The original pitch for BitCoin was Money without all the coercive government cooties and icky regulation. Money for The People! The magic of blockchain made it "secure" and (sort of) anonymous. The financing part, like the "general" part of AGI, was supposed to just happen as a byproduct of existing, I think, to the degree they thought about that at all. It was suppsed to be just Money, not a system. The inevitable desire to do something with all that Money they "mined" led to the current Potemkin "system" which mostly swindles investors and enables changing their Money into real money.
At some point there was a transformation in the culture around BitCoin. I remember when it was a weird geek toy (never did any mining, sadly) and then it became mainstream (or at least mainstream-ish) and blew up.
I believe Stephen Diehl called btc and crypto as a whole magic beans. Interestingly, a crypto critic called Cryptodamus (who has a substack which I highly recommend reading) said that the only cryptocurrency that has intrinsic value is Monero, because privacy is built into it and you can always use it to buy drugs 😂 I’m pretty sure that he was being serious.
Ay, but unless you have refuge in a place with no extradition treaty you’ll probably be caught and become a guest of Uncle Sam for a number of years. Btc is far from untraceable unless you take extreme measures.
"The simplest explanation for the cryptocurrency recovery is that it is a significant asset class within the speculative economy." yeah this is the whole thing - it's gold, basically, with a subsidiary use case of "can be used in crimes" rather than "good insulator for electronic devices/looks pretty" but no real difference in the relationship between its financial value and inherent value (gold, at least, will be usable for something when the computers all turn off)
From now on, the rule is that whenever anyone writes about crypto, one must end with "…What a stupid time we live in."
What I've come to realize is that despite not having anything to do with crypto, crypto is coming for us/is here. From roughly 2008 until now, the creep of hyper-financialization is ruining daily life, while Our Betters can blame it on any of their usual bogeymen and get away with the bag.
The price keeps going up because the US middle class voted itself out of existence in 1980. The middle class used to have enough money to buy lots of goods and services, but there are fewer and fewer people in the middle class and those there have less money. There's nothing to invest in, so people who have lots of money buy things like investment grade sardines.
Just sharing another thought while still reflecting deeply on this piece some time later:
I was going through some old boxes today and came across a KFC Refresher Towel, which I now always look at through the lens of the film "Book of Eli" and thus, hoard religiously. The thought immediately entered my head that, given the future we're headed, this is a better speculative asset than Bitcoin. Not to ostentatiously flaunt my wealth or anything but I have 100+ of these bad boys saved, and I'm feeling secure in that. Diamond hands on KFC towels.
I've been following Bitcoin since its equivalent worth in USD was something around 800 USD. I remember an early spike due to a US Senate hearing or something, that pushed it around 1,200 USD equivalent. I was an early crypto bro, and I've been watching it on and off since. Despite financial privilige, I never felt a need or desire to invest in something that still hadn't proven itself yet. I was a publicly outspoken advocate back then (some digital footprints of this still remain as proof) and so many years later, as cycles of hype push the USD equivalent ever higher, people who know me have circled back to enquire in various tones if I'd become fabulously rich for knowing about this technology so early. My answer invariably dissapoints them.
What I explain to them is that for me the promise was in the other applications of blockchain technology that had been hopelessly overshadowed from the get go (from Satoshi's white paper) by the economic/currency one instead. These were ideas like the tamper-resistant public ledger as a vehicle for holding power to account - tracking provenance across supposedly "sustainable" supply chains where we can see every tree logged and every wage left unpaid (contrast to the Amazone O.N.E project I replied mentioning earlier!), or monitoring an oil pipeline leak with real-time tamper-proof metrics on how much is leaking and where. That kind of stuff excited me once.
There was an eco-crypto-bro hybrid in these early days that talked a lot about sustainability and blockchain. Some still survive, somehow, years on but it barely rates a mention now (until we see the looming Trumpian perversion of it come into mainstream view, that is). That's no accident, either.
That's system-preserving power at work (to paraphrase Byung-Chul Han's "Why Revolution is No Longer Possible). The system-preserving "seductive" potential of reorienting blockchain towards currency/enrichment is immense. The rest is history, still unfolding. That we see it skyrocket in a Trump era of rampant Griftopia (to quote Matt Taibbi's book/term) is perfectly logical, when that administration is the most naked embodiment of self-enrichment ever seen. The launch of Trump and Melania "meme" grift-coins lays it out even more obviously for those who somehow couldn't see before.
Despite being so "early" on this stuff I never wanted to "invest" because, to this day, there's still not anything to invest in as you say - no impetus beyond personal enrichment. I'm still waiting for my food to be sustainably certified in some kind of blockchain, for cop bodycams to upload to the same kind of infrastructure, for oil pipelines and tankers to be rigged all over with devices that hold them to account. These applications might go some way to justifying the immense natural resource drains of this tech. But of course, predictably, that outcome has hardly been given any space or support to materialize. And clearly, over time, this technology has become so hopelessly captured by capitalism and colonialism and patriarchy that investing in it now would be deeply counter-productive to the original emancipatory potential the technology once might have held.
To me this is one of the deeper stories about blockchain and crypto. It's a story about "finance" applications as a diversion away from a technology's other potential applications, and how brutally effective this strategy works to further a system's self-preserving powers inside a rampant griftopia. When people say blockchain still has no application beyond speculation/self-enrichment, part of me wonders if that isn't by structural design, if it reflects the dominant power structures that shape(d) a given technology.
"Diamond hands on KFC towels" is going to stick with me for a long time. Brilliant.
You're hitting a point that I've been meaning to fiddle with some more: the direction of technologies grows toward finance. And finance itself is fluid, changing over time in response to regulatory structures (incentives and penalties), interest rates (ZIRP phenomena) and market concentration.
For well over a decade, finance has been pointed overwhelmingly in the direction of speculation/gambling. And that means all the things that you *could* productively build on a blockchain (with significant time and investment) are sidelined in favor of speculative finance bullshit.
Gonna keep fiddling on it. The piece isn't there yet. But, yeah, we're tapping at something important here I think.
Thanks for engaging with the idea and hearing me out! I agree this is definitely something important to track and I'd love to see how you approach it. I found my way to your "Peter Thiel dreams of Empire" article just a few hours ago btw and greatly enjoyed it. I made a note to follow the author, and then realized~!
As always, looking forward to where your future work/writing takes us, please keep up the excellent work. Though I can only offer moral and intellectual support right now, please know that in the coming neofeudal techno-hellscape, there will be always be a refresher towel with your name on it.
If the O.N.E. Amazon project I've read about is anything close to what I understand it to be, then perhaps it's worth bringing to your attention, because it's an example of a use case of cryptocurrency as a form of colonial extraction, surveillance, and control and it's absolutely tied up with key Global North actors including techbro billionaires in Trump's orbit. It's existence to me suggests far greater agendas to legitimizing crypto and propping up the speculative Bitcoin flagship beyond just enrichment.
Bitcoin has a long tradition. It is called fiat currency. It still exists in the form of Confederate currency. If the south separates from the USA again, the value of the Richmond Greenback will rise again!
The concept of non-fiat currency is gone from the modern mind. The fig leaf used by watered-down currency is that it was supposed to have at least a nominal value. Crypto doesn’t. Its value has not budged. It has an intrinsic value of $0.00
Every now and again, people take common leave of their senses and form a miracle cult around something utterly worthless. The South Sea corporation did the same. NFT, ditto. Beanie Babies, somewhat.
When their covers get pulled, the mob find out that they’ve cornered the market on nothing.
If enough people agree something has value then it has value. That’s not in dispute. People pay millions for vintage baseball cards and comic books. How can old pieces of cardboard and paper have inherent worth? Well because they just do.
Charles MacKay, Extraordinary Popular Delusions and The Madness of Crowds, 1841
Review on Amazon: “In this book, Charles Mackay discusses the irrational behaviors of crowds in the economy, war and magic. He gives several different examples of market bubbles such as the Mississippi Scheme and the infamous Tulip Mania in the Netherlands. Ever since it was written, Investors have used it as a guide to help identify boom and bust cycles. Extraordinary Popular Delusions and The Madness of Crowds has had an important influence on economists in understanding of crowd psychology and feedback loops.”
At any given moment, there are people speculating on objectively dumb shit, followed by a gaggle of boosters hoping to cash in on the boom. It is inevitable that another crazy fad will arise before the last one fails.
Bitcoin, unlike anything tangible, has no intrinsic value. Minting US coins means circulating metal that costs less than face value, called seigniorage. To the consumer, only a nickle has a melt value near its face value. All the rest are fiat value. Pennies before 1982 have a melt value of 3¢, which is why they were culled out of circulation. Silver Mercury dimes go for $2.25 or so in melt. This is a useful measure of inflation.
But you can’t melt bitcoin. It has no intrinsic value. It is like the Beanie Babies and Tickle me Elmo toys of yesteryear. They are valuable until they aren’t.
There's a much simpler explanation of why BTC keeps working as a speculative asset -- money laundering.
I don't earn my pay through illegal activities, but my understanding is that laundering money usually costs $$. If I have a lot of cash and can pay 2% over ask to get some BTC, run it through a mixer and then unload it fast by taking 2% under ask, well, that's probably as good as it gets in the business.
Meanwhile, the presence of a pool of people willing to pay 2% over market for say $100B per month of BTC provides a level of liquidity that most speculators (i.e. gamblers) can only dream of. This attracts a lot of retail speculators who provide the crowd that lets the money launderers trade in relative obscurity.
It seems like it could be pretty stable since the money launderers buy and sell quickly.
If Bitcoin became an actual, usable, spendable currency in trade and commerce, it would instantly amount to theft. By adding additional tokens to the money supply, competing with the “real” money, it would devalue the dollars in your pocket. This is of course far from unprecedented; banks issuing credit which instantly adds to the money supply are doing just that, insofar as they inflate the “real” tokens.
Musk, Sacks, Thiel and the Tech-bro Mafia will decide that the USA's strategic alt-coin reserve should be xxx,xxx number of shit coins (that they own) and at $xxx,xxx price.
Trump rubber stamps, the graft is complete, the USA PLAYS THE PART OF THE GREATER FOOL, the money leaves out Treasury and the South African immigrants are wealthy beyond imagination / that's actually redundant isn't it.
"But the glimmer I found came off a guillotine, if you squint just right"
Well said. Sad too. "All the overnight Web3 evangelists on LinkedIn have rebranded themselves as Generative AI hypemongers." — indeed.
But the worth isn't 0. Because it enables criminal behaviour (like busting sanctions or as a means to get ransomware payments, that is how North Korea and other rogues are using it) it has real value that way.
Who cares that wash trading and front running occurs on all the crypto exchanges, and rug pulls are a regular occurrence (hawk tuah goto jail!). How else are the whales supposed to get their exit liquidity? Talk about wealth concentration! Much worse in crypto than in the stock markets…Gotta pump it up and promote FOMO to the rubes. Trump didn’t even need the crypto bros to win (crypto participation is still very low among all demographics) but they may be his undoing when it all unravels. We shall see. Crazy times….
One of may favorite books, which I read decades ago, is Reminiscences of a Stock Operator by Edwin Lefevre. Written in 1923, it’s about the good old days of finance before the pesky SEC got involved. I imagine that every character in that book can be found in the crypto world today.
A couple of weeks ago I had the thought that bitcoin is, essentially, cargo cult financialization.
They have built all of the elements of a financial sector of the economy without actually financing anything. I still think that's a good description.
(that observation was prompted by reading a Brad DeLong post about financialization: https://braddelong.substack.com/p/lecture-notes-53-post-2010-polycrisis
The original pitch for BitCoin was Money without all the coercive government cooties and icky regulation. Money for The People! The magic of blockchain made it "secure" and (sort of) anonymous. The financing part, like the "general" part of AGI, was supposed to just happen as a byproduct of existing, I think, to the degree they thought about that at all. It was suppsed to be just Money, not a system. The inevitable desire to do something with all that Money they "mined" led to the current Potemkin "system" which mostly swindles investors and enables changing their Money into real money.
At some point there was a transformation in the culture around BitCoin. I remember when it was a weird geek toy (never did any mining, sadly) and then it became mainstream (or at least mainstream-ish) and blew up.
I believe Stephen Diehl called btc and crypto as a whole magic beans. Interestingly, a crypto critic called Cryptodamus (who has a substack which I highly recommend reading) said that the only cryptocurrency that has intrinsic value is Monero, because privacy is built into it and you can always use it to buy drugs 😂 I’m pretty sure that he was being serious.
I've seen people say, seriously, that a valuable use-case for bit coin is paying ransoms.
Ay, but unless you have refuge in a place with no extradition treaty you’ll probably be caught and become a guest of Uncle Sam for a number of years. Btc is far from untraceable unless you take extreme measures.
Oh that's a fun modeling exercise.
"The simplest explanation for the cryptocurrency recovery is that it is a significant asset class within the speculative economy." yeah this is the whole thing - it's gold, basically, with a subsidiary use case of "can be used in crimes" rather than "good insulator for electronic devices/looks pretty" but no real difference in the relationship between its financial value and inherent value (gold, at least, will be usable for something when the computers all turn off)
I like Ed Zitron’s name for it: the rot economy. I don’t know if he coined the phrase but it is apt.
Minor correction, gold is a good conductor (not insulator) that doesn’t corrode, making it good for electrical devices.
Dave - I love your work and really this will be the closest I ever get to a real productive comment:
"It’s a gas. It fills a room. No one can quite see it, but everyone breathes it in."
You missed the obvious fart joke.
Goddammit you are absolutely right!
From now on, the rule is that whenever anyone writes about crypto, one must end with "…What a stupid time we live in."
What I've come to realize is that despite not having anything to do with crypto, crypto is coming for us/is here. From roughly 2008 until now, the creep of hyper-financialization is ruining daily life, while Our Betters can blame it on any of their usual bogeymen and get away with the bag.
Crypto coins are just investment grade sardines.
The price keeps going up because the US middle class voted itself out of existence in 1980. The middle class used to have enough money to buy lots of goods and services, but there are fewer and fewer people in the middle class and those there have less money. There's nothing to invest in, so people who have lots of money buy things like investment grade sardines.
Just sharing another thought while still reflecting deeply on this piece some time later:
I was going through some old boxes today and came across a KFC Refresher Towel, which I now always look at through the lens of the film "Book of Eli" and thus, hoard religiously. The thought immediately entered my head that, given the future we're headed, this is a better speculative asset than Bitcoin. Not to ostentatiously flaunt my wealth or anything but I have 100+ of these bad boys saved, and I'm feeling secure in that. Diamond hands on KFC towels.
I've been following Bitcoin since its equivalent worth in USD was something around 800 USD. I remember an early spike due to a US Senate hearing or something, that pushed it around 1,200 USD equivalent. I was an early crypto bro, and I've been watching it on and off since. Despite financial privilige, I never felt a need or desire to invest in something that still hadn't proven itself yet. I was a publicly outspoken advocate back then (some digital footprints of this still remain as proof) and so many years later, as cycles of hype push the USD equivalent ever higher, people who know me have circled back to enquire in various tones if I'd become fabulously rich for knowing about this technology so early. My answer invariably dissapoints them.
What I explain to them is that for me the promise was in the other applications of blockchain technology that had been hopelessly overshadowed from the get go (from Satoshi's white paper) by the economic/currency one instead. These were ideas like the tamper-resistant public ledger as a vehicle for holding power to account - tracking provenance across supposedly "sustainable" supply chains where we can see every tree logged and every wage left unpaid (contrast to the Amazone O.N.E project I replied mentioning earlier!), or monitoring an oil pipeline leak with real-time tamper-proof metrics on how much is leaking and where. That kind of stuff excited me once.
There was an eco-crypto-bro hybrid in these early days that talked a lot about sustainability and blockchain. Some still survive, somehow, years on but it barely rates a mention now (until we see the looming Trumpian perversion of it come into mainstream view, that is). That's no accident, either.
That's system-preserving power at work (to paraphrase Byung-Chul Han's "Why Revolution is No Longer Possible). The system-preserving "seductive" potential of reorienting blockchain towards currency/enrichment is immense. The rest is history, still unfolding. That we see it skyrocket in a Trump era of rampant Griftopia (to quote Matt Taibbi's book/term) is perfectly logical, when that administration is the most naked embodiment of self-enrichment ever seen. The launch of Trump and Melania "meme" grift-coins lays it out even more obviously for those who somehow couldn't see before.
Despite being so "early" on this stuff I never wanted to "invest" because, to this day, there's still not anything to invest in as you say - no impetus beyond personal enrichment. I'm still waiting for my food to be sustainably certified in some kind of blockchain, for cop bodycams to upload to the same kind of infrastructure, for oil pipelines and tankers to be rigged all over with devices that hold them to account. These applications might go some way to justifying the immense natural resource drains of this tech. But of course, predictably, that outcome has hardly been given any space or support to materialize. And clearly, over time, this technology has become so hopelessly captured by capitalism and colonialism and patriarchy that investing in it now would be deeply counter-productive to the original emancipatory potential the technology once might have held.
To me this is one of the deeper stories about blockchain and crypto. It's a story about "finance" applications as a diversion away from a technology's other potential applications, and how brutally effective this strategy works to further a system's self-preserving powers inside a rampant griftopia. When people say blockchain still has no application beyond speculation/self-enrichment, part of me wonders if that isn't by structural design, if it reflects the dominant power structures that shape(d) a given technology.
"Diamond hands on KFC towels" is going to stick with me for a long time. Brilliant.
You're hitting a point that I've been meaning to fiddle with some more: the direction of technologies grows toward finance. And finance itself is fluid, changing over time in response to regulatory structures (incentives and penalties), interest rates (ZIRP phenomena) and market concentration.
For well over a decade, finance has been pointed overwhelmingly in the direction of speculation/gambling. And that means all the things that you *could* productively build on a blockchain (with significant time and investment) are sidelined in favor of speculative finance bullshit.
Gonna keep fiddling on it. The piece isn't there yet. But, yeah, we're tapping at something important here I think.
Thanks for engaging with the idea and hearing me out! I agree this is definitely something important to track and I'd love to see how you approach it. I found my way to your "Peter Thiel dreams of Empire" article just a few hours ago btw and greatly enjoyed it. I made a note to follow the author, and then realized~!
As always, looking forward to where your future work/writing takes us, please keep up the excellent work. Though I can only offer moral and intellectual support right now, please know that in the coming neofeudal techno-hellscape, there will be always be a refresher towel with your name on it.
If the O.N.E. Amazon project I've read about is anything close to what I understand it to be, then perhaps it's worth bringing to your attention, because it's an example of a use case of cryptocurrency as a form of colonial extraction, surveillance, and control and it's absolutely tied up with key Global North actors including techbro billionaires in Trump's orbit. It's existence to me suggests far greater agendas to legitimizing crypto and propping up the speculative Bitcoin flagship beyond just enrichment.
Bitcoin has a long tradition. It is called fiat currency. It still exists in the form of Confederate currency. If the south separates from the USA again, the value of the Richmond Greenback will rise again!
The concept of non-fiat currency is gone from the modern mind. The fig leaf used by watered-down currency is that it was supposed to have at least a nominal value. Crypto doesn’t. Its value has not budged. It has an intrinsic value of $0.00
Every now and again, people take common leave of their senses and form a miracle cult around something utterly worthless. The South Sea corporation did the same. NFT, ditto. Beanie Babies, somewhat.
When their covers get pulled, the mob find out that they’ve cornered the market on nothing.
If enough people agree something has value then it has value. That’s not in dispute. People pay millions for vintage baseball cards and comic books. How can old pieces of cardboard and paper have inherent worth? Well because they just do.
I disagree. Have you read McKay’s book?
Charles MacKay, Extraordinary Popular Delusions and The Madness of Crowds, 1841
Review on Amazon: “In this book, Charles Mackay discusses the irrational behaviors of crowds in the economy, war and magic. He gives several different examples of market bubbles such as the Mississippi Scheme and the infamous Tulip Mania in the Netherlands. Ever since it was written, Investors have used it as a guide to help identify boom and bust cycles. Extraordinary Popular Delusions and The Madness of Crowds has had an important influence on economists in understanding of crowd psychology and feedback loops.”
At any given moment, there are people speculating on objectively dumb shit, followed by a gaggle of boosters hoping to cash in on the boom. It is inevitable that another crazy fad will arise before the last one fails.
Bitcoin, unlike anything tangible, has no intrinsic value. Minting US coins means circulating metal that costs less than face value, called seigniorage. To the consumer, only a nickle has a melt value near its face value. All the rest are fiat value. Pennies before 1982 have a melt value of 3¢, which is why they were culled out of circulation. Silver Mercury dimes go for $2.25 or so in melt. This is a useful measure of inflation.
But you can’t melt bitcoin. It has no intrinsic value. It is like the Beanie Babies and Tickle me Elmo toys of yesteryear. They are valuable until they aren’t.
There's a much simpler explanation of why BTC keeps working as a speculative asset -- money laundering.
I don't earn my pay through illegal activities, but my understanding is that laundering money usually costs $$. If I have a lot of cash and can pay 2% over ask to get some BTC, run it through a mixer and then unload it fast by taking 2% under ask, well, that's probably as good as it gets in the business.
Meanwhile, the presence of a pool of people willing to pay 2% over market for say $100B per month of BTC provides a level of liquidity that most speculators (i.e. gamblers) can only dream of. This attracts a lot of retail speculators who provide the crowd that lets the money launderers trade in relative obscurity.
It seems like it could be pretty stable since the money launderers buy and sell quickly.
Wow, David Sacks. That is both the least surprising choice, but also horrifying.
As you say, he is not a smart man, and he lacks entirely the empathy gene.
If Bitcoin became an actual, usable, spendable currency in trade and commerce, it would instantly amount to theft. By adding additional tokens to the money supply, competing with the “real” money, it would devalue the dollars in your pocket. This is of course far from unprecedented; banks issuing credit which instantly adds to the money supply are doing just that, insofar as they inflate the “real” tokens.
Musk, Sacks, Thiel and the Tech-bro Mafia will decide that the USA's strategic alt-coin reserve should be xxx,xxx number of shit coins (that they own) and at $xxx,xxx price.
Trump rubber stamps, the graft is complete, the USA PLAYS THE PART OF THE GREATER FOOL, the money leaves out Treasury and the South African immigrants are wealthy beyond imagination / that's actually redundant isn't it.
"But the glimmer I found came off a guillotine, if you squint just right"
Credit @laurenhough @badreads
"what stupid time we live in"
Well said. Sad too. "All the overnight Web3 evangelists on LinkedIn have rebranded themselves as Generative AI hypemongers." — indeed.
But the worth isn't 0. Because it enables criminal behaviour (like busting sanctions or as a means to get ransomware payments, that is how North Korea and other rogues are using it) it has real value that way.
Who cares that wash trading and front running occurs on all the crypto exchanges, and rug pulls are a regular occurrence (hawk tuah goto jail!). How else are the whales supposed to get their exit liquidity? Talk about wealth concentration! Much worse in crypto than in the stock markets…Gotta pump it up and promote FOMO to the rubes. Trump didn’t even need the crypto bros to win (crypto participation is still very low among all demographics) but they may be his undoing when it all unravels. We shall see. Crazy times….
One of may favorite books, which I read decades ago, is Reminiscences of a Stock Operator by Edwin Lefevre. Written in 1923, it’s about the good old days of finance before the pesky SEC got involved. I imagine that every character in that book can be found in the crypto world today.
What do you mean, no use? It compactly stores electricity in a completely unusable form!
I just hope it stays high until 2025. I always promised myself I'd cash-out when my investment doubled. And it has 🥳