There are a number of interesting paradoxes that arise from the blend of human nature and programmatic expression. Bitcoin suffers, you might say, from this plight in its own special way. According to Bergestra & Leeuw, there are five such paradoxes–let’s walk through them.
First up is the expectation paradox, a consequence of Bitcoin’s deflationary model. The conundrum is as follows: as a deflationary currency, Bitcoin lends towards hoarding–a predictable but unfortunate phenomena, because for Bitcoin to thrive, it must not only be used as a long-term store of value, but also as a means to transact value, quickly and cheaply. To spend or not to spend, that is the question.
Next we have the programmer loyalty paradox, a conflict of interest that arises from the Bitcoin core devs that extract economic value from Bitcoin independent of their contributions to the Bitcoin source code. It is conceivable that development priorities could be shifted on that basis alone. This goes on now (see: Bitpay and Jeff Garzik) [note: I am not claiming bias with this specific relationship, just mentioning it].
Third is the standardization paradox. As it stands, this issue hasn’t come to light but with eventual power shifts in the dev team this could become problem. The question being: are the Bitcoin developers committed to building an open standard for Bitcoin “that is a family of specifications of intended behavior for Bitcoin clients of various kinds that work independently of their implementations” or are they committed to releasing [official] clients that require people to rely on core devs to keep up with changes in the Bitcoin source code. It would appear that these two motives cannot operate harmoniously.
Fourth is the idealogical paradox. At first glance it would appear as though some (if not all) of the Bitcoin development community has arrived at the conclusion that an international finance system can operate stably without central or fractional reserve banking to maintain inflation and deflation. There is nothing inherently wrong with that conclusion, in fact it’s a reasonable one if you ask me; however, to maintain the integrity of the Bitcoin project, developers must remain unbiased against the legal and economic aspects of managing money.
Finally we have the legality paradox, everyone’s favorite. I’ll just take this one straight from the horses mouth:
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Bitcoin “strives” for official and normal prominence, so it seems, but its strength is really shown beyond any doubt if it survives a world wide prosecution. It may turn out to be at least as strong as the internet, in no need of any official confirmation.
These paradoxes speak volumes about many of the political/social/idealogical issues Bitcoin will face in its lifetime. While not immediate threats per se, it is vital we keep an open dialogue about these issues and begin formulating solutions before they become a problem. Such are the reasons I believe it all the more important to develop a philosophy of Bitcoin that builds a framework of language for understanding Bitcoin, both pragmatically and philosophically.
You guys agree, disagree? Any the authors missed? etc...
Original post: http://btcgsa.info/?p=186
Source: http://arxiv.org/abs/1304.4758