to read some of the other blog posts. In my brief skim through previous posts, I didn't see anything that immediately struck me as beyond the pale, but the whole "saying a lot to trick you into believing there's a profound argument" idea stood out. An overabundance of historical tie-ins, unnecessarily flowery language... although it's possible that the author is a great writer or I'm a poor reader, I strongly suspect that the simpler explanation -- the absence of a credible argument -- is correct.
"To me, and I hope to other UR readers, the logical leap from step 1 (BTC exchangers are indicted) to step 2 (BTC price goes to 0) is obvious. But here at UR, we are operating under our own special theory of money, which I have modestly dubbed MoMT (Moldbug Monetary Theory). If you know and believe MoMT, the leap is obvious. In the conventional wisdom, it's not obvious at all."
"Imagine that the BTC/USD market is perfectly liquid with no exchange overhead. Imagine also that there are two types of BTC users: Jews, who speculate (holding BTC long-term with the expectation that it will appreciate against USD); and Aryans, who only trade (and sweep all BTC balances into USD at the end of every day). These are simplifications, of course - but edifying ones."
"If I have one lesson to impart (...) it is this: [The US Government] is what it is. It is not what you want it to be. It is not what you hope it will become. It is certainly not what it claims to be. No - it is what it is. Respect that reality, and you will neither run afoul of Leviathan, nor live "free" as his spiritual servant. In short: think for yourself and obey the strong."
> the defendants knew that BTC were used for organized criminal activity
[Irony]And since everybody knows that criminals never use dollars, guns, cars, phones and computers then it is ok to use them.[/Irony]
> The BTC/USD price falls to 0 and remains there
Its price already fell down close to it on Dec/2011. And it rebound back because people need it.
This article is a truckload of bullshit. Yes, most governments in the planet will try to control BitCoin. And most will fail simply because BitCoin is useful, decentralized and is already working.
How exactly are they going to do that? I want to know how are they going to obtain a list of names from websites that do not operate from US or EU, or from those who do not require you to hold a balance account with them (which is what I would recommend to anyone wanting to buy bitcoins anyway). You fail to explain that.
Plus, those who think Bitcoin is just used to buy drugs on Silkroad has probably only a very passive interest in the currency anyway. It is used for much more. Many people, like myself for instance, use it for cheap international transfers. Just like Bittorrent which is used for more than piracy, but despite a massive campaign lasting what 10 years now? which is funded by basically most of the richest entities on the planet, has failed to even decline in use.
The Man doesn't need any list of names (whatever that is). He seizes the exchanges' domain names and their "fiat" bank accounts and the damage is done. Once the exchange rate hits zero there's really no need to bring anyone to trial. (I have no idea whether any government will go after Bitcoin, but they certainly could if they want to.)
I just wanted to post a similar comment. Yes - the US might outlaw Bitcoin in its own jurisdiction. But there's a considerable amount of trade going on in other jurisdictions (see http://bitcoincharts.com/charts/volumepie/).
If Bitcoin is outlawed in the US there will be a price drop, but the remainder of the world will continue trading the same way as before. And even in the US the market won't be fully killed. Already nowadays people violate lots of laws to be able to gamble in offshore casinos. In the future the same people possibly will find an (illegal) way to sell and buy Bitcoins, and use Bitcoin casinos instead (http://www.forbes.com/sites/jonmatonis/2013/01/22/bitcoin-ca...).
I don't want to judge if Bitcoin and everything related is a good thing or not. But I think the chances of killing it are about the same as the chances of killing P2P software.
He's not saying what we should do. He's saying what he thinks will happen. And to me it doesn't sound crazy at all, it sounds like the kinds of things that have been happening in the last years.
There are dozens of exchanges operating fully within the law of their jurisdictions all over the world.
A U.S. exchange take down would only be good for the smaller foreign exchanges and their extended network of established Bitcoin businesses and new Bitcoin start-ups.
Decentralized peer-to-peer networks are like hydra. Cut off one head and two more grow in its place.
As far as government agencies can intervene, it's only a matter of time before global Bitcoin adoption reaches escape velocity--if it hasn't already.
This article assumes that Bitcoins will primarily be a passive asset, but converted back into USD (or other regular currency) for usage. If Bitcoin becomes popular, that won't be the case - Bitcoins will be bartered directly for products and services. So I think the article rather describes step 2 and 3, with step 1 being "Bitcoin fails to become popular".
You can't pay income taxes with bitcoins. If you make income in bitcoins, if you are an American at least, you will need to pay taxes on that income. In this way, bitcoins cannot replace the dollar for American citizens. The most it can ever do is be a stable exchange currency.
This is probably not a big deal for silk road, but what exactly is the rules for paying income tax made with a foreign currency, outside of the country? Do you have to pay before you bring the money back to the US, or only after? At what rate of exchange?
The US has "world tax" which means they can tax their citizens all over the world (no matter what currency). It's not even limited to citizens, it actually extends to anyone who's living in the US for the majority of the year.
That is exactly the kind of thinking that will potentially get us into this trouble in the first place. If you have an income you pay taxes on it, end of story. If you think some income is exempt just because it's a little harder to trace and don't declare it, you are committing tax evasion.
I'm not at all advocating tax evasion, rather pointing to the fact that bitcoin is currently terra incognita which the government does not know how to handle.
As far a the country I pay taxes in is concerned, if I told them I'd like to declare an income of 100BTC, they'd have no fucking clue what weird funny money I'm talking about.
Governmental recognition and adoption of BTC alongside existing currency is the best case scenario for everyone, governments and BTC community alike.
In America, at least, you should denominate your earnings in USD, even if they are held in a foreign currency.
"If you receive all or part of your income or pay some or all of your expenses in foreign currency, you must translate the foreign currency into U.S. dollars."
If you want to model your BitCoin transaction as a barter transaction, the IRS probably won't mind too much. (I'm not promising the degree to which they mind will be zero, but it'll certainly be substantially less than if you give them no money.) Either way, they're going to want and get taxes based on a fair market value. And if you don't pay them, either way, you're going to be in trouble if they find you.
They're a lot more difficult to confuse on the basic matter of "does the IRS get some money out of this transaction" than some people seem to think.
> "you must immediately translate into dollars all items of income, expense, etc. (including taxes), that you receive, pay, or accrue in a foreign currency and that will affect computation of your income tax. Use the exchange rate prevailing when you receive, pay, or accrue the item."
This is fairly straightforward -- if you get paid in EUR, you have to use the exchange rate from when you get paid and declare your income in equivalent USD. Given that bitcoin calls itself a currency, I would expect the IRS to treat it the same way.
Erh, everything (ok, most things) has a dollar value, especially bitcoins whose USD value is constantly tracked by numerous exchanges. It's slightly harder for the IRS but not as hard as finding out about your Swiss bank account. As long as you don't report income you're simply conducting tax evasion.
For people to actually barter and be paid in Bitcoin, the exchange needs to settle down a lot more than it is now. Bitcoin isn't worth the same one hour to the next, let alone a week from now.
That's the issue really. SatoshiDICE seems to make up the vast majority of transactions on the bitcoin network, thousands every hour. There's probably a lot of eyes on the bitcoin network because of that one service.
> The connotations of "speculators" are so negative that I always want to say, "speculators and Jews."
> If your bond portfolio returned 6% last year, but gold went up 9%, you have speculated incorrectly; if you could go back in time and speculate again, you would speculate instead in gold. (It's hard out there for a Jew.)
Because casual ethnic slurs always add weight to an argument.
tl;dr someone who is clearly not a lawyer makes bold and unsubstantiated claims about bitcoin and the DOJ, loosely tying the issue into other pop-law flavor-of-the-month topics such as broad computer hacking laws.
I thought this was going to be a cryptography article. I believe the concern has been raised before and goes something like this:
1. The Bitcoin cryptosystem is shown to be weak in some way, and might be breakable. There is no migration strategy to a new, stronger system, so people are stuck using it.
2. The weakness turns into a full exploit, and anyone with a desktop computer can forge Bitcoin transactions all they like. Bitcoins lose their trust and no one will exchange them for other currencies, goods, or services.
The best part of Bitcoin is that when a problem is found, people can upgrade the software and move past it. Even if there was a weakness in certain cipher, the way Bitcoin is constructed it would take multiple serious vulnerabilities in ECDSA, RIPEMD160 and SHA256 _at the same time_ to have any effect on the security for the end user.
Bitcoin itself has been around for 4 years with some serious attackers already on the core protocol, and it is still pretty much unchanged. It is unfortunately much more rewarding and much easier (sadly, but that is improving) attacking services that use Bitcoin.
I saw the questions raised on discussion threads so I can't recall the original context. The triple protocol I wasn't aware of, and is what provides the transition buffer if one of the protocols is broken. Neat.
If the exchange rate goes to zero or undefined then you need infinite Bitcoins to buy a bag of weed. People who are doing trade in BTC are relying on the exchanges to set an exchange rate.
The theory is that the top N exchanges would be taken out in a simultaneous raid (and the US can reach many jurisdictions, just ask Kim Dotcom) and the remaining tiny exchanges would either voluntarily shut down to avoid prosecution or would collapse under the volume. If the raid was on a Friday people would be unable to transfer money into exchanges until Monday, giving time for the price to drop.
>The evidence: the defendants knew that BTC were used for organized criminal activity. Therefore, they knew they were transferring money for criminals.
That would apply to any currency exchange. Considering the amount of money we're talking about here, I think the defendants could afford a lawyer to explain that to a judge.
The US government doesn't usually directly attack something without putting up a straw man to blame first. Examples would be WMD's to masquerade the purpose of the invasion of Iraq, the drug war, terrorists, etc.
I don't see any big media push to demonize something so a war against bitcoin would then become politically palatable. Not that this won't happen in the future, but for now, it seems just too quiet for them to spring a trap on BTC holders.
A while back I would probably think the whole premise that government would go after people who buy/sell a product sometimes associated with criminal activity is flawed. Articles such as the following have made me think otherwise:
DOJ/USGov't could bring the system to a halt, but I see that it hasn't found a solid use case to do so.
Ideally, BTC could defend themselves and saying that it is a virtual product that the exchange is just coincidence, but holds no merit in the 'real world'
As long as you only generate bitcoins, and then use those online, I think it would be hard to say that is money laundering of any sort. Many many many people do that, including myself, so bitcoins will never die.
Anybody please provide a summary? After a long day of work I just can't finish this long post. Yes I know the main conclusion is bitcoin is gonna die. Please fill me in. Thx
The crux seems to be: "the defendants knew that BTC were used for organized criminal activity. Therefore, they knew they were transferring money for criminals."
He also claims that: 'Government control (excuse me, "public oversight") of all major monetary transactions is one of the basic attributes of sovereignty in the modern world.' - this also sounds dubious - the money laundering laws are not that old and I don't believe they became 'basic' in that short time span - also a government controlling all transactions is a very totalitarian design.
He's got some weird definition of an ideal state based on corporate governance, he thinks black people are a social class defined by welfare queens and petty criminals, he thinks he eviscerated Dawkins by somehow agreeing with him. The length of his work is actually a subtle trap: If you read enough to understand what he's going on about, you're subtly invested in not rejecting it because then you'll have wasted all that time understanding him.