Bloomberg shows why Bitcoin is anything but doomed

Posted on August 9, 2013

1


Back-to-front sign - Gas Street Basin - If you can read this with ease ...

All backwards. Photo by ell brown

The extent of wrongness to which some arguments go to convince you to do something always amazes me. This week it’s the pitiable effort to which Timothy Lavin over at Bloomberg.com has gone to try to denounce Bitcoin as a haven of criminality, in its ‘The SEC Shows Why Bitcoin is Doomed‘ piece.

The oxymoronic (and US-centric) argument somehow proclaims that “the closer Bitcoin gets to being an accepted currency, the less useful it will be as a method of exchange.”

Huh? Ah ok, so Lavin notes that the very point, the existential reasoning behind Bitcoin, is to be unaccepted or unacceptable. OK, there’s a fair amount of truth to that. It’s designed to be uncontrollable which is similar. But different.

That’s right – designed. Heavy crypto and p2p networks. Software engineering. That’d be obvious, you’d think. But apparently not:

“Almost all the advantages Bitcoin has — it’s cheap, somewhat convenient, anonymous, free from centralized authority — derive from the fact that governments haven’t taken it very seriously.”

Stepping around the argument of whether Bitcoin is actually anonymous or not (I like to think it’s anetymous – perfectly trackable on the level of it’s own network), I’m pretty sure all the advantages listed are more to do with the underlying codebase, and the internet infrastructure its all based on. Guess what – email and DNS suffer the same advantages too.

If you’re a ‘fan’ (i.e. not) of fiat currency infrastructures, this bit sticks the knife in:

“All of which is to say that doing anything legally with bitcoins — and especially converting them into fiat currencies — is going to get harder and more expensive as governments involve themselves.”

In other words – Lavin wants you to believe that money needs to be inconvenient. Not only that, it wants you to think that money needs a master, and that that master is very much not you. You have no power over where your money – what you earn, what you use to buy food and housing, what you tip friends with even – where it comes from or how much it should be worth. Let alone how much you’re worth.

Lavin then can’t decide if being the same as other means of exchange makes Bitcoin equal, or worse:

“So hard and so expensive, I’d argue, that any advantages the crypto-currency may have over normal means of exchange, like credit cards, will soon disappear.”

Speaking as someone who doesn’t have and has never had a credit card, I’d question what “normal” means, but mere detail. Lavin manages to miss the point that credit cards are private services – avoiding massive fees is rather tricky – whereas Bitcoin is a protocol as much as a range of services. I could even run my own blockchain if I wanted to. I can certainly write my own wallet and send money for free if I want to. And send coins anywhere in the world for free. And yes, that includes outside the US.

One’s left wondering – is this the start of a double-pronged attack on Bitcoin by mainstream routes looking to clamp it down sooner rather than later? Sure, there’s a slowly-diminishing set of doubters and haters who took it to be a pyramid scheme when prices jumped up – I’d be tempted to lump Levin in with these, just as there are still people who demonise the web.

But there are also those who believe it can work, but don’t want it to – that have something to lose, not from the protocol itself, but the mindset it encourages: that shifting money around doesn’t need separate, privately-owned infrastructures.

Really, this is an encouraging article. The arguments against why Bitcoin should exist are getting thinner as the technology lasts.

Sure, there will still be some bumps in the road – probably massive ones, involving huge sell-offs and security flaws – but Bitcoin has shown the idea of creating and moving money around via TCP/IP can work. That’s either really exciting, or really scary – depending on who you are.

Advertisements
Tagged:
Posted in: Opinion, Power