Hi, I heard your Bitcoin segment on your radio show this morning on WBAI. I’m writing because while I sympathize with your political economic views in general, and share most of your opinions, I think you’re jumping to conclusions on Bitcoin and cryptocurrency. I believe you are too quick to dismiss their revolutionary, anti-capitalist potential. You appear to be making the same mistakes as the hedge fund guys in dismissing the Bitcoin phenomena as pure speculative activity that will eventually go bad, just like tulips did. But to truly grasp Bitcoin and other exciting cryptocurrencies like Ethereum, one needs to grasp the technology underlying them. An exposition about the economics of Bitcoin that does not touch on blockchain technology is not very worthwhile, and most Wall Street guys and economists do not understand this underlying technology, so it all looks valueless and all about speculation. But this is missing the point. Blockchain technology, which is decentralized, and in its public (“nonpermissioned”) form not able to be controlled by any person or group or institution, eliminates middlemen like banks that we currently require for our economy. Blockchain technology’s potential for fostering democratization makes it something all lefties should seek to understand, because it’s coming. Large corporations are trying to co-opt it and privatize it in their own interests, but the most exciting uses are public and open source, like Bitcoin. We must understand blockchain to understand Bitcoin, which is ultimately only one application of blockchain—like email is only one application of the Internet. When blockchain technology is developed as public and open source (i.e. the idea behind Bitcoin and Ethereum), it could foster radical redistribution of power and wealth. Take Ethereum, which does what Bitcoin does in terms of act as a store of value, but more: it is also a tech platform that allows people to create DECENTRALIZED ORGANIZATIONS, including companies along the lines of your ideas. These technologies are not going anywhere, it is often described as the Internet 3.0, and they could end up being our greatest tool for democratizing the workplace. Related question: Where do you place the crypto heads (often millenials with a deep distrust of Wall Street and traditional institutions) who never intend to exchange their digital value for fiat currency like the dollar? Is this still speculation? There are many people in this position, I understand.
Regarding Bitcoin: What is the difference in your between speculation and investment?
January 05, 2018
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Cryptocurrency is a phenomenal concept. But all the potential in the world can’t stop it from being hijacked by the speculative nature of capitalist society. The issue isn’t that it doesn’t have potential. The issue is that the nature of the society we live in creates a mindset that believes in infinite sustainable growth. The more people jump on the bandwagon the better it will perform, until the bubble pops and the remaining speculators find that the exchange-value does not conform to the use-value and that the fifty car pileup resulted in more deaths than accessible housing sales. That grim metaphor aside, it is perfectly possible that a universal or extragovernal commodity could become the universal source of exchange. Freeing it from speculation, however, would require a change in the system and therefore the mindset we use to determine value.