Lifeboat Foundation

Originally posted as Part IV of a four-part introductory series on Bitcoin on June 19, 2013 in the American Daily Herald. See the Bitcoin blog for all four articles.

Prologue

I am reminded of Sisyphus, King of Ephyra (later, Corinth), who was referred to by Homer as the craftiest of men. He committed terrible crimes against mere mortals and ‘worse’ still, and with great cunning, he offended Zeus and cheated Death. For his crimes he was eternally condemned to thrusting a heavy boulder up a hill, only having it come rolling back down as he got near the top. Had his earthly actions against his fellow men not violated the non-aggression principle, I could have probably warmed up to him as some sort of tragic hero, doing all he can to live life as he wanted it, while beating the gods at their own game. But given his crimes as a ruler over men, it does seem appropriate that his punishment is an ever-repeating cycle of arduous labor, engendering within him hope of a brighter future, yet concluding with dashed dreams and a return to square one. After all, to this day, rulers are notorious for repeating past mistakes while expecting different outcomes (a condition humorously defined by Einstein as insanity).

Originally posted as Part III of a four-part introductory series on Bitcoin on May 21, 2013 in the American Daily Herald. See the Bitcoin blog for all four articles.

With gold prices back in the $1,300-$1,400/oz range it is sometimes difficult explaining to non-gold bugs why owning physical gold is still a good long term strategy. Some define buying gold as ‘an investment’, and others as ‘a hedge against inflation’. I tend to look at it as an insurance policy against hyper-inflation or just simply as sound honest money. However, when describing a strategy of accumulating money (in gold form) in some far-away vault, only to be used in some end-of-the-world scenario, it goes without saying that an image of a miserly old man replaces my likeness in the eyes of my conversation partner. Few people stuff dollar bills in their mattress any more, but hoarding of gold and silver when these were de-facto money was not unusual. Commodity money, which tends to increase in purchasing power over time, is predisposed to this ‘problem’. When you ‘love money’ so much that you hold on to too much of it or for too long a time, then you are hoarding.

Originally posted as Part II of a four-part introductory series on Bitcoin on May 7, 2013 in the American Daily Herald. See the Bitcoin blog for all four articles.

The emergence of money and its importance in enabling trade between people has been well researched and documented in the literature of the Austrian School of economics – Theory of Money and Credit by Ludwig von Mises and Man, Economy and State by Murray N. Rothbard being prime examples. The contribution of the Austrian greats to the understanding of money and its origin made clear exactly what money is (e.g. the most marketable commodity), the different types of media that are employed in exchange between people (e.g. commodity money, credit money, fiat money and money substitutes) and a theoretical explanation for their origin (the Regression Theorem). The Austrian School has also given arguably the most convincing analysis of the relationship between the money type in use, the manner by which it is controlled and the business cycle – emphasizing the importance of sound money. But except for a few sparse outliers, what the Austrian School has yet to do is fully recognize Bitcoin as a valid scholarly and academic topic. With this article, I hope to contribute to its recognition.

Originally posted as Part I of a four-part introductory series on Bitcoin on May 1, 2013 in the American Daily Herald. See the Bitcoin blog for all four articles.

The last couple of months proved a very exciting time for Bitcoin and its new owners, with values increasing from $30 to $260 within a month only to come crashing down in days. It went from virtual anonymity to virtual ubiquity and back again — the only constant being that it’s virtual. The dust has now settled and the talking heads have changed topic, and Bitcoin is slowly regaining strength. But does this mean we can finally, in a quiet and rational way, contemplate what this Bitcoin really is and where it has room to fit into our lives? The answer to that is no, because the concept of Bitcoin is so strange, unintuitive and foreign, no matter when you discuss it and with whom, it will lead to very divisive arguments. So I say now is as good a time as any to dive in and discuss it.