“But out here, down here among the people, the truer currencies come into being.” Thomas Pynchon, Gravity’s Rainbow [1]
About six months ago I wrote an article about the ideological underpinnings of cryptocurrency, the ecological problems of crypto mining, and the fact that I’ve heard all the same hype before. I am just starting to think seriously about how technology impacts our lives. Speculative fiction is always a good place to start. Thomas Pynchon, in Gravity’s Rainbow, writes about how we are caught in technologies’ deterministic grip, our dreams instantiated by the technology itself, and only subverted by random acts, good drugs, imaginative sex, and yes, even magic.
“Go ahead, capitalize the T on technology, deify it if it’ll make you feel less responsible—but it puts you in with the neutered, brother, in with the eunuchs keeping the harem of our stolen Earth for the numb and joyless hardons of human sultans, human elite with no right at all to be where they are” Thomas Pynchon, Gravity’s Rainbow [2]
Science fiction author, William Gibson, shares a more proletarian view as his characters act upon the world rather than be acted upon it. Technology may have a purpose or design but:
“The street finds its own uses for things.” William Gibson, Count Zero [3]
So is technology neutral or a force for good and or evil? A bright future or a terrible wrong turn? I don’t know the answer to these questions but I do think that we have agency and what has happened and what we make happen is more vital than what we wish would happen. People have said to me: “Isn’t it amazing what computers have accomplished?” I am amazed at how little has been accomplished, how little of the original promise, and how incremental steps are hyped as major breakthroughs. Web 3.0 and cryptocurrency may sound like new things but the dream to provide value to digital content was first thought about deeply in the 1960s and 1970s by the philosopher Ted Nelson. Nelson didn’t think about computers as a means to make people richer or some nebulous mechanisms of “freedom” or “the market,” he thought about how people can use computers to become smarter and improve their lives. His thinking revolved around the concept of hypertext, a term he coined himself. His idea was not just the jump links we have today but a much richer connection. [6] The term “standing on the shoulders of Giants” has been attributed to Isaac Newton in 1676 and John of Salisbury in 1159 and maybe much older. [11] It means that no idea or thought is unique, everything is in historical context. The hyperlink provides a rich web of connection between the author of a document and the giants they stand on. This connection can also be transactional as Nelson realized early on that a means to give value to digital content is important. Today these ideas are exemplified in the blockchain, a secure ledger that records transactions, and the smart contract, a secure set of rules for a certain transaction. Nelson’s ideas are much deeper than the minting, flow, and manipulation of money, and my reading and listening to the present “thought leaders” about crypto and how shallow their ideas are, is what worries me the most.
Computer Lib / Dream Machines [8]
“The world is not yet finished, but everyone is behaving as if everything was known. This is not true. The computer world as we know it is based upon one tradition that has been waddling along for the last fifty years, growing in size and ungainliness, and is essentially defining the way we do everything. My view is that today's computer world is based on techie misunderstandings of human thought and human life. And the imposition of inappropriate structures throughout the computer is the imposition of inappropriate structures on the things we want to do in the human world.” Ted Nelson [4] [5]
Ted Nelson is not a programmer or a software project manager yet ran the longest-running computer programming project, the Xanadu Project. It started around 1971 and ended in 1999 when the software was made open source. [12] There was never a commercial product despite being supported for a time by AutoDesk. Nelson got a lot of flack because of this and in 1992 left the US in disgust to live and work in Japan. Failure or not and failure in software can be a great motivator of change, I believe that now, many of the technical hurdles that Xanadu ran up against have been mostly resolved.
One of the early applications of hypertext for the Apple Macintosh was Hyperstack. First developed by Bill Arkinson in 1982, supposedly the idea came to him under the influence of LSD. It incorporated crude links set in a stack of digital “cards.” It was a very cool application that created some amazing products. I was privileged to have worked on some Hyperstack projects. [13] Hypertext also inspired literature with the product Storyspace. [14] I once tried using Storyspace but just reading, let alone writing hypertext literature was quite daunting and I didn’t continue. Hypertext literature is still confined to English departments but computer games have taken this idea much further and this winter a nonlinear interactive play, Sleep No More was performed in an old hotel in Manhattan. [15] [16] There have also been attempts to change citations into something more in line with Nelson’s thinking. [7] [9][10] Notice that I still use the old-fashioned academic citations although I do use Zotero, a citation manager. [17]
Now to Bitcoin and cryptocurrency in general. Notice the graphs below. Bitcoin mining’s electrical use is starting to level off at just above 200 TeraWatts. This winter, Iran banned crypto mining until March due to brown-outs [29]. After China’s ban on crypto mining, the industry moved to many parts of the world, notably Kazakhstan and the US, especially the state of Texas [30]. In December, riots in Kazakhstan over neoliberal price hikes in the cost of fuel caused the government to shut down the internet resulting in the loss of 12% of the world’s mining capacity. [27] Ethereum mining electrical usage is still rising exponentially. The system is scheduled to go to a staking paradigm this year with a promised reduction of energy use of 97%. Recently I saw a date for the final changeover of July 2022. This could mean that the energy usage of Ethereum mining might surpass Bitcoin before the changeover. In contrast is a popular joke or “meme” coin of last year, Dogecoin, leveling out at 6 TerraWatts, a much smaller but not insignificant amount. Last winter in Texas, the “decentralized” electrical grid collapsed after a major cold snap. Someone I know had to flee with her family to move to Arizona after spending three days with no electricity and food supplies running low. With Bitcoin mining consuming an ever-increasing amount of the state grid, what could possibly go wrong?
[26]
The odd tale of bitcoin in El Salvador requires some context as to the history of the region. A 1936 massacre of “communists” started a local guerrilla movement that broke out into full-scale civil war in 1980. After three years of bloody brutal war in which the FMLN, the guerrilla movement, was only stopped after massive infusions of American weapons and finally airpower, a truce was signed in which the FMLN became a political party to share power with their right-wing enemy, ARENA. [35] After initial influxes of Salvadoran immigrants to Los Angeles and a massive influx during the war, street gangs were formed to protect the community against other immigrant gangs. These gangs grew in power and ruthlessness and some members started setting up contacts in El Salvador. This was exacerbated in 1992 by an immigration law that sent back to the home country anyone with any trouble with the law (like a traffic ticket.) The gangs quickly grew in El Salvador, getting control of large parts of the country and contributing to one of the world’s highest murder rates. ARENA and FMLN meanwhile, took turns running the country with both parties trying to either violently suppress or negotiate a truce with the gangs. 20% of El Salvador’s population lives and works overseas with the vast majority living in the US. Money sent back to the mother country by these expatriates is a major source of national income. Bank rates for sending money from country to country can be as high as 8% and one of the promises of crypto is a means to send money at a much lower rate. El Salvador, however, does not have a currency, using the US dollar. This is popular because of the dollar’s stability and because there is no exchange rate, the rate for sending money is about 2.5%. Last year, the sudden announcement by president Nayib Bukele that Bitcoin was now going to be the world’s first sovereign currency was a shock.
“Most people are forced to live inside someone else’s imagination. And one of the things we have to come to grips with is how the nightmares that many people are forced to endure are the underside of an elite fantasy about efficiency, profit, and social control.”
Ruha Benjamin [34]
Nayib Bukele was born during the civil war in 1981 to Muslim and Christian parents. He attended a business school and started several ventures eventually running a Yamaha dealership. He joined the FMLN party and started into politics becoming mayor of first Nuevo Cuscatlán and then San Salvador. He established his populist credentials by giving poor students scholarships for study and various infrastructure projects. In 2015 he was ejected from the FMLN over some unknown ethics violation and started his party, Nuevas Ideas. [37] In 2019 he won the presidency, breaking the long run of both FMLN and ARENA. He soon started another campaign against the gangs which cut the murder rate drastically, giving him great popularity and his party control of the legislature. By 2020 he had set himself up as full grow autocrat, bypassing the Judiciary and passing a law to give himself another term. Then the story broke that he had made some sort of deal with the gangs right after his presidential win. What he gave them in return is still unknown. [36 ] By early 2021 warning lights of extreme corruption were going off everywhere, the IMF was holding back a development loan and there were rumors of US sanctions on some members of his cabinet. It was at this time he announced switching his countries currency to Bitcoin. Everyone in the country is to get $30 in Bitcoin through a crypto wallet called Chivo, which means “cool” or “anything positive” in Salvadoran slang but means goat in Spanish. This runs on the Lightning Network, a way to speed-up Bitcoin transactions. [18] [19] [22] The rollout was in September with glitches, a flash crash of Bitcoin, and the first protests Bukele has seen. Bitcoin went up to a new record during November but peaked and is now less than in September. Since the transactions but not the names are public, once people found his account, and he has been open (bragging) about his purchases, the actual value of what he has done can be watched. I have finally found some sources but I haven’t as yet calculated the current value vs purchase price (plus fees.) From research it seems that about 1/3 of people getting the app took their $30 and left while another group used it a few times and then gave up, crypto apps being notoriously user-unfriendly. About 30% of Salvadoran businesses now support the app. [20] In addition, people started using price fluctuations to scalp prices. [41] Why is this surprising? There are rumors that Bukele spends his time day trading his nation’s wealth on his phone. Whether true or not it sounds like something from The Autumn of the Patriarch. [40] I would like someone to explain to me how a technology supposedly based on the expansion of human freedom needs an autocrat to force people to use it? Am I missing something here?
On November 21, 2021, Bukele announced plans to build a Bitcoin City powered by the nearby Conchagua volcano which would also power Bitcoin mining. [42] The city would be financed by Bitcoin bonds, which are to be released soon. [25] During his speech, Bukele likened himself to Alexander the Great (Red flag! Red flag!) El Salvador has some experience in geothermal energy and reached 100% electricity access in 2019 [43], a major achievement. The problem is that the Cochagua volcano is considered dormant and maybe geothermal is not practical. Also, Bitcoin mining preys on cheap dirty electricity and the upfront cost of geothermal is high. OK, but where did this idea come from? Bukele also mentions that the city would have no taxes, except for a Value Added Tax VAT, essentially a flat tax. Flat taxes are a libertarian wet dream but are notoriously unfair as rich or poor are taxed at the same rate but the percent taxed affects the poor much more than the rich. Where do these ideas come from? Is Bukele some sort of genius visionary? One only has to look to Honduras and the privatized cities planned there. On the Honduran Pacific coast island of Roatán, American libertarians are planning the privatized city of Próspera. Bankrolled by the likes of Peter Thiel and others, the city will have no public ownership, and “citizens” must sign a contract of “rules” to move there. One interesting feature is that voting privileges will be based on land ownership and those with more land will get more votes. I wonder if black citizens will get 5/8 of a vote? [38] American privateers have been plundering Central America for over 100 years and thousands of Honduran refugees flee this libertarian paradise [39] each year to our southern border where their children are put in cages or they are stuck in Mexico, prey to Mexican gangs. This is where Bukele’s ideas are coming from.
I think this will be my last post on Bitcoin, hopefully. I wish in the future to explore the crypto space minus this coin. There are plenty of issues including lack of diversity [21] [24] [28], racism [32] [33], treatment of women [23], scams, and Cardano’s dealings in Africa. [34] It is hard to believe that an industry dedicated to making the world better would make bullshit it’s a most valuable product.[31]
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