Cryptocurrency as cuck finance, or, promises made by Pokemon

September 19, 2016 § 36 Comments

This blog is syndicated into a few feeds here and there, and I sometimes read and very occasionally comment on other blog posts in those feeds.  Here is a recent discussion involving bitcoin and cryptocurrencies which some of my own readers may find of interest.  This post started as a comment in that thread.

Cryptocurrency hopefuls fail to grasp the fundamental fact that (unlike stock, bonds, demand deposits, fiat dollars, and the like) bitcoin is not a security: ownership of a bitcoin does not entitle the owner to anything at all other than possession of the bitcoin itself.

The basic suggestion is that ‘currencies’ in general (understood ambiguously), and therefore bitcoins in particular, represent a promise.  But this raises the question of who in particular has promised what in particular to whom.  An abstract ‘promise’ from nobody in particular, to nobody in particular, backed by no specified property at all, is no promise at all. If nobody will buy your bitcoins you don’t have anyone to accuse of breaking their promise; and there is no pool of property which you can reference, claiming entitement to a share in virtue of this ‘promise’.

Cryptocurrencies are only ‘promises’ when every day is opposite day.  Bitcoins are a commodity not a security.  They are not promises made by anyone in particular: they are simply themselves, that is, they are cryptologically authenticated records of wasted computation.

One of the sociological oddities of cryptocurrencies is that software people really ought to grasp the difference between references to objects and objects in themselves. Somehow when it comes to financial securities the intellectual capacity to do basic dereferencing goes out the window.  With this sort of confusion it is no wonder that the ‘smart’ locks on my car seem actually rather stupid.

The conflation of references to property with actual property often serves the interests (no pun intended) of usurers and other financial hucksters, so it is no surprise that this conflation is fostered by ‘the powers that be’.  Cryptocurrencies propose to ‘fight the power’, if you will, by reinforcing these same basic errors.  I think the kids these days refer to this as being ‘cucked’.

That other people may or may not willingly trade for something – beads of necklaces and the like – does not make that something a security (whatever vocabulary we want to use for editorial purposes: ‘pointer’, to you software nerds, and you know who you are). Willingness to trade at this particular moment is not the same thing as title/entitlement to property. That someone is willing – at the moment – to trade for insulin or tulip bulbs is not the same thing as (for example) a bond which entitles you to regular payments backed by a pool of property recorded on a balance sheet.  The latter is a pledge of property made by the owners of that property; the former may as well be a pledge made by a Pokemon.  It is as real as that cartoon character you see in your smartphone.

Cryptocurrency cucks aren’t alone of course. Most modern economic theorists (Keynesians, Austrians, MMT, etc) labor under the shadow of metaphysically anti-realist error.  That is just modern life in between the event horizon and the singularity.

§ 36 Responses to Cryptocurrency as cuck finance, or, promises made by Pokemon

  • Alex says:

    “One of the sociological oddities of cryptocurrencies is that software people really ought to grasp the difference between references to objects and objects in themselves.”

    I wonder if Java and garbage collection might have some fault here…

    By the way, you could use a system like bitcoins to implement actual money, couldn’t you? I don’t really know much about bitcoins, but as I understand, you could in theory have a a government controlled entity that would generate these computations and issue them out according to government policy, much like you can print paper money, right?

  • Zippy says:

    Yes, an infrastructure like bitcoin could be used to issue ‘bearer securities’ like government tax vouchers (fiat dollars). But it would be foolishness for any institution to allow third parties to issue bearer securities on its behalf by “mining”, receiving nothing in return for issuance.

  • Step2 says:

    Following one of your links, I found this:
    A metaphysical anti-realist cannot tell the difference (or pretends not to be able to tell the difference) between things subjectively valued for their objective qualities and things subjectively valued for irrational or destructive reasons; because for a metaphysical anti-realist man is the measure of all things.

    So I’m not buying(!) the characterization of Keynes as anti-realist. To oversimplify his theories; the markets are basically a sine curve of major boom and bust cycles. Those peaks and crashes are governed by his elegant phrase of “animal spirits”, but the moving average over decades or phrased differently the underlying trend line (positive or negative) of the sine curve is the real value of those markets. According to him the job of the government is to moderate the excess of those irrational swing in sentiment, which in turn keeps the markets stable and closer its rational, objective value.

  • donnie says:

    But didn’t Keynes also popularize the ‘Castle-in-the-Air’ theory of investing? That essentially says that an asset’s intrinsic value, if it even has one, is irrelevant and all that matters is calculating the probability that an asset’s price will rise in the future.

    Sounds pretty anti-realist to me.

  • Step2 says:

    Keynes is obviously widely known for his macroeconomic theories and I’m certain that is what Zippy was making reference to. Second, they aren’t incompatible theories: Keynes assumes that irrational, subjective forces are superimposed over the real, objective value of the market in aggregate and in ways that make determination of the objective value possible only in long term retrospect, and furthermore those macro values only match exactly once every decade or so. As an individual investor in individual stocks you are going to be swept up in the tide of anti-realism forces nearly all the time, so it is better to go with the tide. These days with large mutual funds and market-based derivatives there are greater ways to balance risk against those forces although not entirely. Third and only slightly related, as doom and gloom scenarios go I am much less worried about economic collapse than I am about a far larger, older collapse cycle that will bring unprecedented devastation.

  • josh says:


    I generally know better than to argue with you, but I wonder if you aren’t being a bit anti-realist wrt money. Surely gold, bank notes, and fiat dollars have their use value as industrial commodity and securities respectively. And certainly bit coin seems to be an utterly useless commodity. However, doesn’t this ignore the value of these items as money per se. I know you say on the linked thread that “Money” is an ambiguous term.” I’m not so sure. There seems to be a phenomenon called “money” that arises from economic activity wherein a commodity (usually) is valued for its use as *money* (I know this would be circular if I was trying to define the essence of money, rather than merely recognize the existence of the phenomenon) rather than its usefulness in other matters. That the goods which historically have taken on this role historically have use value aside from their use as money isn’t germane to understanding the nature of what appears to be separate phenomenon in their usefulness as money. That this value only comes about via human social interaction doesn’t make money any less real than marriage or the polis. Without getting into an unecessary (for my point here) debate about how this monetary phenomenon comes about and what is its essence, I think it is self evident that bit coin *just is* money right now, in a way that, say, Zim dollars were not during hyperinflation. So of course, bitcoin could cease to be money at some point.

    In any case, i think, if we are trying to “carve nature at its joints”, we should accept that there is a phenomenon called money and bit coin self-evidently is a form of money. Then we can try to talk in terms of the four causes.

    Sorry if I am misunderstanding you and/or expressing myself poorly.

  • Zippy says:


    Surely gold, bank notes, and fiat dollars have their use value as industrial commodity and securities respectively.

    Gold is a commodity. That is, it does not represent a commitment on the part of a property owner, property to which the gold makes reference and with respect to which it establishes commitment. Gold simply is property in itself.

    Bank notes and fiat dollars are securities: they are ‘the paper it is written on’, to use the grammatically incorrect but ontologically correct cliche, where ‘it’ is the commitment of property (or, in the case of mutuum loans, a personal IOU).

    Failure to make this distinction is precisely what is at issue, and is the main source of confusion about cryptocurrencies. Cryptocurrencies are the ‘paper’ on which a commitment is written, minus the commitment: ontologically, a cryptologically authenticated record of wasted computation.

    Without getting into an unnecessary (for my point here) debate about how this monetary phenomenon comes about and what is its essence…

    But that is to ignore precisely what is at issue.

    Technically, securities are themselves property (ledger entries) which record specific commitments with respect to other property. But when it comes to (e.g.) the title for your car, any real value arises from the property to which there is entitlement (the car) not from ‘the paper it is written on’.

    we should accept that there is a phenomenon called money and bit coin self-evidently is a form of money

    Only if we are using the term “money” equivocally to refer to any property or securities used in trade. The equivocation is understandable because historically many people have failed to make the distinction. But that doesn’t make it any less incorrect to embrace the equivocation. Lots of people have historically believed in Allah and his voluntaristic morality, etc.; but that doesn’t make it correct to embrace the falsehood.

    It is of course no secret that many people trade in ways that are irrational, just as many people commit blasphemy and abomination in attempts to ‘worship’ God.

    But irrational trading in bitcoins doesn’t change them ontologically into something they are not, any more than irrational speculation in tulip bulbs makes them anything other than tulip bulbs.

  • Zippy says:

    I think fiat currency confuses people because they don’t grasp that it is a security: that a dollar is a security which authorizes a transaction in the sovereign’s marketplaces (those marketplaces over which the sovereign exercises tax authority) for which the tax is one dollar, based on the tax laws.

    But fiat currency is a security: an authorization or entitlement issued by the sovereign, entitling the bearer to make taxable transactions in his marketplaces.

    Libertarians and classical liberals balk at this because they find the idea of the sovereign owning marketplaces — of consensual ‘private’ property exchanges being regulated and limited by the sovereign’s authority and law — as offensive and contrary to their implicit or explicit deontology (“taxation is theft!”). They also regularly fail to distinguish between property and securities (commitments impairing property).

    But nature/reality doesn’t care about or conform itself to their insane theories.

  • Step2 says:

    I’m not certain, but I think your example of gold as commodity undermines your point about currency. In other words, gold is a commodity with useful properties but it is also a universally accepted means for exchange and barter. Just because gold has useful properties beyond its exchange value doesn’t mean that I want or expect to use it for those properties. Other commodities like chickens could be used (and have been used) as a means for exchange and barter, but that doesn’t mean everyone using that “currency” is trying to become a chicken farmer. In that sense, bitcoins seem much more like an electrical commodity than a security.

    On the other hand, I think your concept and explanation of security as a promise is excellent and enlightening. So thank you for that.

  • You are partially correct.
    Bitcoin is a record of wasted effort.
    Maidsafe is not Bitcoin.
    Maidsafe is a record of services provided.

  • Zippy says:


    … gold is a commodity with useful properties but it is also a universally accepted means for exchange and barter …

    Well, as long as we don’t take ‘universally’ too seriously. People willingly trade for gold when they willingly trade for gold. I won’t buy the stuff myself: it is of no use to me personally, and because it is valued so irrationally selling it to others at market price is morally dubious.

    The same is true of any property. To the extent the ‘universal’ claim is ‘more true’ of gold that is a matter of historical contingency.

    Just because gold has useful properties beyond its exchange value doesn’t mean that I want or expect to use it for those properties.

    That is true, but it is also true of all property and so fails to distinguish between gold and other property. Investment and use/consumption are distinct.

    In general, investors (and anyone who is even so much as storing away economic value of any sort for future use is an investor in the pertinent sense) don’t in general plan to use their actual property personally[*]. They hold on to valuable property so that it can be exchanged at some point for something they need. This isn’t any less true of insulin owned by non-diabetics than it is of gold owned by people who do not manufacture electrical connectors.

    On the other hand, I think your concept and explanation of security as a promise is excellent and enlightening. So thank you for that.

    Certainly. I am myself in debt to Kristor (the Orthosphere blogger) for his invaluable help in clarifying my thoughts on this. As always any errors are my own.

    [*] The ‘in general’ is important. Real estate is a common situation where people use property both for consumption and to store value. The point isn’t that consumption and investment never coincide, it is that they are logically distinct.

  • Dave says:

    Currency is a bubble of sorts; every commodity used and hoarded as such is valued far more highly than it would be otherwise. If the choice of currency is a good one, this bubble need never pop.

    When government denies savers sound money (in hopes that they’ll “lend” their savings to the government), savers hoard useful things, like housing, with catastrophic consequences. A housing bubble forces young people to live with their parents or share tiny apartments, so they can’t marry and eventually go extinct.

    Bitcoin is superior to USD only in that its supply is finite, like gold. Its anonymity cuts both ways — while government can’t tax your Bitcoins, it also can’t help you if your Bitcoins are stolen or embezzled.

    Bitcoin’s fatal flaw is scalability — when every user must be constantly apprised of every transaction, network traffic grows with the *square* of the number of users!

  • josh says:

    I know the difference between a security and a commodity. Fiat currency is certainly a security as you explain. Bitcoin is a commodity, albeit one that nobody would want under most circumstances. This strikes me as so obvious that I am not sure what the big deal is supposed to be.

    On the other hand, I think to ignore the phenomenon that is “money” is miss what is right in front of your nose. Cigarettes in prisons are obviously money in as much as they are valued for their use *as money* over and above their use as cancer sticks. Their value as money is both real and obvious even if it is not inherent in the nature of the cigarettes themselves. We should not require a complete account of the formal and efficient causes of money to admit that it exists. We admit that it exists and then set to work figuring it out what it is.

    If you want an attempt at an account; money is the result of a nash equilibrium in which people converge on a class of items for use as a means of saving and transacting with others. An item can have properties that make it potentially useful as money every bit as much as an item can have properties that make it potentially useful in electrical wiring. Whichever class or classes of items the nash equlibrium converges upon see their trade value with respect to other items increase. This is not because people are being irrational, but because the class of items *actually is* more valuable in that it potentiality as money has been actualized. The items in this class now *are money* which they previously were not. Just as the Zim dollar never ceased to be a security, but certainly ceased to be money as there was a kind of self-perpetuating fire sale.

  • Elostirion says:

    One of the commenters over at the link used seashells as an analogy, but failed to see how that just proved your point. Bitcoins are a return to a kind of bartering system.

  • fjwawak says:

    If I understand you correctly something is not money just because it is a medium of exchange. It has to be a security in the first place. It is so counter-intuitive because most people, including me, see money as medium of exchange.

  • Zippy says:


    I am not trying to argue over vocabulary: over what various people mean by the term “money”.

    I am trying to help people grasp reality.

    All exchange is barter. The property actually exchanged in barter falls into one of two categories: securities and non-securities.

    Securities derive their value from the property they impair and the rights involving that property which they assert, as opposed to ‘the paper they are written on’.

    Non-security property derives its value from its own objective attributes.

    Now, human beings are not always rational. People who don’t understand the difference between securities and (non-security) property, including many economists and the like, have often conflated the two.

    To greatly simplify:

    Gold at one point was considered ‘money’ because it was a non-security property which was durable, portable, and valuable.

    Bank notes conferring property rights to gold in a vault are a security, guaranteed by the bank.

    Gold-backed sovereign notes are a hybrid security which confers both a license to make taxable transactions and property rights to gold in a vault.

    Fiat currency is a security which confers the right to make a taxable transaction in the sovereign marketplaces of the issuing government.

    Bank deposits are securities which entitle their owner to fiat currency on demand, backed by the property on the bank’s balance sheet.

    Etc, etc. I’ve covered all of this before in previous articles.

    Bitcoins are not a security. They are like gold, except that they have no useful properties in themselves (other than the value intrinsic to authenticated records of wasted computation).

    Now it is true – because human beings are both ignorant and irrational much of the time – that you can often trade worthless things for valuable things under the ‘greater fool’ theory, based on fad and fashion and deluded/false economic theories and the like. Whether someone wants to apply the label ‘money’ to the worthless things traded to ‘greater fools’ is neither here nor there when what we are after is an accurate understanding of reality: it doesn’t turn those actually worthless things into actually valuable things.

  • Josh says:

    I agree with you completely until you get to the idea that money is illusory and irrational. That a good maintains a relatively stable exchange rate with other goods over time, is easy to store, split and trade, is valuable in itself. That there are path dependent and relational aspects (wrt other goods) such that a good may exhibit these characteristics in some times and places and not others does not make it irrational to value such a good. Money is clearly useful as money. To deny this is not to describe reality accurately, but to define out of reality something because you have a hard time explaining it.

    or so it seems to me. I’ll pipe down now.

  • Zippy says:

    Other than cryptocurrencies, what other intrinsically worthless property is used as “money” in barter/exchange?

  • Josh says:

    I dunno. Is Wampum worthless? It’s hard to think of many things that are worthless.

    Still, there are a good many goods that became money such that there value as a means of saving and exchange far exceeds their value for other uses.

    Of course it’s certainly surprising that Bitcoin ever became valuable as money, however, now that it has, it is not irrational to value it as such. Do you really want to be someone who puts the word “money” on scare quotes?

  • Zippy says:

    I am not hesitant to put ‘money’ in scare quotes. People call all sorts of categorically different things ‘money’.

  • semioticanimal says:

    If all exchange is barter then money is something valuable which people accept as a measure of value. Therefore, it seem that something must first be valuable in order to be money. Something cannot be money because it is valuable to use as money as money presuppose prior value. However, what is the value of gold apart from being useful as money? You note some modern uses such as conductivity and other properties that make it valuable as money.

  • Mike T says:

    The recent ruling on Bitcoin by a federal judge was even an example of lawyerly duck typing in how the judge arrived at her understanding of what Bitcoin is.

    I wonder if Java and garbage collection might have some fault here…

    Some, but entirely on the Java side. There are plenty of languages with explicit syntax for differentiating between instantiating a new object and assigning a new reference to it like Go, Objective C, C++, C# (?) and I think even PHP.

    I’m not entirely sure about the morality of cryptocurrencies because a large chunk of their intrinsic purpose is to put transactions outside of lawful, valid authority.

  • Wood says:


    A Catholic writer some of your readers are familiar with argues that money is “a fungible representation of human life.” I had initially thought you might disagree with that, or at least not think of money in a different moral category than any other property man can acquire. And then I thought about how the Church teaches depriving the laborer of his wages is a sin crying out to heaven – which seems to give credence to the argument above. Maybe there is something essentially different between what is meant by “wages” and “money”? I’m just wondering because it seems whenever others argue about currency debasement, fractional reserve banking, time-value of money, etc they often link their arguments to some notion of the “moral worth” (for lack of a better term) of money.

  • fjwawak says:

    semiotic animal:

    I think the ancients valued gold as the most perfected of metals. Beauty and perfection, aren’t they good reasons to value something?

  • fjwawak says:


    Thank you for the summary. And ok, redefining money is a task for a future realist economic theory.

  • semioticanimal says:

    I’m not sure what you mean by “most perfected of metals” but I did suspect it had to do with gold’s beauty and value as jewelry. I suspected that to be the case as I read about a Pacific Islander culture that used limestone as a beautiful stone as money since they had no gold. However, I was curious what Zippy thought.

  • Zippy says:


    A Catholic writer some of your readers are familiar with argues that money is “a fungible representation of human life.” I had initially thought you might disagree with that, or at least not think of money in a different moral category than any other property man can acquire.

    It certainly sounds like poetic malarky, but I suppose it depends on what the writer means.

    As I explain in the Usury FAQ and elsewhere, a worker is owed wages not simply for time elapsed but for what he, through his own powers under agreement with his employer, makes actual. Because we are finite beings and can only do so many things in our lifetimes one might poetically refer to wages as representative of human life. It is true enough that cheating workers out of their just wages is wickedness several times over, an unholy combination of robbery, dishonesty, fraud, taking advantage of the good will and often inferior position of one’s fellow man, and destroying his chance to do something different with his finite lifetime. (A sudden calamity preventing payment of wages is a different story of course).

    But poetry about money representing human life probably obscures more than it reveals here. Burning cash or destroying other kinds of property isn’t murder.

    (The following should be read through the lens of what is moral, not through the lens of the requirements of positive law in some jurisdiction or other).

    Consider a car mechanic. He works on your car for agreed rates. Until you pay him he retains the moral equivalent of a “mechanic’s lien” against your car, the property into which he put his labor.

    Consider a barber who just cut your hair. The tacit agreement is that you have money in your pocket to pay him. If you don’t, then see Question 49 of the usury FAQ for the different kinds of scenarios.

    Examples can be multiplied, but note that none of this imparts mystical spiritual human qualities to some particular kind of financial security (e.g. fiat dollars).

    Maybe there is something essentially different between what is meant by “wages” and “money”?

    Setting aside assertions of the positive law (taxes, etc), there is no moral requirement for a worker to barter for fiat dollars in exchange for his work. Any property – or even trading one kind of work for another – will do. The idea that there is something super special about certain securities that make them ‘wages’ and thus ‘a fungible representation of human life’ is really just errant nonsense if it is taken literally.

    I’m just wondering because it seems whenever others argue about currency debasement, fractional reserve banking, time-value of money, etc they often link their arguments to some notion of the “moral worth” (for lack of a better term) of money.

    From my perspective most people don’t know what they are talking about on those kinds of subjects. See (e.g.) this post for my take on currency debasement: in short, it is not wrong because it changes the relative value of currency and bread (the relative values of different kinds of property are changing all the time). It is wrong (when it is wrong) because it represents a waste of sovereign capital, which is supposed to be employed for the common good not wasted.

    In general people who think that they are entitled to the magical preservation of the buying power of their own property (e.g. any cash or bank deposits that they own) against the relentless tide of the second law of thermodynamics are in the grip of a usurious modernist entitlement mentality.

    Someone ought to slap them out of it, for the sake of both the common good and their own good.

  • Zippy says:


    However, I was curious what Zippy thought.

    To make the implications of the Wikipedia link I provided above explicit, human beings have been making beautiful, useful, durable, corrosion resistant (non-‘money’) artifacts out of gold for at least six thousand years. That is why collections like the Varna gold can still be seen in museums.

  • semioticanimal says:

    I can’t deny that I’m perhaps overly curious of what utility they found in a gold “penis sheath” other than an instrument of torture.

  • Zippy says:

    I realize your comment was probably tongue in cheek, but it raises a relevant point. Building a brothel out of lumber or bricks is not evidence that lumber and bricks are worthless. More abstractly, the proposition ‘it is a waste to make Y from X’ is an at least partial validation of the value of X.

  • vimothy says:

    Excellent post.

    It’s notable how, whenever the subject of cryptocurrencies is raised, neoreactionaries quickly abandon “gnon” (i.e., harsh and implacable reality), and turn instead to wild flights of sci-fi fantasy and technological utopianism.

  • Zippy says:

    Most modern reactionary ‘movements’ are not repentance from modernity or an escape from its mind trap. They just reconfigure the insanity, shuffling the chairs around in an ongoing game of cafeteria realism. From my perspective the ‘cuck’ meme can often be more than a little ironic, given the modernist positions taken by those spreading it. It plays like a scene in a movie in which two loose women call each other whores.

  • […] and other cryptocurrencies are not a security. They are like virtual gold, except that unlike actual gold they have no useful objective […]

  • […] monomaniacal idealists: people who don’t grasp the difference between reality and their beloved simulations and fictions; people who believe that messy human authority and fallibility can be dispensed with […]

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