As a common citizen blogging about events at home and around the globe, I cannot deny that Bitcoin fever is showing epidemic features. You only need to google Bitcoin and its actual value in any currency appears. The next North-American Bitcoin Conference in Miami will probably be looking at the past month as the craziest month since the 'revolution' started.
The very connection between the Bitcoin and the rest of the monetary system to me actually exposes the Bitcoin and spoils the party of the egalitarian utopians that were already embracing the currency as the most powerful redistribution mechanism that would provide for equal chances to everyone. Ironically while the underlying block-chain technology was designed to do away with transaction costs of the current financial system benefiting very few people excessively, its connectivity to other official currencies has caused the Bitcoin to do exactly the same: making a few people extremely rich in a very short time span.
Regulators in the US have tried to bring Bitcoin out of the shady uncontrolled market where it paid for drugs and other illegal trade. They started issuing licenses for trading companies that meet criteria around transparency and due diligence. However, it is not the regulatory environment that can change the climate. You don't need to be an economist to see that the real value of Bitcoins is null (which is the case for most currencies, since the gold standard has been replaced by consumer confidence). It is scary to know that the same geeks who have invented the Bitcoin also know how to play public opinion using their algorithms.
Wealth and impact
So, what to expect from this wave that venture capitalists seem to be able to ride to the next level of wealth accumulation, undoubtedly leaving many small investors behind in tatters. If this new market only could capture the wealth of all capital investors and put it to use for the poor and marginalised, it would make the Bitcoin-rush the best Robin Hood action ever.
I remember the time I shared my office space with two colleagues who invested heavily in the internet bubble in the nineties and were spending at least an hour a day to see how their shares were doing, finally to find themselves a lot less wealthy than they had imagined when starting the adventure. I also recall Didi Taihuttu and his family, who sold everything they had earlier this year to buy Bitcoins. He has not been cashing yet, though the nominal value of the bitcoins must have tripled by now. Will he still sleep at night?
From what I gathered reading about the Bitcoin movement it seems intentions of many of the digital currencies that have been introduced was to provide an alternative to the financial system following the financial crisis in 2008. However, as we may learn from the recent Bitcoin rush, a number of unintended effects may show. Intentions are not the only thing that matters as also Prof. dr. Dirk-Jan Koch pointed to in his inaugural speech last Friday at the Radboud University. Prof. Koch is the newly appointed Professor of International Trade and Development Assistance in the Netherlands, partly funded by the Ministry of Foreign Affairs. Koch distinguishes three types of unintended effects of international cooperation: invented, ignored and invisible, which for the sake of this exercise I will try to apply to the Bitcoin industry.
As already mentioned, the paradise of egalitarianism and equal chances, that was predicted by the early days developers of the Bitcoin, seems to have imploded already. The Bitcoin became as much an object of greed as it could be a game changer. So the question is: does it really solve the problem of wealth accumulation or will it in the end be doing exactly that.
It is clear that some of the potential uses of the new currencies were ignored at the beginnning. Like the fact that Bitcoin has been instrumental to the success of Silk Route, an online drugs market that has used the Bitcoin for its transactions, sending drugs all over the world. Due to its untracability a nightmare for the law-enforcement agencies trying to control the illegal drug trade. What is also ignored but gradually comes to the surface is the power supply needed to dig Bitcoins by getting so many computers to run code which will finally supply you the Bitcoin you need, the so-called mining. Like with mining of minerals there is severe environmental impact of mining bitcoins.
What cannot be measured but what is undoubtedly there is the impact the currency had on people, seeing opportunities for quick wins and becoming greedy of others (having sold their own bitcoins way too early). Also invisible is what profit made from trade in Bitcoins will be invested in. LIkewise the impact of massive losses should the bubble burst, won't be easy to fathom.
Many proverbs already point to the fact that the possession of material wealth is rather a concern than a comfort. It is what you do with it that defines you. It seems a lot easier to accumulate wealth than spending it properly. To the ones cashing in time and benefiting of upward market trends I would say: acknowledge that wealth comes with strings attached. The efforts of big philanthropic foundations like Rockefeller and Bill and Melinda Gates should be applauded in that regard. But also in aid unintended effects are at play as Prof. Koch will confirm My advise to Didi and all other Bitcoin investors would be: Have you taken a bite? Don't let it into your system! Spit it out before it swallows you.
In this time of advent, with many people wandering in search of warmth and shelter, I came across the following creed written by José Luis Calan, which I would like to share with the readers of this blog. I am sincerely hoping that the narrative of the nativity story will provide for a new narrative around the many small and bigger refugee crises around the world :
I believe in Almighty God,
who guided the people in exile and in exodus,
the God of Joseph in Egypt and Daniel in Babylon,
the God of foreigners and immigrants.
I believe in Jesus Christ, a displaced Galilean,
who was born away from his people and his home,
who fled his country with his parents
when his life was in danger.
When he returned to his own country
he suffered under the oppression of Pontius Pilate,
the servant of a foreign power.
Jesus was persecuted, beaten, tortured,
and unjustly condemned to death.
But on the third day Jesus rose from the dead,
not as a scorned foreigner
but to offer us citizenship in God’s kingdom.
I believe in the Holy Spirit,
the eternal immigrant
from God’s kingdom among us,
who speaks all languages,
lives in all countries,
and reunites all races.
I believe that the Church
is the secure home
for foreigners and for all believers.
I believe that the communion of saints
begins when we embrace all God’s people
in all their diversity.
I believe in forgiveness,
which makes us all equal before God,
and in reconciliation,
which heals our brokenness.
I believe that in the Resurrection
God will unite us as one people
in which all are distinct
and all are alike at the same time.
I believe in life eternal,
in which no one will be foreigner
but all will be citizens of the kingdom
where God reigns forever and ever.
My name is Reinier van Hoffen.
Click here for a summary.
Also find the text of a lecture Dr. Achterhuis held at the 2012 Bilderberg conference.