Bitcoin: another public good privately provided

In July last year I gave a talk to a Bitcoin conference and was whisked away (as one sometimes is) to give an interview that would be chopped up into ‘grabs’ for a doco on bitcoin. The ‘uncut’ interview (it’s lightly cut, not uncut, but it’s the feedstock that was chopped into a few grabs for the doco) is above for your delectation in case you’re interested. Apologies for occasionally repeating myself which I did because I knew that the interview was really a pretext to get me to express myself as compellingly as possible within a sound-bite. So I occasionally re-bit the sounds when I thought I should.

Postscript: The interview of the interview

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8 years ago

Unfortunately, my download speed is snail-like, so I haven’t viewed your video segment. But maybe one day.

So, forgive me for being naïf (heaven forfend that I should be dis-ingenuous) but isn’t my ;local supermarket also a public good privately provided ? And my weekly rubbish collection: paid for by my Council from rates that I have paid but provided by a private contractor ?

Or is there something unique about bitcoin that I would have understood if only I’d viewed the video ?

8 years ago

Hmmm. Culture and language as ’emergent public goods’. Well yes, I guess they are and they’re quite a bit different from my supermarket and my garbage collection. I’ll still need to think about Bitcoin in this context though.

Thanks for the pointer.

paul frijters
paul frijters
8 years ago

bitcoin hasn’t broken through, nor has it died. It’s in purgatory hoping for some big push to get it up to the Elysium, or else the depths of the Tartarus await!

If you look at the basic stats, the turnover in bitcoin (round about 20 billion a year) reveal the economy of a small city that by all reports is made up primarily of speculation and black-market activity. We can’t know for certain because the block-chain technology does not record what the transactions were for. With a market value of 4 billion, the velocity of bitcoin is around 7, which is pretty low as forms of money go, again indicating its main use is not purchases, but speculation. By comparison, Pay-pall seems to be used for something like 400-500 billion dollars of trade and the narrow money base M1 has a velocity of around 20.

Hard to view bitcoin as a major public good when its main use is speculation and black market activity. The block-chain technology it relies on is sometimes touted as something with great potential use, but I am not sure on that one either as there is an inherent returns-to-scale element to that technology inviting monopolisation (such as happened with bitcoin mining). You thus then get the trust issue of whether you trust the bitcoin community over officialdom when it comes to alternative means of payments. Unsurprisingly, we put more trust in the monopolies we know (nation states and their coin) than those we can’t quite see (ie the computer company/group that has the majority of the computing power in the bitcoin mining community).