Author: Curt Doolittle

ON BITCOIN’S FUTURE – THERE IS NO POST-CAPITALIST FUTURE ON THE HORIZON. BITCOIN OR NO.

um… capitalism (private property, contract, money, prices, and consequential incentives) will exist forever in the same way that math will exist forever, because it is a necessary information system. That can’t go away – ever, because capitalism is required for the voluntary organization of production.

It is not capitalism that will be replaced, it is the reliance on the banking system that evolved during the era of hard currencies, that will be replaced.

There is no evidence that a distributed block chain employing proof of work is superior to a series of centrally managed databases such as Visa, Mastercard, and Amex, wherein transactions are immediately verified.

What is unique to this technology is that under fiat currency, each unit of currency is equal to a share of stock in the corporation of the state, which while not redeemable via the state, is insured by the state, and functions as a medium of exchange, unit of account and at least short term store of value.

Digital currency represents a divisible, fractional share of the issuing network. The state currency is insured by the state, but the digital currency is private and uninsured.

The state is more likely to demand that any network of sufficient scale is insured for it to be issued to the public without harm. I expect this legislation to appear within the coming decade.

Digital currency merely removes the middleman – the bank – from the distribution channel for the currency, and therefore the need for the bank to insure each transaction during the period of clearance when performing an escrow service.

This is the primary value of all bitcoin related technologies.

CONVERSELY

It is not rational to expect that the state will allow a digital currency to remain unregulated primarily because it is a ready-made vehicle for tax evasion and money laundering. (as we have already seen.) And digital currencies (a fractional share of a BTC network used as a money substitute) to rely upon infrastructure that is too perishable (even more so thank ATM networks) and as such the economic impact of such currency failure is too vast.

So digital currencies will never evolve into replacements for fiat money – they may only be used as a store of value against the loss of purchasing power of the fiat currency, when the money supply is inflated.

So the post-hard-currency era (I predict) will eliminate banks as a means of central distribution of credit to consumers, and function entirely as means of financing business credit. And transaction costs will drop precipitously since there is no escrow risk on the part of the bank.

But I might as well bark at the moon because the people who talk about their fantasies for bitcoin are ideologues who have very little comprehension about that which they speak.

Cheers.

Curt Doolittle

The Propertarian Institute

Kiev, Ukraine