Bitcoin Baby Steps (V)

By | 2011-05-03

I heard about Bitcoins last year. Thought “could be interesting one day”, checked the Debian repository for a version of the client (it wasn’t packaged yet), not finding it, I moved on.

Then Slashdot mentioned that trading in Bitcoins had (temporarily) reached dollar parity. One Bitcoin was worth one dollar, but dropped back to about 70 cents. That was enough to make me look again at them. Still no client in Debian, and I can’t be bothered with compiling software myself, so while I was getting more interested, and planned on getting some coins (I had the notion of £50 worth), I let the moment pass.

I’m not going to go BitCoin mad, but I don’t think it will hurt me to get a few and see what happens.

My inherent laziness meant I never actually got around to it.

Recently the Bitcoin client appeared in Debian. So I downloaded, installed it and started experimenting. I wrote about what I’d done, and they were trading at or above $1.

This weekend I found the Britcoin service and deposited a few quid in it in preperation for making the purchase I had planned for so long. It took a few days for that deposit to clear (damn our banking system — more evidence of why Bitcoins are needed).

I’ve never been lucky with investments, and my bad luck hit again. Over the weekend, Bitcoin trading surged to over $4. It’s dropped back to about $3, but has stabilised and looks set to stay there (enough to seemingly have scared Paypal into recognising that Bitcoins are competition and banning the Coinpal service).

Typical. I delay for months and very little happens — on the day I begin to actually do something, they triple in value.

My bad luck aside. There is a certain suspicion that there is a bit of a bubble going on. However it’s worth remembering that all fiat currencies are a bubble, they are simply a bubble that hasn’t burst. The reason Bitcoins attract me so much is that they seem to be a safer bubble than one controlled by government. Fiat currency is a lie. Commodity-backed currency is no less a lie, but is outside central control (to a certain degree). Bitcoins are at least honest in that they explicitly recognise they are worth nothing other than their users value them at (which is identically true for gold).

Recent mentions in major newspapers have started to swell mainstream interest in Bitcoins; the CIA have invited the lead developer to give a talk on them; the recent price spike shows that bigger players are becoming interested.

Think about GDP… GDP is the Gross Domestic Product. That is to say, it is what a country has produced in a year. It is the change in wealth, not the wealth itself. Wealth is the sum of GDP year upon year. Even during a recession it is measured in trillions of pounds. Trillions. Does it not strike anyone as inherently suspicious that we have increasing wealth but inflating currency? Whose fault is that? The answer is government.

Take the currency off them. The money you earned last year should then be worth more next year, because it has (implicitly) been put to work in the economy to generate this year’s GDP.

The current volatility in Bitcoins is caused by it being such a small market. Single trades can affect the price by large amounts. Bitcoins shouldn’t be an investment, bought in the hopes that they will increase in value, they should be a currency, gradually drifting up in value against fiat currencies as those fiat currencies inflate.

I am 100% serious: the use of Bitcoins (or something like them, but since they already exist, they’ll do) is a more powerful way of wresting control back from our governments than any vote, referendum or electoral reform can possibly be. At a time when I have lost hope in the power of democracy to improve the world, I’m finding Bitcoins to be a satisfactory alternative to writing angry blog posts.

Vote with your feet, start buying and selling in Bitcoins, not as an investment, just as economic activity. Start small at first, I’m not suggesting you abandon your existing lives, but slowly it can be done, and the more who do it, the more secure Bitcoins become. Best of all: it requires no collective action, only individual voluntary action — mana for a Libertarian.

I’m in the fortunate position of having saleable skills rather than saleable goods, that means I can offer them for sale for Bitcoins without needing to spend anything other than my time. I think that that is how I shall begin.

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