tag:blogger.com,1999:blog-6189690633638834539.post4236521041853535987..comments2024-03-15T09:21:57.888+01:00Comments on Economics of Bitcoin: The Mises Institute is clueless about BitcoinPeter Šurdahttp://www.blogger.com/profile/17346161576941109337noreply@blogger.comBlogger28125tag:blogger.com,1999:blog-6189690633638834539.post-58247316793083447452017-07-29T14:44:33.554+02:002017-07-29T14:44:33.554+02:00I was surfing net and fortunately came across this...I was surfing net and fortunately came across this site and found very interesting stuff here. Its really fun to read. I enjoyed a lot. Thanks for sharing this wonderful information.<br />historypakhttps://www.blogger.com/profile/12429820414620086221noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-87281157156574108862017-01-04T09:39:55.995+01:002017-01-04T09:39:55.995+01:00It would be nice if you place that quote in the ar...It would be nice if you place that quote in the article as a rebuttal and just not saying I seem to have friends on Facebook who seem to be BTC fans. Thank you.Justin Ptakhttps://www.blogger.com/profile/16344179794502017973noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-48321884282912687082013-12-07T10:08:14.930+01:002013-12-07T10:08:14.930+01:00The reason (as far as I understand) that Rothbard,...The reason (as far as I understand) that Rothbard, Hoppe, Block, de Soto and some others argue that FRB is fraud, is that they cannot fit it into the Title Transfer Theory of Contract, and that thus they conclude that the type of contract that would be required for FRB is not logically possible. I do have some critique of that in an earlier unpublished draft of my thesis, I'll publish it eventually.<br /><br />The other problem is of course government intervention. Some anti-FRB-ists seem to argue that without government intervention, FRB would not exist or be marginal even if it wasn't illegal. I tend to disagree here too but I'm not entirely sure. I haven't thought about this particular aspect to enough for my full satisfaction.Peter Šurdahttps://www.blogger.com/profile/17346161576941109337noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-90139129978625912512013-12-05T04:04:33.851+01:002013-12-05T04:04:33.851+01:00I think Rothbard's opposition to fractional re...I think Rothbard's opposition to fractional reserve banking did not stem from his "natural-law, natural-rights philosophy," but from his understanding of both history as well as speculation about what would happen under fractional reserves, especially if they were widely accepted. If we take his natural rights philosophy at face value, there is nothing wrong with what you called "free banking and fractional reserve banking, even if voluntarily agreed to among consenting adults". But this has nothing to do with whether fractional reserve banking is desirable or not (I personally think it could be under certain circumstances and for certain things). Rothbard and certain Rothbardians are wrong to call it fraud, but I don't think we have any reason to think they mean that something "voluntarily agreed to among consenting adults" is fraud. I think they mean it could be considered fraud because of people using notes that could be affected by fractional reserve banking in a way unbeknownst and/or undesired by them, i.e., inflation. But of course, no one necessarily made them use those notes. It is only if they are somehow deliberately tricked into using them that there could be said to be any fraud. But this has nothing to do with the specific banking practices.<br /><br />-Henry Moore (It keeps trying to publish my comment as "anonymous" for some reason)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-3230753956127334072013-05-28T00:14:47.784+02:002013-05-28T00:14:47.784+02:00I apologise, I must have misunderstood it. My reco...I apologise, I must have misunderstood it. My recollection (I commented heavily in the comment threads back in 2011) is that the overall mood was negative.Peter Šurdahttps://www.blogger.com/profile/17346161576941109337noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-35088337843104949602013-05-22T12:04:47.535+02:002013-05-22T12:04:47.535+02:00I am a proponent of Bitcoin, my posts were meant t...I am a proponent of Bitcoin, my posts were meant to highlight this innovative technology while also illustrating the early growing pains of this very promising virtual currency.Justin Ptakhttps://www.blogger.com/profile/16344179794502017973noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-63679722654288951562013-04-21T19:11:52.602+02:002013-04-21T19:11:52.602+02:00OK Peter
However, you (and Konrad) were surprised...OK Peter<br /><br />However, you (and Konrad) were surprised at the official Institute position on Bitcoin as expressed in their published articles to date (as contrasted to the private correspondence). Their response did not surprise me at all. If you are OK with the response and understand it to your own satisfaction, then you have no need for my insight on this issue, so I'll drop it.<br /><br />I replied to your comment about Bitcoin and Gresham's law:<br /><br />http://mises.org/community/forums/t/33336.aspx<br /><br />Adam Knotthttps://www.blogger.com/profile/15706948461332635548noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-67197850458817408332013-04-21T10:41:38.481+02:002013-04-21T10:41:38.481+02:00At least partially I disagree. Kinsella is my frie...At least partially I disagree. Kinsella is my friend and has been very supportive of my Bitcoin research, reading what I wrote and providing helpful comments, and getting me in touch with Jeff Tucker. In an earlier draft of my thesis there is a part that analyses Bitcoin from the point of view of title transfer theorey of contract and he (Stephan) said it appears ok to him. He doesn't think that FRB is per se a violation of property rights, and he said that he always thought that eventually we'll end up with electronic money. Murphy has been very neutral about Bitcoin, and also does not appear to think that FRB is fraud, and now is working on blog posts about Bitcoin on his site and promised to read my thesis.<br /><br />Salerno is a big disappointment, but Gordon and Block provided helpful input (directly by emailing with them or indirectly by watching their lectures), even though that might not have been intentional. One of Block's lectures is key to my interpretation of the regression theorem, for example.<br /><br />So there appears to be a rift. Just like there appears to be a rift along the freebanking or IP lines. But unlike freebanking and IP, Bitcoin does not give a f*** what the Misesians thinks about it, because it already works.Peter Šurdahttps://www.blogger.com/profile/17346161576941109337noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-91839869283354806642013-04-21T05:59:00.497+02:002013-04-21T05:59:00.497+02:00No. Ask George Selgin or Larry White. Or ask any...No. Ask George Selgin or Larry White. Or ask any of the Hayekian Austrians such as Horwitz, Boettke, etc. The Institute wouldn't support Selgin and White because they advocated free banking and Rothbard was vehemently opposed to it. Read Rothbard's "The Present State of Austrian Economics" (1992). Once you read that essay, you will understand what is and what is not allowed at the Mises Institute. Rothbard was the original head of academics at the Institute. Any theory or libertarian development that contradicts any of Rothbard's strongly held beliefs will generally be opposed by the Institute. <br /><br />Mises favored free banking, but the Institute is comprised of Rothbardians (Salerno, Block, Gordon, Rockwell, Kinsella, Murphy, etc.) and so the Institute has always been against free banking. They are not libertarians in the general sense (generally in favor of liberty from the state); they are specifically Rothbardian libertarians. This means they advocate a specific set of concrete values that Rothbard advocated, such as the gold standard, the notion of a pure libertarian society consisting of only private protection agencies, etc. They are absolutely against free banking and fractional reserve banking, even if voluntarily agreed to among consenting adults. This comes from Rothbard's natural-law, natural-rights philosophy which departs radically from the Austrian theory of subjective value, and substitutes a theory of objective or absolute values. <br /><br />According to this kind of thinking, gold and the gold standard are seen as absolute values that are inseparable from libertarianism. A libertarianism or libertarian future absent a gold currency is virtually unimaginable to such a mind. They are not that interested in a currency, whatever its concrete form, that conforms to general libertarian principles. They are much more interested in the concrete currency that their philosophical leader, Rothbard, wanted, and that is gold.<br /><br />The Institute is a Bitcoin opponent due to Rothbard's objective-value philosophy which he argued for (and against an Austrian approach) in the first 26 pages of The Ethics of Liberty. They are against Bitcoin because it doesn't square with Rothbard's particular vision of libertarianism in which gold is the only money.<br /><br />That is why uninformed and sloppily written articles opposing Bitcoin will be published by the Institute, while well-informed and well-written articles in favor of Bitcoin will not be published by them.<br /><br /><br />Adam Knotthttps://www.blogger.com/profile/15706948461332635548noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-81333009069912846502013-04-20T21:39:05.544+02:002013-04-20T21:39:05.544+02:00I don't know. The Institute I thought I knew l...I don't know. The Institute I thought I knew looked pretty open.Peter Šurdahttps://www.blogger.com/profile/17346161576941109337noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-5893509547180389832013-04-20T21:31:18.468+02:002013-04-20T21:31:18.468+02:00Two further comments:
1. Clarification. What I ...Two further comments:<br /><br />1. Clarification. What I mean to say is that in Mises's theory, gold or the gold standard is a means to an end. Mises holds that the gold standard is/was merely a means to render the exchange value of money independent of partisan politics. If the means are found to be faulty or insufficient, and other means superior, then it is perfectly consistent with his scientific vision that the former means be abandoned and the superior means adopted. Obviously, virtual or computer currency was not an available means in his time. As he saw things, gold or the gold standard was the best AVAILABLE means to keep the money supply independent of political manipulation.<br /><br />By contrast, Rothard tended to see gold as an absolute or "objective" value. He saw gold not merely as a means to an end, but as a fundamental and absolute value within his conception of libertarianism. To him, libertarianism includes gold as a fundamental value. We know from Rothbard's The Ethics of Liberty that he was a proponent of such objective or absolute values while Mises was an opponent of any kind of objective or absolute theory of values. Rothbard was willing to jettison subjective value theory and switch to objective or absolute value theory if that would support is convictions. In his mind, the gold standard was an absolute good, and fractional reserve banking and free banking were absolute evils.<br /><br />This is what I meant in claiming that the Mises Institute seeks to advance a Rothbardian and not a Misesian paradigm. Whenever there is a conflict between Austrian economic theory or developments in the libertarian world (such as Bitcoin) on the one hand, and the concrete values of Rothbard the man on the other hand, the Institute will generally advance the values of Rothbard the man over Austrian economic theory and over advances in libertarianism or libertarian theory.<br /><br />This explains why the Institute has come out against Bitcoin in its published articles. For Rothbard, gold is a fundamental absolute value. Anything that contradicts or threatens this notion is to be opposed.<br /><br />2. I've made a short post suggesting a possible application of Gresham's Law to Bitcoin:<br /><br />http://mises.org/community/forums/p/33336/518418.aspx#518418Adam Knotthttps://www.blogger.com/profile/15706948461332635548noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-26841438931545792852013-04-18T21:23:06.075+02:002013-04-18T21:23:06.075+02:00I deal with this on a very broad level in my thesi...I deal with this on a very broad level in my thesis, I think section 3.6, the one labeled something like "If Bitcoin fails, what would replace it?". I also deal with it in a bit more detail in two of my blog posts:<br /><br />http://www.economicsofbitcoin.com/2013/03/re-bitcoin-bubble-20-by-patrik-korda.html<br /><br />http://www.economicsofbitcoin.com/2013/03/the-classification-future-of-bitcoin.html<br /><br />Basically, both Hoppe and Korda are wrong. The network effect (whether in money or anything else) is neither omnipotent as Hoppe presents it, nor impotent as Korda presents it. It's somewhere in the middle. So while we can't be sure that one money will beat all else and emerge victorious (it could, we just can't predict that in advance), we can estimate that there will tend to be a small number of dominant players, and the market share fluctuations will tend to get slower the more mature the industry becomes and the larger the market share becomes.<br /><br />The scenario of "inflation through competition" is unrealistic. That's not to say that competition is entirely absent, it would just get a smaller issue as time goes.Peter Šurdahttps://www.blogger.com/profile/17346161576941109337noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-28513849471632256562013-04-18T21:13:06.889+02:002013-04-18T21:13:06.889+02:00JP,
check out this presentation by Mike Hearn:
h...JP,<br /><br />check out this presentation by Mike Hearn:<br /><br />http://www.youtube.com/watch?v=CUP38679mxY<br /><br />http://www.youtube.com/watch?v=mD4L7xDNCmA<br /><br />It's the same presentation, just two different cameras, I don't know which one is better, I was there live and I didn't watch the videos.Peter Šurdahttps://www.blogger.com/profile/17346161576941109337noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-29105685523746130532013-04-18T21:10:51.027+02:002013-04-18T21:10:51.027+02:00It of course depends on how you define "faile...It of course depends on how you define "failed". But the Austrians have a long history (Mises and Rothbard) of giving the highest normative preference to free market money because it prevents the state to exercise monetary policy (i.e. redistribution of wealth). And here is where gold failed. For Austrians following Mises and Rothbard's normative goals it should therefore be clear that gold is not a suitable means to achieve the goal of separation of money and state. Good money must be able to resist the state, and the banks. I don't know if Bitcoin can do that but from this perspective it's way more suitable than gold. Check out a 2 year old article by Michael Suede: http://www.libertariannews.org/2011/06/28/the-ridiculousness-of-demanding-government-return-to-a-gold-standard/Peter Šurdahttps://www.blogger.com/profile/17346161576941109337noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-51287018961124928562013-04-18T18:37:12.012+02:002013-04-18T18:37:12.012+02:00You can read more about it here:
https://en.bitcoi...You can read more about it here:<br />https://en.bitcoin.it/wiki/Contracts<br /><br />Basically, a bitcoin transaction can be more advanced than simply giving the coins to someone else. You can also put requirements on the coins which the reciever need to fulfill in order to spend them.<br /><br />One possible use case is to spend the same coin to multiple adresses controled by different people. Then you could put a requirement on your transaction that a specific number of the recievers would have to sign a transaction in order to spend the coin again. The coin is unspendable until a sufficient amount of them agree where to send it.Anonymoushttps://www.blogger.com/profile/01646917143197845402noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-48535861111788416592013-04-18T18:17:26.050+02:002013-04-18T18:17:26.050+02:00Hi Peter
The reaction of the Mises Institute to B...Hi Peter<br /><br />The reaction of the Mises Institute to Bitcoin is disappointing but not unexpected. To understand why, it is necessary to realize that the Institute was founded to promote a Rothbardian paradigm of which Misesian-style Austrian economics is merely a subordinate part.<br /><br />Austrian economics is expounded at the Institute only to the extent it supports Rothbard's normative conclusions. (in this case, his normative convictions regarding gold and the gold standard) When formal Austrian economics conflicts with Rothbard's normative conclusions, the Institute promotes Rothbard's normative conclusions and argues against (explicitly or implicitly) formal Austrian economics. <br /><br />Salerno, Hoppe, Shostak, etc., are hardcore Rothbardians. White was never a Rothbardian and cannot be counted on to support Rothbard's normative views, and that is why his writings are not promoted at the Institute.<br /><br />To understand the Mises Institute, you have to understand that its purpose above all else is to promote Rothbard's views, and in Rothbard's conception, Austrian economics serves the purpose of justifying or rationalizing only a portion of his normative convictions. In cases where Austrian economics cannot plausibly support Rothbard's convictions, it is jettisoned. <br /><br />Thus, for example, when a Rothbardian wants to argue for a Rothbardian norm, the concept of subjective value will be abandoned and (implicitly or explicitly) the concept of "intrinsic" or "objective" value will be employed.<br /><br />The Institute is "Misesian" in name only. In practice it is the Rothbard Institute, delegating to Mises and Austrian economics the task of providing theoretical support for a portion of Rothbard's norms.<br /><br />Adam Knotthttps://www.blogger.com/profile/15706948461332635548noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-62424308695497776542013-04-18T16:40:20.525+02:002013-04-18T16:40:20.525+02:00@JP Koning, please have a look at this wiki page f...@JP Koning, please have a look at this wiki page for in depth information on Bitcoin contracts: https://en.bitcoin.it/wiki/Contracts<br /><br />Hope it helps.alguienhttps://www.blogger.com/profile/09464999520601821551noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-66420555617442361662013-04-18T16:29:21.236+02:002013-04-18T16:29:21.236+02:00Great essay, Peter. I have a comment/question abou...Great essay, Peter. I have a comment/question about a part of it:<br /><br />"And even if we disregard it as a hypothetical, we just need to remember that gold already failed, because it was reduced from money to a secondary medium of exchange. This was only possible because money substitutes emerged."<br /><br />To be clear, neither silver or gold failed. They were relegated to their current status by fraudulent decrees backed by force of the state.<br /><br />The important thing about Bitcoin is that it's the first universal money to be money without a state decree - fiat - since electrum, gold, silver, copper and iron were first employed by governmentless humans long ago.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-6878985593498879062013-04-18T16:16:36.126+02:002013-04-18T16:16:36.126+02:00they'd belong to a different 'system',...they'd belong to a different 'system', if you just copied it like that with no changes, people would have to invest in the copied version, and why would why? Bitcoin is created with the intention for improvement, it is possible for someone to create a change and fork the program to their own version, essentially copying Bitcoin. This is intended, competition is good. If a significant improvement is made then eventually people would migrate over, or it might be adopted by the primary blockchain (which is most likely). Though as it stands such improvements are presented to the foundation for being added into the current blockchain.<br /><br />Basically, what you said is an intended part of Bitcoin, to inspire competition and growth. It would however not inflate the Bitcoin market as you can not make extra copies of Bitcoin like that, its due to the primary maths numbers (the only way is a 51% 'attack', which is essentially impossible).Anonymoushttps://www.blogger.com/profile/07685789131908794782noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-80823394972547546662013-04-18T15:29:06.041+02:002013-04-18T15:29:06.041+02:00Hi Peter
"With algorithmic contracts, it can...Hi Peter<br /><br />"With algorithmic contracts, it can make large parts of the financial sector obsolete."<br /><br />Can you give a quick sentence or two on this? Never heard of algorithmic contracts before.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-58074964062731545922013-04-18T14:11:58.776+02:002013-04-18T14:11:58.776+02:00I found a good point somewhere, and I'm wonder...I found a good point somewhere, and I'm wondering what is your opinion about it. It goes something like this: <br /><br />Bitcoin doesn't have real scarcity. While bitcoins have scarcity, the entire system of bitcoin can be copied multiple times with other name, so there would be many indentical cryptocurrencies.<br /><br />So if they serve identical need, and the only difference in quality is its popularity (or call it a brand), unlike commodity money which has differences in physical properties to distinguish themselves, wouldn't multiple identical systems like bitcoin really inflate bitcoins (theoreticaly indefinitely)?Anonymoushttps://www.blogger.com/profile/07322307441846897179noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-31686356770282035582013-04-18T11:05:54.105+02:002013-04-18T11:05:54.105+02:00Yes and no. My point is we cannot assume all other...Yes and no. My point is we cannot assume all other things are the same, in particular when our current situation. And an email exchange I had with Hoppe back in 2011 indicates that he does not think that once you have money, it's irreplaceable. I'm attempting to stress the entirely hypothetical nature of the argument and that it shouldn't be given unnecessary weight.Peter Šurdahttps://www.blogger.com/profile/17346161576941109337noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-25801709504969181532013-04-18T10:57:51.805+02:002013-04-18T10:57:51.805+02:00But there's a difference between scholarly ske...But there's a difference between scholarly skepticism and posting haphazardly assembled sentences. That's the main issue.Peter Šurdahttps://www.blogger.com/profile/17346161576941109337noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-19229183641893949232013-04-18T10:47:49.213+02:002013-04-18T10:47:49.213+02:00I don't think Hoppe is that silly. Surely that...I don't think Hoppe is that silly. Surely that statement is meant with ceteris paribus in mind?Jurajhttps://www.blogger.com/profile/17935808575088983189noreply@blogger.comtag:blogger.com,1999:blog-6189690633638834539.post-45666277722683222912013-04-18T10:40:55.167+02:002013-04-18T10:40:55.167+02:00everyone who heard about bitcoin the first time we...everyone who heard about bitcoin the first time were skepticalSteffenhttps://www.blogger.com/profile/00524044104314517683noreply@blogger.com