Re: <nettime> Ten years in, nobody has come up with a use for blockchain

On Sat, Dec 30, 2017 at 7:12 PM, Morlock Elloi <morlockelloi@gmail.com> wrote:

But I want to get back to Bitcoin as a random mindless technology that found its receptors in the society, and use proof by negation: Bitcoin has three key components: asymmetric crypto (for signatures), Merkle tree (for chains) and virtual machine that executes code. Asymmetric crypto uses modular arithmetic in the finite field, Merkle tree uses one-way hash functions. Which of these technologies/inventions or combinations thereof start to present the moral failure? Should we blame Whit Diffie, Ralph Merkle or Von Neumann and their respective societies? Where do you draw the line, and how is that line not arbitrary?

You left out the most important design decision: to cap the number of Bitcoins in circulation, therefore building deflation into the currency. And that decision has nothing to do with crypto, science or technology, but is purely political and based on a cyberlibertarian reading of "Austrian economics".

- I'm phrasing it this way (instead of writing "based on Hayek") after having read the fascinating blog article "Was Friedrich von Hayek a Nihilist?" ("War Friedrich von Hayek ein Nihilist?") in Frankfurter Allgemeine, a politically conservative, pro-free market newspaper. Written by its financial markets editor, the article suggests by implication that a lot of the Hayekianism in AnCap and cyberlibertarian subcultures is based on a narrow reading of Hayek's earliest positions - positions that Hayek himself later renounced: most of all, that interest rates shouldn't be lowered (=money shouldn't be inflated) in times of economic crisis. According to the article, Hayek had been - as a young economist - overambitious with his model. Refuted by academic peers, he later accepted that "deflation is no good" and shifted his work from financial market theory to social theory.

Hayek is quoted in the article, in English, with the following statement: "I probably ought to add a word of explanation: I have to admit that I took a different attitude forty years ago, at the beginning of the Great Depression. At that time I believed that a process of deflation of some short duration might break the rigidity of wages which I thought was incompatible with a functioning economy. Perhaps I should have even then understood that this possibility no longer existed. . . . I would no longer maintain, as I did in the early ‘30s, that for this reason, and for this reason only, a short period of deflation might be desirable.“

Frankfurter Allgemeine's editor concludes his article with the sentence: "The phenomenon that economists base their political recommendations on their own world view, even when theoretical insights of the economic sciences contradict them, may not have died out in our times".

http://blogs.faz.net/fazit/2017/12/27/war-friedrich-von-hayek-ein-nihilist-9489/#1.5359731

-F

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