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100 sats \ 5 replies \ @elvismercury 15 Jun \ on: when do people stop trading houses that are on fire for fireproof houses? bitcoin
One thing in this metaphor is that the fireproof houses stop being fireproof when people stop believing in them. The more people who believe, the more fireproof, but it all feels so precarious...
I know I have a weird mapping but I was imagining fireproof house meant immutable ledger entry - not exchange rate. But what good is an immutable ledger entry when no one else wants it?
I see bitcoin as the closest thing we have to a platonic ideal of money. If that’s true, I can’t imagine why we’d lose that ideal and, if no money closer to the ideal emerged, why people would stop believing in it.
This makes me think back to our conversations about grounding, which I still don’t fully grasping I’m sure (having not done the homework), and I wonder if ideals are sufficient for grounding or if some things we think of as grounded are partially grounded in ideals at least.
Is our desire for ornamentation and utility (in the case of gold) that different from our desire for and utility of a fair ledger as we scale our coordination?
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Actually love the analogy, but I'd like to add that it's not the fireproof house itself that you need to obtain; there is an additional requirement.
The
Water Requirement:
The fireproof house needs water to actually be resistant to fire; if you don't have water when the firestorm comes, you'll just burn up. Initially, fireproof houses generated only little demand for water because people were trying them out and fires were isolated. When the lakes were drying up, it didn't take long for people to build bigger and bigger dehumidifiers that sucked every water molecule out of the air.Then, people started
hoarding water and some even went as far as leveraging their stashes of water to borrow paper and then trade that paper for more water. After the paper traders held a big "Water 2025" conference in the desert, many became inspired with the success of one particular paper trader and currently there are many filings with the paper commission of those that wish to emulate the scheme. Note, there are also derivative designs that use inferior liquids to obtain fire resistance, but let's be real: Pepsi really is shitwater.Many fireproof houses are stashed with paper. One of the main paper manufacturers which is also a water hoarder and operates a lot of dehumidifiers, builds fireproof houses out of paper, claiming these are superior. Everyone knows of course that paper isn't fireproof, but since paper is so prevalent, it is easier to forget that and just ignore water.
You don't need many water molecules at a time, just flow, but since everyone is very much focused on the water markets, especially the water/paper pair, hoarding instead of preventing fires, it is hard sometimes to convince people to get some water so that they can be prepared for the firestorm. It doesn't help that water doesn't catch fire, unlike paper.
Ultimately the reason why people stop using their water for fireproofing their houses is because the market says they can get so much paper for their water. Currently, the water distribution system isn't ready to for an extinction level firestorm and nearly everything will go up in flames if that were to happen today, which is undesirable. Therefore, all we can really do is plumb ourselves better piping and prepare not only us, but society as a whole for the inevitable.
PS: it may very well be that because of the constant dehumidifying, the risk of the firestorm increases because there is less water naturally occurring and therefore could speed up the timeline.
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My view of grounding probably just continues to be naive, but it seems like a lot the examples of grounding rely on a person in isolation finding value in the the thing, which might be why the concept seems to break down with bitcoin - which has no utility until it’s shared.
So I guess I’ll add to my homework:
- Can something be grounded in ideals?
- Is there anything we consider grounded that loses its grounding when everyone stops sharing it with you?
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I think the grounding question is a big part of it, but there's a related class of precarity that's easier to talk about.
People always share that chart originally done by Vijay about how btc is better than gold in every way except for not having been around for three millennia. I think that's such cope.
Like, there is nothing that humankind can realistically do (James Bond movies aside) to ruin gold. It exists in the physical world, and nothing is required for it to continue in its role as a perfect ledger, instantiated in physical reality. Its POW was when the universe got created, now it need merely continue to exist. You can drop it into the bottom of the ocean for 400 years and it can be unearthed later, as good a SoV as ever. Its role as a perfect ledger could be ruined if we somehow found some massive motherlode of it in the center of the Earth or on an asteroid or something. But that's it. It cannot be vaporized if you get a head injury.
Btc is the ideal money. Or: the Ideal money. It is pure money-ness and nothing else, the abstraction rendered pure. But a pure abstraction is a dangerous thing. Or at least, so it seems to me. There are so few examples in the real world of a pure social abstraction that it's hard to tell. My best thinking at this point is to wrestle with this by making a very concrete functional argument:
- money is valuable for what it unlocks
- btc is pure money-ness
- its value should therefore converge on something like:
value of btc = a - (b + c + d)
a: value of pure money-ness
b: btc's foreignness and annoying idiosyncrasies and weaknesses, e.g., scaling
c: value of fiat money-ness
d: value of gold and commodity monies' money-ness
After all the noise shakes out, this seems the heart of it. So what do we get? It seems like a is a big number, and probably growing due to the nature of online life, the rise of AI, etc; and both b and c are shrinking while d is growing, although less fast than a.
So maybe it's fine. But apropos of our recent discussion on another topic, this to me is one that could benefit from really drilling into.
PS: going dark for a week, don't feel ignored if you respond and I don't.
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I think a person's value assignment to bitcoin can certainly be grounded in ideals, and the more "ideal" something is, the more likely it is that many people will find value in it.
But I also think our own understanding of what is ideal is shaped by the people around us. So if everyone around us stops believing in something, it might be harder for us to maintain that belief in contradistinction to those around us.
Lastly, we can consider a thought experiment of what happens if only one person in the world assigns any intrinsic value to Bitcoin. Then, that person would probably own every Bitcoin, and there wouldn't be a market price for Bitcoin because it won't be traded. For all intents and purposes, it would be the "bitcoin goes to zero" scenario. But that doesn't mean it wouldn't hold value for at least one person out there, and the value may be revived once again if someone else decides to assign value to it as well.
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