Over on MetaFilter, someone re-posted my wildly popular article exposing the shady pasts of Bruce Wagner and his possible involvement in the MyBitcoin debacle. It was basically a rundown of my previous post in a TL;DR article, citing and highlighting the important parts. Its seems to have been a pretty popular article and sparked some good debate with over 168 comments, some pro and some con on the side of Bitcoin. There were also, as always, a very vocal minority of libertarians embracing their flawed ideals and reinforcing the idea that the “invisible hand” of the market could do no wrong.

Amid the turds though was a sparkling gem of a comment. Very well written, well thought out and with a clear narrative, it tears down the ideals of libertarianism and dismantles and evaluates the basic ideals which will keep Bitcoin from ever succeeding.

You can think of bitcoin, paypal, even the U.S. dollar as communications protocols. There are various levels of protocol, and, with some looking at it you can see why bitcoin is at best more anonymous paypal, and at worst, ripe for scamming. Bitcoin really appeals to the hardcore, I-can’t-handle-relationships-with-others type of libertarians. Also, you can think of the basic level protocols as something you have to have if you want to do business in a certain ring-fenced economic zone (physical or otherwise).

The U.S. dollar, yen and euro are all low level payment protocols, we can think of them as fundamental communications protocols. In fact, the USD and JPY are basic protocols because they are not based on anything other than the taxing authority of the respective governments of the US and Japan. The euro is a little different because although it is based on the taxing authority of the respective EU member states, since the EU government passes its taxes collected on to the members states. A currency such as the HK dollar is actually not a fundamental protocol because its value is pegged against other protocols.

One step higher than the dollar, yen, and euro are the various transfer services such as Paypal or the credit card systems. For example, Visa, Mastercard and AmEx all maintain private, closed networks over which participants can transfer money in the lower level protocols of national currencies, or the pegged currencies. But none of those systems create their own currency, they’re just a conduit for others.

Bitcoin is trying to become a fundamental payment protocol, in that they are creating their own currency units. Also, WoW gold is a fundamental payment protocol– its value isn’t based/pegged against another item. Realistically you can think of WoW gold as a low level protocol like the US dollar because it is necessary to get it if you want to play WoW, just like dollars are necessary if you want to play in the USA.

Now, okay, you can look at these protocols as necessary to play in a particular economic zone, i.e. the U.S., Europe, etc. You need HKD if you want to play in HK, but the _value_of the HKD isn’t set by the number of people that want to play in HK, as much as it is set against the peg which is maintained by the HK government currency organization.

Bitcoin is trying to derive its value from scarcity, and, since its introduction there is now a “Bitcoin bloc” , i.e. a group of people that are doing business in Bitcoin. So let’s say the Bitcoin bloc keeps growing. Great, no problems. Logically, however, since the Bitcoin has finite value, someone or someones will realize that they can, in one way or the other “corner the market” on Bitcoin. When that happens, it will be similar to what happens in online games like WoW when a few players control all the currency units. Namely, those players will be able to dictate to others what happens. Of course there is no accountability under this system– technically it’s “the market”, i.e. the universal God, that’s supposed to prevent this but in practice I have my doubts. Technically a community-backed currency (like the USD or WoW gold) has ways to deal with the situation where one small group monopolizes all the currency– but Bitcoin, by design, lacks this.

Someone is going to say “look fuck you wuwei, governments aren’t even accountable to their people so what difference does it make.” I’ll agree that a lot of national governments have accountability issues (mine sure does) but the difference is in the idea of a common good. The idea of government is to have a common good that binds everyone inside of the economically and geographically bordered community. When you don’t have that, ultimately, you end up with the kind of dispersed society that is the default for humanity– clan behavior, and one level up from there, fictional kinship. Fictional kinship can come from organizations that try to create family bonds between the members, things like guilds, organized crime ‘families,’ and religions. We’ve got a whole lot of people in the United States who don’t even believe in the collective good anymore, they don’t think such a thing exists, mostly because they don’t want to have to live in the same community with people who look different.

As I wrote previously, that is the kind of world that the Bitcoin libertarians, who love John Locke, Ayn Rand and “freedom” can’t handle, because it’s a world where no one gives a shit about abstract rights– it’s all about personal relationships, blood debts and honor. Even WoW gold is connected to a community of people who come together to play a video game and blow off some steam, but Bitcoin isn’t. Bitcoin is all about shitting on the idea of a community and living in some minarchist fantasy land where you, your immediate family and some AR15s are the MOTHERFUCKING SOLE SOVEREIGN over your immediate surroundings, living well off your TOTALLY AWESOME L33T SK1LLZ and learning how to microfabricate everything you need to live and trading with other awesome microfabricators who also have l33t sk1lllz and open carry their cocked and locked 1911s everywhere. But there’s a little problem with this. Stuff like precision medical supplies definitely need a large degree of cooperation, process, control long lead times and surprise, regulation, otherwise they don’t tend to work.

Memo to the Bitcoin guys: you can build a community that has some cool microfabricated steam engines and open source software. But the first time your grandma need a pacemaker, or blood pressure pills and dies, and when your neighbors decide to just use squatholes for shitters and there’s a cholera outbreak which leads to your clan leader finding out about that girl you like from the Smith clan, which your clan hates and clan integrity is the only thing protecting you from a cruel world, and the only person who would have spoken up from you was your grandmother, and then the boiler of that micro-fab steam engine you built that didn’t need those commie government regulations explodes and kills half your clan members, and that cute girl, and then your clan leaders excommunicate you and put your sorry ass naked out in the street, bleeding, with a latent head trauma that only an MRI could diagnose and only a neurosurgeon in a sterile ER could fix, then you’ll miss the common good. Right before you bleed out.

But it’ll be too late because you and your fellow traveller community-haters will have destroyed everything that made it possible, including the idea of a common good.

So, rather than continuing to destroy the social fabric of America, I’d prefer that you all get the fuck out now. Thanks.

You can read the comment in it’s entirety, and the rest of the thread here.