Tag: Merchants

Shave and a Haircut

 

Two bits! There, that feels better now, doesn’t it? A sense of completion and the comfort of familiarity. The phrase “two bits” indicates twenty-five cents specifically, and can also mean something cheap generally. The digital currency bitcoin apparently derives its name from the old fashioned uses of “bit” to indicate parts of a dollar or other currency. At the current exchange rate of around 15,000 dollars to one bitcoin, however, a bitcoin itself represents anything but parts of a dollar. Quite the opposite.

From the 1988 film Who Framed Roger Rabbit, the irresistibility of finishing off “Shave and a haircut, — —-“.

The record high valuation of bitcoin may not stand for long, and in six months one bitcoin may be worth 30,000 dollars or it may be worth 150 dollars. No one knows for sure, and that’s what is fueling a lot of argument and speculation. High amounts of speculation in the market are what inflates a bubble, and the question with bitcoin is whether it is indeed a bubble and when it might burst. That generates more speculation. More small investors buy into the market. Historically what has happened in such cases is that something happens, a large investor or two gets spooked, dumping shares on the market, a selling panic ensues as everyone tries to get out of the market while the watch the value of their investment plummet, and that’s it, the bubble burst.

Bitcoin or something like it will be around for as long as there is an internet and a demand for a monetary barter system which is decentralized and doesn’t involve significant charges going to middlemen such as banks or credit card companies. As more people use digital currency and more merchants accept it in transactions, the volatility of its valuation will settle down. Tulips are still around, after all, and people still value them, just not to the unrealistically high degree they did when the bulbs were novel. The long term problem with digital currencies generally, and bitcoin in particular, will be in decreasing the horrendous energy demands of mining them and, to a lesser extent, processing transactions. The electricity demands of mining bitcoin are now equivalent to those of Serbia, and will soon be on a par with Denmark’s electricity use.

Discussion of whether the current valuation of bitcoin represents a bubble often refers to Charles Mackay’s 1841 book Extraordinary Popular Delusions and the Madness of Crowds, and particularly to Chapter 3, “The Tulipomania”.

Much of the mining occurs in China, using electricity generated by coal-fired power plants. At a time when combating the effects of global warming is becoming a top priority, the mining of bitcoin could present an ecological catastrophe when it reaches the same level of energy consumption as that of the entire industrialized world, as it is predicted to do in the early 2020s. The digital currency genie is out of the bottle, and there’s no stuffing it back in. That leaves two options, or a combination of both – finding more energy efficient ways of mining digital currency, or using more environmentally friendly energy sources, such as solar.


The solar energy option is immediately attractive because it would help defray installation costs of solar arrays more quickly and because poorer countries, which are generally nearer the equator and hence in sunnier climes, could see income from a source that is neither environmentally nor socially destructive the way production of sugar or other cash crops has been for them. Puerto Rico, the United States territory that recently had its conventional power grid devastated by Hurricane Maria, could benefit by rebuilding with the intention of using solar energy at least partially for the profitable production of digital currency. Surplus energy from the arrays built with money from bitcoin mining would power homes and businesses at subsidized rates for people who could not afford it otherwise in very poor parts of the world. Smaller, locally owned solar arrays would be a better way to produce power because of the inefficiency of transmitting solar power long distances either in the form of direct current, or after inverting it into alternative current. Decentralization of the means of production would also serve to keep power and money in the hands of locals.

De Waag Bitcoin
Bitcoins accepted at a café in Delft, The Netherlands, in 2013. The Netherlands became a center of the tulip trade in the seventeenth century during “The Tulipomania”, and remains a primary grower of the bulbs to this day. Delft lent its name to a particular kind of pottery and the shade of blue it is renowned for, which has also been applied to some flowers bearing the same shade of blue. Photo by Targaryen.

Should you invest in bitcoin? That depends on your outlook. In the currently volatile market, investing in bitcoin should be treated like gambling. In other words, don’t invest any more of your government backed (in the United States the currency is actually backed by the Federal Reserve System, a private institution of the banking industry, though it is insured by the federal government) currency than you can afford to lose. For some people that can be quite a lot, but for most people that would amount to very little.

Should you get involved in bitcoin mining and processing of transactions? At the current valuation of bitcoin, that could be quite profitable. Tomorrow its valuation could drop below the cost of the electricity required to mine it. At any rate, the “mining” simile is somewhat inaccurate, since in a comparison of the digital currency market to real world mining, the people with computer equipment engaged in its production and in the processing of transactions are actually more like the merchants in a nineteenth century American mining town who sold goods to the miners who were hoping to strike it rich.

The opening scene of Powaqqatsi depicts working conditions at the socially and environmentally disastrous Serra Pelada gold mine in Brazil. This 1988 film by Godfrey Reggio, with music by Philip Glass, is the second in his Qatsi trilogy of meditative documentaries.

A very few of those miners struck gold, and most went bust, while the merchants usually did consistently well, a few becoming household names still known today, like Levi Strauss. If you do get involved in bitcoin “mining”, it might help to connect the equipment to a solar array rather than the conventional power grid, because then when the bubble bursts and the valuation of bitcoin drops to the floor, you can possibly still operate at a profit when others cannot, or at the very least you will have an inexpensive, environmentally friendly source of power for your other ventures.
― Techly

 

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Too Much of a Good Thing

 

Sugar can be derived from numerous plants, including beets, corn, and the fruit of trees, but it has come into its own since the Middle Ages in Europe as the refined product of the sugarcane plant, a perennial grass. The plant originated in New Guinea, and from there traders introduced to Asia, where it eventually found its way to southern Europe by way of Arab merchants. As noted from its origin, the plant grows in tropical or sub tropical climates. Europeans quickly developed a taste for refined sugar, but since the plant would not grow well in Europe or northern Africa, they needed to find either another source or another place to grow, or forever be at the mercy of Arab merchants, who kept the price high.

When European explorers stumbled upon the New World in their search for a trade route to the Far East that bypassed Arab middlemen, they were interested in exploiting sugar resources as much as spices. The tropical and sub tropical bands of the New World – the Caribbean, much of eastern South America, Central America, and the far southeastern portion of North America – turned out to be well suited for raising sugarcane. The problem was finding a suitably cheap labor source for the backbreaking and dangerous labor involved in sugarcane cultivation as well as refinement. The Europeans, after exhausting the Native Americans as a labor source, turned to Africa as a source of slave labor.


There were other plantation crops that Europeans raised in the New World exploiting slave labor, such as tobacco (a plant native to the western hemisphere) and cotton, but sugar was the big money maker for them, the linchpin of Atlantic trade from the 1500s well into the 1800s. Sugar grown on plantations in the New World traveled, some in the form of rum, to northeastern ports of North America and then on to Europe, where it was traded for manufactured goods; some of the manufactured goods then were traded in Africa for slaves, who were loaded onto ships destined for plantations in the New World, their voyage across the Atlantic being known as the Middle Passage of this triangle of trade. Some didn’t survive the voyage, and of the ones who did, many suffered abominably under harsh conditions in the sugar growing regions and elsewhere.

No such thing as too much (4578918974)
Pancakes with syrup, or syrup with pancakes? Photo by jeffreyw.

Hundreds of years later, sugar is still exacting a toll from poor black people, as well as poor and working class people generally. The European quest for cheap sugar succeeded all too well. Now it’s found in far too many supermarket foods and beverages, where in the case of processed foods it masks the loss of wholesome flavors. Sugary beverages like soda and many fruit drinks are especially egregious sources of the endocrine disrupting carbohydrates present in refined sugar that can lead to obesity and type 2 diabetes. These processed foods are easy to prepare and are relatively cheap and, because of the sugar in them, to some people they taste good enough.

“Big Rock Candy Mountain”, first recorded by Harry McClintock in 1928, is about a hobo’s idea of paradise. McClintock claimed to have written the song in 1895, based on tales from his youth hoboing through the United States. McClintock’s 1928 recording was used by Ethan and Joel Coen at the beginning of their 2000 film, O Brother, Where Art Thou?.

People could cut back their consumption of processed foods, and certainly they could drop sugary sodas and fruit drinks out of their diet and not lose any essential nutrients. People can use will power and self control, even though there is evidence that sugar’s effects on their health are more insidious than industry mouthpieces would have everyone believe. People can do all those things. But they don’t. Why not?

What if crack cocaine were as cheap as sugar? How about cigarettes? Opioids? What levels of consumption would we encounter then among the general population, and among the poor and working classes specifically? All those substances stimulate pleasure centers in the human brain, just like a good hit of sugar does in a smaller way, and all are ultimately destructive in high enough doses. Is sugar as destructive as those other addictive substances? No, not in the short term, and it would be ridiculous to equate a cookie with a hit of cocaine. In the long run, however, over the course of ten, twenty, or thirty years, sugar consumption at modern American levels of a hundred pounds or more per person per year is proving destructive enough. Time to turn some of that exhausted soil in the tropics over from growing monocultures of sugarcane for export to growing fruits and vegetables the locals could consume for themselves. We could easily cut back from two or three lumps of sugar to just one.
― Izzy

 

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