More I read the essays Gary North write about Bitcoin and more I wonder if they are actually written by Peter North.
First of all, North do not understand there is a difference between Bitcoin (the payment network) and bitcoins (the units of account used by the network).
The statement "In order for Bitcoins' promise of privacy to work, the division of labor must be exclusively governed by Bitcoins. There must be no re-entry into the world of government fiat money."
Please, I could buy gold or silver coins and then reenter in the fiat money system without leaving traces, if I was inclined to self harm, but why should I do so? To experience devaluation of my purchasing power? To have my money legally owned by banks? No thanks.
This citation "The system will, without law or custom, and without enforceable property rights, autonomously evolve into a system with the same features and benefits as the present property rights order enjoys. It will do this without any intervention by the courts." I'm unable to find the actual source (only North's articles are show by Google). I hope Mr. North is not using a straw man of his own creation. It would be very sad.
The statements: "You have to have digital currency in order to buy Bitcoins." and "Bitcoins could not exist if there were not an integrated system of digital currency." are wrong.
I, like many others, have bought bitcoin in cash or sold goods and services for bitcoins.
Or I could put my bitcoins in one of many tumbler or remixers and have them mixed with other's coins and have the coins sent to some address not linked to my original coins.
Bitcoins are not anonymous, they are pseudonymous and could become anonymous only if you take the appropriate steps to make them so.
In fact, using a service like Bitpay, leave a pretty easy path to follow.
If you want to pay anonymously, cash and gold/silver coins are much more anonymous than bitcoin and are anonymous without the need of any other further step.
The statements "You are then told that you can make purchases with Bitcoins. These will not leave a record." are false. Any and every transaction using Bitcoin is stored in the blockchain forever. If I buy bitcoins using a reputable exchange like Mt.Gox and Bitstamp I link my bitcoins to my identity (via my bank account). So the government is able to follow the money entering in the exchange from a side and the bitcoins existing the exchange from the other side. They have my name stamped over because of KYC and AML rules.
If I want to have anonymous bitcoins, I need to buy them with cash (cash is a truly anonymous form of currency) from a local seller and hope he don't keep records of the transaction.
The statements: "You have to have digital currency in order to buy Bitcoins." and "Bitcoins could not exist if there were not an integrated system of digital currency." are wrong.
I, like many others, have bought bitcoin in cash or sold goods and services for bitcoins.
The statements "You are then told that you can make purchases with Bitcoins. These will not leave a record." are false. Any and every transaction using Bitcoin is stored in the blockchain forever.
The statement "He must convert his Bitcoins to real money. That is because he must buy real goods." is patently false:
You can buy cars, food, electronic appliances, services with bitcoin without converting them in fiat money before the purchase. What the seller do after the purchase is his problem. Some convert 100% of the bitcoins in fiat money (they just use it as a payment system like VISA or PayPal just faster and with lower fees) other keep all the bitcoins (bitcoinstore.com) and many are somewhere in betweens (Gyft keep the profit generated with Bitcoin payments in bitcoins).
The statement "Bitcoins are virtual money. Problem: virtual money buys very few real goods." This contradict his previous statement that you must convert bitcoins in real money (like the US dollar?) to buy real goods.
The statement "The problem for the defender Bitcoins is this: we need a comprehensive system of prices." is beyond embarrassing. The same arguments could be done for the €. Would North support the argument Europe must convert to the USD because ,as it is, the € can not stand because it would collapse the division of labour?Or maybe the Swiss Franc or the Icelandic Krone.In the original essay North link the pencil is made from goods coming from different parts of the world like Mexico, Ceylon, Mississippi, Dutch East Indies, Persian Gulf and Brazil. At the time do they used the same currency?
The statement "Bitcoins' defenders do not openly say that there is no need for a private property system, no need for legal appeals, no need for any kind of arbitration system no need for contracts, no need for anything except algorithms." is beyond the pale. Mr. North could spend less time writing and more time reading bitcointalk forums. If any, he could, at least, link to any of these statements just to prove they exist.
Apparently Mr. North think the actual implementation of a private property system is the only way a property system can be implemented. This make the same sense as telling the only way to travel is using horses and cars supporters are saying there is no need of streets.
In fact, the Bitcoin system is first and mainly a private property registry archiving and validating every transactions.
You can have self validating/self executing contracts on the blockchain. Just write a contract in a programmatic way and it will self execute when the right conditions are fulfilled. I could have escrow with bitcoin, I could have delayed payments, I could have multi party transactions that execute only if all parties sign the transaction.
In many ways, Bitcoin reduce to the bare minimum the need to a human third party to judge and execute a contract. Nothing prevent two parties to select a third party to adjudicate some conditions to fulfil or void a contract in the contract. What Bitcoin prevent is a third party altering the contract unilaterally (just the governments are used to do).
Apparently Mr. North think the actual implementation of a private property system is the only way a property system can be implemented. This make the same sense as telling the only way to travel is using horses and cars supporters are saying there is no need of streets.
In fact, the Bitcoin system is first and mainly a private property registry archiving and validating every transactions.
You can have self validating/self executing contracts on the blockchain. Just write a contract in a programmatic way and it will self execute when the right conditions are fulfilled. I could have escrow with bitcoin, I could have delayed payments, I could have multi party transactions that execute only if all parties sign the transaction.
In many ways, Bitcoin reduce to the bare minimum the need to a human third party to judge and execute a contract. Nothing prevent two parties to select a third party to adjudicate some conditions to fulfil or void a contract in the contract. What Bitcoin prevent is a third party altering the contract unilaterally (just the governments are used to do).
Bitcoin system will have enforceable property rights. But the enforcement of these will not be left entirely at the will and whims of the governments branches. The bitcoins in someone address are his own and no one without the right cryptographic kay will ever be able to control them. The only way the government can control them is if they are able to take hold on the keys. The algorithms are controlled by math and physics and the laws of math and physics will not be changed by any man or group of men any time soon.
The statement "A social framework is necessary -- a moral, intellectual, and legal framework -- to make possible the monetary systems of the world, which in turn make possible the modern division of labor. The advocates of Bitcoins do not discuss any of this." is ridiculous.If there is something advocated of Bitcoin do is to discuss this.
The statement "A social framework is necessary -- a moral, intellectual, and legal framework -- to make possible the monetary systems of the world, which in turn make possible the modern division of labor. The advocates of Bitcoins do not discuss any of this." is ridiculous.If there is something advocated of Bitcoin do is to discuss this.
"Never in the history of libertarianism has there been any more utopian proposal that Bitcoins. They rest on an implicit denial of the private property system. They rest on an implicit denial of contracts and a denial of courts. They rest on an implicit denial of face-to-face resolution of disputes. They rest on an implicit denial of bargaining on a face-to-face basis. This is an implicit denial of virtually everything that exists in the free market society. The whole idea is delusional beyond anything I have ever seen."
What the Bitcoin system do is to give a programmatic contractual framework. The framework is used at the service of the humans using it, not the reverse. The framework reduce the need for courts, do not cancel it. It is used to reduce conflicts not eliminate them.
"Real money is bank money." Yes, Mr. North the Fed. Notes are real money. How very austrian from you.
"If the advocates of crypto-currency have a case for a free market social order, then they should advocate not buying Bitcoins until such an order exists. Money develops out of a social order. They have put the cart before the horse: a new monetary system before the institutional arrangements to support it."
How much wrong statement: The advocates of bitcoin build the institution of the new social order first: it is the bitcoin protocols and the network to enforce it on the people freely joining the network and adopting the protocol. Then people joined freely (and can leave freely). They can see the advantages and the disadvantages of the network and decided the advantages are greater than the disadvantages. They joined the network and experienced these advantages and disadvantages. And until now they continue to flock to the network.
If I was the scoundrel I am, I would think Mr. North was hit in some sensitive spot of his ego by the idea some young, inexperienced, amateur economist without any reputation built a revolutionary system a lot of smart, educated and influential professors could not devise in their wildest dreams. Add to this he can not attack the character of the inventor because he is disappeared and no one know his identity.
In the end Mr. North and a large number of Bitcoin detractors are left fighting with the ghost of Satoshi Nakamoto as reality escape their grasp.
P.S.
I want add I really appreciated many writings of Mr. North in the past but, as they say of any investment, past performance is not an indication of future results.
