She asks and partially answers the question. Equally important, she bridges the gap between the BTC community and the prepper/survivalist community, who sometimes look askance at each other (although I’m well aware that within the Living Freedom realm, there are plenty of people who are both bitcoin users and preppers with gold, silver, and canned goods stashed).
Anyhow, from Wendy:
The question is a large obstacle to the mass adoption of digital currencies and it should be addressed head-on. The audiences being targeted as adopters are also a problem. The question and a problem overlap.
Calls for mass adoption usually aim at the mainstream and often translate into some form of government approval. This approach alienates two significant categories of people who should be fellow travelers: “preppers” and “survivalists.” (For the differences between them, click here.
Preppers and survivalists are rigidly individualistic and anti-government. The crypto-community needs them to counterbalance the trend toward licenses, regulation, and state control.
There are two problems with outreach, however: some voices in the crypto-community are openly hostile or scornful to preppers and survivalists; many preppers and survivalists view bitcoin with skepticism. The later ask a reasonable question which is often shrugged off: will bitcoin survive a collapse of infrastructure which could include the electric grid?
I have no doubt that digital currencies will not only survive but also grow as they have in the chaos that is Venezuela. But, again, the question is reasonable and deserves a respectful response.
But what is it with True Believers, anyhow? Wendy includes a mind-bendingly stupid quote from Jeff Berwick, a BTC fan, that could just as easily have come from the mouth or pen of a most bigoted religionist. Or could have come from a political fanatic on either side of the recent dismal election. Go. You have to read the quote to believe it.
OTOH, nutty though Berwick sounds, I’ve heard equally incredible narrowness come not only from people with rigid views of religion or politics (which are at least subjects worth having strong opinions about), but from people who “believe” in some current trend in fashion or music or pop psychology, or who follow the latest here-today-gone-tomorrow moral panic. “Agree with me or you’re a HATER.” That is such incredibly creepy “thinking” and it seems to be becoming more common.
If bitcoin’s going to survive, it’ll be because it proved its value over time in the market. Telling people “if you don’t like bitcoin there’s something wrong with you” isn’t going to get anybody very far. Anyhow, Wendy’s series on BTC is very good and this may be her best offering on the subject to date.
Ah, Bitcoin… early on, I thought it was a good idea. I bought a little. But in practice:
1. It’s damned inconvenient. It was awkward to use without a specialized smart phone app. I don’t have a smart phone.
2. It’s largely useless in meatspace where I’ve lived. It’s hard to find a vendor accepting bitcoins outside of overpriced-coffee-snobberies in metro areas. I tend to avoid metro areas and overpriced-coffee-snobberies.
And yes, I’ve encountered the rabid (seriously- that guy at PorcFest* needs a medical check) Bitcoin… advocates. They don’t exactly induce me to go out of my way to encourage their antics.
And then there’s the blockchain. Blockchains are great for assuring the integrity of distributed data. Especially in a comparatively closed system like a corporate VPN. Bitcoin? Not so much.
Raise your hand if you know what Bitcoin mining is. For those whose hands aren’t up, mining is the process of keeping “the blockchain consistent, complete, and unalterable by repeatedly verifying and collecting newly broadcast transactions into a new group of transactions called a block” (https://en.wikipedia.org/wiki/Bitcoin#Mining). Miners are paid sorta-volunteers.
Ask yourself how you would like the idea of the NSA setting up its own Bitcoin mining pool with a few supercomputers.
As for the folks who think the Internet WILL be there post-TEOTWAWKI because it’s based on ARPANET which was designed to survive anything…
Nope. The Internet is not ARPANET. “Based upon” doesn’t mean it still works the same way. Yes, it still has a hufe degree of backbone redundancy. But too many essential elements aren’t sufficiently redundant to handle something like a mid-North America EMP.
How many of you got stalled by some of the recent DNS attacks? How many remember most of the US Internet going down in the ’90s merely because WorldCon took down own primary DNS location? How reliable is the Internet in California during the annual rolling black/brown outs?
—–
* I was helping a friend who was selling food at PorcFest a few years ago. He was on break, so I was working the counter. Some clown came up to buy something. When his food was ready, he waved his phone in my face. Knowing what was up, I inquired if he wanted to use Bitcoin, and explained that we don’t accept it. He launched an extremely loud diatribe on the virtues of Bitcoin, and why I HAD to take it. Not why I should, but that I was REQUIRED to do so. I explained that I wasn’t the vendor and that wasn’t my call, that he could wait around to talk to the actual vendor. He descended into a near-frothing shouted rant — profanities included — that I HAVE TO. He refused to leave when requested.
I put away the cash box, told him to fuck off, and walked away.
He followed me, still telling me that everyone HAS to use Bitcoin. I told him to get the fuck away from me.
A little later, he tracked me down near the music pavilion and started in again. I shifted my jacket to make sure hardware was visible and stated flatly that it was in his own medical best interest to back off.
I imagine that sunnuvabitch thinks he’s a great advocate for inconvenient currencies.
I think Bear summarized a lot of Bitcoin downsides. I have one coin at $600 I bot as a very expensive lottery ticket. It’s too intangible to work outside of a committed Internet society IMHO.I know millennials think, like England, there will always be an Internet but…
I used to think Jeff Berwick WAS crazy with his religious numerology and cycles but then occasionally he came up with a real fact I didn’t know so I waffled. Now I think he’s a paranoid personality who has come up with a way to make it work for him. That doesn’t mean Bitcoin is a store of value like gold IMO.
the Internet WILL be there post-TEOTWAWKI because…
They need to meet Murphy.
Couple of years back a contractor down I-10 toward San Antonio bored a big posthole, and came up with a screw-full of fiber optic cable. Our 911 went out for a day and a half. (Turns out a call from my house three miles to the sheriff’s dispatch goes through SA. Don’t ask.)
Government O.M.G. reaction. Contracts for a redundant route down TX-16 so That Won’t Happen Again.
Six months later another contractor cut the I-10 cable, and service switched to TX-16. Just as the emergency response folks were high-fiving, a different contractor ran a backhoe thorough the TX-16 cable, and we again lost 911, for two plus days.
Meetings at the Highest Level. Redundant redundancies installed. We were assured It Will Never Ever Happen Again.
Last month a contractor working on our county jail started a fire in the roof. Luckily it was put out before the 911 dispatcher got more than a whiff of smoke.
The county 911 folks are asking for a new office with an alternate command center/911 terminal. That Will Surely Fix It.
Ain’t holding my breath.
My main objection to Bitcoin and/or Cashless Society stems from a not-omigod situation, when the power goes out because a tornado wiped out a main electric transmission line just outside of a small city. Or the path of a hurricane does minimal damage to the central part of a city but takes out many overhead electric lines.
Even fiat paper is beaucoup better than dead cellphone apps and dead plastic.
Part of being free is the right to have private property.
I like Gold (the smaller the denomination the better), platinum, silver, etc, even cold hard cash, bartering is good too for services & products. Heck one of my biggest investments is lead.
No use for Bitcoin, just don’t think it will be available in a grid down situation anyway.
Doesn’t seem to be a lot of Bitcoin fans here. Not trying to sell you on something you don’t have any need for, and Bear’s experience at Porcfest sounds extremely annoying, but there are obnoxious evangelists in pretty much any movement of any size.
Bitcoin’s strength isn’t in facilitating face-to-face exchanges. Where it really shines is in its ability to pseudonymously send and receive value anywhere in the world in a matter of minutes, and governments and banks are powerless to stop you.
Because of special purpose computer chips used in mining, the NSA wouldn’t get very far in seizing control with generic super computers, and there are countermeasures if they tried. Infrastructure failures could cause serious disruptions, but there are some possible work-arounds. But Bear’s point is well-taken: Governments and infrastructure failures in one way or another pose a serious threat to the vitality of Bitcoin. And there are other potential threats as well. But there are some absolutely brilliant people working hard to overcome some of these vulnerabilities, and if Bitcoin isn’t able to thrive, some other cryptocurrency that builds on the lessons learned from Bitcoin is likely to fill the void.
see here for information on the cost of transactions for bitcoin.
Cube64:
“Bear’s experience at Porcfest sounds extremely annoying,”
That was well beyond annoying and into the “am I going to have to shoot this guy?” realm. While that was an extreme case, most of the Bitcoin proselytizers I’ve dealt with have been less intensely similar: millenial JWs with a new faith, waving smart phones instead of pamphlets.
“Because of special purpose computer chips used in mining, the NSA wouldn’t get very far in seizing control with generic super computers”
Sorry; I didn’t make myself clear. I wasn’t suggesting that the NSA could take control of Bitcoin. I was addressing the privacy aspect, as in “it ain’t private if a large scale miner wants to track transactions.” Think of it in terms of “metadata.” It isn’t that they can run the process to keep blockchains consistent and alter them at will, but that they can sign up to monitor blockchain transactions. In a time when countries are trying to eliminate cash for electronic currencies for the sake of tracking (those nasty cash-only tax evaders, ya know), please note that few are outlawing Bitcoin; only pushing to incorporate it into their systems and regulate it.
And why do you think the NSA/other alphabet soup agency of any country wouldn’t have ASIC farms if they chose to do this? It isn’t as though the chips are hard to come by.
There are many possible negative scenarios for Bitcoin and I don’t know how each one of them might play out, but so far Bitcoin has been amazingly resilient and there are potential countermeasures for different types of attacks. In the case of NSA acquiring an ASIC farm, I suppose the so-called nuclear option of changing the Proof-Of-Work algorithm would be deployed, which would render ASICs impotent.
I’m not trying to persuade anyone that it’s necessarily a good investment or that they should start using it if they don’t have a need to. Especially at the present time, it isn’t for everyone, but it’s not all that difficult to use and it has some very beneficial properties which can make it a valuable tool. Some of these properties include:
1) It is not controlled by governments
2) If you know what you’re doing, it can be used in a way that your identity can’t be traced
3) It has a known and decreasing inflation rate
4) It makes it relatively easy for moving money across international borders
5) Easily hidden and not easily confiscated
The question is an interesting one but does not address what Ms. McElroy sees as a societal collapse nor does she say how far down the ladder she thinks society would spiral.
Like it or not the infrastructure that powers our society is very complex. Joseph A. Tainter author of The Collapse of Complex Societies defines a societal collapse as “a rapid shift to a lower level of complexity”. As I see it Tainter’s definition translates into no power/internet or, at best, a spotty power/internet with the internet, when on line, possibly reduced to local intranets. I can’t see the internet not being affected in a world reduced to however far you can drive (until the fuel runs out) or walk. This begs the question: how would you access your bitcoins? Consider even with the internet of today, if you are on a country drive the odds are high you will not able to make a purchase at a roadside fruit stand with your trusty Visa or debit card. So the question you have to ask yourself is, how are you going to use bitcoins to buy food in a society that has arrived at lower level of complexity in a drastic manner?
In the article it’s pointed out that the internet was designed to be resilient but, at best, it would be spotty just like the power grid. In today’s cities around the world there’s a heavy reliance on JIT (just in time) delivery. With deliveries suspended how long would cities where servers are located function and how long would those servers function in hostile environments where people need resources like fuel? Even if this wasn’t an issue, everything runs out eventually so how long would the servers be able to stay on line and would you even be able to get online to reach them? Then later if systems started to come back there is no reason to think the electronic records of your Bitcoins would have survived.
So my answer to this question is that while precious metals are not the be all and end all, at least they are a tangible asset not a bit or two of data on a server half a world away. For the short term maybe bitcoins would be useful IF there were a lot more places that took them as payment and as long as the power/internet was up. In the long term during a collapse, I don’t think so. I think it would be bitcoins until the fall then barter and some precious metals until things started up again then precious metals because barter is too much like work in getting an agreed price.
For there to be even the faintest prospect of averting 1984-world by any means short of rebuilding out of total collapse a la Atlas Shrugged, elimination of the State monopoly on money provision will be required. Whatever its present deficiencies, Bitcoin – or, more likely, some future development / refinement of cyber-currency technology – strikes me as the only possibly feasible way to accomplish this.
I notice that the discussion of ‘after SHTF’ or ‘after TEOTWAWKI’ somehow assumes that there will still be electricity to transfer the Bitcoins. But as far as I know they are ‘data only’ and you can’t walk around with one and plunk it down on a table.
So. What about the aftermath of an EMF event. Bomb or solar flare – you pick. Either will wipe out not only the grid, but power generation and transmission together. We have no national inventory of generators, for example, and without power it’ll be decades before we can rebuild that capacity. Even gas pumps won’t work. How will Bitcoin work then? Even paper currency would at least be a medium of exchange that it will be possible to exchange.
Cube64 wrote:
Bitcoin’s strength isn’t in facilitating face-to-face exchanges. Where it really shines is in its ability to pseudonymously send and receive value anywhere in the world in a matter of minutes, and governments and banks are powerless to stop you.
Yes, exactly. I view Bitcoin as a medium of exchange, not a store of value.
Bear wrote:
I wasn’t suggesting that the NSA could take control of Bitcoin. I was addressing the privacy aspect, as in “it ain’t private if a large scale miner wants to track transactions.”
Forget miners; anyone in the world can track Bitcoin transactions. Take heed: ALL BITCOIN TRANSACTIONS ARE PUBLIC. They are essentially entries in a gigantic ledger that anyone can read. If it’s privacy you want, don’t use Bitcoin. (There are workarounds for this, but a sufficiently determined party can still find out a lot about your transactions.)
Sorry to hear about your encounter with the Bitcoin zealot, Bear. I’ve yet to meet anyone like that. And for what it’s worth, I don’t trade BTC with a smartphone; I use MultiBit on a Linux desktop. (While at home, obviously; not at the local coffee shop.)
@ Brad R… One of the things I notice in these hypothetical discussions is a trap a lot of people fall into. They are all gung-ho on strategy and tactics while totally ignoring logistics. Bitcoins are a wonderful thing but to depend upon them during a society collapse… no.
Ask yourself this, in failed states like Somalia or soon to fail states like Venezuela, can you walk into a store, whip out your cell phone and pay with Bitcoin? Before you answer take into account when you answer that the servers for your Bitcoins are still in operation. Now with a collapse of the American economy do you think it will be limited to just America? Before you answer take a look at the world trade map at this link:
http://metrocosm.com/map-international-trade/
With the entire globe effected by the collapse, would you be willing to bet your life on being able to use those Bitcoins to buy food when the overwhelming number of establishments don’t except it as payment right now. Are you willing to bet that later, when things start to return to a semblance of normal, the various servers that held you Bitcoin account will be operational and not laid waste by looters looking for things like the gas used for generators or the precious metals used in the electronic components?
I’ve only been musing about an economic collapse, what about an EMP and the fact Bitcoins are in cyberspace? A pandemic where after a few weeks people stop risking exposure stay home so who runs the power plants and other bits of infrastructure like phones, cell phones etc? With JIT delivery to food stores, gas stations etc. how long before things went to hell if the deliveries stopped in the cities? In a WROL situation how long would the computer centers with their alternate sources of power stay viable?
You would be much better off to have a selection of cash, precious metals and barter goods then to rely on an intangible item like a bitcoin. There are simply to many vulnerabilities with the Bitcoin supply chain to overcome for it to be viable as an alternative in a crash.
MJR said: With the entire globe effected by the collapse, would you be willing to bet your life on being able to use those Bitcoins to buy food when the overwhelming number of establishments don’t except it as payment right now.
No. I think in most of the scenarios you describe, bitcoin would not be my asset of choice. However, there are many crash/semi-crash scenarios where things would play out differently, and bitcoin could be useful in some of those. Since we don’t know exactly how a crash would unfold, it makes sense to be prepared for as many of the likely possibilities as we can. An example where I think bitcoin would be more useful than gold is if you needed to cross a border and wanted to carry some of your assets with you, without having them stolen. Bitcoin is just one (and far from the most important in a survival situation) of many possible tools or assets you might want to have on hand.
MJR — do read the comments on Wendy’s original article; many of them touch on the points you raise. You can also direct questions there to Wendy. Everyone seems to agree that the usefulness of Bitcoin in a “collapse” depends on how bad the collapse. I particularly liked the comment by LucSr that “From 1 to 6, it may be economy downturn, economy meltdown, scarce of energy, scarce of food, war hot zone, comet hitting, and by the same ordering I will lose confidence in check, traditional currency, bitcoin, gold, bread, anything.”
In particular, ask the Bitcoin experts there about the survivability of Bitcoin. I am very far from being an expert on its internals, but my understanding is that the blockchain is maintained independently by a large number of distributed servers, and as long as a few of those servers survive, the blockchain can be reconstituted as soon as network connectivity is restored. (There’s the rub.)
Practically speaking, I worry much more about a Venezuela situation, or a cash crackdown like India’s, than an EMP event or global war. It’s worth noting that Bitcoin is highly prized in Venezuela right now. As would be gold, I’m sure, if it was available there. I expect the Venezuelan government will crack down on Bitcoin as soon as they figure out how; but I gather that it’s still functioning as a black-market currency.
Again, I view Bitcoin more as a medium of exchange — a way to transfer value — rather than a store of value (an asset). And I quite agree that it’s important to diversify one’s holdings…including barter goods, if you expect the worst.
MJR, my apologies; I see you did comment on the bitcoin.com article. (At least I assume the MJR commenting there is the same as the MJR commenting here.) I only just noticed when reviewing the comments this morning.
It’s been sung, “A diamond is a girl’s best friend”. But, she can’t eat it, sleep on it, or sell it for its original purchase price. Same can happen with Money/Coinage/Gold/Silver/Bitcoin/whatchamacallit.
All those mediums of exchange ARE suitable for a number of very worthwhile and purposeful goals in a business-as-usual economy: as investments, hedge against inflation, privacy, etc.
BUT, in a TEOTWAWKI/SHTF situation (Venezuela, perhaps?), the authenticity or usefulness of those mediums can’t always be absolutely guaranteed. IOW, if a stranger comes along and offers me a ‘piece ‘o eight’, for some food, I’m gonna throw it right back at him and send him packing. How can I know whether it’s real or not?
The best option, IMHO, is to use those mediums of exchange NOW to purchase/create/store sufficient, sustainable, and renewal supplies/skills – of whatever nature – ahead of time. The goal, however, is not to live forever, but only to outlive all the other poor ba$tards who didn’t do that.
During the Serbia conflict I think Selco indicated gold was good if you had offshore contacts. Methinks SHTF events can come in many forms and getting there sequences, in a scenario where paper money becomes toilet paper, then there’s maybe a period where gold, silver or the likes would have some value, when you get to a point that they do not either methinks then you will be looking at only things that keep a person alive, gives enjoyment, etc are of value, how fast that point gets somewhere is anyone’s guess.
Methinks two of the original currencies was salt & tea, I sure there were many others, but in the case of salt you ain’t living very long without it. However if I was fleeing a scene, it would be a lot easier hiding & carrying some type of valuable coin, jewels, etc then 100#’s of salt.
My opinion is if you like bitcoins go for them, if gold go for that, but also put away a little, salt, tea, spirits and tobacco for a rainy day to do some trading with. And to have a bunch of any kind of coin without investing in weapons,food storage, water, heat sources, shelter, GOOD SOCKS!!!, etc would not be the direction I would go, but to each their own.