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The Bitcoin Strikes Back
smitty777 writes "Slashdot readers are no doubt informed of the infamous crash of Bitcoin. In fact, its demise was followed closely here. Wired has a recent article tracking Bitcoin's climb out of chaos. Valued at $17 before the crash, it had lost 90% of its value due to the hacking incident, down to a low of $2. It climbed back up to $3 in December, and is currently valued at $4. From the article: 'Bitcoin boosters have traditionally suggested that Bitcoin is an alternative to [the world's] currencies. But we'll suggest an alternative explanation: that Bitcoin is not so much an alternative currency as a "metacurrency" that allows low-cost and regulation-free transfer of wealth between nations. In other words, Bitcoin's major competitors aren't national currencies, but wire-transfer services like Western Union.' Still, Bitcoin has significant obstacles to overcome, such as covert mining, criminal uses, and other security issues."
Amir Taaki of the Bitcoin Consultancy (who did an interview here a while back) disputes the reasoning and the conclusions in the Wired article.
'Bitcoin boosters have traditionally suggested that Bitcoin is an alternative to [the world's] currencies. But we'll suggest an alternative explanation: that Bitcoin is not so much an alternative currency as a "metacurrency" that allows low-cost and regulation-free transfer of wealth between nations. In other words, Bitcoin's major competitors aren't national currencies, but wire-transfer services like Western Union.'
Sounds more like they're saying get in and out as quickly as possible, do not keep wealth or speculate on bitcoins, just push money in and let someone somewhere else convert the coins back into real money ASAP.
That's pretty much the opposite of what speculators want (The proposed use is highly liquid so harder to bubble).
Pay attention to what is going on here, because you will start to see it in other areas as well.
The establishment (through the media) is attempting to build a consensus that Bitcoin is not a legitimate currency, but a "money transfer service". "Money transfer" is a service that carries with it the implication of guarantee against loss of value during that transfer. It is a regulated industry.
By branding Bitcoin a "money transfer service" in the eyes of the public, powerful banking interests will then be able to begin loading Bitcoin down with regulations. Large Bitcoin institutions may even go along willingly. Regulations create monopolies, and monopolies bring higher rents.
This is the classical method in which the free market is subverted by government regulation, and creeping nanny-statism benefits large, risky centralized corporate interests at the expense of main street. It is the prisoner's dilemma in action. So pay attention as it plays out.
"I assumed blithely that there were no elves out there in the darkness"
"It has value because we pretend it does."
absolutely true!
fiat currencies are just as much a shared hallucination as bitcoin.
at least bitcoins may provide more privacy...
The Remnibi, however, is exactly how you described, except that the military backing it up is a hell of a lot larger than the US's, and they've got the US' economy by the balls.
The Chinese military is not larger than the US military in 1:1 terms overall. Ground forces? Well yeah. Duh. How do they get their military anywhere? They never have. Their only aircraft carrier is an ancient retrofitted throwaway from Russia that is being used for training and experience.
The US military on the other hand, has been in Korea, Japan, all over the Pacific, Panama, France, Germany, Vietnam, Italy, etc. just in the last 100 years. Probably more places, but you get my point.
It's a rather pointless comparison. The US has much smaller ground forces but an incredibly larger ability to move those forces anywhere in the world. China cannot, and has not, moved its military anywhere farther than its own continent. The US could never even begin to hope to obtain a beachhead on Chinese soil, much less sustain actual ground conflict.
It's a stalemate. China could never move and protect ground forces to US soil without air and sea support at least as large as the US. The US does not have enough resources in both ground forces and sea/air support to do the same.
Nobody has anybody by the balls. It's just a bunch of bullshit the 1% likes to have us argue about because it distracts us from the larger problem. I'll let you figure out what that actually is.
Hint: Somebody has somebody else by the balls, but neither side is a country.
I should have clarified that I think Bitcoin intrinsically lacks qualifications for a currency capable of buying a car.
For instance, a break through in prime factorization (or however bitcoins are created) that is kept secret could mean that someone generates a ton of money out of thin air, which are impossible to identify apart from normal bitcoins (as they would be legitimate bitcoins). Think the counterfeiting problem, except a breakthrough here means an exponentially bigger problem.
Further, the problem of the wildly fluctuating prices: why would I want to store money in a currency whose value can wildly fluctuate from $17 ea, to $2, to 4, all in the span of a year? Why would a bank want to give out loans in a currency when they could end up receiving far less than they loaned out? Why would I want to loan from them when my debt could skyrocket in price?
Further, I can think of very few usecases for the anonymous features of Bitcoin. Every scenario I can think of involves activity that is internationally illegal (ie, money laundering). How would you like seeing Big Corp, Inc have $1B in bitcoins from venture funding, then "losing" $500 mil to "unforseen contingencies", and knowing there is no possibility of tracing what happened? Hmmm, doesnt sound so good now does it?
And my understanding is that we moved away from a gold standard precisely so that we could regulate the economy to some degree by controlling the flow of money. We gave up the stability of having some real-world backing (gold) so that we could have more flexibility. Bitcoin has the worst of both worlds: its "backing" is a mathematical function, the supply is uncontrollable, and its value is unstable. Wooo, where can I sign up?
True but bitcoins are completely untraceable
Ok, so here's how Bitcoin works:
Bitcoins aren't really a thing you can have. Even the physical "bitcoins" you can buy aren't really coins. They're just private keys that are allowed to sign transactions on behalf of accounts that have a non-zero balance.
The only reason why people talk about Bitcoin as being untraceable is that anyone can create accounts, and there aren't necessarily names attached to accounts, but it would be too hard for authorities with warrants to catch you if they suspected you. The entire transaction history is still there, forever, for everyone to see!
This I'm curious about. USD don't change in value much. What happens when you accept $60 worth of bitcoins today for goods and services, and tomorrow that currency is worth $2.50?