Philosophy & Economics of Bitcoin

Andrew M. Bailey, Bitcoin Policy Institute

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Week 4: How to Evaluate Bitcoin

Lecture: You're Biased. I'm Biased. So What?

Key Themes

• The troubling role our own biases play in evaluating institutions and policies
• Symmetrical biases that afflict both bitcoin’s friends and critics
• How to work against or counteract our own biases using abstraction techniques (such as a ‘veil of ignorance’ thought experiment), and the limits of such techniques

Focal Readings

• Resistance Money, Chapter 4: 'Behind the Veil'
• Bindseil and Schaaf, 'Bitcoin's last stand'
• Quiggin, ‘The Bitcoin Bubble and a Bad Hypothesis’
• Krugman, 'Golden Cyberfetters'

Secondary Readings

• Bailey, Rettler, and Warmke: ‘Money Without State’; ‘The Moral Landscape of Monetary Design’
• Gladstein, 'Fighting Monetary Colonialism with Open-Source Code'
• Valentini, ‘Ideal vs. Non-ideal Theory: A Conceptual Map’
• Buchak, ‘Taking Risks behind the Veil of Ignorance’

Reflections

1. 125 words or less: give a few examples of your own biases and how they bear on your evaluation of institutions and policies. What steps do you actually take to counteract these biases? Be specific, concrete – and, if you can manage, honest!
2. 125 words or less: in your own words, explain the difference between evaluating bitcoin from ‘behind the veil’, on the one hand, and a simple expected utility calculation, on the other. Give a non-bitcoin-related example to illustrate how these two styles of evaluation differ. You may, if you like, also comment on which style of evaluation is more useful or apt, whether in particular cases or in general.
3. 100 words or less: does bitcoin’s rise in purchasing power over time refute its critics? Why or why not? Put differently: does bitcoin’s rise in purchasing power over time vindicate its proponents? Why or why not?
4. 100 words or less: prepare exactly two critical discussion questions about any of the focal readings. For each question, be sure to include a specific quotation or citation to indicate how the readings prompt it, and one sentence about why it matters.

Practicum

• Find two articles in mainstream news sources (e.g., Straits Times, Washington Post, etc.) from at least ten years ago (i.e., published in 2014 or earlier) – one that is broadly pro-bitcoin, and one that is broadly anti-bitcoin. In one paragraph each, briefly summarize the target article’s main points and any empirical discoveries that have been made since publication that either confirm or disconfirm those main points. What have we learned about bitcoin in the last decade, in other words, and what does it show us about early journalism or scholarship on that topic?
• Find a cryptocurrency project that is, in your view, unquestionably useless but that has a token with a positive market price. In one paragraph, answer this question: if the project is useless, why isn’t its token worthless?

Schedule

Tuesday 6 February
Readings	Read all focal readings carefully and in their entirety.
Reflections	Complete any one of Reflections 1-3, and Reflection 4, and submit by midnight before class.
Friday 9 February
No class meeting
Practicum Assignment	Complete both practicum assignments with your group and submit to the Practicum document (I suggest you get this done well before today, so as to enjoy a genuine Lunar New Year break!).