Mindsets, Bitcoin, and The Future You Wished For

After 2 days and 200 USD in Bitcoin, I have come to the conclusion that “cryptocurrencies” are not ‘digital gold’, their future as ‘digital cash’ is infeasible, and the endeavor as a whole is not worth my time.

That being said I learned a lot about what Bitcoin et. all actually are, and have a much better idea on what’s going on now that I have spent time and money on it. Was it worth that much to learn that I don’t care about this thing that’s popular? Maybe not.

I learned a bunch of other things too. And those were definitely worth it.


In one phrase, the problem with “cryptocurrencies” is: “blockchain scalability problem”.

The original aim of bitcoin to be a decentralized currency where no one needs to go to some preset central authority figure is due to its central technology, called the “blockchain”. No one owns any amount of items called “bitcoins” specifically; what they own when they have a private key is access to withdraw from the value of a cell on a spreadsheet. The blockchain is this spreadsheet. Everyone has a copy of the blockchain, the blockchain records all transactions and all accounts that ever exist, and so, no one needs to go to someone else to tell them they do or do not have, are or are not allowed to withdraw, send, or otherwise use their bitcoins, because everyone knows how much is in each cell, and who’s allowed into which cell is secured by “cryptography”. The blockchain also makes bitcoin extremely difficult to counterfeit, along with a number of other really neat features I won’t get into.

The problem is that everyone needs to have a copy of the blockchain.

This blockchain has a size, and that size is currently 150gb.

bitcoin blockchain size at 150gb

Think about how fast bitcoin has grown in relation to USD; that’s basically how fast it will grow in relation to your hard drive – supposing everything stays approximately the way it is. There’s a couple of proposals to change this, either in bitcoin itself or in one of the other couple thousands of “altcoins”, all of which either

  1. spell the death of decentralization for bitcoin on the code level, or
  2. make it significantly easier to counterfeit or any of the other problems that make a thing not a currency.

That being said, bitcoin is basically centralized as it is. Bitcoin is not a permanent protocol, do not think of it as like actual gold, there’s people out there who are or aren’t part of the official Bitcoin team and they write code and put it up on github, have conventions talking about what should or shouldn’t be done, and then when things are put into place people can choose to update to one or another or not update at all. It’s democratic, as some people like to call it. “No central authority”, so says their wiki.

That doesn’t mean no authority at all.

Bitcoin wiki screenshot: Bitcoin is a decentralized digital currency that enables instant payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate with no central authority: transaction management and money issuance are carried out collectively by the network.

The people who get to choose though are those who keep the blockchain – which about 10~100k people have today, fewer and fewer people will have as time goes on. And even amongst those who keep the blockchain it’s not equal; the miners do more deciding than /g/oe Schmoe, even if /g/oe Schmoe himself is a miner, because “the” miners in this case are two or three Chinese guys running computers that fill up multiple entire purpose-built buildings. If these guys want something to change on bitcoin, it will happen eventually. If they don’t want something to happen, it won’t. You can vote, so long as you have the blockchain. Your vote means as much in bitcoin as it does in the usual sense. The 51% rule is as you remember it.

The proposed suggestion for the blockchain scalability problem that doesn’t make it easier to counterfeit etc. say that it should be localized to some extent; that rather than seek confirmation from basically all blockchains out there, to not having to seek it if it’s local. This just means centralization. Whatever local(s) blockchain you refer to so you don’t have to do it yourself, now have a say in whether or not you get to do what you want. It becomes online banking, basically. There may or may not be more banks than there are now, they may or may not be the same banks that there are now, and they’ll all be global. These are minor details, considering that banks and global banks run everything as is. I suppose it’d be BTC banks and not USD banks that run everything. I don’t know if that means anything.

The big difference is that with bitcoin though is it’s trivially easy to find out how people use their money. USD, or fiat currency in general, is accepted as legitimate money (as opposed to counterfeit) because of physical appearance if it’s cash, and because of centralized VISA servers if it’s digital. Bitcoin is accepted as legitimate because you can trace lineage of every coin and account back to the first ever transaction.

That includes all of yours.


I’ve had the opportunity to see bitcoin from a few very different perspectives. Usually when “different perspectives” is conceptualized it’s like “red team” vs “blue team”: basically identical except for one thing, and that one thing is what decides who’s who and what’s what. This happens to have been true in US politics for at least 20 years (except for maybe Trump, which is why we got a lot more noise, but probably not Trump, because we’re getting a lot less noise these days), and it’s definitely reinforced by the price system, which has existed for maybe a hundred years. I’m not sure why it’s so pervasive. There seems to be a number of other ideas linked to this too, like how all knowledge can and should be equally accessible to everyone, and that possession or usage of something never changes the user…

In any case I think that’s a load of shit.

The most popular way to think about bitcoin is that it’s some kind of foreign currency. Or a stock. Which is why we have all these people coming in buying things up and sending it above 10,000:1::BTC:USD. They may have heard some word sounding like “kryptonite” here or there but all they’re really looking for is whether or not their Coinbase/Blockfolio/etc. balance number goes up or down relative to USD (and, by extension, their own currency, if it’s not the USD). They don’t care about how or why bitcoin or some other altcoin goes up or down. It’s not that they don’t “want” to put in the time or effort to learn about things. It’s that such a concept doesn’t even occur to them. These people will think in terms of “buy low sell high”, think that bubbles are inherent and incomprehensible, and simply a matter of timing entries and exits. They see money, they want money, they will clamor for money.

The other common way I’ve seen bitcoin is as a middle finger to the current world order. Buying bitcoin is a matter of having or signalling belief in a future, one which looks very different to the one we have today. Security, privacy, freedom, any number of ideas are the things that are important, not what dollar value it happens to be at this moment. And as a result some of these people go into mining themselves, many of them look into the background of the technology and people behind certain altcoins before putting their money in them. I don’t know much about investing, but if that one video of Shkreli’s I watched was how real investors invest, then these people would be investors. The previous group is apparently commonly called speculators.

These are not the same type of people, they do not do the same types of things; they are only “basically identical except for one thing” only in that they are words with different spellings; don’t confuse the name for the real thing. All those guys talking about how we’re 99% same DNA and 100% same stardust don’t have your interest in understanding in mind.

I approached it with a little interest in making money and a little interest in doing something outside the current economic system, though I’d like to think the majority of it was attempting to understand what was going on with this nearly-20,000USD thing that used to be worth 10,000-to-1pizza instead.

I spent 20 hours (including nonsense time) reading up on things, then I bought 200USD worth. Then read another 13 hours before I decided the endeavor was a failure. The 20 beforehand was general research on what to research, how bitcoin worked internally, and what names/sites/programs to use in what order in order to obtain them. The 13 after contained some experimentation time and largely revolved around finding out what exactly it meant to “have” bitcoins and what handles of control I had on it. The second experiment was when I deemed it to be a failure. 4 or 5 of the 13 occurred after as posthumous research.

The two experiments were:

  • Moving bitcoin from Coinbase.com to a “paper wallet”
  • Moving bitcoin from the “paper wallet” to an “Electrum” “hot wallet”.

The two results were:

  • Coinbase had a seemingly flat fee of ~15USD. Transfer time was ~15 minutes.
  • Electrum had a fee slider, to which the minimum was ~8USD. Transfer time was ~90 minutes.

At this point I already knew I couldn’t be bothered with day trading altcoins because I found out constantly staring at graphs was boring, and I knew constantly or even generally keeping up with news on what coin is doing what would not be interesting. Apparently just money does not motivate me. Finding out the results of the tests sealed the deal. I didn’t find out about this fees thing either until after I had bought it already because apparently no one in my research decided it was important to talk about. That was whatever since it made sense that such a thing existed since fees exist generally as a human interaction cost, and I knew bitcoin should be thought of more as a global spreadsheet cell than cash in hand. But 8USD and 90 minutes was simply not acceptable. Knowing that such a thing was caused by the blockchain being so large, that bitcoin automatically slows down to miners trying to upgrade their equipment so that they’re always in an arms race (this is why GPU prices have skyrocketed), and that the blockchain (along with times and fees) will only ever grow larger, made me decide it was a lost cause. Well, unless they change the code and make it so that people go to “localized” Lightning Networks or whatever. In which case it’s just online banking and you don’t own the stuff. Which also means it’s a lost cause.

I was looking for something I would consider digital cash or digital gold.

I did not find it.

What I found was something that may, sometime in the future, become online banking, like Steam or Amazon store credit, except with the ability to go un-fee’d across borders. Of the ones I looked into, the eventual winner of that seems like it’s going to be Ripple (because banks are literally behind it). Bitcoin’s prevalence appears to be largely because it was the original and a lot of people know about it. This doesn’t mean it’s bad, but it has all the problems that I’ve talked about above. As far as I’m concerned it means bitcoin is not digital gold, it is not digital cash, it is just really really shitty online banking with really high fees. Where it isn’t shitty online banking with high fees, i.e. when you have your stuff on an exchange, it’s day trading and stock gambling, and I don’t care to lose any of my dollarydoos to a “hack” or whatever else excuse they come up with to make off with my money. I suppose there’s also things like moving money without it being seen by capital controls (at least, not without a hefty amount of work) and funding people normal online payment systems won’t fund.

Moving money without it being seen by capital controls and funding things normal payment systems won’t fund: the demand for these determine the true value of bitcoin.

I don’t think it’s fair to say bitcoin “is” money laundering, but seems to be the primary role it fulfills. “Doing things governments don’t want you to do with money, and/or across borders”. Not that this is a bad thing, it simply presents no benefits to someone trying to buy things off, say, Amazon or Steam, which seems to be something that needs to be possible for something to be a replacement currency. It’s one thing if Amazon/Steam don’t accept your currency, it’s another if people don’t want to use it because of internal issues. If you hold the bitcoins, you have to wait 20~90 minutes plus some ever-growing fee; if you don’t, then it’s online banking with a different set of three letters. I’m not so sure about its comparison to gold. I suppose it is easier and probably will always be faster for bitcoin to be verified than gold to be verified, or even to find someone to verify your gold.

But gold and cash have many other benefits, simply because they are not digital.

The main and so far only practical use of cryptocurrency is getting around financial system countermeasures. This means primarily muh weed &c.

You send bitcoin, they send you weed in the mail. PROBLEM: If you can send weed in the mail, you can just send fucking cash. And people do send cash, including overseas to other countries, in exchange for weed and other illegal shit.

Why the do you want to do this transaction over the internet? We must understand that all the networks are compromised right down to the bone, and that throttling or delaying or cutting off connections is pretty damn trivial? Meatspace is so so SO much more secure it’s unbelievable. Cash is amazing compared to cryptocurrency for shady or criminal doings, compared to any online transaction! The internet is a great way to find sellers and instructions, I don’t see how it is or has to be a great way of carrying illegal transactions.

[…] People are way too infatuated with information technology. Information technology is good for communicating. That’s mostly it. It’s for jabbering. Which now includes sending hyper-HD 360 3D videos, which isn’t much of a practical upgrade. It doesn’t really matter that much. Never will.

When you do things on computers, especially online, you leave indelible trails that are permanent, very shallow, very cheap to access. Meatspace trails are temporary, deep, expensive to access. What you send, what is delivered, what is handed off is impossible to detect and prove without expensive and time sensitive meatspace operations.

That’s not to say that some decentralized IT currency meme can’t be interesting, but BTC definitely isn’t it. You want something that you can run on a rooted phone, and be self contained there. You need hundreds of GB and lots of time for confirmations to verify transactions yourself with Bitcoin. Storage footprint and latency need to be improved by orders of magnitude. Then UX also needs to be vastly improved. But that will all be to get a product that is still vastly inferior to cash in terms of security and reliability.

The argument for cryptocurrency, essentially, is that the state is incapable of cracking down on a technology, even if said technology threatens to undermine the state’s whole economic power. Judging by the way that the state crushes neo-Nazis and casually demolishes buildings and suchlike, I suspect that this an unreasonable proposition.

Regular, present-day currency is rooted in the idea that every dollar has a physical manifestation in a form of a piece of paper issued by the Federal Reserve Third Bank of the United States, and that whoever physically holds this paper is the possessor of its value. The cooler features of the financial system, things bank accounts, checks, credit cards, and more recently Apple Pay, are all built upon this fundamental logic. It’s nice, because money has been around forever, and anybody can physically hold paper and understand how it works, and it’s completely ad-hoc: it’s difficult enough (and dangerous enough) to fake a physical dollar that it rarely happens, and so there is no supertotalitarian Great Ledger in the Sky.

Cryptocurrency is something completely different. Cryptocurrency is rooted in the idea that mostly anonymous, effectively untraceable cash just isn’t cool anymore, maaan, so we need to move our means of exchange from human-friendly meatspace into NSA-friendly cyberspace. Oh, and because bits are super easy to fake, we need to use hand-wavy algorithms incomprehensible to normal human beings to build One Computer System in order to keep a perfect historical record of literally every transaction ever, viewable and Big Data-izable to anyone and everyone (or just your friendly neighborhood CIAniggers). And, oh yeah, if you’re ever hacked even once ever, or you forget your password, or your drunkenly change your password, or you’re scopolamined, then say goodbye to your life’s savings, ‘cuz you ain’t gittin’ it back, suckahh.

And if the government ever sinks its long, grasping talons into the One True Ledger, or simply issues its own virtual currency and outlaws the rest (can you say: adoption rate?), then yes, fuck you, you filthy heretic, you will be shunned by all of humanity, and good luck buying a house or a car or food at the grocery, or getting your children into not-nigguh-skool.

Apparently there’s a number of other differences, like “counterparty risk”. I’m not entirely sure what it is, but in the context of bitcoin I understand it to mean:

“If I send you gold/cash and you don’t give me the goods, I can shoot you in the head and find the gold/cash/goods myself. Or call the cops. Or someone. Might take time and effort, but it is possible.

If I send you bitcoin and you don’t give me the goods, and you decide that you’d rather lose the bitcoins than give me anything and go delete the key, no amount of torturing you or hacking your computer can get them back. It’ll be there on the blockchain, but no one can touch it again. Forever.”

Pretty big deal.

I think.

And I can only act on what I think, so that’s what I’ll do.

girls last tour creature: Things I can't eat don't have value, nom, nom.


As for the other altcoins they generally look like scams at most likely or nonsense at best.

Why would anyone care about, say, Musicoin? Musicoin, the site, says it streams music if users use Musicoin, the blockchain currency. Wow! Isn’t technology amazing? Why would I use a Chuck-E-Cheese token except it works at iTunes I mean Musicoin instead of Chuck-E-Cheese? I’ll take MP3s, thanks. Not iTunes MP3/AACs, those mysteriously disappear off my hard drive if I stop paying them. On that note, not Musicoin MP3s either.

Now if this isn’t a scam and it’s nonsense instead (which I don’t believe because Hanlons’ Razor is for tools), it’s pretty depressing nonsense. The selling point of the site to musicians is that there’s no middleman: There are no intermediaries in the Musicoin platform. You get to keep every last cent of your income. No intermediary. Except Musicoin. Your problems aren’t being washed away, they’re just being rearranged. That you can set each member of your three-man band to get 33% of the money just means you’re less likely to work together and more likely to be extremely suspicious if something screws up in benefit of one of you.

Maybe on the larger scope of things labels and middlemen doing hollywood accounting take out enough of a chunk for these to be much nicer problems to have, but these problems don’t disappear. This stuff isn’t magic. Either Musicoin, the site, or Musicoin miners and nodes control will control (the politics of) the inflation rate. How much do you want to bet labels today will be Musicoin miners tomorrow? And you’ll probably still have to convert back to fiat to buy stuff, or maybe not, because if this or blockchains in general ever get big you can bet that every large online retailer will be in on the currency exchange moneytrain. Musicoin, and any other blockchains like it, are the hope and likelihood of having more money now, at the cost of not being able to figure out who’s getting shafted when later because a bunch of numbers of inflation and fee rates is more difficult to visualize than just one.

Is it better to know you’re getting shafted and how much? Or better to know you’re getting shafted but not how much?

In general I just smell a lot of trouble in a future with blockchains.

Along my research (the 20 not the 13, if that matters) I found something that, at the time, I wrote off as just painting a story, but stories reveal the intentions of the author, and even more importantly they reveal what the author believes to be so immutably true they are confident that it will come through in the message they’re encoding to come out as truer than the words they speak.

This passage comes from Erik Voorhees, one of the great priests of blockchains becoming functions of society:

Peer just slightly into the future…

The reputational value of a parent’s Identity Token will be leveraged as collateral for a car loan. Access to the car, once purchased, will be transferred to the owner’s daughter via a blockchain key. In the car, the daughter will play the latest Taylor Swift single, tokenized in limited quantity for her Number 1 fans, which she acquired by bartering her tokenized Candy Crush trophy earned the prior day. This single, it should be noted, is streamed to the car over a P2P network, seeded by a man in Toronto with spare bandwidth, paid in real time with Platform Tokens that he intends to use to buy pizza, once he acquires 10,000 of them.

Now that I’m here and having written down enough of my thoughts, I have remembered why this is absolutely not the future I desire. I’ve also remembered enough of the thought to go looking for the original – which I have found, successfully.

“A walking man formerly could go where he pleased, go at his own pace without observing any traffic regulations, and was independent of technological support-systems.

When motor vehicles were introduced they appeared to increase man’s freedom. They took no freedom away from the walking man, no one had to have an automobile if he didn’t want one, and anyone who did choose to buy an automobile could travel much faster and farther than a walking man. But the introduction of motorized transport soon changed society in such a way as to restrict greatly man’s freedom of locomotion.

When automobiles became numerous, it became necessary to regulate their use extensively. In a car, especially in densely populated areas, one cannot just go where one likes at one’s own pace; one’s movement is governed by the flow of traffic and by various traffic laws. One is tied down by various obligations: license requirements, driver test, renewing registration, insurance, maintenance required for safety, monthly payments on purchase price. Moreover, the use of motorized transport is no longer optional.

Since the introduction of motorized transport the arrangement of our cities has changed in such a way that the majority of people no longer live within walking distance of their employment, shopping areas and recreational opportunities, so that they HAVE TO depend on the automobile for transportation. Or else they must use public transportation, in which case they have even less control over their own movement than when driving a car. Even the walker’s freedom is now greatly restricted. In the city he continually has to stop to wait for traffic lights that are designed mainly to serve auto traffic. In the country, motor traffic makes it dangerous and unpleasant to walk along the highway.

[…] When a new item of technology is introduced as an option that an individual can accept or not as he choices, it does not necessarily REMAIN optional. In many cases the new technology changes society in such a way that people eventually find themselves FORCED to use it.”

The author of this quote ran it to its logical end and called for the destruction of all industrial civilization. I don’t quite agree that everything is all bad, in this specific example I think with proper urban planning the train offers more freedom to man than a car or just walking alone. But the point of technological progress is true: it’s mandatory.

It’s not a choice. It’s not freedom. How could blockchains be freedom when they chain you to the internet and, in theory, literally everyone? “If we are all enslaved then we are all free”? Have I heard this definition of freedom somewhere before? Yes, the blockchain makes it so that you don’t have to go to a bank or a government to say your money is real and you can use it. Now you can and, soon if Voorhees’ vision becomes true, must rely on absolutely everyone instead. If blockchains happen to go the Lightning Network route and become like online banking then maybe not much will change. If they go that route and there’s multiple of them (applecoin, steamcoin, amazoncoin, etc.), maybe life will be a bit more complicated. But if we have the ultimate dream of decentralization, where everyone has effectively infinite digital storage and power… anyone in the world can look at your entire history. At any time. You think we’re hearing a little bit too often about women complaining about rape now, wait till everyone gets a look at everyone else’s money history.

Maybe I have it wrong. I hope I have it wrong. But that’s the future I see. Not a future where I’m magically rich and retire young from day trading these things barely anyone understands. Not a future where the USD collapses and it’s raww paww land forever. Banks or some other institution would take over and run things, business as usual, except worse because of these new doohickeys and because they no longer have to answer to governments or even paper, and there’s no more frontier for people to go to to build up for years or decades their own little city or army to come back and strike when opportunity arises. We got a demonstration of what happens when you try that in the era of airplanes and telecommunications and they didn’t even screw with anyone; it was called Rhodesia. If you try it in America, the FBI will (statistically) have an inside man by the time you hit 4 people. If you try it outside of America, Russia, or China, it’ll take a few people longer, and rather than the FBI it’ll be someone that makes you wish it was the FBI. So to stop it it’s either revolution, in which case institutions probably win, if they don’t then outside institutions win; or hope that the institutions do the right and moral thing for the good of the people with new technologies.

Or hope for a solar flare to burn all the grids.

An Act of God.

Or hope that blockchains fail to catch on as currency. I think I’ll get on that boat. That sounds the easiest. Given that bitcoin is already burning the grids as it is, it’s not too implausible. We’ve heard about VR and a bunch of other hip tech nonsense that hasn’t caught on for a while, hopefully this too will just be a bubble.

In the meantime I’ll stick to stuff I see and understand and stuff my great-grandfathers could’ve seen and understood, thanks.

hehcoin is made of cardboard

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One thought on “Mindsets, Bitcoin, and The Future You Wished For

  1. Pingback: The World Beyond Words – All Else Is Halation

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