Monero is an also-ran cryptocurrency, in the same proof-of-work family as Bitcoin and Etherium.
Monero.town is a Lemmy instance whose main communities are: Monero, privacy, Monero Memes, Meta, and Monero Mining.
Enough has been written on the negative ecological effects of proof-of-work based cryptocurrency that I think it’s not controversial to say it is incompatible with the Solarpunk vision.
Pictured inciting incident is a person advertising the crypto-capitalist Lemmy competitor “Nostr” in the anarchism community.
I don’t personally mind a debate about Nostr, but like most of the content from Monero.town, it doesn’t belong here. More sales pitches from a crypto-currency hype instance are going to be tedious, and crowd out the kind of progressive politics and human interactions we’re looking to nurture here. Reddit’s /r/anarchism had to constantly repel assholes trying to pass off their edgy capitalism as anarchist, Lemmy gives us the unique opportunity to send a strong message and nip this in the bud.
Fediverse sites that have already blocked Monero.town –
reject (10): solarpunk.moe, polyglot.city, freethought.online, icosahedron.website, sunbeam.city, vtuber.house, fruef.social, cutie.city, fuckcars.social, karas.social
followers_only (3): toot.cat, orbsafe.masto.host, partyparrot.social
Image Description
[Image description: Screenshot of an exchange between user [email protected] and Five containing the following text
Yea, that’s just not how Nostr works. Take a look here: https://github.com/nostr-protocol/nips These are implementation possibilities that the protocol enables. Every client must implement NIP-01. All of the other NIPs are optional so every client that you use (an app for example) has decided to implement different NIPs. You decide which client you use and how Nostr should feel like. Almost no client prioritizes content that received bitcoin.
Your “login mechanism” (private cryptographic key) has nothing to do with cryptocurrency. If you want to send btc to people you have to set that up yourself, manually linking a wallet to your key.
Five
I’m confused why you’re downplaying Nostr’s primary selling point - its close integration with Bitcoin. It’s clearly a cryptocurrency capitalist con job.
Almost no client prioritizes content that received bitcoin.
That’s not what I was saying, but I’m fascinated that you’re implying it’s much worse than I anticipated. Which clients have their priority linked to received bitcoin? ]
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Defederation doesn’t make a place disappear from the internet, although exploding-heads is shutting down at the end of the month as apparently they got frustrated with being defederated everywhere (which reveals a lot about the real purpose of that instance).
But what I mean is: do you have any examples of monero.town users causing actual problems here on slrpnk.net or harassing people via DMs?
I remember only one such occasion and when I got in contact with the monero.town admin it was resolved pretty well on their end, so I currently don’t really see an urgent need to defederate them here.
Of course there is the option to defederate as a statement of some sort, and I did so for Facebook’s Threads, but as much as I think cryptocurrencies are poisoning the well, I think that monero.town is not really comparable to Facebook etc.
Yeah, Monero.Town is small fries in comparison to the damage Threads could do to the culture here. That was a good call.
It is still an evangelist instance; I’d put it in the same category as Hexbear. Their users have a message that they’re heavily invested in, and that’s all they want to engage other instances about. The post in anarchism is a particularly egregious shoe-horn because of the history of capitalist entryism in anarchist spaces. I’ve heard Hexbear’s admins are cooperative as well, but that doesn’t change the nature of the sub.
The tipping point for me was reading the admin’s opinion of instances that have defederated already:
My instinct is to express solidarity with anyone a capitalist calls ‘small snowflakes,’ especially because we’re a larger instance. Crypto-currency groups have a toxic culture problem, and maybe slrpnk.net defederation will be a wake-up call; probably not. But in any case, fewer of our people will have to put up with it.
Isn’t it fair to say that literally all cryptocurrencies in the ‘proof of work’ model are extremely not-solar-punk to the extent that they’re kind of the antithesis of solarpunk?
I say this because under the current model these are hardware systems designed to essentially waste as much energy as possible for no good reason whatsoever
block chain tech could be useful for tracking the status, qualities, dispositions etc of physical or logistical resources in a democratic, anonymous, and decentralized way WITHOUT the equivalent energy expenditure of burning several hectares of old growth forest per hour, but that’s a far cry from what these shitcoins all do.
Yes, that’s more than fair to say.
It’s possible to design a block-chain that works by signing each link with multiple public-key cryptography pairs, for example, and that doesn’t require proof of work. I’ve been careful to specify ‘proof of work’ not only because most criticisms of Monero can be applied to other cryptocurrencies in its family, but the intense hype and popularity of these schemes crowd out the alternative distributed currency systems that exist or are possible.
I think it is solarpunk to be interested in distributed digital currency, and I don’t want to stigmatize curiosity in technology. In the current situation anarchists are using digital currency schemes designed by their enemies to privilege the capitalist class, and I think we should be clear on that. I don’t want to exclude the possibility of digital currency that reduces harm to anarchist and solarpunk goals in comparison to existing schemes.
I would probably give them more leeway if their members engaged with SLRPNK content rather than just posting ads for Nostr and WireMin …
I’m not sure I’d call Monero an “also-ran” given that it’s the only cryptocurrency that’s actually regularly used as a currency, rather than just as a speculative asset/Ponzi scheme.
Sure the primary use as a currency is buying drugs, but that’s still use, and plenty of people happen to like drugs.
I’m sure plenty of people on this instance happen to like drugs. As I’ve explained earlier, Monero specifically is a terrible tool for that purpose. Given that we want to protect people from criminalization for their medicinal choices, we should be encouraging more anarchist and solarpunk aligned solutions, like establishing hawaladar networks.
I just read most of that wiki article and I am struggling to see how Monero is different from a digital version of hawala. What am I missing?
I feel like there is really little overlap between the communities on both instances. Atleast I would probably not even notice the defederation.
But since the instance seems to focus on the cryptocurrency Monero I would like to point out reasons why Monero might be relevant for slrpnk.net.
- one of the ways to donate to the Lemmy project / developers is via Monero
- for anarchy2023.org, which was a pretty big anarchist event (3000-4000 participants and 400+ workshops), Monero is one of the 3 ways to donate for covering the costs
- we have [email protected] on slrpnk.net - while probably most people in that community are getting their equipment&seeds in a legal way (and do not sell drugslol), there are also many folks worldwide who have to rely on illegal ways to get those things. buying them online, using crypto like Monero might one way to do that
I hope this does not come over as an endorsement of Monero. I just want to point out the small, but existing connections some folks on slrpnk.net might have with Monero
I knew that about Lemmy, but not about anarchy2023 - thanks for sharing.
My position is not that anarchists shouldn’t use Monero ever under any circumstances, but that Monero is about as antithetical to solarpunk and anarchism as the Swiss banking system, which is incidentally another way to send support for anarchy2023.
If there was a Lemmy instance set up as a grassroots marketing initiative for TWINT, I would suggest defederation from them as well.
If Slrpnks are using Monero to avoid government oversight against better advice, using the same Lemmy account to post about growing cannabis and to comment in a Monero help post is pretty terrible security culture. Defederation discourages this privacy mistake.
Kinda wild seeing this thread as a a dude who finds block chain stuff interesting but isn’t invested in any coin. I started up a few subs on my local if anyone wants to talk about it but yeah, I also love solar punk stuff so to speak and clean energy, and they are working against each other in current deployments.
Hope you guys come up with something that works for all your users on your lemmy server.
TIL there’s a solar community, cool.
We shouldn’t defederate. The environmental impact depends on the tech and how you produce power…
Also other than cash, bartering, monero is the only currency that respects privacy.
We need privacy and anonymity in a free society, even a solar punk one.
people need privacy and anonymity – we don’t need currency
Solarpunk’s goal is anarco-comunism, there wouldn’t be any money nor a need for it, it would follow gift economy.
I’d argue that like most leftist ideologies it’s about both the ends and the means to get there, so we shouldn’t ignore the utility of privacy in transactions as we work towards that future, but I do agree with what you said. We should try to use currency only as necessary. It’s unproductive to hold one currency on a pedestal for its qualities, it should only be seen for its immediate practical utility while also weighing negative environmental and political impact
Solarpunk is also how we achieve eutopia, which involves the starting point of “here and now”
I agree we need privacy and anonymity in a free society, but the only people making the claim that Monero respects privacy are Monero people.
Block-chain crypto-currency relies on the concept of a public ledger. Without a openly verifiable record of wallets or money, a zero-trust system cannot function. Therefore Bitcoin and Etherium are not private or anonymous, though they were often falsely advertised as such during their inception.
I don’t know the precise method Monero uses, but I know that it’s mathematically impossible to make a zero-trust block-chain cryptocurrency that is as private as cash transactions; only to make de-anonymizing more computationally expensive. For this reason Monero is worse than Bitcoin and Etherium, which are more widely known to be public records. Since more people currently believe Monero’s marketing, they are less likely to take other precautions to protect themselves. When faced with the tools of an adversary with resources like the IRS, the Monero chain is effectively transparent.
I don’t feel bad for not deeply understanding the mechanism behind Monero’s privacy claims, because it’s clear that the Monero people don’t understand it either. All the ledger information for Monero for the last three years is now publicly visible, and will continue to be available for public analysis. There is no way to guarantee there are not more bugs of this type still in the complex codebase.
TL;DR- This turned out way longer than I expected. Skepticism of Bitcoin among solarpunks is understandable, but things aren’t as bad as they seem.
I’m neutral on the defederation issue here. I am overall mildly hostile to Monero, and also mildly against defederation without a strong reason (such as being EH, grad, or HB). However, I would like to address the idea that Bitcoin (specifically) and proof-of-work are antithetical to the interests of solarpunks.
To lay all my cards on the table:
- I don’t really consider myself a solarpunk, so this is a bit of an outsider perspective. I think solarpunk is kind of cool, but it’s also new to me.
- I’m here to lurk (and maybe participate) in the anarchism community. I’ve been an anarchist for a long time (almost 20 years), mostly centered on mutualism. I’ve also been interested in alternative currencies (digital and otherwise) since before Bitcoin existed.
- I do have a financial stake in Bitcoin, but not any other cryptocurrencies. I sincerely do not believe my commentary in general has any effect on the price of bitcoin, and especially not when addressing such a small audience. I am not looking to convince anyone here to buy anything.
- I have been heavily interested in Bitcoin almost since it’s creation, and as a result have a pretty deep level of knowledge about it. I want people to understand Bitcoin both because I enjoy sharing my obsessive interests with others, and because knowledge is power and power should be widely distributed. The latter part goes double for anarchists, because I want anarchists to be well-informed in order to help the anarchist project succeed.
For the purposes of my argument, everything bad that is said about altcoins (non-Bitcoin cryptocurrencies) is true. Some of them can maybe be generously described as “honest experiments that are likely to fail”. The rest are varying degrees of scammy, up to and including “intentionally planned as a scam from the start”. Monero is probably one of the lesser offenders in this regard.
Also, I’m presuming that at least some people here see some value in the existence of decentralized digital currency. If you think money is inherently bad and that humanity should abolish it completely, then obviously through that ideological lens Bitcoin is all downside with no benefit. The only thing that I can do to change your mind is to convince you to change your lens, and that’s outside of the scope of this discussion.
Continued in reply
Energy Consumption
This is admittedly the weakest part of my argument. Even if one accepts that the existence of a decentralized digital currency might be beneficial, the energy consumption of proof-of-work is still a real cost, and the benefit needs to outweigh that cost. I think it will become a clear net benefit in the future, but right now things are more hazy and theoretical, as Bitcoin has not yet been fully adopted, nor is its development “finished”.
Why use proof of work anyway? Because it’s the only way that we’ve found so far to make a hard decentralized digital currency. Non-hard currencies involve trusting someone else, and that someone can be leaned on by governments, can be robbed, or can be a scam artist themselves. Trust is a necessary part of being a social animal, but it is also useful to reduce the degree to which you are at the mercy of others, particularly when money is concerned.
Proof-of-stake is not a suitable replacement for proof of work. It compromises the security properties of the system, and it introduces a wealth-concentrating mechanism. Stakers are rewarded in proportion to the amount of currency that they have. This literally bakes capitalism into the system. See the next section for more on this.
Perceptions of Bitcoin’s current and future energy consumption tend to be overblown. Yes, it uses more electricity than entire (small) countries. However, that currently amounts to under 0.5% of global energy consumption, and it peaked at under 1% in 2022 (see here and here).
Environmentally-focused skeptics tend to assume that Bitcoin’s energy consumption will continue to increase without limit. This is dependent on the “deflationary spiral” idea that the price of bitcoin will also continue to increase without limit. Both are incorrect.
Yes, there is a hard cap on the amount of bitcoins that will be produced, which makes it a deflationary currency. Yes, this will result in more saving (“hoarding”) and less borrowing when compared with the inflationary currencies that we use now. Yes, that means there will be less investment due to the lack of cheap credit. However the “spiral” part is nonsensical on its face. Bitcoin is not some economic black hole that we’ll throw all of our economic resources into until we starve to death. Besides, from an environmental perspective, less investment should be a good thing.
Without the “line goes up forever” aspect of the deflationary spiral, the argument for runaway energy usage falls apart as well. Bitcoin will use an (eventually) stable, likely small percentage of our global electricity output. If we’re generating that electricity from sustainable sources, we’ll be fine. If we remain stuck on fossil fuels, we’ll choke to death on carbon even without Bitcoin in the mix.
There is a silver lining to this aspect of Bitcoin as well. It’s to at least some degree incentivizing renewable energy deployments. There are lots of areas that have “stranded” renewable energy, in that they’re a good place to harvest electricity, but there’s no one nearby to use that electricity, and no power transmission infrastructure to carry it to populated areas. Previously, smelting operations would be set up in these areas to turn bauxite into aluminum. However, Bitcoin mining has significantly lower overhead. You can set up solar/wind/hydro, ship in Bitcoin miners, and make some money off of it without having to run long-distance power lines right away. Once the lines are built, or once some power consumers set up nearby, the mining rigs can be sent off to some other site.
Continued in reply
More Bitcoin Means less Punk
Yes, there is a hard cap on the amount of bitcoins that will be produced, which makes it a deflationary currency. Yes, this will result in more saving (“hoarding”) and less borrowing when compared with the inflationary currencies that we use now. Yes, that means there will be less investment due to the lack of cheap credit. However the “spiral” part is nonsensical on its face. Bitcoin is not some economic black hole that we’ll throw all of our economic resources into until we starve to death. Besides, from an environmental perspective, less investment should be a good thing.
Less investment should be a good thing when it comes to oil development, but when money is not re-invested in a capitalist society, the result is increased scarcity. In the absence of bitcoin, a middle-class person might chose to spend their surplus money on a bicycle, building a chicken coup, or learning a new skill. Bitcoin hucksters would prefer they spend it on Bitcoin, with the promise that it might make them more money for less effort by sitting in the blockchain doing nothing.
Society advances through infrastructure, and while the Solarpunk project requires different infrastructure than what is currently planned, it still requires resources. If we are going to create a society of abundance, building it on a currency that thrives on scarcity is a non-starter.
Popularity -> Energy -> Scarcity
Without the “line goes up forever” aspect of the deflationary spiral, the argument for runaway energy usage falls apart as well. Bitcoin will use an (eventually) stable, likely small percentage of our global electricity output. If we’re generating that electricity from sustainable sources, we’ll be fine. If we remain stuck on fossil fuels, we’ll choke to death on carbon even without Bitcoin in the mix.
If the Bitcoin system survives until 2040, it will reach a maximum of 21 million coins. Once minting new blocks is no longer rewarded with new coins, continued minting is expected to be funded by transaction fees. That does not mean the energy usage will stop, or even plateau. The energy use of bitcoin is related to the demand for Bitcoin. The more demand, the higher the value in dollars. The higher the dollar value, the greater dollar value return for mining it. The more value for mining, the more mining rigs will come online. The more rigs, the more energy is used.
Currently bitcoin is used for niche markets, and is not widely adopted. If the crypto-bro dreams of mass adoption were realized, like the primary currency of a world-wide solarpunk society, demand would skyrocket and energy use would spiral out of control. Using 1% of the world’s energy is a huge number, but is minuscule when compared to the amount needed in that scenario.
Capitalism
Let’s be clear. Capitalism is not money. Capitalism is not market exchange. Capitalism is not “line goes up”.
Capitalism is a system of state-granted privileges for owners of capital. Some of these privileges were intentionally implemented, and some likely came about by accident, but they all have the effect of transferring wealth from the working class to the owning class. The state primarily does the bidding of the capitalists. Even though much of the world is ostensibly democratic, when there are policy disagreements between the working class and the capitalist class, the capitalists generally get their way.
The capitalist class does not want “anarcho”-capitalism. It does not benefit them. The state already works for them. Without the state, they lose their privileges. Without their privileges, they eventually lose their wealth, as their megacorporations are incredibly inefficient.
This is not a defense of “anarcho”-capitalism. At best, ancaps are confused. If they were to destroy the state, they would allow the capitalist class plenty of opportunity to recreate it. (And of course, the worst of them are outright mask-off fascists.)
Bitcoin is not capitalism, even if ancaps tend to like it. Bitcoin is not issued by any government. It doesn’t require the use of the banking system that they control. They cannot use it to manipulate the economy. They cannot freeze anyone’s Bitcoin wallet, nor can they seize bitcoins that are properly protected. The degree to which adoption of Bitcoin diminishes the state’s abilities is a matter of debate, but it does impose some real constraints. And in constraining the state, it also constrains the capitalist class. Issuing money is also seen as one of the reasons we “need” governments, so the existence and adoption of Bitcoin deals a blow to that as well.
In the previous section, I mentioned that proof-of-stake introduces a wealth-concentrating mechanism. Proof-of-work, on the other hand lacks this. Unlike with PoS currencies, holding bitcoins does not grant you more bitcoins.
If you want to gain bitcoins through mining, you need to purchase specialized equipment to do so. If done properly you can recoup the dollar cost of the miners, but they aren’t likely to produce as many bitcoins over their useful lifetime as you would have gotten from just using the dollars to buy bitcoins directly.
Even in terms of dollar return, you can’t just keep buying more miners to gain more dollars compound-interest style. The return on Bitcoin mining always approaches the cost of miners + electricity + labor. There is no guaranteed profit margin.
As for people getting rich off of buying bitcoins, I’m not aware of any indications that there’s been a particular order in which the various socioeconomic strata have invested. The early adopters were largely not already rich, as far as I know. A fair number of “old money” types have been skeptical of Bitcoin. Of course, one does need to have at least some amount of disposable income to invest in the first place. Some technical inclination also helps. It may just be a case of “the middle class get rich” rather than “the rich get richer”.
Also note that as I touched on in the previous section, the line won’t go up forever. The price will reach equilibrium once Bitcoin reaches its “final” adoption level, wherever that happens to be.
Continued in reply
“It’s a Scam”
I’m not sure if this point is being directed at Bitcoin specifically, or just at cryptocurrencies in general in this thread and in the article that poVoq linked. I’ll address it briefly anyway. (The previous two sections are the more important ones.)
Many Bitcoin skeptics have described it as a Ponzi scheme or pyramid scheme. If you read about what these schemes actually are, and read about what Bitcoin is, it should be obvious that it’s not a match. Bitcoin isn’t centrally controlled, so there can’t be anyone filling the role of Ponzi or of the directors, at least not for the entire system. It’s certainly possible to run such a scheme using bitcoins, but that’s true of any currency.
When pressed, these skeptics will usually say something about how everyone invested in Bitcoin is just looking for some group of “greater fools” to pump the price up so that they can make their exit. Like, sure, maybe some people are like that, but to claim that it’s some coordinated scam across all of Bitcoin just sounds like a ridiculous conspiracy theory. There are plenty of people that have had ample opportunity to exit profitably and just… haven’t?
Being more charitable, these folks largely see Bitcoin as having no future (“it’s a bubble”). If everyone is eventually going to get tired of Bitcoin and give up on it, that does make it a really bad investment. That doesn’t make it a scam, though.
Anyway that’s enough words, I need to sleep. -_-
I may or may not respond if people want to argue over this. Not something I have a ton of patience for these days. If you’re genuinely curious and want to pick my brains though, feel free.
I appreciate the effort you put into this post. I welcome this kind of discussion, and I hope this will contrast with the kind of bad-faith hucksterism that typically comes from grassroots cryptocurrency sales initiatives.
I’ve also watched bitcoin and cryptocurrency with interest since the days it cost thousands to buy a pizza. I suspect you may be able to teach me some things, but I also think there are some things you are missing.
Many Bitcoin skeptics have described it as a Ponzi scheme or pyramid scheme. If you read about what these schemes actually are, and read about what Bitcoin is, it should be obvious that it’s not a match. Bitcoin isn’t centrally controlled, so there can’t be anyone filling the role of Ponzi or of the directors, at least not for the entire system. It’s certainly possible to run such a scheme using bitcoins, but that’s true of any currency.
Pre-mining Scams
The structure of bitcoin-style cryptocurrencies is perfect for Ponzi schemes. The first aspect of these schemes is the concept of pre-mining; Before a new currency, bit it Monero, Ethereum, or Shitcoin#02314 is released to the public, its founders create a large cache of currency with little work because they own all of the mining rigs at that point and aren’t competing with anyone. They then hype the fuck out of their coin, usually advertising that people buying the coin that they’ve mined are getting in at the ground level. Once they’ve sold all their coin, the value flatlines, the scammers disappear with their fiat currency, and then start another scheme with a new name. 99% of altcoins don’t survive this phase.
Even Bitcoin started out with a significant portion of the total cache pre-mined by Satoshi Nakamoto. The halving of bitcoin awards privileges early adopters, and Nakamoto was the earliest. He hardly spent any of it before he stopped participating in Bitcoin development in mid-2010. It is widely speculated that he is dead, but rumors that he might have moved 50 of the 750,000 to 1,100,000 bitcoins held in his wallets are blamed for the crash in May 2020. The uncertainty lead to a $6.5-billion drop in Bitcoin’s market capitalization.
Pump and Dump Scams
You rightly identified bitcoin as deflationary - that in addition to market forces that can raise or lower its value, the money supply is designed to grow at a diminishing rate, halving roughly every four years. For comparison, the dollar is printed with the intention to match the demand for bills in circulation, plus inflate at a slow and predictable rate. This encourages re-investment and discourages money hoarding. The principles behind this are based on the lessons learned from economic mistakes during the great depression.
This makes bitcoin attractive as a store of wealth, but its value derives from its use as currency. While there are over 19 million bitcoins minted, only a small portion of those are ever in circulation. This allows people or cartels with large amounts of bitcoin to have extremely large influence in the supply available and thus the price. This is a weakness that plagued the early stock market, and lead to the formation of regulations and the FTC. No such institution exists for cryptocurrency, making all deflationary crypto a choice medium for pump and dump scams.
I’m going to reply to both of your replies in this part of the thread, because I don’t want to split this up 3 ways. 5000 character limit is really annoying here. -_-
I appreciate the effort you put into this post. I welcome this kind of discussion, and I hope this will contrast with the kind of bad-faith hucksterism that typically comes from grassroots cryptocurrency sales initiatives.
I’m down to discuss a bit more, though I may also wander off because very ADD.
I’ve also watched bitcoin and cryptocurrency with interest since the days it cost thousands to buy a pizza.
This is good to hear. I find that a lot of times, people that are skeptical of {thing} tend to also not be particularly informed about {thing}, due to a relative lack of interest. I also just don’t like to see stuff that I consider promising abandoned to the right. I’m glad you’re still keeping track of it even if you’re skeptical.
I suspect you may be able to teach me some things, but I also think there are some things you are missing.
In terms of what you’ve brought up, I think it’s more that we weigh things differently. I also tend to be biased more towards optimism than pessimism.
Trying to objectively evaluate the gaps in my knowledge here: I’m a software developer, and I’ve dug through Bitcoin Core’s code a little bit, but not extensively. I’m not particularly well informed about more recent developments, like the Taproot upgrade. My deep dives into Bitcoin stuff tend to correlate with price rises and overall excitement in/around the Bitcoin community (because ADD). During the doldrums I tend to drift off. I was heavily involved in the “Block Wars”, so I’ve got a pretty decent understanding of the Segwit upgrade and the debate and events surrounding it. My understanding of the internals of the Lightning Network is weaker than I’d like. I kind of get the HTLC stuff, but I have no fucking idea how payment routing actually happens. “Economic” arguments tend to make sense to me, though I have basically zero formal education in the subject.
I also have a definite “because it’s cool” bias.
Pre-mining Scams
I would definitely categorize pre-mining as shady, though not necessarily an outright scam. I know that a number of altcoins do disclose ahead of time the amount by which they’re pre-mined and what purposes those funds will be used for. I dislike these arrangements, and think they’re yet another good reason to stay away from those altcoins, but it doesn’t qualify them as a scam. It becomes a scam if the pre-mine isn’t disclosed, or if the pre-mined funds are spent in a manner contrary to what buyers had been led to believe.
Pre-mining is also not a Ponzi scheme. A Ponzi scheme involves a scammer holding money on behalf of investors, drawing from the held funds to make payouts that give the appearance of productive returns whiling lying about the actual balances held, and then running away with the money once they’ve tricked enough investors.
When you buy cryptocurrency tokens, it’s an exchange. The dollars you pay are not held in your name by the creator of the cryptocurrency. Those dollars are not yours anymore. Instead, you have the tokens, which may rise or fall in value. You are not being promised any returns. If the cryptocurrency you bought is part of a pre-mining scam, at some point the creator will sell their stake, reducing the value of your tokens. You were scammed by being lied to about the properties of the thing you bought, but that is not the same thing as a Ponzi scheme.
As for Bitcoin, Satoshi did everything right in this regard that they realistically could. They released the design on a public mailing list in advance of launching the system. They embedded a recent newspaper headline in the first block to prove that it couldn’t have been created before that headline was written. So in that sense, Bitcoin isn’t pre-mined.
However, as you allude to, they were “shouting into the void” by themselves for a while, and amassed a sizeable number of coins. There is debate about how much of the early coins actually belong to them. Hal Finney was also known to be involved fairly early on. In any case, whoever created Bitcoin almost certainly has a large number of coins. It’s not unreasonable to be concerned about, but I don’t think it’s right to lump it in with pre-mined altcoins, and calling it a scam is too much of a stretch.
Pump and Dump Scams
Being deflationary doesn’t make an asset a good target for a pump-and-dump scam. PnDs are best executed on assets that are low-valued enough that you can easily force the price up or down using the funds that you have available to you. Being deflationary causes an asset to leave this territory sooner.
Bitcoin is not a good target compared to altcoins, and as far as I’m aware PnD scammers have largely moved on to those. Bitcoin also has a culture around it that is resistant to the PnD scams. The general advice given to people that are new to Bitcoin (after “only invest what you can afford to lose”) is to dollar-cost-average by investing fixed amounts at fixed intervals, to avoid trying to time the market, and not to panic about large price movements. Following those rules makes one immune to the PnD scam. Newer people are less disciplined about following them, but over time the group of “core holders” continues to grow.
This makes bitcoin attractive as a store of wealth, but its value derives from its use as currency.
“Store of wealth” is one of the uses of currency. People tend to get worried that Bitcoin isn’t being used as a medium of exchange as much as they think it should, but there isn’t actually a problem there. As Bitcoin’s value grows, it’s price will become more stable. This gradually makes it a worse growth investment, but a better medium of exchange and unit of account.
While there are over 19 million bitcoins minted, only a small portion of those are ever in circulation.
Nearly all of them can potentially enter circulation though, and with very little advance notice. If the order books on the exchanges get wiped out and the price starts spiking wildly upward as a result, those non-circulating coins will start to move.
The principles behind this are based on the lessons learned from economic mistakes during the great depression.
I don’t think we should value the lessons of mainstream economic analysis too highly, as they take the existence of the state for granted. Maybe this one is a point in favor of the communists, but I’m not ready to concede it just yet.
Society advances through infrastructure, and while the Solarpunk project requires different infrastructure than what is currently planned, it still requires resources.
Fair point, I wasn’t thinking about the infrastructural retooling aspect.
I do think “more saving” is a point in favor on the anti-capitalist side, though. People that have savings are less inclined to tolerate shitty employment arrangements, and more able to go on strike or start their own ventures.
Bitcoin hucksters would prefer they spend it on Bitcoin, with the promise that it might make them more money for less effort by sitting in the blockchain doing nothing.
As I touched on in my other reply, Bitcoin won’t be a growth investment forever. Once it reaches the point of maximum adoption, any further increase in value should be relatively slow. Going from slightly inflationary to slightly deflationary will have some effect, but I don’t think it’ll be as severe as you’re implying.
Popularity -> Energy -> Scarcity
The income from fees is something that can we can change by adjusting the block size. Doing so requires broad consensus among Bitcoin’s users, but it can be done. The main question is how much mining is needed to keep the network secure against a 51% attack.
If things were to get dire, we could even end the block subsidy early through the same mechanism. While consensus between users is needed, such changes can actually be pushed through against the will of the majority of miners.
It sounds like you have more technical experience with cryptocurrency than I do. I think I understand the economics side a little better, though I admit I’m not an expert. I’m sure a more professional economist would have a conniption based on how I’m using some terminology and concepts.
Why is Deflation Bad for Currency?
‘Inflationary’ and ‘deflationary’ as adjectives are usually applied by economists to government fiscal policy, not to currency itself. Since cryptocurrency fiscal policy is usually set in code when it is released, and reaching consensus required to change it is rare, I think it’s kind of appropriate to label cryptocurrency with these adjectives, but I realize it’s also confusing. I’ll do a better job of explaining it, because our differing understandings of this concept are going to be a problem if I don’t.
Money, like all commodities purchased with money, responds to supply and demand. The more money available in an economy, the less that money is worth with regard to other commodities. When the value of money with regard to other commodities goes down (more dollars, less eggs) this is called inflation. When the opposite happens, (less dollars, more eggs) this is called deflation.
During most of history, money was linked to precious ore. There wasn’t a lot of academic economics going on back then, but this meant that the rate at which ore was mined and minted determined the base of a civilization’s currency supply. Argentarii, Priests, and Metalsmiths offered credit, usually some multiple of the actual amount of precious metals they had on hand. Rulers debased their printed coins with non-precious metals. But these methods of increasing supply had drawbacks, so available ore was king.
The policy of letting the availability of precious metals have a direct influence on the money supply continued until very recently. I want to be clear - granting government (I use the term loosely here because the FED, Bank of England, and most other national analogues are technically not a branch of government, but are so intertwined to make the distinction irrelevant) control of the money supply gives it another tool of power, and I’m not happy about that. But giving control of the money supply to the rate of strip mining, conquest, and trade policy is still government-involved, and in many ways worse.
I bring this up because the same economic thinkers who championed Bitcoin are the ones who think a return to the days when money was pegged to the gold standard is a good thing. They’re wrong. Even without the other problems associated with using precious metal as currency, having a money supply that does not adapt to market conditions creates forces that re-enforce hierarchical structures, and privilege the capitalist class over the working class. It gives power to bankers, and removes power from debtors.
The primary use of money is as a medium of exchange. In cases where money retains its value with regards to other commodities or increases in value over time, it can be used as a store of wealth. But money that is a good store of wealth is bad for use as a medium of exchange. “Good money” slowly loses value over time; slow enough not to cause a panic to spend it, but enough to encourage spending it rather than hoarding it. In order to save money, it must be placed in a bank with an interest rate higher than the rate of inflation. The bank then uses that money to issue debt, and it goes back into the economy.
Inflation takes some of the edge off of debt - interest rates are decreased when the inflation rate is factored in. Consider what happens when the opposite is true; not only does the total debt increase over time, but the money to pay the debt becomes more and more scarce, both increasing the value of what is owed and making it difficult to pay in a reasonable time. While inflation has an effect on real wages, raising the minimum wage and negotiating salary increases compensate for this effect. It is difficult for banks to renegotiate contractual agreements on long-term loans in the same way.
Being able to save wealth without banks might be considered a benefit of deflation, but something much worse happens. Working people generally need to spend most of the money they earn, and only a small fraction of a rich person’s income is needed for life’s necessities. When it becomes beneficial to hold on to money, the capital class can easily reduce spending, but those with less money are forced to continue to spend, leading to a pattern that collects more and more of the money supply in the hands of the rich. Because banks and the wealthy are incentivized to hold on to money, less infrastructure is built, loans are harder to get, and the amount of jobs available and total economic activity decreases. This is called a contraction, and a period of economic retraction is called a recession. When a recession becomes really bad, it’s called an economic depression.
It is no mistake that decoupling the dollar from precious metals coincided with the lessons of the great depression. People lost faith in the political order, revolutions occurred in Russia and Germany, and many turned to fascism. The tight coupling of banks and government is no mistake, as they rely on each other for stability. If we built a society based on a fiscal policy that allowed the currency of exchange to significantly deflate, it would fall into economic depression and revolution also.
Bitcoin is Bad Exchange Currency
Bitcoin, unlike precious metals, derives its value from its ability to be used as an exchange currency. I’ve explained why it’s a terrible candidate for that use. Like starving people during the gilded age, the primary people using bitcoin for exchange when it is more valuable to hold are the ones who have little choice in the matter - people with no safer way to get illicit items and victims of ransomware gangs.
I call Bitcoin deflationary because it was designed from the start to encourage deflation, but even cryptocurrency like Dogecoin, where the monetary supply is designed to increase exponentially, can increase in value if demand for it is high enough. Cryptocurrency will never replace government money so long as it doesn’t improve on its ability to avoid periods of deflation or hyperinflation. In order to do this it needs to respond to market conditions, scaling the money supply when population and economic activity changes.
As it stands, the monetary supply of bitcoin may be increasing with each minted block, but it is also tempered by the amount of bitcoin ‘burned’ - people losing their keys, or dying with no-one inheriting access to their account. This is the best scenario for Satoshi’s million, for example. It’s difficult to gauge the amount of bitcoin that can come into play even when it is in highest demand due to this ambiguity.
Since 19 of the 21 million coins have already been minted, and the rate of minting new coins is slow and predictable, the independent variable for Bitcoin’s value is not supply, but demand. Ending the minting of new coins will not cause stability in the price - its price will still fluctuate with demand. Population is projected to grow long past 2040, when Bitcoin will stop minting. Take an absurd and simple model of the world where the entire population uses bitcoin: an increase in the population means the same amount of coins for more people, resulting in deflation, a predictable economic depression, and the collapse of that society unless it adopts a better monetary system.
I had a look at Nostr and it seemed more like a Twitter competitor, which is why I use Lemmy.
I’m not sure I agree that crypto is fundamentally incompatible with solarpunk but I’m not necessarily an expert. Obviously anything that uses large amounts of fossil energy for non-crucial reasons is problematic but there’s no reason crypto can’t transition to green energy along with the rest of the world economy.
Is this just a single post by one user or is it a pattern? I think a simple message that this type of content is not on topic, and maybe removing the thread is a better approach than defederation in that case. If it becomes a pattern that users are engaging in this despite making it clear that it’s unwelcome, and particularly if admins of the instance are not addressing it, then defederation may be appropriate.
I think it’d take more than a change in power sources to make the current cryptocurrency schemes fit solarpunk ideology. Proof of work systems essentially create currencies backed by waste, tremendous amounts of processor-intensive math done for no other reason than to generate the currency. Math/power/processor time that could be spent tracking weather patterns, identifying patterns in invasive species, climate change, or other potential public goods. I’m not against reconsidering the current billionaire-centric financial systems, but the current crop of cryptos look more like capitalist get rich quick schemes with a lot of hardware and power externalities to me.
If there’s a currency that mints coins when your rig discovers an exoplanet or something I’d personally aay there’s room for that
Edit: for what it’s worth, I’m not sure defederating is necessary yet, but I also wouldn’t object to it if that’s the way it goes
This is a single post, but a known pattern for the culture of crypto-evangelists.
Removing threads not only removes the offending messages, but also the replies. We don’t need censorship to protect us from the concept of proof-of-work cryptocurrency, we just need to reduce moderator and community fatigue. We should be proactive about this.
Hi there! Looks like you linked to a Lemmy community using a URL instead of its name, which doesn’t work well for people on different instances. Try fixing it like this: [email protected], [email protected], [email protected], [email protected], [email protected]
Thanks CommunityLinkFixerBot, but the link structure is intentional.
I want to provide references for people to verify my statements, but I don’t want to encourage users here to brigade Monero.town.
I am thinking about banning this bot. It’s well intended, but really don’t do anything very useful at this point.
Yeah, it needs at least some kind of cue that would make it self-delete.
Little late to the party but I don’t think defederation should be taken so lightly and applied on the basis of “this instance isn’t aligned with solarpunk”. MOST instances aren’t aligned with solarpunk and thats fine IMO. If a user from that instance posted something off topic in the anarchist sub then just ban that person?
IF it becomes a major problem where they are crashing subs and stuff like that then sure lets assess defederating but the whole walled garden thing is not what I came to Lemmy for.
If you don’t like crypto, dont follow those subs, if someone posts crypto offtopic on slrpnk then report it and move on.
