The Exit Machine

in #bitcoin2 years ago

Ten years after bitcoin started, I still hear many educated people saying "bitcoin is a Ponzi scheme" or "it has no value" (or both).

Some months ago, I wrote an article called "What's Bitcoin's Value?" discussing several more-or-less plausible "reasons for-", or "sources of-" bitcoin's value. I called the first and most important one "ideological value"

[...] people want to make a statement, to send a message, to protest against a system - the current financial system - seen as deeply flawed, unfair and exploitative.
In a sense, it has been said that bitcoin embodies yet another aspect of the "revolt against the global (financial) elites"

After 2008 and even more so after 2016, nobody will contest a pervasive feeling of decline in our civilization. The level of mistrust has greatly increased. We have lost trust in politicians, in media, in each other. Our societies seem to be tearing themselves apart, to have entered a destructive spiral of hysteria and radicalization.

The responses to decline in firms, organizations and states have been famously analyzed and explored in a landmark publication from the 70'-ies by Albert Hirschman, called "Exit, Voice and Loyalty".

If the underlying blockchain technology is a "trust machine", its first and most famous application, bitcoin, uses it to offer an "exit from the global financial system"


Someone who finds himself part of a declining firm, organization, or state can choose to "stay loyal":

"I think things are not going well at all but I trust the leadership: they have noticed it too, they have the right analysis and they will come up with solutions to our problems"
credit: GETTY Images


Those who trust the capacity of the system to right itself, to heal, even if they might not trust the existing leadership can choose the Voice option: expressing their unease, proposing an analysis, proposing solutions, protesting against the analysis put forward by the existing leadership or against the solutions, agitating for a change of leadership.
credit: "New Mail Nigeria"


However once loyalty to the leaders is lost and confidence in the "system" as a whole fades, the only reasonable answer is an "exit":

  • an employee would seek another job
  • a member of a trade union, a political party or another organization would resign
  • a citizen of a state would emigrate
    credit: Dreamstime

The Global Financial System

It used to be that if one wanted to live a decent (perhaps even prosperous) life, there were a few choices. Then the field narrowed drastically: with "capitalism" victorious, the "market economy" took hold in all prosperous countries, its "flavors" ever closer, its uniformity ever greater.

In practice, this was brought about by increased freedom in capital movement, free convertibility of currencies, closely aligned financial and monetary institutions, with independent central banks all aiming for a 2% inflation rate, all ending up resorting to "quantitative easing" (aka "money printing") when the economy stalled.

With the "rules of the game" the same everywhere, whether in Europe, US or Asia, the recipe for financial success began looking more and more similar all over the world.

The competition field for individual success gradually became global. Those who didn't want to join the "rat race", those not lucky enough or not good enough to succeed in one place found themselves with nowhere to go, with "no other game to play".

The global financial system offered no exit option.

Until the invention of bitcoin, that is...


As such, bitcoin provides a useful "safety valve" for a part of the discontent. The "defensive" narrative of "Bitcoin as the 'knight in shining armor', defending the victims of the 'banksters' from their oppressors" is quite strong and people believing in it justify a significant part of BTC's worth.

These words from my "What's Bitcoin's Value?" article are cast here into a classical, well-known analysis framework, that of Albert Hirschman's 1970's "Exit, Voice and Loyalty".

In a context where, although changing jobs, parties or countries is still possible, people started feeling oppressed by "the dictatorship of the financial system", the dictatorship of money. Indeed, the globalisation of the financial system left no "exit" option, right when it, witness the 2008 financial crisis, entered decline.

However, bitcoin alone cannot compete with the fiat currencies system. As The Economist observed back in June 2011:

Bitcoin is technically sophisticated. As a monetary system, it looks primitive.

source:Bits and bob

Back in March 2018, in another post titled Blockchain Revolution: Money and Credit, I was writing

Bitcoin and cryptocurrencies challenge the monopoly of fiat money thus enabling a new, complementary economy.

As I plan to discuss in a future paper, in order to mount a significant challenge to the dictatorship of the fiat money, bitcoin needs the help of the other blockchain systems with their cryptoeconomies and currencies. Bitcoin needs the "cryptoverse"

If you know what witnesses are and agree that people commited to keeping this blockchain ticking play an important role ...

(by simply clicking on the picture - thanks to SteemConnect)

Related posts

Blockchain, Crypto and Society

Steem ecosystem


Interesting analysis.
George Gilder calls it the "cryptocosm" in his book "Life After Google".

It was Gilder’s book that led me to look beyond bitcoin and investigate the evolving DLT projects like Steem. I’m still wrapping my head around all of the potential beyond using the blockchain as a secure transfer of funds!

There is so much innovation happening on Steem. It’s almost impossible to get your head around all of it!

Posted using Partiko iOS

Yes, we discussed this in Krakow :-)
I happen to like the sound of "cryptoverse" better than that of the synonymous "cryptocosm" :-)

Well written perspectives as I think these times we are headed towards will make these factors even more relevant. I see more as an evolution instead of a revolution!

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Thank you for posting this. I need more people like you in my life.

I totally agree with your view except it's not just the "dictatorship of fiat money", it's something bigger: the dictatorship of the social stack.

I'm curious to know what you think about what I'm writing.

I've read the first one, I can't say I disagree with your analysis but the real question is: what's to do about it?
I don't think society can be changed. It does change by itself, it evolves, more or less at its own pace. while it evolves, how are the individual destinies ? In the past, when people felt trapped in one of the "layers" of the stack, it ended up with a bloody revolution. For as long as there's some social mobility and "hopeless ants" can strive (and sometimes succeed) to become ants, ants to become super-ants and so on, we should all be more-or-less fine. Overall, the human condition has greatly improved over the course of history. Can we do better ? Possibly. Can we do worse ? Oh yeah, that's for sure, we have already botched a couple times ! So given risk and benefit, perhaps the social stack is not great but about as good as we are able to do ...

How much you earn on a single post man ?😱😱😱

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It's called "advertising". Not real earnings, don't get your hopes too high :-)

Actually, I pay myself to get visibility. I pay this money to Steemium who optimizes the bots who upvote the post so that it reaches trending and so many people who would otherwise not have seen it, get to see it. ...

Look at the comment from @steemium for more details. The "126.23$ has been spent" myself :-)

To whom are you 'advertising'? People still ignorant enough about rewards and bid bots who bother to look at trending?
An otherwise good post, but yeah, it's not a $200 post in proportion to other posts. That's irrespective of you paying for the upvotes, which really has nothing to do with anyone else on STEEM but you and the bots. Keep telling yourself that it's just advertising, and not a significant reason why STEEM gets a bad rap.

To people who don't know my blog and who might learn something from discovering and reading it. Irrespective of rewards and bid bots, I want my work to be read as widely as possible. And I know no other way to draw attention to my posts.

No, wait, I could "bait" people in other ways, like the "clickbait" ads you see nowadays even on the websites of reputable journals. How do you propose someone to draw attention to his posts ?

There are many ways to look at it.

I've explored this in an older post: How I learned to stop worrying and love the Bid Bots

In short, bid bots and vote-selling markets are another reason for people outside the platform to invest, buy steem with fiat because they offer an opportunity for passive income in exchange for "currency risk".

So in short, the primary argument FOR is that they generate passive income for some purported bid bot 'investor'? How exactly is that supposed to scale?

No, wait, I could "bait" people in other ways...

You'd prefer to 'bait' people using artificially distorted rewards rather than a catchy title, and that occasionally mentioning it down in the comments, somehow that absolves you of creating the fiction to the casual observer, that you somehow earned the $200?

So in short, the primary argument FOR is that they generate passive income for some purported bid bot 'investor'? How exactly is that supposed to scale?

Just like capitalism. You know, the real world.

Someone offers "work" (or "labor") - this is the content creator. Someone else offers "capital" - this is the passive investor.

Labor + capital = prosperity

Except that the steem economy needs diversification. Just "content and attention" (the "blogging business") is not enough.

We now have games too (Steem Monsters - @steemmonsters, Drug Wars @drugwars, Next Colony @nextcolony, etc), but more diversification is needed.

We used to have "open source software" with Utopian but alas, that business folded.

We have Fundition @fundtion for charity management but I'm not sure it's thriving.

I talked for instance about a marketplace for selling art here: Revisiting Steemland: a fairer and more transparent art market as a new "export".

Another idea is a marketplace for selling unused storage space. A bit like filecoin / storj / sia / bittorrent but with the power of the best cryptoeconomic system, that of steem: Steembit: a decentralized storage marketplace for Steemland

There are a bunch of other ideas for diversification, like @oracle-d for instance.

The more diverse the types of work one can source from Steemland (supposedly better quality or cheaper price than elsewhere), the more attractive the ecosystem is for investors.

Just like capitalism. You know, the real world.

This isn't an answer, and neither is the subsequent vacuous mess of platitudes you dumped after it.

I did not intend to "dump a vacuous mess of platitudes". My intention was to talk economy. "Labour + capital = prosperity" is a literary shorthand for a basic macro-economic law (added value).

If I had written instead "mass * velocity = momentum" you probably would not have taken that to be a "vacuous mess of platitudes".

So perhaps the discipline of economics is for you a "vacuous mess of platitudes". Could that be the case ? Perhaps you just don't know enough about economics and it all looks Chinese (or Greek) to you ?

Hmm ... you don't give me much gripping surface there ... I don't see how to engage further.

That's why you have downvotes

Not sure you are reading his comment like I do. My interpretation is: "how do you manage that, I'd like to know how to earn that much myself!"

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Note the comment from Steemium below: it says I've spent $126.23 in "advertising" this post through the bidbots. Now if you look for instance in you can see that "author payout" for this post, at the time of me writing this comment, is $131.63.

That means this post earns an equivalent of $5 in SBD and SP, in case I cash out, which I never do.

Yeah, it kinda' takes out the magic, right ? It's about the content, not about the money.

Obviously, BTC is not a scheme and it does have value. But does it have a future? It is based on outdated technology and its volatility won't let it grow outside the crypto enthusiasts community. Besides, the total lack of regulation may not be a pro for the currency in the long run.

fair questions ... time will tell ..

Nice article! I am investing in Bitcoin for long term. May be for 30 or 40 years. I am not sure how much it will be in future. But I am not selling and will hold Bitcoin along with other coins for long term. We take risk with all sort of investment including business so why not Bitcoin or Crypto. I think in next 20 years block chain and crypto currency will rule the world.

I hope you're right

The funny thing about bitcoin being called a ponzi, to me, is that there used to be (not sure if there still are) many many different ways to get free bitcoin. lol. There were faucets and ad campaigns and such that you could take advantage of and get "free" (Doing a task isn't technically free... lol) bitcoin in the process.

What ponzi have you ever heard of, that gave you free entry? And then allow you to keep getting money free? With no investment? :P
I haven't heard of any, at least.

Also, bitcoin made no promises to anyone! Bitcoin itself never said "I'll make you tons of money! Just buy X amount of me!" Our beloved Bitcoin has never asked anything of any of us. Except for us to love it. lol

People relish intellectual comfort. Thinking is the most energy-expensive task we can do, so many people have devised mechanisms to allow them to save (scrimp) on thinking. Labeling something as, for instance a "Ponzi scheme" without looking closer allows one to "safely" avoid thinking ...

Great insight. Bitcoin is a pure escape from the deterioration of a centralized and greed infected society. It will not be just an exit but a mass exodus. Cheers

all i read was "exit to voice" lol

i heard ned ius telling steem devs to leave to eos

maybe ned will make a steem airdropped voice alternative with his money hes makin sellin steem LOL

its fine we are better without ned, but we can beat ned ewto it, aggroed can put Steemp from steem engine onto eos, and we can have a steem sbale coin on eos that stays 1:1 to steem price, that way we can be connected to eos, and have a steem token on newdex. steem engine too can be an eosio token traded listed for free on newdex

inter blockchain communication

"Ponzi scheme" People never change, they just didn't know how powerful is blockchain technology! The time will come for sure!

Good analysis, some people still see bitcoin as a ponzi scheme but they didn't know what is behind that!

One big factor on bitcoin's side is time, as fiat currency is continued to be printed it becomes more diluted.

It's only a matter of time before inflation takes permanent hold. Look at negative bond rates in Europe if you want evidence.

Bitcoin will become digital gold as more people realise that it is a hedge/protection against inflation and the current fiat-based monetary structures.

bitcoin will survive every hurdle

let see if it survives the "Transaction and Mempool hurdle"...

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The bitcoins is a future!

Wow, very nice analysis and very good conclusion!!

Amazing write-up. The world has not been able to comprehend the idea behind bitcoin. Bitcoin is the solution to all financial problem across the world.

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Hi @sorin.cristescu!

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Bitcoin needs the "cryptoverse"

Well said! !ENGAGE 100 und lieben Gruß Kadna

There has already been too much ENGAGE today.

To view or trade ENGAGE go to

hi @sorin.cristescu
didn't hear from you in a long while. Hope you're still okey there and just taking a break from Steemit?


hi @crypto.piotr
nice to see someone noticing ! :-)
I took a long holiday. Back now but I have lots of things on my plate and probably won't be very active on steemit in the near future. I also need to understand how HF21 works ...
How about you ?

Hi @sorin.cristescu

I've pen and paper and I note names of people I like, I value or I consider them solid content creators. And I visit profiles of each one of them any time I can.

You're on that list :)

Hope you had a good holiday.

probably won't be very active on steemit in the near future

Would you perhaps consider "renting out" some of your SP if you're planning to be away? I would gladly share all weekly rewards I would be receiving from my manual curration.
(example: if I would receive 50SP weekly for curations, and you would delegate 10k to me then it would be exacly 28% of my total SP. So at the end of the week I would transfer to you 14 STEEM).

This way you would be having some FAIR extra weekly paycheck and I would be able to support some of my followers, which I value a lot.

My discord: crypto.piotr#3426
Telegam: crypto_piotr
email: [email protected]

Hope to hear from you,

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