Zen and the Art of CBDC Analysis
Zen and the Art of CBDC Analysis (Part 1): 5 ways to focus the mind before leaping to conclusions on an overheated topic (Original here https://brettscott.substack.com/p/cbdc-analysis) Brett Scott Our economies are held together by three layers of money, with the government issuing the first layer, the banking sector issuing a second layer of ‘digital casino chips’, and players like PayPal issuing a third layer of chips built upon the bank chips (learn more in The Casino Chip Society https://brettscott.substack.com/p/casino-chip-cashless-society). The end result is that you and I have a choice between Layer 1 state-issued physical cash, Layer 2 bank-issued digital chips, and Layer 3 corporate-issued digital chips. The so-called ‘cashless society’ refers to the situation in which the first option is removed, leaving us captured by the other two, but this has now been complicated by the arrival of a hypothetical new player called CBDC - central bank digital currency. If this were introduced, it would be a form of Layer 1 state-issued digital money, to supposedly co-exist alongside cash. It would be a bit like having an online account at your country’s central bank, which is something you can’t have right now. I’ve been involved in CBDC discussions since 2015, but it’s only in the last year that I’ve seen it catching on as a hot topic in public. Google Trends data confirms this, showing that interest in it started to spike in 2022. This interest is partly due to the fact that a variety of central banks have launched research initiatives and pilot projects to experiment with CBDC (see the CBDC tracker to explore these). Also, since the pandemic, an army of crypto day-traders has emerged, which has lead to a big industry of crypto pundits who flood social media with hot takes on money topics, and CBDC is one of those topics. I could give you my own hot take, but we don’t need more of those. What we need is a cool-headed way to approach the debate, so I’d like to offer 5 meditations that may help you in your quest. MEDITATION 1: ACKNOWLEDGE YOUR BACKGROUND IMAGINARY The first step in analysing CBDCs is to not think about CBDCs. Instead, we should acknowledge that all of us are bound to leap to certain conclusions about the topic, because all of us are haunted by background imaginaries that shape how we interpret things. ‘Imaginaries’ is a bit of a wanky academic term, but think of an ‘imaginary’ as being like a subconscious mental game-board upon which you play out scenarios in your head. It’s a game-board that has certain pre-set biases that will exert a pull on your thoughts, warping them in particular directions. You can have more than one imaginary competing to warp your thoughts, but here’s a selection, along with descriptions of what they are likely to make you think about CBDC. CBDC in the libertarian imagination If you’re a person who refers to yourself as a libertarian, your background imaginary will likely be set up as a battleground between good and evil. On the good side is a heroic, innovative and productive entrepreneur class defending against a bad, stagnant and parasitic government that tries to rob things. In this game-board, regulations are just an oppressive shackle suffocating innovation, and state enterprises are inefficient and corrupt drains upon society. Actually, you might not even believe in ‘society’ (echoing Margaret Thatcher’s belief that ‘there’s no such thing’ as society), and prefer to see the economy as but a collection of sovereign individuals without obligations to each other, who only interact to mutually pursue their self-interest. From this perspective, welfare systems are just one group of people using the state to leech off the hard work of others. So how might a libertarian imaginary affect your perception of CBDCs? Well, it’ll probably bend your mind towards viewing CBDC as a new attack launched by the evil side of the battle. The state will use its control over this new digital money to watch you, censor you, and discipline you. In the socially conservative version of libertarianism, CBDCs loom as the monetary wing of a terrible new system of woke environmentalist authoritarian control. It’ll be enlisted to force you to buy green vegan products and to demote you if you fail to declare your pronouns. CBDCs may appear as just one more means to unnaturally distort the natural hierarchy of God and male patriarchs, who would otherwise by striving to preserve themselves and their family by competing hard in the market (which is imagined to produce spontaneous natural order when left to run without interference). Conservative libertarianism is also very heavily invested in the Tarzan Suite, a mode of thinking about economies in which the individual is primary, and which tends to lead - through a number of twists and turns - to you imagining that money should be akin to a natural commodity
I, Token: the untold story of the hole in Bitcoin's heart
I, Token: the untold story of the hole in Bitcoin's heart /*(for the images that accompanied the original piece, see here https://brettscott.substack.com/p/the-hole-in-bitcoins-heart)*/ Picture this scene. You are a weary 12th century traveller quietly sipping an ale at a tavern. A man approaches you. “I have something that’s in very limited supply,” he whispers to you conspiratorially, before asking, “would you like it?” You look at him suspiciously, and, over the drone of bard music, reply with, “depends on what it is”. He sits down and continues. “It’s something that can be split into pieces and moved around”. You shrug and say, “I’m already carrying a lot of stuff, so tell me what it is first”. “It’s almost weightless,” he adds with a wink, “and cannot be seized from you”. Now you feel irritated. “Listen, can you actually tell me what this split-able, moveable, lightweight, unseizeable thing is?” He seems offended. “Surely those are features enough my friend?” You growl back with “look, syphilis is lightweight, movable and cannot be taken away either, but that doesn’t mean I want it.” “Come on!” he shouts out, “I’m offering you something scarce that can be passed to others across borders!” You slam your drink down: “Tell me what the thing is and then I’ll tell whether I care. Are you trying to hand me gems, bubonic plague, seeds?” He backs off, saying, “It’s an object”. You retort with, “I don’t want a random object”. “What if it were beautiful?” he asks. You give him one final chance, replying with, “Is this object you have beautiful?” His final response is, “Ah, no... but it has a beautiful emblem. Let’s just say it is… um… a /token/. Many have been buying it. I’ll sell it to you for two ducats”. *The moral of the story* There is a simple reason why the man in the story above is so frustrating. He insists on describing features /around /the object he is promoting, rather than describing the inner essence of the object itself. This same practice is extremely common within the Bitcoin community. This essay will explain why, and in doing so will reveal a hole hidden in the heart of Bitcoin. I will lay this out in five parts, as follows: 1. Part 1 will explore the use of /nouns versus adjectives/ in our descriptions of things, and how they are used to convey primary and secondary features of things. 2. Part 2 will explore how to describe the noun ‘money’, but without resorting to vague and evasive ‘functions of money’. 3. Part 3 will explore the surface level numbers that accompany a monetary system, and question to what extent they are nouns or adjectives, before applying this analysis to Bitcoin. This will reveal that the numbers that accompany normal money are /numerical adjectives/, whilst those that accompany Bitcoin are /numerical nouns./ 4. Part 4 will show how the numerical adjectives of normal money are fusing to the limited-edition numerical nouns of Bitcoin, and how this creates havoc in the psychology of the tokens. 5. Part 5 will offer suggestions for how to fill in the hole in the heart of Bitcoin. *Part 1: An evasive noun beneath an adjective armour* Bitcoins are digital objects, issued out and moved within an elegant technological system. They are borderless, cannot (in theory) be seized, and are ‘scarce’ in the sense that there are a known number of them released predictably, rather than a fluctuating number released unpredictably. They also have a logo and a brand name. These objects get called ‘tokens’, but manifest as /numbers /on a screen, which is the only sensory information about them that a person can experience (they cannot be touched, tasted, smelled, or heard). I have been involved in the scene around these tokens since 2011, and promoted them in the early years. I used to receive them in exchange for my first book, and would try to exchange them for actual goods and services when possible. In the early Bitcoin community the tokens were somewhat mysterious, but we initially ignored this because we were fascinated by the innovative way of issuing them and moving them around. But, like a baby moves from fixation upon the mere appearance of an object to eventually questioning what it is, the question for me became /what are these tokens being issued and moved?/ What is a digital ‘token’ supposed to be anyway? From early on, however, I noticed that many Bitcoin enthusiasts would avoid deeply addressing this question, or would simply bypass it by calling the tokens ‘coins’, as if that were description enough. I remember speaking at a big Bitcoin event where countless talks described how to move the tokens around securely, or speed them up, or protect them, whilst my talk was the only one asking what they were. Some of the audience looked irritated at this, as if it were obvious what they were, and as if such introspection was distracting from the
In Praise of Cash
I just published this big essay in Aeon Magazine, looking at the dark sides of 'cashless society' (aka. the bank payments society): https://aeon.co/essays/if-plastic-replaces-cash-much-that-is-good-will-be-lost. This follows from an earlier essay I did called The War on Cash. The battle to protect cash is one full of ambiguities - it feels somewhat like trying to protect good ol' normal capitalism from a Minority Report surveillance-capitalism. The full text is below IN PRAISE OF CASH: BRETT SCOTT I recently found myself facing a vending machine in a quiet corridor at the Delft University of Technology in the Netherlands. I was due to speak at a conference called ‘Reinvent Money’ but, suffering from jetlag and exhaustion, I was on a search for Coca-Cola. The vending machine had a small digital interface built by a Dutch company called Payter. Printed on it was a sentence: ‘Contactless payment only.’ I touched down my bank card, but rather than dispensing Coke, it beeped a message: ‘Card invalid.’ Not all cards are created equal, even if you can get one – and not everyone can. In the economist’s imagining of an idealised free market, rational individuals enter into monetary-exchange contracts with each other for their mutual benefit. One party – called the ‘buyer’ – passes money tokens to another party – called the ‘seller’ – who in turn gives real goods or services. So here I am, the tired individual rationally seeking sugar. The market is before me, fizzy drinks stacked on a shelf, presided over by a vending machine acting on behalf of the cola seller. It’s an obedient mechanical apparatus that is supposed to abide by a simple market contract: If you give money to my owner, I will give you a Coke. So why won’t this goddamn machine enter into this contract with me? This is market failure. To understand this failure, we must first understand that we live with two modes of money. ‘Cash’ is the name given to our system of physical tokens that are manually passed on to complete transactions. This first mode of money is public. We might call it ‘state money’. Indeed, we experience cash like a public utility that is ‘just there’. Like other public utilities, it might feel grungy and unsexy – with inefficiencies and avenues for corruption – but it is in principle open-access. It can be passed directly by the richest of society to the poorest of society, or vice versa. Alongside this, we have a separate system of digital fiat money, in which our money tokens take the form of ‘data objects’ recorded on a database by an authority – a bank – granted power to ‘keep score’ of them for us. We refer to this as our bank account and, rather than physically transporting this money, we ‘move’ it by sending messages to our banks – for example, via mobile phones or the internet – asking them to edit the data. Money ‘moves’ to your landlord if your two respective banks can agree to edit your accounts, reducing your score and increasing your landlord’s score. This second mode of money is essentially private, running off an infrastructure collectively controlled by profit-seeking commercial banks and a host of private payment intermediaries – like Visa and Mastercard – that work with them. The data inscriptions in your bank account are not state money. Rather, your bank account records private promises issued to you by your bank, promising you access to state money should you wish. Having ‘£500’ in your Barclays account actually means ‘Barclays PLC promises you access to £500’. The ATM network is the main way by which you convert these private bank promises – ‘deposits’ – into the state cash that has been promised to you. The digital payments system, on the other hand, is a way to transfer – or reassign – those bank promises between ourselves. This dual system allows us the option to use private digital bank money when buying pizza at a restaurant, but we can always resort to public state money drawn out of an ATM if the proprietor’s debit card system crashes. This choice seems fair. At different times, we might find either form more or less useful. As you read this, though, architects of a ‘cashless society’ are working to remove the option of resorting to state cash. They wish to completely privatise the movement of money tokens, pushing banks and private-payments intermediaries between all interactions of buyers and sellers. The cashless society – which more accurately should be called the bank-payments society – is often presented as an inevitability, an outcome of ‘natural progress’. This claim is either naïve or disingenuous. Any future cashless bank-payments society will be the outcome of a deliberate war on cash waged by an alliance of three elite groups with deep interests in seeing it emerge. The first is the banking industry, which controls the core digital fiat money system that our public system of cash currently competes with. It irritates banks that people do indeed act upon their right to convert
Preparing for the War on Cash
Hi Nettime, I've just published a big article on The War on Cash and the rise of the digital payments panopticon. If you want the original article with links, you can find it here [1]http://thelongandshort.org/society/war-on-cash although the piece hit the front page of Hacker News and the site went down, so not sure if it's accessible. I've pasted the text below Cheers, Brett @suitpossum PREPARING FOR THE WAR ON CASH: BRETT SCOTT Several months ago I stayed in an offbeat Amsterdam hotel that brewed its own beer but refused to accept cash for it. Instead, they forced me to use the Visa payment card network to get my UK bank to transfer EUR4 to their Dutch bank via the elaborate international correspondent banking system. I was there with civil liberties campaigner Ben Hayes. We were irritated by the anti-cash policy, something the hotel staff took for annoyance at the international payments charges we'd face. That wasn't it though. Our concern was an intuitive one about a potential future world in which we'd have to report our every economic move to a bank, and the effect this could have on marginalised people. 'Cashless society' is a euphemism for the "ask-your-banks-for-permission-to-pay society". Rather than an exchange occurring directly between the hotel and me, it takes the form of a "have your people talk to my people" affair. Various intermediaries message one another to arrange an exchange between our respective banks. That may be a convenient option, but in a cashless society it would no longer be an option at all. You'd have no choice but to conform to the intermediaries' automated bureaucracy, giving them a lot of power, and a lot of data about the microtexture of your economic life. Our concerns are unfashionable. Without any explicit declaration, the War on Cash has begun. Proponents of digital payment systems are riding upon technology-friendly times to proclaim the imminent Death of Cash. Sweden leads in the drive to reach this state, but the UK is edging that way too. London buses stopped accepting cash in 2014, but do accept MasterCard and Visa contactless payment cards. Every cash transaction you make is one that a payments intermediary like Visa takes no fee from, so it has an interest in making cash appear redundant, deviant and criminal. That's why, in 2016, Visa Europe launched its "Cashfree and Proud" campaign, to inform cardholders that "they can make a Visa contactless payment with confidence and feel liberated from the need to carry cash." The company's press release declared the campaign "the latest step of Visa UK's long term strategy to make cash 'peculiar' by 2020." There you have it. An orchestrated strategy to make us feel weird about cash. Propaganda is a key weapon of war, and all sides present themselves as liberators. Visa comes across like a paternalistic commander when assuring us that we - like a baby taking first steps - will feel a sense of achievement at liberating ourselves from the burden of cash dependence. Visa's technology offers freedom without dependence or dangers. Visa is joined by other propagandists. In 2014 Penny for London arrived, an apparently altruistic group set up by the Mayor's Fund for London and Barclaycard, using charity as a hook to switch people to contactless cards on the London Underground. PayPal plastered cities with billboards claiming that "new money doesn't need a wallet", along with a video proclaiming: "New money isn't paper, it's progress". Astroturfing campaigns like No Cash Day are backed by American Express, highlighting such anti-cash themes as the environmental impact of banknotes. Other tactics include pointing out that criminals use cash, that it fuels the shadow economy, that it's unsafe, and that it facilitates tax evasion. These arguments have notable shortcomings. Criminals use many things that we keep - like cars - and fighting crime doesn't take priority over maintaining other social goods like civil liberties. The 'shadow economy' is a derogatory term used by elites to describe the economic activities of people they neither understand nor care about. As for safety, having your wallet cash stolen pales in comparison to having your savings obliterated in a digital account hack. And if you care about tax justice, start with the mass corporate tax avoidance facilitated by the formal banking sector. The peculiar feature about this war, however, is that only one side is fighting. Very few media champions defend cash. It is like a taken-for-granted public utility, whereas digital payments platforms are run by private companies with an incentive to flood the media with their key messages. When they fight this war, their targe
If you talk to bots, you're talking to their bosses
Hi all, just published this on the disingenuous and phony behaviour of AI 'bots', suggesting that the next stage of corporate personhood is for corporations (legal persons) to literally claim to be natural living persons, something that can be acheived only if the user-experience layer of a company’s processes can be completely automated and then attributed with an abstract personality to make it a being-in-itself. Original article link: https://howwegettonext.com/if-you-talk-to-bots-youre-talking-to-their-bosses-cd8e390c242f#.3w98g4c82 IF YOU TALK TO BOTS, YOU'RE TALKING TO THEIR BOSSES: BRETT SCOTT At a recent financial technology conference I was invited to meet Cleo, a friendly automated spirit living within the confines of an iPhone interface that offers financial advice to those who chose to activate her. Described as an “AI assistant for your money,” she playfully answered text message queries about bank balances, spending, and budgeting. Hey, Cleo, what’s my balance? Hey, Alex! MasterCard: -£760. Current account: £1048. Savings: £1700 Cool, how much have I spent at Pret this month? You’ve spent £44 at Pret since you got paid on the 15th of December Despite the futuristic jargon and growing wave of hype around such bots, automated assistants are not really that new. Our world is full of simple bots, like the automatic hand dryer in a public restroom that jets hot air if you trigger its sensor. By now many of us have experience with some that attempt to mimic basic personality, like the tinny voice of the supermarket self-service checkout machine as it coldly attempts to replicate one half of a stilted, human conversation. There are two new trends emerging, though. First, the sophistication with which bots interact is increasing. They are able to respond to (or more accurately, be triggered by) a greater variety of situations. The iPhone’s Siri is programmed to respond to all manner of vocal instructions, from answering your queries about the time, to searching the internet for you. Second, the mode by which they frame that interaction — how the machine addresses you — is also shifting. An old automatic hand dryer may have a sticker on it that says: “To activate dryer, put hands below.” This is essentially an instruction left by the creator of the machine. The supermarket checkout machine similarly offers generic audio instructions like, “Place items in the bagging area.” The new breed of bots, however, are dropping non-personal words like “the” in favor of mysterious first-person pronouns like “I” and “me,” or possessive pronouns like “my.” Imagine the automated checkout asking you to “place the items in my bagging area.” Machine entities are increasingly claiming to have some subjectivity, some sense of an independent place in the world. Or, rather, the team that creates the machine programs it to claim subjectivity. The new generation of bots, which include the scheduling assistant Amy and Amazon’s Alexa, would very much like to get on a first-name basis with you. Amy’s website offers an enthusiastic greeting: “Hi, I’m Amy! You interact with me as you would to any other person — and I’ll do all the tedious email ping pong that comes along with scheduling a meeting.” She then gives her personal email address. Who, though, is this “I”? Who is Amy exactly? The home page certainly doesn’t mention her creators. Perhaps the personalities, agendas, and egos of the team might distract from the personality, agenda, and ego of the being they present to us as their avatar. Amy is keen to tell you that her ability to schedule your meetings is “like magic,” rather than, say, the end result of using venture capitalists’ money to pay highly trained machine-learning software engineers. The creation of a subjective identity for the bot may be an attempt to mystify and delight, to create some kind of warm, intuitive human experience. Humans have a long history of mystifying objects in order to imbue them with meaning beyond their immediate functional use. Anthropologists sometimes refer to this as fetishization. A fetish object is not just something you find in an S club. It’s any object seen to be more than just an object. The entire branding industry works off this concept: Levi’s jeans are not just functional items of clothing. They’re a lifestyle. Jack Daniel’s isn’t just whiskey. It’s a carrier of the down-home spirit of rural America. We do it too with sentimental items and heirlooms, like the old guitar inherited from your grandfather or that faded leopard-print shirt that your mother once wore in the 1980s. A key element of this fetishization is to take a social relationship of some sort — such as a relationship between family members — and project it into, or imagine it within, the confines of some physical thing, as if your relationship with your mother is in the fabric of the shirt. This can be a very positive experience. Perhaps, if your mother has died, you hold onto that shirt when you
Re: nettime Hacked Team
Yes. Actually, this email is a good place to start to uncover VCs https://wikileaks.org/hackingteam/emails/emailid/158747 1) Finlombarda 2) Innogest - they even list it on their site http://www.innogest.it/the-fund/portfolio-companies/ 3) 360 Capital Partners (they do not list it on their portfolio http://360capitalpartners.com/portfolio-2/). Here is the list of emails with 360 Capital Partners https://wikileaks.org/hackingteam/emails?q=360capitalpartners.commfrom=mto=title=notitle=date=nofrom=noto=count=50sort=0#searchres ult 360 also backed Vupen http://www.forbes.com/sites/andygreenberg/2012/03/21/meet-the-hackers-who-sell-spies-the-tools-to-crack-your-pc-and-get-paid-six-figure-fees/ Cheers, Brett @suitpossum Brett Scott / @suitpossum / LinkedIn / Blog / Book 0044 (0)79 8243 7769 -- Original Message -- From: mazzetta mazzett...@gmail.com To: nettim...@kein.org Sent: 10/07/2015 15:33:31 Subject: Re: nettime Hacked Team but still omits the venture capitals in the list. IÂ can solve the mistery, the main financing comes from a venture capital set by Regione Lombardia (Milan's region), Finlombarda Gestioni SGR, sided by a couple of of smaller from Turin area. More important, if not intelinked, seems the political support they've enjoyed, particularly among officers of the many Italian police corps and secret services, who apparently loved their products here's a searchable cache of their emails from Wikileaks, enkoy https://wikileaks.org/hackingteam/emails/emailid/304208 mazzetta 2015-07-10 14:45 GMT+02:00 Jaromil jaro...@dyne.org: dear nettimers, most of you may have heard of the Hacking Team scandal http://www.wired.com/2015/07/hacking-team-shows-world-not-stockpile-exploits/ which is now even among the wikileaks hall-of-fame. ... # distributed via nettime: no commercial use without permission # nettime is a moderated mailing list for net criticism, # collaborative text filtering and cultural politics of the nets # more info: http://mx.kein.org/mailman/listinfo/nettime-l # archive: http://www.nettime.org contact: nett...@kein.org
