Dread Pirate Roberts supporters thrown for a moral loop.

The radical libertarian world was just hit with a bombshell revelation the other day. Previously, the defense team of Ross Ulbricht surprised us by admitting that Ross was the originator of Silk Road, however they claim that Ross left the position after only a few months, handing it off to another entity. This "real" Dread Pirate Roberts, the one who ran the site for the the bulk of the time, eventually went on to drag Ross back in to frame him when he felt the heat from the Feds. Well, now the plot thickens; the defense team is naming a name: long time MtGox operator Mark Karpelès, the one who held the reins when it collapsed and who a lot of people are bitter towards. Furthermore, they have evidence to that end, as a federal agent testified that Mark was their original lead before they went after Ross.

This initially seems like a cause for small celebration. Here is a chance that Ross Ulbricht can be free, or at least substantially reduce the sentence he is liable to receive. But let's slow down for a second because I think we've lost a little moral clarity here. It seems that at a certain point, the focus drifted from supporting the heroic operator of the legendary Silk Road marketplace to supporting one Ross Ulbricht. Only allegedly the same thing, as some libertarians are quick to point out. According to the defense team of our hero Ross, the "real" Dread Pirate Roberts, operator of Silk Road marketplace, is Mark Karpelès. Well, if we're in this because we support the Silk Road, shouldn't our support now turn toward Mark?

There are now only two approaches to take with regard to Mark. Either we can be happy he is taking the heat off of Ross or not happy. Suppose we're happy. This is, after all, a guy who ran MtGox into the ground, caused many people to lose a lot of bitcoin, and, as some suspect, even ran off with a lot of the btc himself. Even if we don't support people going to jail for facilitating drug sales, we can perhaps be content in this sort of poetic justice. If Ross, the human being, is found not guilty or responsible for being Silk Road's operator, we still of course can cheer that an innocent man is allowed to be free, or have a reduced sentence for his reduced role. But wait – then we're conceding that the real heroic Dread Pirate Roberts, operator of the legendary Silk Road marketplace, is in fact not a hero. Suddenly we're happy to see him behind bars. Remember how defensive we were when Ross was charged with soliciting a murder-for-hire? As our focus has turned toward our sympathy for Ross, the human being, we may have forgotten what we originally supported: The idea of a free market pioneer, morally true, despite and even because of complete disregard for the law.

Okay, so suppose we're willing to forgive Mark the transgressions from MtGox, and not hold it against him in his capacity as the DPR. Suppose the murder-for-hire charge doesn't apply to him, either. Or maybe he wasn't the DPR in the first place. In that case, we still don't have such a cause to celebrate this latest move from Ross' defense team. It just transferred most of the heat from one innocent man to another. But it's even worse than that, because now, Ross, our libertarian folk hero, the one who still started the Silk Road, is in fact a snitch who just fingered an innocent man, possibly the heroic real Dread Pirate Roberts. This is not at all to say that I wouldn't forgive Ross for doing so, nor that I wouldn't do the same thing under the circumstances. However it does hurt our cause for having supported him in our ideological capacity, and taint the minor hero status that he'd still earned for starting the site and running it a few months. At the very least it may send a mixed message if we continue to support Ross under this favorable view of Mark.

I suppose the best possible outcome, from a libertarian stance, is that Ross knows Mark had nothing to do with Silk Road and the Feds have nothing on him, but Ross's defense team still uses him to create enough reasonable doubt to set Ross free. Seems a bit of a long shot, though. So really, this is not a great situation in liberty land.

Porcfest 2014 Trip Report

This year I went for the third time to the Porcupine Freedom Festival, usually referred to as Porcfest, in New Hampshire. I went in 2011 and 2012, but missed 2013. So many notable things happened that I started taking notes because I knew I would otherwise forget. I wanted to convey to other libertarians just how great of an experience it can be. So I've compiled my notes into this post. You can also see all of my pictures from over the week, including the ones embedded in this post.

I feel I should mention upfront that just the other day I read a very sobering point made by George Donnelly about the future of Porcfest. I don't want to spoil the positive tone of this blog post prematurely, but this is a very long post and a lot of people may drop out before getting to the end so I'm putting it at the beginning. I hope he's wrong or at least blowing it out of proportion, but it's definitely worth considering.

We arrived on Monday evening. I had come from California on a redeye, and I expected to crash in the hotel early that evening. However no such thing happened, it was already that exciting. The events at Porcfest generally culminate on the weekend, but over the years things have been getting set up earlier and earlier. In 2011 things got happening by Thursday. This year vendors were already up by Monday, maybe even Sunday.

Tuesday morning I went to Grass Fed Revolution for breakfast.

We chatted up a guy named Ben, who turned out to be a reporter for the Washington Post. He was not a libertarian, but he appeared to be having a good time none the less, and he had come with his friend who was a reporter for a DC based libertarian publication called the Washington Free Beacon. We knew how zany the antics of Porcfest are, and that it must be even more so for an outsider, so we eagerly talked with him for about an hour and told him to take notes. I drew him a crude Venn diagram of various strains of libertarian political ideology.

He got our names. Neither my name nor my diagram were ultimately mentioned in the article, but my friend Kamil was quoted. If you read it, you might imagine our disappointment with how we were characterized after such a friendly and open discussion. I guess I've learned my lesson when it comes to DC reporters. Should I have expected no better from a non-libertarian publication? Well, compare this to the Planet Money feature about Porcfest 2011. I would go so far as to say they were even nicer than they needed to be. Ben's friend, not surprisingly, put us in a much more favorable light.

A little later I ran into my friends Brian Sovryn and Stephanie Murphy. I had a nice chat with Brian about various crypto-currencies and secure communication platforms. Then I talked with a couple of guys who turned out to be former scientologists. They had not disavowed Scientology entirely, however they were against the organization. They were similar in outlook to the Free Zone folks. They seemed reasonable enough. We mostly agreed about the issue of psychiatric over-medication, but also that psychiatry is appropriate in certain cases. They just believed that Scientology offers some sort of technology that can help the average healthy person excel. We didn't talk about any religious aspects.

I saw an interesting talk about cooperative business models. This topic has been very interesting to me lately. I love the idea, but I have my doubts about the economics, particularly the fact that effective entrepreneurship is necessary for any speculative venture. One insight I gained in a discussion afterwards is that entrepreneurship can be taught to others if only they are allowed to practice it within a cooperative. I saw a talk by Mike Vine about the creation of a new regional cultural identity called Arcadia, which would exist north of New England. It would encompass New Hampshire and Vermont, and stretch all the way up into some of the eastern provinces of Canada. It turns out that there is now a Free Province Project centered around Prince Edward Island, which is part of this region. He gave some historical context for the movement, and in particular the name Arcadia.

In the evening, I ventured into what functioned as the LRN media room for the duration of Porcfest. Many podcasts and radio shows were recorded and/or broadcast from there. The show being broadcast (Internet only) at this point in time was Peace News Now, hosted by Derrick J Freeman. The guest on the show was a woman who was attending Porcfest. Earlier that day, she had decided to walk topless through the vendor area of the event, known as Agora Valley. Several people had complained to Porcfest security, which was being performed by a volunteer organization known as The Church of the Sword. The security agent strongly encouraged the woman to cover herself up. The discussion of the show centered around freedom and gender equality. However, being a libertarian show, I objected to the conflation of social freedom and political freedom. It was, after all, on private property, and rules can apply. I was invited onto the show for two segments to express my point. I don't see the broadcast on the show's site just yet, but if it shows up, it should be the episode from Tuesday, June 24 2014.

That said, I think that if Porcfest is to be an experiment in libertarian society (and many think it is) I believe that the Free State Project should make a deliberate point of releasing the reins to at least approximate a scenario with multiple adjacent property titles owned by people of differing preferences, to see how well the market and free bystanders really resolve issues peacefully and without unduly marginalizing anybody.

Later on I was hanging out outside and chatting with a group of people. At one point, one guy excused himself and started to head down the hill. A moment later we noticed he fell over. A few of us went to help him out, but he seemed content enough to be on the ground. It turned out he had consumed Bacardi 151, weed, and some shrooms. He was amazingly articulate given all of this, but he kept periodically blacking out for a few seconds at a time. I was impressed overall with the situation, because of the initiative of the bystanders, and because of the way he took our word that something was wrong, despite that he felt like he was okay. It was also a libertarian approach; no demands on him, no judgments for the drugs he took. Just a strong suggestion to convince him he needed help, and he was reasonable in kind. We helped him along to a safe place where an EMT could take his vitals, and he turned out to be fine. We concluded that he just needed some food, which he got. Later that night he got back to drinking. Live free, I guess. (Or die)

Even later that night I caught up with my friend Drew, who had just come in that evening. We had a long chat about bitcoinnotbombs.com, which he does some work for, and for which I'm the resident Bitcoin "hater". I ended up coming back to my hotel room at 3am.

That was Tuesday.

On Wednesday morning we met a very interesting Muslim. He was a white man named Will. He was from Tennessee, had a long beard, and a straw hat. He had a deep southern accent which was occasionally interrupted when very deliberately pronouncing Arabic or Indian words. His wife is Gujarati, and he was cooking Indian food. He had set up a mosque tent, which I believe was used by a couple other Muslims in attendance. He was keen on smoking his "hillbilly weed". He explained to us that the only reason there is a ban on marijuana in many Muslim communities is that hundreds of years ago it was used as a political tool in a certain region to marginalize the Sufi population who were fond of hashish. This is a technique that was arguably copied in the United States vis a vis the Mexican population. He told us that he had interviewed four "rockstar" imams on the subject, and they at least agreed that medical cannabis was acceptable. I don't recall what he said about recreational.

The interesting talks that day were the Hacking Facilitation talk, and the Mesh Networking talk. The former was basically about how to run a meeting and making sure nobody is marginalized, nor dominates the conversation. The presenter's experience was from Occupy Boston, but she later applied it to professional scenarios. The Mesh Networking talk was basically an introduction to the subject, but at the end there was talk of organizing a mesh network for Porcfest 2015, which I tentatively plan to try to organize.

One of the fun aspects of Porcfest is the use of alternative currencies. Silver and Bitcoin are the most popular. This year a couple vendors accepted Dogecoin. I wanted to trade an ounce of silver for some Doge, but it was hard to find someone to trade with. I had the idea of creating a Currency Exchange Board, a simple sign-up board to find people who wanted to make a trade. I set off to the local small town hardware store, and sure enough they had what I needed. I set up the board near the Bitcoin Not Bombs tent, and even made some advertisements around the campground the next day. It was a very minor success, but it was still fulfilling to contribute to the Porcfest economy. However, in the end I got my Doge though a personal introduction instead.

I also relearned a lesson about the market, which is to pay attention to the behavior of your customers. This board was repurposed as a craigslist of sorts, to sell phones. Later it even turned into Craigslist Missed Connections: a lady who made bitcoin earrings in response to a comment I made at Porcfest 2011 wanted to show them to me. She learned that I was the one who created this board, and used it to get my attention.

Interesting antics that day included a guy in a loin cloth. Apparently that did not warrant a chat with the Church of the Sword. Also, it was rumored that Chris Cantwell was on the pemesis. He had been banned from Porcfest for writing brazen blog posts supporting killing police officers (in certain situations), and also apparently being a drunken mess at last year's Porcfest.

The main event that night was the Big Goth Dance Party, a Porcfest first and hopefully not last. I talked to a guy who wore a KMFDM shirt (I'm a fan). There was also a guy wearing a Pinochet shirt. He was likely the only person at Porcfest who was a fan of a dictator. Afterwards I went to hang out in The Satoshi Saloon, and ended up signing the Statement of Intent to move to New Hampshire for the Free State Project. I also had an interesting chat with a Russian lady who had attended, if I recall correctly, almost every Porcfest.

On Thursday, the interesting talks were about Thick vs Thin libertarianism, and an abortion debate. The abortion debate apparently had started well before Porcfest in the Facebook comments section as soon as it was announced. Ultimately it ended when somebody commented "let's save this for Porcfest where everybody is drunk and armed". Fortunately or not, the actual debate didn't generate any sparks, it was just a sharing of various perspectives and hopeful future solutions. At night, a group of us went to a small private musical performance at a campfire by Jordan Page, who played in one of the official event tents later in the week.

On Friday I was running out of silver and Federal Reserve Notes, so I ended up spending some of my bitcoin on eggs. The only bitcoin I had was from being paid for writing a few anti-Bitcoin blog posts on bitcoinnotbombs.com, so I was reluctant to spend much of it. Later that day I found a way to avoid going into town for an ATM by buying silver pieces from the Suns of Liberty Mint with PayPal.

Though there had been no confirmed sightings, Chris Cantwell's presence was felt at Porcfest that day:

These posters, it turned out, were put up by his lackeys, he never showed up. They were vandalized over the course of the week. I'm by no means a fan of Cantwell, but I found all this to be quite funny.

There was a PGP key signing party. The guy running it wanted to bring his own SKS server but forgot. However I actually had one on a Raspberry Pi that I brought. The party was sort of a mess in the end, though. These things are pretty hard to run smoothly. I attended a workshop to learn basic CPR. Turns out that there are defibrillators which are very easy to use these days, located in most large establishments. I watched part of an episode of The Bitcoin Group get recorded. The Friday keynote speakers were Nick Gillespie, who spoke on the wonders of Pop Tarts, and Joel Salatin, who spoke on the wonders of organic food.

That night was the Big Gay Dance Party, which is the biggest event at Porcfest and by now an annual tradition. Around the time this was getting started, Porcfest received a surprise appearance by none other than Vermin Supreme!

I chatted with him after the party. It turns out that he's more of a socialist anarchist, though he doesn't have a problem with markets. His main concern with libertarians was that he believes that mutual aid (not charity) is paramount to a successful free society. However he came to be comfortable with the Free State crowd when he saw that they actually practiced mutual aid. Not many left-anarchists, at least the ones I've seen on the Internet, seem to have any tolerance for anarcho-capitalists, so it's nice to see that we can find more in common than we think once we get to know each other.

On Saturday, we watched a talk by Lyn Ulbricht, mother of Ross Ulbricht, who is accused of being the former proprietor of the Tor-based drug market Silk Road. She related a message from him to us, saying that, with our help, he hopes to attend Porcfest 2015. Seems unlikely to me, but aim high, I suppose. Jeffrey Tucker spoke as well, in his usual uplifting tone, about how technology will soon outpace the state's ability to regulate it, ultimately ending in the state's collapse. However it depends on us continuing to create the technology. Bitcoin was the obvious example. I had a chance to have a very brief chat with him, as well as Nick Gillespie, who was still around that day.

Later that day there was a panel talk called How Not To Be A Creepertarian. It was an excellent open and understanding conversation about socially awkward male libertarians, and the women who are made uncomfortable by their advances and lack of ability to interpret social cues. I wish this sort of tone could be taken in the San Francisco tech scene (which, granted, faces somewhat different problems) but that seems to have devolved into mutual hostility.

Later, Jeffrey Tucker was seen performing in a (painfully long) play called The Night of January 16th by Ayn Rand. This was amusing to me because many years ago he performed in a play written by Murray Rothbard, making fun of Ayn Rand, called Mozart Was a Red.

I chatted with a vendor who was selling various 3d printed ornaments, including jewelry made of pieces of the functioning 3D printable gun, the Liberator. He had a holstered copy of this gun, in Porcupine black and yellow. Elsewhere at Porcfest, there was a "rifle raffle" for an AR10.

Saturday's keynote was done by Overstock CEO Patrick Byrne. He is of interest to the libertarian movement because of his push to get Overstock.com to accept bitcoin. Interesting to note that he was also involved in some lawsuits against some Wall Street hedge funds (which rendered applause from the libertarian crowd; leftists take note). He was warned that he would be the subject of federal investigations in retaliation, and sure enough he was the subject of six of them (and cleared on all of them, if I recall correctly). However, his talk was mainly about the history of (classical) liberal philosophy. He starts the lineage from the Book of Daniel in the Old Testament, and explained that liberal philosophy developed in Holland before it came to England. (I later approached him to ask if he'd read the seemingly blatant libertarian passages in the Tao Te Ching, and he had.) He also mentioned Snowcrash as an "anarcho-capitalist handbook".

That night was Liberty Feud, hosted by Robert Murphy, which was basically Family Feud where the survey was taken among Porcfest attendees. I had a couple great conversations that night, including clarifying an economics question with Robert Murphy, and discussing general libertarian views with Jonathan Waller, a British dude from Japan. My night ended at the campfire at four in the morning, where somebody was selling jello shots to fund a political campaign.

All in all it was an intense yet relaxing week. So much went on that it felt like two weeks, and by the end of it I all but forgot what I did for a living. In some ways it feels like coming home for a week once a year. The specter of a police raid notwithstanding, hopefully this convinces some libertarians out there to check it out next year.

Bitcoin: The Greater Fool's Gold (crosspost)

I recently made another post on BitcoinNotBombs, in response to a post made by Robert Murphy. I thought it was a great opportunity to make my point:

http://www.bitcoinnotbombs.com/bitcoin-the-greater-fools-gold/

Well, it turns out Bob eventually read my post:

==> Speaking of Bitcoin skeptics, I thought this guy had a good response to one of my recent post

Who's excited? This guy.

Going to Bat for Peter Schiff (crosspost)

I recently made a guest post on BitcoinNotBombs. I was invited as a guest Bitcoin "hater" to try to spur some conversation. If you're following my blog, you know I've made a couple posts on the subject. So, to keep everything in order, I wanted to share the link with you: http://www.bitcoinnotbombs.com/going-to-bat-for-peter-schiff/

I will be posting there again very soon.

Larken's Liberty-Baiting

Larken Rose is an outspoken proponent of radical, stateless libertarianism. In an infamous article, When Should You Shoot a Cop, and a recent speech at Porcfest, he has challenged a taboo among the libertarian movement, particularly the Free State Project, by asserting our right to use physical force in self defense against government agents. While he appears to make a compelling case, I think that it's important to highlight some important problems with his arguments.

Libertarian Guilt Trip

Most recently, there was a video in reaction to the expulsion of Christopher Cantwell from the Free State Project, who wrote a controversial article in a similar vein:

The first problem I have is that Larken is taunting us by telling us that we're afraid to address the issue, and painting people's condemnation of his point as fear of addressing the arguments. I agree with Larken that ignoring it is a weak tactic, which is why I'm responding. Hiding would merely strengthen Larken's point that the only thing standing between us and the truth is fear of facing an uncomfortable reality. This would embolden and isolate the ranks of people with this brave and potentially dangerous point of view.

I initially took him at his word, and I personally understand the desire to just make this issue go away. But considering that they let him talk at Porcfest, and that people debate the issue quite rationally on Free Talk Live (a radio show heavily connected with the Free State Project) for days on end, Ian giving him due respect, I think that Larken, to some extent, is crying censorship as a persuasive tactic.

A Free Agent

The next problem I have is that Larken makes the argument that organizations such as the Free State Project, which hold an official ideological position, stifle progress. As a member of an organization, things you say are to some extent representative of the organization, and Larken considers this a limiting factor. To address this, consider the ways in which one can act as part of a group.

In reaching ends (not just political ends), libertarianism, in my opinion, does not promote collective efforts, but it does promote concerted efforts. The difference is that in a concerted effort, membership in the group is not a matter of identification with the group, but rather a revocable agreement with its means and goals. If a group of people are considering conducting a concerted effort, there needs to be an description of what that effort is, so that people can decide whether or not to join. The description is pivotal, because every member of the group understands that every other member joined with the understanding given in the description. If a member does not meet the description, the leadership should consider removing them from the group. If the official description is not adhered to by the leadership in this or other ways, the disappointed members should consider leaving.

It may be a bit of a drag on progress, but it gives other people an important assurance as to what they're getting themselves into. If Chris Cantwell wants to take a position contrary to the means of the Free State Project, that's great. But I am strongly considering joining the Free State Project, and I, for one, don't want to join an organization that tacitly supports Chris's point of view. As such, it makes me comfortable to know that, in joining the Free State Project, I will be among others who feel comfortable with this decision. Chris, for his part, should find another concerted effort that matches his means.

The same could be said about headless movements. Larken amusingly goes on to say that there should be a splinter in the movement between people willing and not willing to use violence in self defense against government agents, and that the latter aren't true advocates of liberty. What if somebody called themselves a libertarian and advocated for socialized medicine? You'd tell them "sorry you don't understand libertarianism, you're not really one of us". It's basically the same thing, less formally instituted.

What would be dangerous is if an organization was not the holder of the banner, but was the banner itself. At this point the organization would represent a collective effort, which is identification with a group rather than just adherence to a principle. This is the concern that Larken is expressing, and to this extent it is valid. However so far, I don't think it applies to the Free State Project. (What does trouble me about the Free State Project is that it seems to be engaging in mission creep. I liked it better when it just planned to get everybody into New Hampshire, and dissolve thereafter.)

Daring to Speak of Violence

Now let's get to the meat of the matter. Here's his talk at Porcfest, "Why Speak of Violence":

Let's look at his first basic assumptions. 1) It is moral, according to the Non-Aggression Principle, to use deadly force, as necessary, for self preservation. 2) The aggressor having a badge does not create an exception. So much I agree on. Well, so what? Larken acts as if it is only the most enlightened, intellectually honest libertarians who would come to this conclusion. In reality, I think almost everybody, libertarian or not, will agree with this given the proper hypothetical. In Indiana, it's not only a socially acceptable position, it's LEGAL.

Further, I'd argue that almost everybody, libertarian or not, would agree that there are certain hypothetical situations in which a government "goes rogue", where it's time to take up arms (assuming there was any hope in the endeavor). Guns rights activists talk about this hypothetical all the time.

This, again, only serves to put Larken in the position of being the holder of some inconvenient truth. Don't be fooled, there's nothing that compelling about this point. The point that is compelling, however, is where he makes this argument in the context of activism. As an activist, your job is to go against the grain of public opinion. Practically, this is the difference between defending yourself against a police officer who is threatening you without giving you an option to comply, and forcefully defending yourself against a police officer because you don't want to obey a law. I understand that this is not important from a moral standpoint, but it is important from the standpoint of acceptance across society. Larken is clear that he is not advocating revolution, but when there is an institution whose actions are respected by the critical mass of the population as legitimate, using deadly force to defend against it may as well be a violent revolt.

To continue such an effort en mass as libertarians without eventually complying (and Larken implies that at some point we should all stop complying), it may necessarily require what even he would call a violent revolution. Activism is about persuading the public. Anything that requires force to overcome the critical mass of public opinion will render a large demand among the population for a counter-revolt. This is why many of us advocate what is often dubbed as "Peaceful Evolution". This is the true reason that the idea of shooting police officers in defense of our freedom makes some of us nervous, because so many in history have used injustice as a justification for such actions, almost always to awful ends.

Larken's Calculus

Finally, let's look at Larken's calculus of force in society, which can be described as, "Freedom occurs when the good guys are more willing to use deadly force than the bad guys.". I think this is an oversimplification; more accurately, the calculus is, "Freedom occurs when people are more willing to use deadly force for good than for bad.". Note the subtle distinction. I'm not inclined to think that anywhere near 100% of the police force is comprised of evil people. They are full of good people on some bad missions. Perhaps on a power trip, but they are still driven by an ideology. That is why we believe that peacefully promoting and demonstrating a countering ideology is a potentially effective strategy. To begin to turn the tables, we need to turn minds.

But, Larken would ask, what about to finish turning the tables? What about the remaining, truly evil people in the forces? Don't we need some good guys to finally be willing to shoot the remaining bad government agents? Not necessarily. For one, consider the flip side of my calculus: it's possible to convince bad people to do good things. Evil people could be convinced to leave the police force by offering better pay as security guards in the agora. As the agora progresses, choosing to work in private security may also increase such people's standing in society. So, it may be more worth their while to do the right thing than to commit evil.

And as for those who remain in the police force regardless? Well, let us ask the question, what is a police officer? A police officer is an agent with the support of the critical mass of the population, otherwise he's a thug or vigilante in a clean shirt. Returning to my above point, the dangers in using defensive force against state agents is that in the eyes of the critical mass of the population, it may as well be revolution. Once the agora has taken hold, and the critical mass of the population has a different opinion, that agent ceases to be a police officer. At this point he works for a rogue agency that has lost most of the respect he had. At this point, there will be little need to make the case for defense against him or her.

Did I just concede Larken's point? No, because Larken's point is that we need to be talking about, and focusing on, this eventuality right now. But we don't. Before it's time, it's dangerous to yourself and to society. When the time comes, it will go without saying. Do we need to speak of violence? Yes, but only to make a reasoned argument against it, to avoid the appearance of being afraid of it, to avoid being tempted into Larken's point of view.

The Fallacies at the Root of Bitcoin's Value: Part 2 - Troll Economics and Value From Transferability

"Bitcoin has value a tool: you can use it to near instantly make payments across the world, with almost no transaction fees."

In my initial post, I clarify the properties of value, why I believe a source of value outside of trade is necessary to at least rest assured with a given currency, and why I believe that Bitcoin (aka BTC) does not have such a source of value. There are many responses to this point, citing claimed sources of value, but I believe them to be almost always erroneous. Here, I will focus on the above claim of Value From Transferability.

Disagreements about the economic viability of BTC can usually be split into two areas: "Does Bitcoin have consumable value?" and "Does it even matter? (I mean, look at the inflated price of gold!)". With respect to the claim of Value From Transferability, I will only argue against the former. Arguments against the latter can be made independent of this particular claimed source of value, and will be done in future posts.

Some specifics on the nature of value

Most importantly, certain things are valuable because they're directly consumed. The "shininess factor", with regard to things like silver (aka Ag). This is based on personal preference, and its market exchange rate is as reliable as the existence of that preference among independent individuals across the economy. Other things are valuable as tools to help produce or obtain things that have shininess. Still other things have properties, currency features, that help preserve its own value, assuming it has value to begin with. Durability of Ag is a canonical example.

However, all action in the real world is speculative. Even when I value something for shininess, I speculate that I will in fact enjoy it. But this is not speculation on others' behavior, so it is not relevant to this discussion. More importantly, if I'm a holder of Ag for the purposes of exchange, its value from durability depends on another person down the line valuing its shininess, making the value from durability speculative. And if I'm talking about a commodity without any shininess attributes, that is circulating as currency regardless, any properties such as durability has arbitrary speculation, ie I'm effectively guessing people will continue to take it, because they did yesterday.

Problem?

So with that in mind, let's revisit the Value From Transferability claim: BTC has value, because it's useful, because it can extremely cheaply and reliably transfer value across the world. Seems plausible enough. I want to make a transaction of Ag to somebody across the world in exchange for a vintage postage stamp I wish to collect, but there are expensive wire charges involved. However I find that I am able to exchange some Ag for some BTC in order to send that BTC across the world for miniscule fees (and the fees are not zero). Thus, the BTC demonstrably is valuable to me in that moment.

So what is the problem? In short, it is begging the question. If the BTC system were a means of cheaply transferring something with established value, with BTC as the vessel, then yes, that would give BTC a sustainable value. However the BTC system is a means of transferring BTC. Any value inherent in it is established after, and independent of, the transfer. The claim of Value From Transferability shouldn't depend on BTC already having an established value from some other source, otherwise the claim is superfluous. Thus, we are left with BTC having value because it helps me transfer value, that value again being in the form of the ability to transfer value, ad infinitum.

Value From Transferability is a Currency Feature, but without any speculation on somebody appreciating its shininess. Exactly how much value is at the end of this chain of events is completely arbitrary. Thus, in reality, as with essentially every source of value of BTC, it comes down to arbitrary speculation on people's behavior. Again, whether that is an acceptable basis for a currency is the subject of another discussion, but this conclusion should suffice to dispel the claim that Value From Transferability changes this basis.

Preferences in detail

Let's start with the fact that an exchange can take place when two entities have opposite relative valuations of two objects:

V1(A ) < V1(B)

V2(B ) < V2(A)

Where VX is the person X's valuation of the given object.

Base case: Pure arbitrary speculation

Supposing you were to describe a scenario where, as I claim, people choose to use BTC purely based on arbitrary speculation. For example, let's say there is a current exchange rate of 10oz Ag/BTC. However, there is a common fear among certain people that Ag will soon take a dive. But BTC has been holding steady for some time, so it is preferred by those people. Suppose the cost of each BTC transaction is .01 BTC. What would this scenario look like?

The first person prefers to trade in their Ag for BTC at the current exchange rate:

V1(8.1oz Ag) < V1(.81 BTC)

This same person prefers to trade 0.81 BTC for a certain product, P1. To properly demonstrate opposite relative valuations, which is necessary for a trade, we also note that they prefer 0.8 less than either of these:

V1(.8 BTC) < V1(.81 BTC) < V1(P1)

The next person prefers to trade P1 for .8 BTC, and trade that for another product, P2. 0.79 BTC is shown, again, to demonstrate opposite relative valuations:

V2(P1) < V2(.79 BTC) < V2(.8 BTC) < V2(P2)

And so on:

V3(P2) < V3(.79 BTC) < V3(P3)

Note that the objects are colored to highlight the opposite relative valuations, which allow for the objects to be exchanged, as explained in the beginning of this section.

There's nothing setting the exchange rate of BTC here other than each actor's valuation of their desired product, and their speculation that the next entity will part with it for that much.

Transferring value via BTC

Now let's examine the claim of Value From Transferability, which implies that the above is inaccurate. Suppose I am holding 10oz Ag, which I am willing to exchange for the postage stamp. The stamp vendor is willing to part with it for 8oz Ag so that she can buy a phone. The traditional wire transfer fees are 2oz Ag. The expenses to me would total 10oz Ag, so I am willing to make this transaction.

But then, before I pick up the phone to call Western Union, the stamp vendor hears about BTC from the phone vendor. She explains to me that I can exchange 8.1oz Ag for .81 BTC, send it to her, and I will lose only 0.01 BTC in transaction fees. She can exchange the remaining .8 BTC for the phone, closing the deal. Very directly put, the value of BTC to me here is that it has saved me 2oz Ag. Seems on the surface like the BTC has real use value, but let's examine further.

Since I would be willing to trade 10oz Ag for the stamp, I value 10oz Ag less than I value the stamp. Assuming I could trivially give away silver if I really wanted to, I reasonably value 10oz Ag more than 8.1oz Ag. Here Vm denotes my valuation:

Vm(8.1oz Ag) < Vm(10oz Ag) < Vm(Stamp)

I value .81 BTC more than 8.1oz Ag, because with the Ag I can't directly obtain the stamp. However, I want the BTC for no reason other than to obtain the stamp in an exchange, therefore I value the stamp even more:

Vm(8.1oz Ag) < Vm(.81 BTC) < Vm(Stamp)

Now I am speculating the following, where Vs denotes the stamp vendor's valuation:

Vs(Stamp) < Vs(.8 BTC) < Vs(Phone)

The stamp vendor would, in turn, be speculating that the phone vendor could use the BTC to obtain something he wants:

Vp(Phone) < Vp(.79 BTC) < Vp(Pp)

Now let's restate the above, rearranging some terms, and adding some self-evident terms (valuing more BTC over less):

Vm(8.1oz Ag) < Vm(.81 BTC)

Vm(.8 BTC) < Vm(.81 BTC) < Vm(Stamp)

Vs(Stamp) < Vs(.79 BTC) < Vs(.8 BTC) < Vs(Phone)

Vp(Phone) < Vp(.79 BTC) < Vp(Pp)

This takes the exact form as the arbitrarily speculative base case:

V1(8.1oz Ag) < V1(.81 BTC)

V1(.8 BTC) < V1(.81 BTC) < V1(P1)

V2(P1) < V2(.79 BTC) < V2(.8 BTC) < V2(P2)

V3(P2) < V2(.79 BTC) < V3(P3)

Despite my making a choice of BTC over Ag, the incentives resulting in exchanges are fundamentally the same as the arbitrarily speculative base case. BTC is still valued only by speculating on other people's willingness to take it in exchange for desired products.

But saving 2oz Ag in transaction fees seems to be valuable, how does that not factor in? Well, just as with the base case, the perceived disutility of Ag has no impact on the perceived utility of BTC in obtaining desired products.

A further observation: the fact that using 0.8 BTC can save me 2oz Ag is based on the particular exchange rate. If the exchange rate were 1oz Ag/BTC, it would take 8 BTC for the same effect. In other words, the amount of utility in a given amount of BTC is based entirely on its exchange rates.

Transferring value via a voucher

This may seem altogether counterintuitive. Am I effectively saying that money transfer systems are not fundamentally valuable? No, a transfer system is valuable as a tool, so long as what is being transferred already has value. Let's imagine a product that does transfer value, then.

Supposing that, instead of BTC, I found a wire service where I could spend 9oz Ag for a voucher, which I will denote by v8, which I could transfer half way across the world. 9oz Ag is cheaper than 10oz Ag, so I'll take it.

Vm(9oz Ag) < Vm(10oz Ag) < Vm(Stamp)

Vm(9oz Ag) < Vm(v8) < Vm(Stamp)

Vs(Stamp) < Vs(v8) < Vs(8oz Ag) < Vs(Phone)

Similar rules thus far apply here as with BTC. However, instead of the stamp vendor speculating about a phone vendor, she speculates about the preferences of the wiring company:

Vw(8oz Ag) < Vw(v8, R)

Where R is the reputation retained by the company for honoring its voucher.

Putting this all together, my valuation of v8 is based on the speculation that the stamp vendor will speculate that the wiring company will want to maintain its reputation by honoring the v8. Such a voucher system could not be implemented using BTC because no company has control over the exchange rate. They each must themselves speculate on how other companies would treat BTC. Honoring the v8 on the other hand only takes agreement on the part of one company.

There is no need to speculate on the preferences of further people because the v8 is destroyed at the point of redemption. Unlike with BTC, there's an anchor on the exchange rate, somewhere between 8 and 9oz Ag. I could even trade the v8 in a market, where people would value it based on the utility of transferring 8oz Ag and their trust of the company to redeem it.

Conclusion

Looking at the claim of Value From Transferability, it seems that some BTC proponents see it as a currency feature of BTC, and yet believe that it is inherently useful to the point where it gives it a "shininess factor". I hope that I've shown that shininess does not follow from a currency feature, because shininess happens after the commodity stops being a currency. Alternately, they may see it as a tool to transfer existing value. And indeed, that would make BTC sustainable. I hope that I have shown, however, that only arbitrarily speculative value is transferred. Thus, this feature merely cuts down on losses incurred in transferring BTC, while BTC's value ultimately stems from arbitrary speculation.

NSA and the unspoken tradeoff

Now that we libertarians have your attention for the moment, inasmuch as your general trust in the government is momentarily shaken, I felt I should take advantage of the opportunity to invite you to do some introspection as to root of the outrage you may be feeling toward the NSA. Instead of thinking about how the government can repair its damaged trust, I would invite you to reconsider the nature of your relationship with the government.






Barack Obama said a lot of silly things in his press conference on Friday in San Jose. However, if you remove the collectivism, he made one very sensible statement: "as a society" (You'll understand the need for quotes in a minute), "we" have to decide on a balance between privacy and security. Agreement with this statement may surprise you coming from a libertarian, but bear with me. It's very popular right now to completely disregard the NSA's claims that they are protecting us from a terrorist threat, and indeed there's plenty of reason to be skeptical of any secretive organization. However, I think that in a world with everybody acting of their own accord, where it's not all that hard to kill a lot of people at once, it seems at least rather plausible, to me, that the right group of people finding patterns in human activities can help anticipate such events. I won't go into the details of this, other people have written about it and you should probably consider what they have to say. However I will just take as a given, for the purposes of my argument, the plausibility that some amount of security can be bought at the cost of privacy.

So why am I so easily conceding this point as a libertarian? Have I gone soft? Isn't it the libertarian position that no amount of privacy is an acceptable compromise for security? No, the libertarian position is on a third axis, advocating for the maximization of liberty, which should not get conflated with privacy. Liberty is the ability to actually have a choice in the matter, between security and privacy, and as Mr. Obama implied, each of us can have a preference on how to best optimize between privacy and security in our own lives.

The distinction is much easier to illustrate this using everybody's other favorite *SA organization.

Hands in the air, citizen

Again, as much as I like to talk about overblown threats, I will concede that there is a non-zero utility to extra scrutiny at the airport (even if the TSA doesn't happen to be providing any such utility with their current procedures). However, a lot of people do believe that the TSA's procedures involving body scans are a violation of privacy.

Assuming you, the reader, are among them, I will ask you, why exactly is this a violation? Is it a matter of the degree of privacy invasion? Would it suddenly become morally acceptable again if the TSA only tried to detect metal on your person? Is this not also a violation of your privacy? How is that fundamentally different?

The principle in play cannot be that violations of privacy are categorically wrong, or else a metal detector would be considered a lesser violation, but a violation all the same. The principle cannot be that some sorts of privacy violation are acceptable, if it is below a certain threshold; that could only be a preference, not a principle. If that were the case, body scanners would not be an outrage as much as a matter of dissatisfaction with the conditions.

No, a metal detector is not fundamentally different. The reason there was no noticable outrage with metal detectors is that most people do not feel personally invaded when a metal detector is used on their person. Thus, the decision the government made for them happens to be the same one they would make for themselves. Two morally equivalent situations are producing a moral reaction only if the degree of one of the variables is sufficiently high, and I think the explanation is a moral principle at play that many people fail to recognize. What's going on is that there is an implicit moral problem that the government has made that decision for you. There is no transaction here between you and the government that has merely left you dissatisfied, the government just stepped in the way. The only transaction is between you and the airline, and the government has restricted the conditions you are allowed to make with the airlines.


credit: Saturday Morning Breakfast Cerial comics

One way to resolve this situation is to abolish the TSA, and hold the airlines liable for any damages done by, and (by default, before any waivers) within, their aircraft. They will have to decide how much they would be risking at each level of customer privacy intrusion, and how much privacy customers are willing to part with at the corresponding price point and with the corresponding gain in their own security. Once this occurs, there can be some justice in the matter, because the customer will be making a voluntary agreement (or not) with the airline, with no third party forcefully interjecting themselves.

We as a society

So let's go back to where Barack Obama talks about how "we as a society need to decide". This is obviously asinine on its face, as many have already pointed out, because "the society" wasn't even consulted on the matter, as they have been unaware of these NSA programs until last week. This makes it particularly outrageous, but is this the only source of outrage? Even if we knew about the program all along, do you suppose there would be no moral outrage? He still made the decision for you, and I'd be willing to bet that for a vocal handful of you, this would go beyond your threshold of preference. This is no different than the decision made by the TSA, that decision was made wide in the open. "The people" were well aware of it. Yet there was still a moral outrage.

And this comes to why I use quotations for these collectivist statements.

Perhaps there's a world where the snooping program is very popular, and you are one of a small minority who are not keen on it. Does it make it any less outrageous that somebody is making the decision for you, even if it's endorsed by 90% of the people around you?

The fundamental problem here is that there is no such thing as a decision made by a society. Decisions require thoughts, preferences, and reason, and the only relevant entities with these faculties are individual persons. A society as a whole has no such faculties. There is such a concept as "the will of the people", but to have any meaning it can only be a function of the wills of each individual person, and usually an ill-defined function at that. Majority rule is the usual standard, but there is nothing special about this particular function that makes it any more a true will of "the people", because "the people" is not an entity. Abiding by the output of such a function merely attempts to minimize the dissatisfaction of the members of the society. It aims to optimize for preference, but it can not make the outcome any less immoral.

This is why the government constantly claims to speak for "the people", to the outrage of so many persons. This will keep happening so long as enough individuals believe in this sort of collectivist concept. Outrage is not merely the result of corrupt persons within the government, though that is of concern, and those persons are happy to take advantage of this common collectivist viewpoint. This viewpoint is altogether illogical and will always lead to unhappy results.

A moral compromise

This episode is particularly outrageous because the founding documents that are used to justify Mr. Obama's power are written based on the principle that Americans have rights a priori. The government is instituted among "the people" (ok, so they weren't perfect), and is given permission, by "the people" to occasionally violate the rights of persons. The government does not dispense rights onto individuals at the government's discretion. Mr. Obama is in no position to be lecturing the individuals living within the US borders on what sort of intrusion they should be ok with, and what sort of "accountability" we should all be ok with. He should be asking for your forgiveness for taking your liberty! Do not let Mr. Obama tell you that there is a choice "the people" have to make, between privacy and security. Make your own judgement: is it an acceptable compromise of liberty that the president is even in the position to make this decision on your behalf? Because for him to even be in that position requires a moral compromise, with your liberty on the receiving end.

Unlike with the TSA, it is hard to conceive of a voluntary arrangement performing the same tasks as the NSA (though I am not asserting that it cannot be done). As such, you may be willing to make a compromise along the axis of liberty, since under the NSA everybody within the US borders has to have the same policy imposed on them. Because you value security, and because the threat is perhaps so great, you are willing to sacrifice a certain amount of liberty, which leads to a sacrifice of a certain amount of privacy at the discretion of the politicians. So when you consider this, recognize that if you accept the existence of the NSA, you are inevitably making a moral compromise, not just a compromise in privacy. Yea, if you accept the existence of any government program, you are making a moral compromise.

Now, am I saying you should never make a moral compromise? I will not necessarily tell you that, at least not for the purposes of this argument. To take an extreme example, I would personally be willing to put up with a certain amount of moral compromise if I truly believed it was the only way to prevent a nuclear holocaust. But I ask you, when considering a proposal for an expansion of government, don't just weigh "pros" and "cons", and let the government tell you that they're balancing your privacy, security, or any other factors for you. Recognize that any proposal for an expansion of government is immoral first and foremost, and then decide if the moral compromise is worth it, and consider if there is an alternate solution, not involving government expansion, that allow for individuals to balance these factors according to their own preferences.