but there is something to digital value
I started seriously working with computers in 1979 and have seen firsthand the hype, turmoil, and yes advancement that they have caused. Computers were supposed to bring wealth and prosperity to all, to eliminate the business cycle, to bring freedom to the oppressed, reduce the workweek, save trees by eliminating paper, blah, and blah. The same has been said about its bastard children, the internet, cell phones, and social media. Deep, almost religious struggles over programming languages and browsers. My favorite is virtual reality. Beginning in the mid-1980s the hype machine revs up every decade or so with little actual use. Paper use has grown 400% in the last 40 years. So much for trees. Yet all these “advancements” have changed the world in some good ways, just not exactly the Utopian bill of goods.
I have heard the term techno-barbarism used for years. The idea is that we will spend the day in Zoom meetings while bodies lie rotting in the street. Wait! That was last year. Almost. I’ve been trying to find out the source of this word but have had little luck. A Google search finds that the term has been appropriated by the World of Warcraft game. More concretely, it seems to be associated with Susan Sontag’s “Regarding the Pain of Others” (7) and the philosopher Slavoj Žižek (3) although Sontag may have never used this specific term. Sontag’s essay is about war photography but it is also how technology abstracts and distances us from reality, a common critique of modern technology. Žižek’s main idea is that modern technology has allowed Capitalism to leave democracy behind for a more authoritarian system, just as monarchism was left behind during the Industrial Revolution by democracy. A shining example of this is China.
Technological change is a historic process and because of this, less than optimal situations can get “baked” into the system. The QWERTY keyboard was invented because of mechanical issues with typewriters around 1903. Changes came a few years later to typewriters and now typing is digitized so any arrangement of keyboards is possible. The Dvorak keyboard, which is 40% faster, is still rarely used. The Von Neumann design for a computer is the same for every computer in the world while the desktop design or the design of a smartphone is pretty much locked in. Despite what the techno libertarians would have you believe, free markets don’t allow the superior product to win. Many other contingencies such as manipulation, hype, timing, and just plain luck can be a large factor. Add to this is that free markets are not equitable, a small group always dominates. (1)
So now to cryptocurrency, the newest technology to “save the world.” Several compelling ideas are floating around this. It will create a global decentralized economy that will be open to everyone, no matter how wealthy they are. It will end governmental control of money. It will eliminate the middleman in monetary transactions. It will create value for creative works that have been digitized and devalued and it will put more of this value in the hands of the creator. It will create a fair contractual system that can’t be broken. It will make (some) people rich. This is the techno libertarian ideal. Which will hold true? What could possibly go wrong?
Bitcoin is the first digital currency. On Nov 1st, 2008 the anonymous blogger, Satoshi Nakamoto published a white paper called “Bitcoin: A Peer-to-Peer Electronic Cash System.” (4) Today there are thousands and thousands of digital currencies of different categories and purposes. If one has access to an internet-connected server you can create your own currency in fifteen minutes. There are YouTube videos of course. Currently, there are between 1 to 1.5 trillion dollars invested in cryptocurrency. This may seem like a lot but remember that some 5 trillion dollars are skimmed off the global digital economy per year by thieves who in the case of ransomware, require payment in Bitcoin.
Bitcoin and other early cryptocurrencies like their “rival” Ethereum create new coins using a process called mining. A new coin is created by computers calculating an algorithm called a hash. Hashes are difficult to calculate and easy to verify and this calculation process requires powerful computers that require a great deal of energy. Bitcoin and Ethereum combined rank #22 in energy use against all countries in the world and Bitcoin uses some 4 times the energy per transaction than Ethereum.
(6)
To me, hash mining is the biggest waste of computational power I have ever seen and the opposite of Admiral Grace Hopper’s maxim to “Liberate the machines.” More recent cryptocurrencies use a process called staking which is much less energy-dependent. Ethereum is moving towards staking which should conclude sometime next year. In the meantime, Ethereum mining has gone exponential this year. On April 17th a huge coal mine in Xinjiang China was shut down because of flooding and in June the Chinese government banned cryptocurrency mining altogether. Bitcoin lost 50% of its mining capacity and a price drop of over 50%. This took the rest of the cryptocurrency market with it. So much for freedom from government interference. And how can this be a currency when it fluctuates so wildly over the span of a few months. (5) Hedge against inflation? One would think that the Bitcoin community would come up with a solution but they have only doubled down. The hype is sickening. Bitcoin is really green. Bitcoin mining can run off of volcanoes. Bitcoin mining can run off of nuclear waste. Retch. Meanwhile, Bitcoin miners have migrated to iffy countries like Kazakhstan with their dirty coal or reopened closed coal mines in Montana. To me, Bitcoin can be summed up in a simple equation:
BITCOIN = SHITCOIN
Now the tendency here is to write off all cryptocurrencies as a massive scam but unfortunately the beast is loose in the world and must be dealt with. If there is any hope at all to this then Bitcoin needs to die. My hope is that cryptocurrency dis-attaches itself from Bitcoin soon without any major disasters and Bitcoin becomes the AOL of crypto with a dwindling and aging user base using an unsupported and hacked system. The process of “software eating the world” (2) has left many people attached to vampiric companies that feed on their creativity while giving back nothing. This disruption into digital has made a few very rich, again not by market forces but by timing and hype. How can one mitigate that? Is crypto a solution? Perhaps, perhaps not, solutions are not just technical, they must be social as well.
Beaver, Bill. “Simple Economy.” Emergent Thoughts, April 9, 2021. https://wjbeaver.wixsite.com/mysite/post/simple-economy.
Marc Andreessen. “Why Software Is Eating the World.” Andreessen Horowitz, August 20, 2011. https://a16z.com/2011/08/20/why-software-is-eating-the-world/.
“Pandemic or Not, Capitalism Marches Onwards toward Techno-Barbarism.” Accessed July 30, 2021. https://www.adbusters.org/the-pulse/pandemic-or-not-capitalism-marches-onwards-toward-techno-barbarism.
Nakamoto, Satoshi. “Bitcoin: A Peer-to-Peer Electronic Cash System,” 2008, 9.
Vyas, Chinmay A. “Security Concerns and Issues for Bitcoin.” International Journal of Computer Applications, 2021, 3.
“Digiconomist - Exposing the Unintended Consequences of Digital Trends.” Accessed July 31, 2021. https://digiconomist.net/.
Sontag, Susan. Regarding the Pain of Others. New York, N.Y: Picador, 2003.
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