Jun. 21st, 2011

I've been paying a lot of attention to bitcoin recently. It's a fascinating idea, and I'm really curious as to where it will go. But reading the comments on the Internet about it is even more interesting, though also kind of upsetting. People say the most ridiculous and stupid things, and it's all out of nearly violent emotion. I don't really understand.

Some people say ridiculous things like "It can only go up!" (in reference to the USD/Bitcoin exchange rate) or "It can't fail!". Optimism beyond the point of sanity. Bitcoin can fail. It can fail if it turns out that nobody wants to accept it. Currency that nobody will trade anything for is just as useful as a small piece of paper, and in bitcoin's case, even less useful. And that's a very definite possible future of bitcoin.

People also go through all kinds of logical contortions to declare it a scam. But it doesn't fit the definition of a ponzi scheme any more than any other currency does, nor does it fit the definition of a pyramid scheme at all. The closest it comes to is a hot tech stock. And nobody calls those scams unless they accuse them of 'pump and dump'. But 'pump and dump' doesn't fit the profile of most people who are interested in bitcoins and are trading them either.

And then people declare it valueless, as if any currency (even gold) has any intrinsic value beyond people's willingness to trade stuff for it.

Very few people talk about the worthiness of the cryptography. But even the ones who do paint either incredibly rosy pictures or ridiculous apocalyptic scenarios, neither of which really approach the truth of things.

I just find the way people ignore any reason and base their opinions on pure emotion to be kind of upsetting. And I notice this in a lot of arguments. But the arguments over bitcoin are almost comical in just how incredibly intense this phenomena is. The only thing that makes it not comical is that you realize these people are deadly serious.

I think a lot of people have a lot of unexamined hang-ups about the meaning of money. It's deeply tied to their fundamental beliefs about politics, ethics, morality, and even self-worth. I think most people are terribly unequipped to tease these things apart and examine them separately. Money is 'magic'. People do not see it as the societal cooperation tool that it is.

I think, perhaps, that is one of the most valuable parts of the bitcoin project. Its nature provides a handle or a window for examining money as a societal and organizational tool. I suspect most people won't be able to take advantage of this, but I suspect many will, and our society will become richer for it.

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