re: Cryptocurrency is an abject disaster
Updated 2023 May 07 by Likho (licho@firemail.cc)
Note: sendero.social is no longer online. The url is kept but is no longer a link.
https://drewdevault.com/2021/04/26/Cryptocurrency-is-a-disaster.html
Lately, I read a blog from Drew DeVault regarding cryptocurrency. With most of it, I agree. I do not operate a continuous integration (CI) service, and I am a writer that accepts cryptocurrency as donations. I do believe a resilient and decentralized currency has value especially in the age of financial censorship, the surveillance economy, and deplatforming. However, investments and speculations have become the new face of cryptocurrency despite the first intentions to create an economy. So I find the “modern” waves of opportunism tragic. I say “modern” as the recent years of speculation and hype surrounding cryptocurrency isn’t exactly new.
For this blog, I will address the two common concerns regarding cryptocurrency and the current one I accept donations in (as appropriately as I can).
Disclosure: I have received 128.39 Ğ1 in donations.
(1) Power Consumption
For currencies based on Duniter including Ğ1, there is no mining, no race for power, and no block rewards. So there is no market force that inflates video card prices or exploits publicly subsidized power plants. Using and transacting in Duniter based currencies does not fill the pockets of miners nor does it provide liquidity for their market. It also has no presence or evaluation in the mainstream cryptocurrency market.
The specifics of Duniter’s power consumption are detailed here:
https://duniter.org/en/is-duniter-energy-consuming/
(2) “Ponzi Scheme” or Temporal Asymmetry
Ğ1 is based on The Relative Theory of Money (Théorie Relative de la Monnaie) by Stéphane Laborde which applies the theory of relativity to economics. As the author states, models used in the financial world are influenced heavily by laws of the natural world and theories of quantum mechanics.
“The RTM is based on the principle of economic relativity, which states that every human being defines a legitimate frame of reference to estimate and produce any type of economic value, known or unknown by others.1”
The Relative Theory of Money defines “debt currencies” and the characteristics of “debt currencies”. The contrasting term is “free (libre) currency”. The characteristic Bitcoin shares with “libre currency” is its free licensed software. Although the issuance of new Bitcoin units may not be based on the creation of new debt, Bitcoin shares similar problems with debt currencies and is considered a non-libre currency.
One of the problems Bitcoin shares with debt-currencies is temporal asymmetry. Temporal asymmetry can be described as the disparity between earlier and later adopters, the phenomenon that earns cryptocurrency the suspicion of being a “Ponzi scheme”. Though the accusation remains contested, the term “Ponzi scheme” only approximates the theory’s definition of temporal asymmetry. Temporal asymmetry is demonstrated when Bitcoin block rewards decline over time from whole numbers to what is currently marginal fractions or “dust”. Although the cryptocurrency market does not use the terminology, it exercises skepticism for similar reasons regarding cryptocurrencies or assets with pre-mines.
The Relative Theory of Money is as the title indicates: a theory, and Ğ1 is the implementation and the experiment. When the goal is temporal symmetry, it forgoes the fantasy of “becoming rich just for getting in early” or the attempt to repeat the appreciation (and fate) of Bitcoin’s experiment. To accomplish temporal symmetry, rate of issuance remains stable over time. Ğ1 also eponymously defines an atomic unit (Ğ1) and a relative unit the DU (Dividende Universel). As a result, the supply of money increases at a predictable rate yet the applicability of the term inflation is disputed by the community. To emphasize, Ğ1 considers itself free currency (monnaie libre) and word cryptocurrency independently does not capture what Ğ1 is.
Whether the specifications of Ğ1 accomplishes it’s goals— a currency that does not create crises or exacerbate wealth gaps— or if economics is an appropriate application of the theories of physics is something I have yet to discover. Trying to keep this post as far from a puff piece for Ğ1 as I can, The Relative Theory of Money is still an interesting read I would recommend.
The English translation can be read here:
https://en.trm.creationmonetaire.info/index.html
If I get anything wrong. don’t hesitate to send a message and correct me. I’m also open to all forms of feedback.
https://sendero.social/display/9dbc5517-1760-92f2-c62c-980897591945
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