Sunday, April 07, 2013

Can you have an economy based on the Bitcoin, the Linden Dollar, or no currency at all?

A topic that I see tweeted about a lot these days but have so far not heeded much is the “bitcoin”, a decentralized digital currency transferred among smartphones and computers over P2P networks, with the money supply controlled by “bitcoin miner” servers and authenticated by “EDCSA digital signatures”.  Wkipedia gives a pretty thorough overview here
One technical columnist(appearing frequently on Arstechnica and Forbes), Timothy B. Lee, calls himself “binarybits” on Twitter and often posts about it.  On Tumbler, Lee has a brief overview here.  The original instrumentalities of finance – “banks, currencies and securities” don’t fit the bitcoin very well.  Nevertheless, more merchants around the world are accepting them. The monetary basis in March 2013 was over $1 billion.
I think you can wonder how a discussion of bitcoin would fit other claims that “fiat money” has not intrinsic value when divorced from a gold or scare raw material standard.   Yesterday, on the Movies blog, I reviewed a film (“Future By Design”) about an architect Jacque Fresco, who argues that a truly advanced civilization will no longer need money at all.  It’s pretty interesting to me to speculate on science fiction scenarios based on a moneyless society, where one is abducted to another planet and has to survive on his work and karma alone.  In fact, some “intentional communities” around the county operate on keeping track of “work credits” but don’t allow money to be exchanged except when residents leave the premises (such as the Twin Oaks community north of Richmond, VA, which I visited and reviewed, coincidentally, one year ago today, on my Issues Blog).
In fact, in August 2011, Lee wrote a piece for Forbes about the decline in the bitcoin’s “value”, here. One factor that would keep the value of the bitcoin unstable is the relatively low volume of people who use it. 
Many tech-oriented websites do accept donations through bitcoin, as shown on this list. One of these orgs is Wikileaks.
I haven’t used "it" (yet).  But I haven’t tried a lot of P2P or smart phone things.  I probably should learn to.  Think of the value of being able to get a cab quickly late at night in a questionable area of town after Metro isn’t running.  Or of being able to find an address in a remote area at night quickly by car. 
I wonder if the bitcoin can be compared to the “Linden Dollar” of Second Life, which again, I have not tried.  I like inventing model kingdoms (one of my screenplays has its hero winding up living as an avatar -- and forced to marry a female doll -- inside a model railroad controlled by a foe – that is a setup of “Baltimore Is Missing” (2003), but I haven’t exactly done what I imagine (certainly not “naked” – so I have to “fake it”).  

Noam Cohen has an article ("Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm" on the bitcoin valuation and "bitcoin mining" Sunday in the New York Times, here, "Link by Link" series. . Cohen explains also how some people feel that bitcoin transactions are harder for governments or maybe stalkers to track.  

On Sunday, April 14, Neil Irwin wrote an article on the Washington Post Wonkblog, "Bitcoin is ludicrous, but it tells us something important about the nature of money, here

Update: May 28, 2013

Timothy B. Lee has an important Washington Post Wonkblog article comparing Bitcoin to Liberty Reserve, as to whether the fibbies would really try to shut down Bitcoin (could they?), link here. John Grisham would love this.  

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