Dmytri’s argument is quite correct, when he talks about the two types of money (public and private), and how bitcoin is not suitable as public money.

i’m going to have to re-read it a few times, because his phrasing isn’t really hitting me immediately. for example, a major confusion was his use of the term “public” itself in the title, and throughout the text. oh, he does use it quite correctly – in the sense of “public ie govt spending” –

but when i first read the term “public” i actually took it to mean what he actually means by “private”: ie, the great unwashed public who needs a currency so they can trade things amongst themselves and escape the clutches of the central bankers and the govt. so what i informally, instinctively might call “money for the public (for the masses”, he actually calls that “private money”, and when he says “public money” he means governnment spending, taxes, avoiding austerity, etc.

so i am afraid that the phrasing of this article – with its highly technical use of the terms “public” and “private” – can be initially confusing to some people – at least to me! when i’m reading an article about “bitcoin” and i see the word “public” the first thing i think is: “yeah, the public, we the people, screw the government and the banks!” but it seems that Dmytri’s use of the word “public” here means quite the opposite: he means “public ie govt in terms of communal decision making about allocating resources and funds, including printing of said funds (in defiance of the austerity idiots)”

so he seems to be saying that bitcoin works fine as a currency functioning to support the private economy of people circulating goods and services among themselves – but it cannot function to support public ie govt spending.

this makes sense. i think i do recall having heard similar ideas about the “two kinds of money” (government-issued and privately issued) from Michael Hudson and the MMT (Modern Monetary Theory) crowd, and they did make sense. something about how austerity is needless, since the govt (aka the public) can just decide how much money it wants to “create” for public projects (provided, of course, that the real resources are actually available: people, materials, etc.)

however, it’s not much of an objection. he’s basically saying that bitcoin works for what he calls “private money” (and what i call “the public at large, people”), but it can’t be used to print money and allocate resources for public (ie, govt) expenditures.

fair enough. but not much an objection. just give the govt a separate bitcoin system of its own, call it govcoin or something. i don’t see any problem here

…except for convertibility between govcoin and bitcoin – and i have heard elsewhere arguments made for having two separate currencies: one for the government, and one for the “private” economy. i’m not sure what the issues all were, but it seemed to make some sense, and again, i don’t see bitcoin as being intrinsincally incapable of this.

“bitcoin” doesn’t just refer to the unit of currency, or the community using it – it also refers to the open-source software itself, and this already has been used to create several parallel other currencies which compete with bitcoin, as well as other things such as bitmessage (which is a secure way of sending encrypted messages instead of sending money).

so my initial response to Dmytri would be: just create govcoin (or pubcoin?) and set up some kind of massive online wiki-game where the public decides what “govt” projects to spend “our” 21 million govcoins on or whatever.

again, the tricky point is always the interface between two currencies. mathematically, economically, politically, psychologically, criminologically – this is a weak link all the time. if you’re gonna have a bitcoin and a govcoin, then people are gonna want to convert between the two. i have no idea where that leads, but i as i said i do recall reading proposals which explicitly stated that is may be a good and necessary thing to indeed have a separate public (govt) currency and private currency.

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some individual lines:

Does Bitcoin have the potential to replace Government fiat money? No. It doesn’t. It only has the potential to be one commodity form within the money economy.

ok, point granted. but there’s a lot of assumptions to unpack here, and observation to make, eg:

(1) is govt fiat money a thing which we want to even perpetuate?

(2) bitcoin “only” has the potential to function as a kind of currency in the money economy. this seems to be what alternative currencies usually do, and usually do to very good effect. so i wouldn’t say “only” here.

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The origin of money is tribute.

I was quite taken aback when i read this blithe, sweeping statement.

really?

i believe david graeber has written a whole book on the subject, based on extensive anthropological studies, and his answer was quite different!

i think what Dmytri means is “the origin of govt fiat money is tribute”. i have heard this argument also made elsewhere, and, when this adjective “govt fiat” is added, it appears to be correct: fiat money gains acceptance precisely because people are required to use it to pay taxes.

i have never really felt that the government should be burdening everyone with taxes anyways. i have read some very persuasive arguments to the effect that the only thing that should be taxed is “rent” in the sense of “rentiers”: the only people who should be paying any tax are the people who lucked out and were granted “ownership” of the public’s communal assets such as land, airwaves, etc. in this alternative system, things like wages would be untaxed.

plus i have often daydreamed that the govt could extract no taxes at all, from anyone. when we see that the govt (or its central bankers) are able to summon into existence 14 trillion dollars at will, it starts to strike me as kind of odd that they feel the need or the right to come and badger me for 25% or more of my paycheck. go print your own damn money, government, like you always do!

so it seems there could be various ways of giving the government its own govcoin (or giving the public its own pubcoin, to use another terminology), in parallel to the “private” bitcoin economy, supporting transactions among private individuals, private institutions, etc.

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the notions about two kinds of money (which he variously calls “heads” and “tails” money, or “public” and “private” money) are certainly quite important. the fact that bitcoin seems quite capable of handling at least one of these kinds of money seems like something in bitcoin’s favor, rather than against it.

here Dmytri makes an assumption which points the way to the solution:

If the public restricts itself to commodity-money for public expenditure

ok, fine, so as i was saying, just don’t do that.

just set up a separate bitcoin system called pubcoin (or govcoin) to handle public expenditure. problem solved.

(except you need to address somehow the issue of the inevitable urge to convert between pubcoin and bitcoin. my initial suggest is: disallow it. not sure if that would even be enforceable though. a skilled economist might be able to figure out various scenarios regarding convertibility.)

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this is fine:

The critical feature required of public money is that we can socially determine how much of it there is, and how much of we want to apply to public purpose. We need ways to create and destroy public money so that we can can have a counter-balance to private activity, to manage cycles, to counter-balance economic sectors, and to socially pursue public objectives, such as health, education, and justice.

but it doesn’t give him the right to conclude, in the next sentence:

Thus, Bitcoin’s innovation in terms of creating a networked form of commodity money is not useful in creating networked forms of public money, and as a result it does not create a way for networked public forms to replace the current State forms.

we are still just trying to figure out what happens when multiple bitcoins systems are run in parallel. probably all the the me-too parallel bitcoin systems released this far fall into the category of “(yet another) private bitcoin system” (“private” in Dmytri’s sense: among individuals and institutions, not publicly debated as part of govt). and it seems likely that there may be a first-out-of-the-gate rule for multiple bitcoins in the private realm: the first one out of the gate (bitcoin itself) is the one that wins, probably by sucking all the other systems into it somehow, simply by virtue of having gotten the early momentum.

but there’s no reason why a different, more “public” or “democratic” sort of bitcoin system couldn’t be set up in parallel to the “private” one, in order to serve the purpose of government funding. i think this is an interesting issue which should simply be brought up – and not dismissed as being impossible the way Dmytri does.

in fact, it may be somewhat related to our recognition that there is a need for a more democratic bitcoin: one where everyone got the same number of bitcoins at the outset!

i could envision a kind of “world-peace-game” inventory of the world’s resources (assets), problems (liablilities: eg, toxic waste cleanup sites – or even more generally: tasks to be worked on: thorium energy development, healthcare, etc.), and people – and some way of divvying up an intial allocation of “govcoins” or “pubcoins” to the various “stakeholders” at the startup moment of a system for public administration.

this would be a step in the direction i always want to go: implementing many of the decision-making and organizing and work-performing actions of groups like occupy within the framework of an actual, legitimate framework of economy and governance: taking over the reins as it were from the central bankers and the government leaders who have proven themselves too corrupt and paralyzed to do these things.

so i simply take Dmytri’s essay as an elucidation of a problem which we should try to solve: applying a bitcoin-type approach (along with many other democratic mechanisms) to issues of public funding, decision-making, banking, etc.

i think the problem in this case has to do with trying to establish a kind of inventory of where we are (in terms of resources and needs), and then capturing that as a sort of starting point of a pubcoin (govcoin) system.

and of course any “govcoins” or “pubcoins” which people get at the outset in such a game/system are not to be traded in the private market. (you have regular old bitcoin for that). in some sense, these govcoins and pubcoins are really like “votecoins” – in the sense of direct budgeting etc which is implemented an old site i saw over 10 years ago, and which never seems to be updated or mentioned, but which is still there and still seems to make sense:

http://www.accuratedemocracy.com/

http://www.accuratedemocracy.com/a_primer.htm#spending

in some sense, much of voting should revolve around “what should we spend our money on”. (which is a much better question than: should we ban abortion, allow gay marriage, allow pot smoking etc. i like to keep govt focused on “where is the money?” rather than on “who should we hate?”)

it seems – taking an optimistic note from dmytri’s pessimistic essay – that a “govcoin” or a “pubcoin” or maybe call it a “votecoin”, allowing all stakeholders to directly determine budget allocations, could actually be a step in the direction we want to go in – away from austerity.

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