EspañolThe recent shutdown of Mt. Gox, once the world’s largest trading platform for bitcoins, has sparked, as expected, a flurry of flashy headlines in the mainstream media warning that the event portends nothing less than an apocalyptic end for the cryptocurrency.
This is, of course, a natural consequence of the institutionalized worldview that axiomatically and uncritically assumes market dynamics as chaotic, socially destructive forces, only to be tamed by a benevolent governmental apparatus in charge of watching over the interests of the wider public.
Take, for instance, the headline from Joe Paglieri at CNN Money:
“Mt.Gox site disappears, Bitcoin future in doubt” (emphasis mine).
It’s one of the clearest examples of the phenomenon. The bankruptcy of a key player in an industry is assumed to inexorably imply instant doom for the industry as a whole. A very similar logic to what the whole “too big to fail” meme meant towards justifying the enormous bailouts handed out to the banking industry during the latest global financial crisis.
But upon reading the body of the article, it is clear — at least for anyone with a minimally consistent view of how markets work and their role in the evolution of a sustainable economic systems — that there’s nothing in it that warrants such an alarmist conclusion.
What the article does say is that Mt. Gox’s competitors immediately stepped forward to collectively condemn the company’s practices that allegedly led to its failure and the loss of its customers’ assets:
This tragic violation of the trust of users of Mt.Gox was the result of one company’s abhorrent actions and does not reflect the resilience or value of Bitcoin and the digital currency industry.
Furthermore, Paglieri writes that “although Mt.Gox’s shutdown was unexpected, its piling troubles were no surprise,” at least for other key industry players, such as Evan Rose, president of Bitcoin ATM company Genesis:
The people running the systems right now are not necessarily business men.… For the most part, they’re people who came into this digital project without grasping the value or risk of it. The ecosystem is maturing, but it’s a little scary for everyone involved.
If anything, candid statements by key players about the evolving nature of an infant industry and its inevitable weeding out of bad actors, appear to be positive signs that it is healthy and most probably able to sort out this mess relatively unharmed. (Erik Voorhees’s recent delcaration is also an interesting example in this regard.)
Meanwhile, at Reuters, a news story by Joseph Ax and Karen Freifeld published today does a great job of showing how the regulatory bias works, and how it may become what ultimately stunts the growth and development of bitcoin as a sound medium of exchange to a fraction of what it could have been.
First off, the nub of the story, what makes it newsworthy, is that Mt. Gox customers “might be out of luck” because, well, they may not be able to get their money back should the company finally declare bankruptcy.
This already shows how entrenched the notion is that no one ever, under any circumstances, should take final responsibility for what he does with his own money.
What’s even more telling, though, is that the article cites James Grimmelmann, a professor at the University of Maryland who focuses on Internet law. He says that “customers would have the same avenues of legal redress as anyone who entrusted property to an institution that failed to keep it protected, such as negligence, breach of contract or even fraud.”
In other words, the current state of the law would allow customers to handle the issue in the same way that responsible adults would handle any other problem related to their fairly acquired property in the marketplace.
But for the state apparatus, of course, there is simply no way that rational, responsible adults would be able to evaluate for themselves the quality of the businesses they deal with: the article warns us that “New York State’s top banking regulator is exploring licensing requirements for bitcoin exchanges.”
And if the licensing requirements are finally implemented, these artificial barriers to entry will of course allow for the cartelization of the bitcoin industry into the hands of a few giants. Not so many years from now, they will surely be characterized by the media, in typically Orwellian terms, as “the inevitable result of cut-throat market competition.”
But despair not, dear non-statist, or even minimally-rational Mt. Gox-debacle spectator. There’s plenty of content in the tubes taking a good shot at a non-inflamatory, market-oriented perspective at the whole thing.
Do your own Googling, but allow me to suggest my two favorite pieces so far:
Khadim Shubber’s “Good Ridance to Mt. Gox,” at Slate:
[Mt. Gox’s] death poses serious questions about how long advocates of the digital currency can resist regulation. But it also offers a glimmer of hope that bitcoin’s reckless youth may finally be behind it.
Tom Knapp’s “Future Of Bitcoin ‘In Doubt?’ I Doubt It,” at c4ss.org:
If Bitcoin falls to zero in perceived value today or tomorrow, it will still have been a smashing success: Proof of concept that a non-government, peer-to-peer, self-organizing currency with no central authority can be done.
And yes, Bitcoin proper could fade away into irrelevance as better, stronger, sounder, more easily anonymized cryptocurrencies replace it.… cryptocurrencies are here to stay.
Why? Because they work. They serve several vital functions: Not just protecting their users from government and private thievery, but also making “micropayments” — the holy grail of Internet commerce in very cheap things — feasible and making borders economically superfluous.
EspañolMuch of the analysis regarding the grave situation in Venezuela has focused on the lone figure of Nicolás Maduro — his inability to govern and lack of education, for example. However, the current situation in Venezuela is not the result of one personality, but rather the ideas that members of this society believe. This was apparent in an interview that appeared a few days ago with a representative of the Revolutionary Armed Forces of Colombia (FARC), currently in negotiations with the Colombian government in Havana. The representative goes by the name of "Alexandra," and unlike the Venezuelan president, she is from Holland. On the surface, she appears to be a harmless person — concerned about social issues and, according to her statements, highly educated. However, just as with Venezuela and its defenders of Socialism for the 21st Century, she justifies the existence of the guerrilla army on the basis of inequality that exists in Colombia. She perhaps ignores that at the time of the creation of the FARC (1964) there may have been direct influence from the Cuban Revolution of 1959, which brought in a new ruling class and immense poverty for the general population. Even worse is that she boasts a terrifying simplicity in her way of thinking. She explains that her decision to join the armed group came when she realized the impossibility of working within the law to address the problems of inequality. She claims that anyone who thinks differently in Colombia is assassinated, imprisoned, or persecuted. Besides this simply not being true, her statements discount the work of thousands of people who, without the use of arms, also care about human rights and defend "different ideas" similar to her own within a democratic framework. "Alexandra" tries to project an image of the guerrilla as a "savior." However, she does not recognize the atrocities that she herself is committing, and merely dismisses them as simple mistakes. Moreover, she refers to this illegal group as if it were concerned about the education of its combatants — as though "education" were inherently positive, regardless of what type of information is being taught or what use it provides. One can, of course, learn to read or write through other means, without the need to create a group of assassins who bomb and rob the lands of the farmers they claim to protect and educate. The effort to clean up the image of the guerrillas is the most deplorable element of the interview. This must be done, according to her — and the same goes for the Venezuelan regime — because the media is biased. They feel they are victims being attacked on all fronts. In reality, they are the ones who only tolerate others saying what they want to hear. For them, the only objectivity that can exist is one that fawns and conceals their violent and impoverishing methods. They do not understand that in liberal societies like the United States, ideas of all sorts are not just tolerated, the open criticism enriches the nation. Her branding effort and attack on the press reflects the paranoia on which the FARC depends. The paranoia is also visible in the way she describes the role of the international community in the Colombian conflict. She claims the response from the Colombian military is not a result of the threat posed by the guerrillas, but instead driven by the intervention of the United States and other multinationals. It must matter very little to her that there is an inherent contradiction in criticizing the intervention of the United States. She takes up arms herself, not in her native Holland, but in Colombia. On the other hand, she reflects the core of the statist perspective: the state is a superior being, capable of thought and feeling, whose raison d'être is an undefined illusion of "sovereignty." As such, this young Dutch woman claims the Colombian state has "no feelings of sovereignty," or "love for its people." It doesn't even want to "share its well-being with the people of Colombia." This young guerrillera ignores the fact that empathy is a feeling shared among individuals, and "well-being" refers to something that pertains to people, not an organization like the state. One could argue that "Alexandra" embodies the condescending attitude of superiority that Europeans have when analyzing the situation in countries like Colombia and the people who appear to them as simple folk. That's possible. However, the problem has more to do with the ideas that this young woman believes in, and the conclusions they lead to. For this reason, Colombians must defend the need to reach a peace agreement, but also ensure ideas such as these never come to power. As demonstrated in our neighboring Venezuela, they are not only ineffective, but they perpetuate poverty, inequality, and more conflict. Translated by Guillermo Jimenez.