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Comment by rockyleal | Hacker News Reader

The author of the Article summons Graeber in an abysmal way. In 'Debt' Graeber proposes two main ideas, that the State is by no means necessary to have a great economy (he is an anarchist, with small 'a'), and that our current debt-based monetary system is a mess. Bitcoin is debt-free because no one needs to take loans or create bonds since bitcoins are mined. I think Graeber would be (is?) fascinated by them.

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"Bitcoin is debt-free... since bitcoins are mined"

That's not true. Debt is perfectly possible with a fixed currency base, and mining or grabbing transaction fees is not a substitute for debt in any way. In fact, you can have a whole expansionary currency system on top of a fixed asset like BTC, in the same way that the USD was once convertible in and out of gold.

No, it is true. To describe a currency as 'debt-free' means that it is not created through the process of creating new debt. The way modern currencies like the dollar are emitted is through the generation of new debt (government bonds are government debt, and banks create new currency when they 'loan' money). The negative consequences of not paying what you borrow (forclosure, etc.) are ultimately what backs debt-based currencies. Graeber argues (and I agree) that it is therefore the threat of violence from the state what gives value to currency in the modern era.

Bitcoin is fundamentally different because new currency is created through mining. Yes, you could create a secondary market on top of Bitcoin that handles loans, but not new Bitcoins, therefore it is debt- free currency. When Nixon decided to decouple the dollar from gold in the seventies, what he did was effectively to move from a debt-free currency to a debt based currency. The move had huge implications in shaping the world until today, because it meant that the US became free to print dollars endlessly. The external market for dollars was solid because of the world reserve status, enforced through the US military. In this way the US could print away AND keep internal inflation very low in relation to the amount of circulating currency.

Breaking this cycle, which is what feeds the US empire, is why I think Bitcoin will in the end provide a great service to mankind.

I think you may have misread Graeber. He is NOT advocating for commodity/debt-free currency. His whole point is that money started as credit - only later was it viewed as commodity, and only occasionally.

Money effectively is both commodity and an IOU. Attempts to force it into one category or another eventually leads to social breakdown.

The key question for our time is how to craft a stable monetary system that is decentralized. We don't know how to do this yet, and Bitcoin is not likely the answer BECAUSE it is finite (which would be catastrophic, as gold was). Crypto currencies can and should grow in experimentation but this one has a fundamental flaw.

http://www.theguardian.com/culture/2011/dec/16/note-worthy-n...

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