On Bitcoin Bubbles

Why don't otherwise competent financial analysts chart Bitcoin compared to earlier vanguard infrastructure technologies like silicone chips, microcomputers, operating systems, email, mobile telephones, and social media?

Instead, they persist in describing it as a single stock or commodity caught in a speculative bubble.

While bursting bubbles certainly appear in the price charts of individual companies providing services using various components of global infrastructure, do such bursting bubbles really appear in the growth of infrastructure itself?

Doesn't quantum-leap evolutionary significance occasionally produce sustainable parabolic exceptions? Might not the 'nothing goes up forever' mantra have its own exceptions?

I honestly don't know the answer; I only mean to decry the lack of inquiry into this possibility by professional commentators who seem not to ask whether 'bitcoin', (judicious use of lower-case 'b'), might be less a brand name and more an underlying standard that is soon to embed into a number of fundamental human transaction types.

I suspect bubbles are more likely to burst in specific 'speculative' applications of bitcoin (sic) infrastructure, not in the underlying technology itself.

For that reason, while ordinary investors should certainly treat individual 'Bitcoin' ventures with the same caution they would any other start-up or penny-stock investment, they should take a stake in the legitimate underlying 'bitcoin' infrastructure.

Philosophy of Bitcoin

I seldom reprint the writings of others in this space, preferring to merely link to the original source. But this is the clearest take on bitcoin I've come across so far and I want to save you the effort of even that one link. From Oleg Andreev, here are his words unaltered:

"There is no philosophy in Bitcoin. It is not anarchic, libertarian, Austrian or anonymous. It is just an internet protocol and a bunch of people that use it to transact between each other.

The protocol has purely technical and monetary measures to prevent spam, DoS, double spending and reversal of transactions. Transactions themselves do not advertise their purpose or identities of people involved.

It is not “against Bitcoin spirit” to have non-anonymous service built on top of Bitcoin. It is not a “hack” to use Bitcoin addresses generated not from random numbers, but from document hashes to implement secure document timestamping.

You can do whatever you want with Bitcoin as long as your transactions are compliant with the protocol and you pay the fees when needed. You can use it as a currency. Or as a payment system. Or as an investment. Or not use any of its monetary properties whatsoever, but use it to register predictions about the future. You can use it in clear to accept donations for a good cause, or you can use it through Tor network to buy illegal stuff. You may require others to identify themselves before accepting payments, or you may allow your customers to hide their identities from you. After all, you can avoid the whole thing completely and live a happy life.

If there is a single philosophical thing about Bitcoin, it is this one: voluntarism. On the internet, across oceans and thousands of walls, you cannot force another person to do what you want. And neither can he or she. Therefore, to make a deal with another person, you have to negotiate and find consensus. And if you envision risks and potential problems, you are free to creatively find voluntary solutions to them, which will also be part of negotiation. No amount of unilateral declarations, laws or appeals to objectivist philosophy will make another person send you bitcoins. Only negotiation and reasoning give you a chance to get what you want."

Oleg Andreev

Knock Knock. Hugo's there?

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Remember when Hugo Chavez wrinkled his nose from the podium of the United Nations General Assembly and claimed to detect a whiff of sulphur in the room? A sign of the recent presence of the imperial devil in the form of George Shrub (Bush Jr.)?

Three-quarters of the assembly giggled loudly, as was intended. They recognized the Michael Moore or Jon Stewart style of irony. The entire American delegation walked out, however, in what was obviously a rehearsed and planned move. They then launched a ferocious campaign depicting Chavez as some sort of unstable whacko. He must be bi-polar at least, right?

Can you imagine what hemispheric relations might be like if an American President had the presence of mind to join in the laughter and invite Hugo to Washington for some tough minded honest debate? Do you really think the likes of Cuba's Fidel Castro and Brazil's Lula da Silva could spend hours in conversation with an idiot, if Chavez were just that idiot? There must be something more to the fellow than we are led to believe by our mainstream media.

One possible source of additional information, Oliver Stone's new documentary "South of the Border", isn't showing anywhere near me yet. The DVD won't be out until October. Funny, I had no problem getting to see Michael Moore's "Sicko" when it was released. Care to speculate on the difference?

In the meantime, assuming neither Oliver Stone nor Michael Moore are scheduled to read this blog today, I will ask anyone who knows them both to make the following suggestion.

Take one part "Inconvenient Truth' using the format of a TED-like lecture with giant graphs showing the numbers, perhaps with Paul Krugman playing the part of Al Gore; add a zest of man-in-the-street or women talking around a kitchen table interviews to illustrate the realities of life, somewhat the way residents of France did in "Sicko"; now add a double shot of Oliver Stone doing the kind of intimate interview with Paul Volker that he did with Fidel Castro in "Comandante'; juxtapose that segment with Fareed Zakaria facing a panel of three: Michael Moore, Oliver Stone and Jesse Ventura, not as the host, but as the guest for a change, with Fareed on the hot seat to answer questions concerning his own proud capitalistic economic assumptions; and finally, perhaps as a special feature on the eventual DVD release, have Noam Chomsky lay down a voice-over audio track analyzing and restoring the deep structure underpinnings of a good number of the ambiguous statements likely to merge from all the preceding.

Oh, what is the theme for all this you ask?

I suggest the title be 'Confounded Interest' and that the task be to show the role and impact of compound interest on human behaviour. Whether on credit card debt, national and international debt, mortgage debt, or the crowbar wielding friendly neighborhood loan shark.

Oliver, Michael, I dare you. Nobody could do it the way you two could. Jesse is there to protect you.

Don't worry about distribution.

I'll pitch it to Tony Burman for you.

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