Tuesday, January 9, 2018

Venezuela is a Perfect Example of Bitcoin Delusional Thinking

Bitcoin delusion: These lines aren't happening in Venezuela.
The argument among many bitcoin enthusiasts is that bitcoin and other e-currencies are a hedge against hyperinflation and that they will protect against destruction of an economy.

Last night at Circle Rothbard-San Francisco, a bitcoin enthusiast claimed that bitcoin was being used as an alternative currency in Venezuela where price inflation tops 1,300%.

So my question to him was:
So let's grant for a minute that people are using bitcoin in Venezuela, is your claim that Venezuela is an example of bitcoin heaven on earth? That this is the type of protection we should expect bitcoin to provide? Is this your example of how bitcoin allows people to subvert totalitarian government?



  1. They'd argue that Bitcoin can help most where the problem is most severe. Also, too few people are using it there to have any macro effect on Venezuela.

  2. It may not save Venezuela, but it might help individual Venezuelens navigate the chaos.

  3. absolutely asinine line of questioning--but unsurprising considering it comes from you.

    BTCer claims BTC is being used as an alternative currency to the destruction that the world system, American foreign policy (et al), and the Venezuelan gov't has wrought on the economy. RW immediately acts as if the BTCer has claimed "use as an alternative currency" is synonymous with a claim that BTC will manifest paradise.

    I own no BTC, have never, and do not believe it will ever be used significantly as a currency. Your incoherent reaction, though, is quite telling.

  4. A gold standard is dumber than a bitcoin currency system. And a Bitcoin system is dumber than a NAV or PIVX system. Gold doesn't serve any purpose under a gold standard, other than to act as an accounting unit. It just sits in bank vaults doing nothing. Further, as the price of gold appreciates under a gold standard, the incentive to mine it sky rockets, which just adds inflation and wastes resources for absolutely no good purpose. A true gold standard has no limits on inflation.

    Bitcoin is a gold standard accounting system without the gold, without the inflation, and solves the problem of being able to send gold around the world for transactions. However, bitcoin still drives massive waste because the incentive to mine it goes up as the price of the coin goes up. Further, it's not as anonymous as gold.

    NAV and PIVX take the best of the bitcoin standard and mix it with the best of the gold standard, eliminating the wasted resources of mining and allowing for anonymous transactions. Further, NAV will allow for decentralized applications.

    Then there are third generation cryptos like Raiblocks and IOTA, which do away with the blockchain entirely. I'm much less convinced about the privacy and long term viability of these systems as a currency though.