Bitcoin Frenzy

by Henry on March 10, 2016

I’ve a piece in today’s Financial Times about the political fights racking the Bitcoin community.

Bitcoin, the decentralised, mainly digital currency that is neither issued nor guaranteed by central banks, has always seemed like a magic trick. … Radical libertarians have desperately wanted to believe in it … Politics disappears and a combination of technology and cryptographic proofs is conjured up in its place. Unfortunately, the magic is wearing off. Some of the technological innovations associated with bitcoin will stick around. The political project will not. … As more people have started to use bitcoin, the system has grown more unreliable.The problem is that coming up with a fix requires political agreement. Because there is no centralised authority within bitcoin, there is no one who can impose a mandate. … This free-for-all demonstrates the main problem of technological libertarianism. It does not escape politics but temporarily displaces and conceals it. … The apparent value of bitcoin depends on a suspension of disbelief. It is hard to see how the illusion can work when the magicians are punching each other out on stage.

NB one error which crept in (completely my fault) during the editing process: “protocols to make the blocks bigger so that more bitcoin are released at one time, speeding up transactions” should just read “protocols to make the blocks bigger, speeding up transactions.” NB also, more interestingly, this piece by Ben Thompson at Stratechery, which I wish I’d seen before writing my own, especially since it has a couple of lovely and apposite quotes. [click to continue…]