I first heard of Seinfeld Ammous in January of this year when I saw a bizarre, expletive-filled and frankly rather unlettered tweet of his attacking someone who committed the horrible crime of asking a question about an “altcoin.”
He struck me at the time as a sort of alcoholic Taleb-wannabe and I have to say I forgot about him mostly until I became the target of one of his late night rants, not long after which he blocked me entirely.
Bcash doesn’t compete with Bitcoin on being hard money since the con artists behind it can edit at will, so the whole thing is retarded and pointless. Bcash competes with shitcoins on who can scam more gullible fools.
— Saifedean Ammous (@saifedean) May 11, 2018
Recently his new book, The Bitcoin Standard, has become sort of the “standard” text for the BTC maximalist position, and though I won’t purchase it, I did have a chance to read it.
I’m not going to write an in-depth review of the book because frankly no in-depth review is really possible for the simple fact that the vast majority of the book is not about Bitcoin, but rather about the history of money, gold, government monetary systems, time preference, war, and other topics that are interesting but which you can read about in much better detail from far more competent Austrian economists than Seinfeld.
Only the last three chapters really discuss Bitcoin and one is left with the feeling that all the intro material was set up to smuggle in a pro-Bitcoin maximalist position at the very end without having to actually prove anything about it.
Instead I’d like to address a few errors in the book that stood out to me as I think these are enough to show that readers should be wary of Seinfeld’s conclusions.
1. The Introduction by Taleb contradicts the already false conclusion.
One of the most important parts of Seinfeld’s thesis in the book is that Bitcoin was “immaculately conceived,” meaning essentially that no other coin could ever have Bitcoin’s genesis history and therefore could never replace Bitcoin and that Bitcoin can never be recreated again.
All other coins are “scams,” as Seinfeld likes to put it, because people create them to make money and they are highly centralized. Anyone who claims otherwise is, as he said in the tweet to me, a “con artist” and a “scammer.”
If this makes no sense to you at all, don’t worry, it’s not really intended to. You’re expected to take it on faith, though when looking at the history of Bitcoin you can see that it was anything but “immaculately conceived.”
Bitcoin was created by a specific person for a specific purpose at a specific time. It was highly centralized when it began and Satoshi Nakamoto had the opportunity to mine upwards of 1 million coins himself, 5% of the total supply of Bitcoin that will ever exist, making him one of the richest people on the planet if he is still alive and has access to his coins. There is nothing all that fundamentally different from it and other coins other than that it got a head start.
On top of that, the introduction by Taleb clearly states:
Bitcoin will go through hick-ups (hiccups). It may fail; but then it will be easily reinvented as we now know how it works.
One wonders how Seinfeld could have missed such an obvious contradiction like this this when he is so strongly against any suggestion that Bitcoin can be reinvented.
2. Straw men! Oh straw men!
The book is chop full of logical fallacies but I’ll address probably the most egregious one which is Seinfeld’s false equation between changes to throughput capacity and changes to monetary policy and inflation rates. In other words, Seinfeld suggests that a change to the block size means a change to the fixed supply of Bitcoin down the road.
By package-dealing these two totally different changes he is able to effectively straw man anyone who believes Bitcoin’s block size should be raised to meet the growing transaction volume demands, when in reality nobody has and nobody will suggest changing the fixed supply as it is universally accepted among people working on Bitcoin that the fixed supply is a core part of its value.
The fact is that there are qualitative differences in changes to the Bitcoin protocol and they should be evaluated individually, not lumped into one category. To do otherwise is to be misinformed or dishonest.
3. Seinfeld’s Bitcoin world is a fairy tale
Perhaps the most unfortunate part of the book is the conclusion that Bitcoin must scale off-chain. In Seinfeld’s Bitcoin world, somewhere between 1,000 and 100,000 node operators will act as central banks and those are the only people who will get to make onchain transactions whereas everybody else does second-layer transactions because on-chain is too expensive.
In other words, people will store their life-savings in time-locked smart contracts that require one to constantly be connected to the internet. Any other Bitcoin will be in banks which might be well open to government regulators.
Indeed, Seinfeld goes as far as to write that “…Bitcoin’s scaling will likely require the use of third-party intermediaries.”
It sound’s strangely similar to what we have now, albeit with perhaps some improvements over the existing system assuming the supply of Bitcoin on solutions like the Lightning Network doesn’t ever become disconnected from the supply of Bitcoin on the main chain.
Seinfeld also never answers how Bitcoin can scale on an off-chain solution without a protocol change, although all the current suggested off-chain solutions will require one to raise the block size in the future (remember, raising the block size is for evil, scammer con-artists who want to inflate the monetary supply).
The results of these unanswered questions, the strawmanning and package dealing, the lack of Bitcoin material, and the hilariously contradictory introduction is a C- book on Bitcoin with B level economics and history that you can get elsewhere.
You’d be better off getting a good Austrian economics text and reading Steve Patterson’s wonderful book, What’s the Big Deal About Bitcoin?
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