Last Forking Warning For Bitcoin

ASDFnz writes "It has been just over two months since the bitcoin block chain was rocked by a near disastrous fork causing the bitcoin price to crash. The culprit of the crash was found to be a bug that prevented pre version 7.1 bitcoin clients accepting large blocks that could be generated by version 8 clients. A temporary fix was put into place by Bitcoin Project lead developer Gavin Andresen that forced version 8 clients to generate blocks that version 7.1 could understand. It is important to note though, the fix was a temporary one! In just under two days on the 15th of May the fix will expire and version 8 clients will once again be able to make large blocks that older clients will not be able to understand."

Comments

Crap, the sky is falling

[roman_mir]

Oh shit, the sky is falling.

Total disaster, never happens in real world, not virtual one. Except for all the times when 'real world' currencies undergo devaluations, revaluations, forced exchanges, just plain old inflation, all the things that lead to currencies collapsing. I mean name me a paper currency that lasted longer than 80 years on this planet without a major restructuring, without collapsing?

This is a technical problem, I am pretty certain it will be addressed. Not that I care much about Bitcoin in itself, but I like the idea of competing currencies and this is definitely a revolutionary one, so it's interesting to observe. I don't think it's going away any time soon even with technical issues.

Re:Crap, the sky is falling

[loufoque]

What technical problem is there?
It's just that the new Bitcoin and the old Bitcoin are becoming two different currencies. People need to convert all their old Bitcoins to new ones to avoid this.

Re:Crap, the sky is falling

[Joce640k]

Total disaster, never happens in real world, not virtual one. Except for all the times when 'real world' currencies undergo devaluations, revaluations, forced exchanges, just plain old inflation, all the things that lead to currencies collapsing.

You can remember your currency collapsing during your lifetime?

Re:Crap, the sky is falling

[Anonymous Coward]

Oh shit, the sky is falling.

Total disaster, never happens in real world, not virtual one. Except for all the times when 'real world' currencies undergo devaluations, revaluations, forced exchanges, just plain old inflation, all the things that lead to currencies collapsing. I mean name me a paper currency that lasted longer than 80 years on this planet without a major restructuring, without collapsing?

This is a technical problem, I am pretty certain it will be addressed. Not that I care much about Bitcoin in itself, but I like the idea of competing currencies and this is definitely a revolutionary one, so it's interesting to observe. I don't think it's going away any time soon even with technical issues.

I'm interested in this perspective. When you compare Bitcoin fluctuations with 'real world' currency fluctuations as somewhat the same - which major currencies has recently lost 2/3rds of value overnight like Bitcoin did? If you had significant money in Bitcoin the sky was falling. Its value behaves exactly like very speculative stocks.

What is the actual 'real world' basis for this sudden notion that major 'real world' currencies can collapse any time? Yes, they can fluctuate a few percentages, that is very very very different than 60-70% loss of value recently for Bitcoin (or 90%+ the last time the price crashed).

Re:Crap, the sky is falling

[glwtta]

Sure, sure... most real currencies don't go through that every two weeks, though.

Re:Crap, the sky is falling

[MadKeithV]

There is a pretty long list actually of places with serious inflation in recent times. It's not unlikely that there are slashdot posters from those areas, who have indeed experienced a currency collapse or at least runaway inflation in their lifetime.

Re:Crap, the sky is falling

[roman_mir]

I was born in the USSR, I lived through a number of currency collapses just in THAT country and then after the dissolution through collapse of new currencies created AFTER that country collapsed.

Yeah, I remember.

I also know enough history and geography that if you want, I can name close to 50 currencies of top of my head that collapsed. Oh, USA also had that, it was called the Continental. Today it's called the Federal.

Re:Crap, the sky is falling

[roman_mir]

Look up the history of currencies just over the last 100 years.

Latest off top of my head is North Korea with 100 to 1 devaluation over 2 day weekend.

90%? How about 99%?

Re:Crap, the sky is falling

[DarkOx]

Except that isn't even whats happening here. Its more like an issuing bank telling customers are retailers they are not going to do magnetic strip ATM cards any more and people need to replace their cards and equipment with the RIFD variety. Its a non-event except for people who were expecting to never have to upgrade software.

Re:Crap, the sky is falling

[roman_mir]

North Korea devalued currency over the weekend 100 to 1.

Cyprus basically split Euro in 2 at least, where if your money was in one of their banks, you lost anywhere between 40 and 100%, that would be a devaluation. All of a sudden if your money is in a Cyprus bank your Euro is not worth at all what other Euros are worth.

Rubble collapsed with the collapse of USSR, but even before the collapse it was just in a constantly accelerating free fall. Grivna or Hryvna or however you write that in English (Ukrainian post USSR currency) replaced another currency that existed before it (and there were more than one), which devalued at amazing pace day to day and things like that happen over DAYS or HOURS sometimes, that's because a restructuring is not a restructuring without massive losses.

By the way, that's a big reason as to why I only sees gold as real money, something that cannot be 'revalued' by gov't in a heartbeat.

There are South American stories, there are European stories, the Japanese are going down that path, there are African stories, Asian stories, you point at a location on the world map and if there are people there, there was a currency collapse there at some point (and there will be more later on).

Re:Crap, the sky is falling

[fuzzyfuzzyfungus]

What is the actual 'real world' basis for this sudden notion that major 'real world' currencies can collapse any time? Yes, they can fluctuate a few percentages, that is very very very different than 60-70% loss of value recently for Bitcoin (or 90%+ the last time the price crashed).

The question I would ask is less 'can real world currencies collapse?'(yes occasionally one does, albeit generally one of the lower-tier ones); but 'do real-world currencies collapse outside of conditions where things are going all to shit across the board?'

Given how much fun it isn't, it's not as though you go through a round of hyperinflation just for giggles. It's not as though everybody wakes up one morning and says "I can see it so clearly now! My fiat currency is nothing but a political construct subject to the whims of politicians! It's all over!" and the currency's value against real assets suddenly dives for the floor. If the situation, as measured in actual economic activity, commodity availability, etc. goes to shit, the currency may well follow; but at that point your problem isn't that your currency is a paper lie; but that things have gone to shit, at least within the jurisdiction that minted the currency, if not more broadly.

Re:Crap, the sky is falling

[pla]

It's just that the new Bitcoin and the old Bitcoin are becoming two different currencies. People need to convert all their old Bitcoins to new ones to avoid this.

Bzzzt. Users of Bitcoin don't need to do anything beyond download a client written in the past year. They don't need to convert anything, they don't need to send themselves their balance to make sure the new program sees it, they don't even need to re-download the block chain. Just update their software.

Nothing about the currency itself has changed; just the removal of an artificial cap on block size placed in the original client, from back before the early developers expected it to take off so well.

Re:Crap, the sky is falling

[Lumpy]

The US dollar is still collapsing. and will continue to collapse fast for the next 5-10 years.

When you have real double digit inflation and cost of living increases you have a collapsing dollar. And yes, it's real double digit, the Fed is downplaying it to avoid a panic.

When you cant buy a week's of groceries (real food not ramen) for two people and stay under $80.00 you have a economic crash happening. Clothing, food, housing, gasoline. Cars are at disgustingly high prices... really an econoBox car is $15,000?

I am actually surprised the poor are not starting to band together and start killing the rich and stealing their stuff.

Re:Crap, the sky is falling

[Anonymous Coward]

Venezuela also recently had a 46% currency devaluation after having done a 100% deval some years ago*. And this is after they took 3 zeroes off.

I remember a friend was moving there (from Argentina no less) and one night he called his wife to talk to her abount buying a new car, and told her it would cost something like 30 Million in the then-current currency. Her immediate response was "are you crazy?!", which didn't last after he explained it was like US$ 12K, "oh, alright then"..

But, you can get gasoline for your car real cheap, really, really, real cheap. So it kinda balances out, except it doesn't.

* That is, of course, the official figures. The non-official ex. rate is....dire.

Re:Crap, the sky is falling

[Chris_Jefferson]

However, other currencies don't have this problem where the currency just "breaks" suddenly, and basically stops working.

Imagine if bitcoin had been more popular, if everyone had bitcoin applications on their phone which take months to get updated, where half the world if running v7 and half v8. This would have (as I understand it, and I think I do) just fundamentally broken bitcoin, possibly beyond reasonable repair.

Re:Crap, the sky is falling

[roman_mir]

What do you mean? That's exactly what we just observed in Cyprus, the currency just broke. You can argue that it wasn't the currency, but the banking system in Cyprus, but I can say: bitcoins in your wallet didn't break, it's only a technical issue of client incompatibility.

Sure, and the same thing happens when a bank prevents you from withdrawing your money you supposedly have there and then you find out that anywhere between 40% to 100% of it is lost for you.

Re:Crap, the sky is falling

[loufoque]

I was using an analogy. Of course nothing needs to be exchanged.

Re:Crap, the sky is falling

[Lord Bitman]

This isn't an issue of "two different currencies". What other time in history has a government issued a new currency, exchanged the "old currency" for the "new currency", and *let you keep* the "old currency" when handing you new currency?

The inability to deal with prolonged netsplits sanely is a fundamental limitation of the Bitcoin protocol.

Re:Crap, the sky is falling

[Serious Callers Only]

Total disaster, never happens in real world, not virtual one. Except for all the times when 'real world' currencies undergo devaluations, revaluations, forced exchanges, just plain old inflation, all the things that lead to currencies collapsing. I mean name me a paper currency that lasted longer than 80 years on this planet without a major restructuring, without collapsing?

I agree that the dangers of bitcoin forking have been overstated, and are something of a manufactured drama - technical problems like this are not very difficult to surmount. The real problem with Bitcoin for me is that the system is not transparent, and nothing backs the currency (unlike those fiat ones you mention above).

A currency is a token of trust (trust that others will value it the same amount), and that's a fragile thing.

Bitcoin is currently a small curiosity, it's only just becoming big enough to attract the interest of the real sharks, and I'm not convinced the creators have the resources, motivation or interest to keep the currency fair and secure once serious money becomes involved. Many of the exchanges are still pitifully insecure (run on VPSs !), the infrastructure is not well managed (witness problem above), and the creators probably never expected it to take off or really thought through the implications. Once there is serious money involved, lots of people are going to want to change the rules. If Bitcoin becomes popular it will be easy to coopt, devalue, and tax until it is just another currency, probably tied to a particular corporation or government. There's absolutely nothing you can do about that as a user of bitcoin. If the developers decided to change the direction of the currency you have your life savings in, devalue it, create a new block chain, you don't even have a vote on the matter.

Currently, if the government of your country or anyone else with the power to control the flow of bitcoins decide it should become valueless for you, or illegal, that can easily happen, if someone corners a significant supply of coins, they can manipulate the market (this is probably already happening as there are ZERO controls in place to stop it), if the public panics due to misinformation or rumour in such an illiquid market there is nothing to stop huge swings in value, and if a government decides to coopt the currency, shut down exchanges and change the rules by fiat, no-one is going to be able to trade in it and interest will evaporate. I see that as the largest problem with bitcoin by far - there are no backers putting up their own goods, no-one to trust, and no way to ensure that others continue to play by the same rules as they used to. It's certainly very appealing to utopian crypto-anarchists, but of limited interest to anyone who wants to store value or exchange it, given that it has the disadvantages of cash (anonymous, fungible) with none of the upsides (backed by a sovereign government, relatively stable, regulated to a greater or lesser extent, insurable etc), and a few downsides of its own (massively fluctuating value, built-in deflation, early-adopters privileged).

Because it is untraceable, and not guaranteed by law, it's of no interest to the majority of people who use currencies to store and transfer value and receive payment. I *want* my transactions to be traceable, so that I can prove to gov. and counter-parties that I have fulfilled my part of a bargain, made a payment, and should receive goods or services in return. If I don't want a transaction to be traceable (very rare, but conceivable), I'd use barter or some kind, but a currency outwith the control of government holds little interest for me, *precisely because* it is outwith the control of all the rules of society I value. Those who've had their valuable bits stolen from some VPS have no come-back using bitcoin, and no way to find a thief or enforce punishment - I'd demand far better than that for any currency I put trust in.

Re:Crap, the sky is falling

[murdocj]

the whole argument for going thru the pain of adopting a new currency is that it's immune to the problems of the existing currencies. If it's going to have the same sort of problems, what's the point? Does it really matter to you whether the result of your currency being devalued is due to government policy or a bug?

Re:Crap, the sky is falling

[roman_mir]

Technical details will be hashed out, as I said - this is an interesting thing to observe. This is a revolutionary type of currency, the society is learning from it and eventually it will be replaced of-course by many other currencies that will learn from this one.

Personally I don't think it's a store of value or even a unit of account, but I think it's a good medium of exchange, the more people accept it, the easier it is to transact without involving large existing institutions that have their costs to consider and are regulated by governments.

Re:Crap, the sky is falling

[roman_mir]

albeit generally one of the lower-tier ones

- I don't know what you consider to be a 'lower-tier one', when one is used on 1/6th of the total land mass of this planet, is it a 'low tier one'? I am talking about the USSR ruble in this case. I think that probably was the biggest currency collapse in terms of land area that used it.

Of-course in the former USSR there were many currency collapses, a number of times ruble was redefined and restructured all due to inflation and lack of productivity but huge government spending. That's what it takes: lack of productivity, government spending and thus inflation (the government controls the fiat currency and prints it to spend on government). But there is no productivity, so the increase in money supply only bids up prices for existing assets and products and prevents businesses from investing, because there are no savings in high inflation scenario and without savings the real interest rates are enormous. Of-course if that's also coupled with regulations and laws that prevent business from occurring then it's a double whammy. But really, think about the SIMILARITY of that to US dollar and the Euro (though in both cases there are areas where productivity is concentrated to a higher level, like in California, Switzerland, Germany, or resource rich areas, like Texas, Norway).

Nobody goes through hyper (or even just high) inflation for giggles, but note that the mainstream 'economics' is ALL about creating inflation. That's all that your 'economists' push for, that's all they promote. Well, that and higher taxes on the productive population, higher income redistribution. Really, those are not economists, from POV of economics they are shamans and politicians not economists.

All fiat currency IS a sham that is subject to whims of politicians, that's why it is FIAT. Fiat is by definition not real money and instead an abstract controlled (inflated) by the politicians, who like the power it gives them to spend without taxing and thus to keep in power.

This is different from Bitcoins in a very important way, though I DO NOT consider Bitcoins to be money. Bitcoins have 1 of 3 properties of money, but it is a useful medium of exchange that allows bypassing the official channels and fees and gives you speed and flexibility.

Also it's not commodities that cause inflation, commodity prices only respond to inflation, inflation is by definition expansion of the money supply.

Re:Crap, the sky is falling

[Anonymous Coward]

You can see it that way, but since the Bitcoin protocol and its adoption defines the properties of the Bitcoin economy, a forced upgrade of the client is in fact a big deal. Like this benign protocol modification, other policy decisions can be turned into fact by writing the code and finding a reason to force an upgrade.

Re:Crap, the sky is falling

[Anonymous Coward]

Sometimes, even in conditions of otherwise economic calm, Shit Happens: http://en.wikipedia.org/wiki/Friday_the_13th_mini-crash http://en.wikipedia.org/wiki/2010_Flash_Crash

Re:Crap, the sky is falling

[dbIII]

Funny thing is it just went up today.

Re:Crap, the sky is falling

[Anonymous Coward]

It is not a big thing. Countries do this to their paper money all the time. They issue new bills that are harder to counterfeit. Then they set a date - the old bills will not be accepted after that. No big deal because you can change all your old bills for new ones before the set date. Or just put money in some bank and let them sort it out. It seems "big" because the bills themselves gets invalidated, but it is not. It merely means you can't store money in a mattress (or private safe) indefinitely. Normal people don't do that anyway.

Bitcoin deals in software rather than pieces of paper. Both kinds gets upgraded from time to time, with the "old" kind becoming obsolete.

Re:Crap, the sky is falling

[bill_mcgonigle]

I am actually surprised the poor are not starting to band together and start killing the rich and stealing their stuff.

And that's why the rich banded together to cause the State to take money from the middle class and give it to the poor. Aka the "Progressive Era" (16th Amendment, Federal Reserve, etc.).

But, yes, that system cannot keep up with a collapsing currency. When I tell people who area concerned about the poor that the 1964 minimum wage was just under an ounce of silver per hour (~$1.25) and that today's value would be around $25 per hour, their eyes glaze over in disbelief. They cannot believe their State would do that to them, because the State cares for them like Mom does; it's not a bunch of corrupt, rich, and powerful actors only looking out for others to the extent it protects their own interests. It's especially unbelievable to Democrats who are bickering about the difference between $7 and $8 per hour. If I suggest to them that the difference in value has gone to the financial sector through steadily controlled inflation that has taken wealth out of local economies and sent it to the Wall Street/Financial Sector fatcats, they know for sure I must be one of those Occupy loonies. And forget about it if I tell them that 2/3 of their 401(k) appreciation winds up as fees to the same group - that Just Can't Be(TM).

Re:Crap, the sky is falling

[Anonymous Coward]

Cyprus basically split Euro in 2 at least, where if your money was in one of their banks, you lost anywhere between 40 and 100%, that would be a devaluation. All of a sudden if your money is in a Cyprus bank your Euro is not worth at all what other Euros are worth.

Nope. A money grab by the government is "taxation", not "inflation". This "half of your bank account belongs to us" scheme was brutal and surprising - but a one-off tax is what it was. Tough luck if you had an account there - "tax havens" collapse too from time to time.

Re:Crap, the sky is falling

[Anonymous Coward]

What other time in history has a government issued a new currency, exchanged the "old currency" for the "new currency", and *let you keep* the "old currency" when handing you new currency?

The transition from old notes and coins to new designs of notes and coins. Or, if you want a more dramatic example, the transition of numerous countries to the Euro.

Re:Crap, the sky is falling

[Anonymous Coward]

I can, I live in one of the countries in Eastern Europe. We remember economical crash of nineties and the time when paper money become almost worthless - people were losing savings of entire life. There was once a popular form of saving for houses for your children, backed by goverment, paid when kid enters adulthood. In one month you could buy for these savings nice two room flat, in next month you could buy for them maybe TV set or personal computer.

Re:Crap, the sky is falling

[Anonymous Coward]

You don't understand. It also means that there is nothing preventing that developer (or others) from comming up with an "Elite Client" that can process really large and complex blocks, but all existing clients can't. This means a select few COULD potentially be at the top of a pyramid, getting a vast majority of the wealth.

Re:Crap, the sky is falling

[JasterBobaMereel]

Real world currency - A currency that has a value backed by either :

              Physical something of real value - Gold, Silver, etc that actually exists in a vault somewhere

              A Large entity who guarantee to pay, and are trusted enough to do so (Government/Bank/etc)

      And/Or - Fiat currency that will always (and sometimes will only) be accepted for the purposes of paying taxes and so will always have value

        All real world currencies are usually legal tender - It is required that people have to accept legal tender as payment for good and services

Bitcoin - A currency backed only by the assurance that they cannot be faked/cheated but is otherwise free floating
          No-one has to accept Bitcoin, if they do they can assign any arbitrary value to it as an exchange rate depending on how much they trust it ...

Re:Crap, the sky is falling

[JasterBobaMereel]

My government will always accept the current legal tender for payment of taxes
Any one trading in my country has to by law accept the current legal tender in payment

Some people will accept other currencies in exchange for the legal tender or in payment at whatever exchange rate they deem appropriate, but it is not required

No-one *has* to accept bitcoin anywhere, and the exchange rate is therefore *only* subject to market confidence and nothing else - and could be zero tomorrow ....

Re:Crap, the sky is falling

[Anonymous Coward]

If it's troll, it's a 0/10 one. If it's not: "blocks" are basically pages in a global bitcoin ledger. This 7.1/8 fork was because 8 uses inch step for binder's punch holes, and 7.1 used 2.5 cm, so they can't file new pages from 8. The only effect of your client producing blocks too big is getting them not accepted by anyone else.

Re:Crap, the sky is falling

[Anonymous Coward]

Weimar Germany. Economy went to shit because of the currency, not vice versa. And that currency was widely held Internationally, like the dollar today.

Re:Crap, the sky is falling

[gidoca]

Total disaster, never happens in real world, not virtual one. Except for all the times when 'real world' currencies undergo devaluations, revaluations, forced exchanges, just plain old inflation, all the things that lead to currencies collapsing. I mean name me a paper currency that lasted longer than 80 years on this planet without a major restructuring, without collapsing?

The Swiss Franc? Unless you count things like exchange rate manipulation by the central bank, but that isn't really a collapse.

Re:Crap, the sky is falling

[seizer]

I don't think you know enough about Bitcoin, and I encourage you to read more about it. While it is hugely volatile, and even more hugely risky - not to say stupid - to "invest" in, I think many of your criticisms are invalid.

Bitcoin is absolutely traceable - it's far more traceable than cash. Read up about how the blockchain works (and see the Zerocoin proposal to see how it could be made untraceable, optionally, in the future). (The only non-traceable coins are those minted by miners with very paranoid security arrangements).

Cornering a "significant supply of coins" would take a significant investment of "real world" cash to actually corner these coins - not a trivial thing to get your hands on. So I don't think this is a large risk for the current Bitcoin ecosystem.

Also, you suggest that with regard to an entity trying to coopt or alter Bitcoin, "there's absolutely nothing you can do about that as a user of bitcoin". That's not true - simply running the reference software implementation makes you a node in the network, thus enforcing your (i.e. the default software's) set of rules on the transactions you do/do not relay. And additionally, the computing power deployed by today's miners would probably be impossible to exceed except by a very determined and well financed attacker. How much would a government spend to attack Bitcoin?

And if the "creators" (by which I suppose you mean the current set of core devs) try to create a new blockchain, good luck to them - the blockchain is far more resilient and the network runs as a democracy. It wouldn't work unless a vast amount of users also followed.

Your point about exchanges is key of course - they are extremely amateur operations right now. But that's easily changeable by hard work.

Digital cash ought to excite any geek - whether Bitcoin is "it", or simply an alpha version of something better yet to arrive, who knows.

Re:Crap, the sky is falling

[MrVictor]

Can you please explain the $1.25 -> $25 calculation. Do you have a source for this information?

Re:Crap, the sky is falling

[Anonymous Coward]

(here comes the usual "omg, value of dollar fell through the floor since 1900" graph, without corresponding "yeah, and median wages grew to compensate and more")

Re:Crap, the sky is falling

[Anonymous Coward]

A currency is a token of trust (trust that others will value it the same amount), and that's a fragile thing.

The reason Bitcoin is so popular is exactly because there's nobody you need to trust. It's D-E-C-E-N-T-R-A-L-I-Z-E-D. Also, Bitcoin is money, not currency. It's much closer to digital gold than it is to digital cash.

Re:Crap, the sky is falling

[Anonymous Coward]

And that's why the rich banded together to cause the State to take money from the middle class and give it to the poor. Aka the "Progressive Era" (16th Amendment, Federal Reserve, etc.).

OK, you are an "end the fed" loon. I can pretty much ignore the rest of your comment then.

Re:Crap, the sky is falling

[FireFury03]

Real world currency - A currency that has a value backed by either :

              Physical something of real value - Gold, Silver, etc that actually exists in a vault somewhere

But the value of the gold probably bears little relation to what its intrinsically worth. I.e. if gold weren't being used as a currency of sorts, it wouldn't be as valuable since its uses would be relatively minor (jewelery, electronics, etc). In this respect its very much like a fiat currency - it has an inflated value because people believe they can sell it on for a high price.

A Large entity who guarantee to pay, and are trusted enough to do so (Government/Bank/etc)

The "guarantee to pay" is a little bit meaningless here - I can't go to the government and tell them to exchange my bit of paper for something with intrinsic value. What makes a currency have value to me is that I believe that people offering goods and services that I want will be happy for me to pay for those goods/services in that currency. That has little to do with the government.

All real world currencies are usually legal tender

Untrue. For example, in Scotland there is no such thing as legal tender, but the pound sterling still works by virtue of the fact that it is usually worth someone's while to accept it.

It is required that people have to accept legal tender as payment for good and services

Also untrue. Legal tender just means a creditor has to accept it as payment of a debt by the debtor. If you haven't incurred a debt already then the person you're paying can tell you to go take a hike rather than accepting your money. For example, at the point you reach the checkout in a shop, you haven't bought the items so there is no debt - the shop is well within their rights to refuse a legal tender currency. Of course, most people have no problem accepting one of the mainstream currencies so won't refuse, but this may not always be the case with very unstable currencies.

No-one has to accept Bitcoin, if they do they can assign any arbitrary value to it as an exchange rate depending on how much they trust it ...

So, the same as any currency then.

Re:Crap, the sky is falling

[Anonymous Coward]

the 1964 minimum wage was just under an ounce of silver per hour (~$1.25) and that today's value would be around $25 per hour

Sure, if you just ignore the fact that US currency hasn't been backed by precious metals since ~1970.

I checked two separate inflation calculators, and they both agree that $1.25 in 1964 would be somewhere around $9.13 - $9.26 in 2012 dollars, depending on which data sources you use. That's still higher than current minimum wage, but not by all that much.

Re:Crap, the sky is falling

[nine-times]

Yes, but since most currencies are not generated by an encryption scheme, they're arguably not quite as subject to software bugs and upgrade incompatibilities. Not in the same way.

Re:Crap, the sky is falling

[Anonymous Coward]

He got the numbers a bit wrong.

He meant to say that in 1964 the minimum wage was no cellphones and today it's plenty of cellphones, but if he'd given that information it would have maybe caused readers to go "Wait, wait a minute, I'm not sure that's a sensible metric for comparison" whereas by arbitrarily tying payment to the value of a particular commodity metal the reader may be fooled into thinking there's a real insight here.

Re:Crap, the sky is falling

[roman_mir]

Swiss Franc became currency in September 2011, I remember it very well, I follow such things. Up until then it was basically a bank note that you could exchange for a weight of gold or silver.

Re:Crap, the sky is falling

[thoth]

Just update their software.

Yes, "that's all" clients need to do. But since the BitCoin enthusiasts are generally anti-government anti-central-control Libertarian types, how do you force anyone in particular to upgrade? Won't they see that as some sort of central control coercing them against their will?

To me, this is the most fascinating about BitCoin so far and I'm interested to see how it is handled. In a network with no central control made of anti authority anti coercion attitudes, how to you force a client software upgrade? Maybe some dedicated hardware miners can't upgrade?. Especially if a significant block of miners remains on pre-bugfix clients? Maybe they just won't give a shit and ignore post-bugfix signature blocks.

Re:Crap, the sky is falling

[squiggleslash]

You can remember your currency collapsing during your lifetime?

Oh, USA also had that, it was called the Continental. Today it's called the Federal.

Wait, how old are you?!

Re:Crap, the sky is falling

[Anonymous Coward]

When you have real double digit inflation and cost of living increases you have a collapsing dollar. And yes, it's real double digit, the Fed is downplaying it to avoid a panic.

Yes, that conspiracy theory makes perfect sense. After all, people don't base their view of extreme inflation on whether they suddenly don't have enough money to buy the things they need despite suffering no loss in income. No, it's based upon the Fed figures. Every week, millions crowd around the radio to listen to ol' Franklin Roosevelt tell them the latest from the Fed, but the Fed is sneakily underplaying the number.

When you cant buy a week's of groceries (real food not ramen) for two people and stay under $80.00

Where, in Britain?

When I came to America, I was shocked that I rarely managed to leave the supermarket paying less than $50-60 per week for roughly the same groceries. That was, however, in 1998.

Of course, you can relatively easily feed two people less if you buy less prepackaged crap on under $30, but that wouldn't fit your hyperbole.

Re:Crap, the sky is falling

[Sulphur]

What technical problem is there?
It's just that the new Bitcoin and the old Bitcoin are becoming two different currencies. People need to convert all their old Bitcoins to new ones to avoid this.

Like old francs vs. new framcs.

Version 8 was quantitative easing.

Re:Crap, the sky is falling

[Anonymous Coward]

Sorry, you're completely missing the point. The Bitcoin software isn't just some client that's used to access a separate Bitcoin monetary system. The Bitcoin client *is* the monetary system. The rules of the game, if you will, are literally set by that software, so any change that would split the blockchain if users didn't all switch to a different Bitcoin client does in actual fact change the rules. This current modification is benign, but the concept of what is happening is not.

Re:Crap, the sky is falling

[thoth]

Sure, countries replace currency all the time. But in all those cases there is a central control "the government" which makes it happen "legal force/coercion".

BitCoin doesn't have either. In fact, it is expressly designed to avoid that. There is no central control and the whole experiment appeals to an anti-central-authority no-coercion crowd. Given that, how BitCoin coerces - isn't forcing a software upgrade a type of coercion? - the network of miners into upgrading is kind of an open question.

Fundamentally, how do you push out needed software fixes/upgrades in a decentralized anti-authority crowd. I'd laugh my ass off if this does cause a currency fork or if the BitCoin devs mandate the upgrade. The latter shows that sometimes having a central authority is needed.

Re:Crap, the sky is falling

[Kjella]

All real world currencies are usually legal tender - It is required that people have to accept legal tender as payment for good and services

Generally no, only as payment for debts, products consumed or services already provided like eating at a restaurant and paying afterwards. Stores can refuse you for having too large money like $100 bills, too small money like tons of one cent coins or pretty much any reason they want. Having legal tender doesn't force anyone to do business with you.

Re:Crap, the sky is falling

[jythie]

Which touches on a long term problem. As bitcoin support/bridges slowly work their way into other systems, upgrading clients becomes a bigger and bigger problem. For technically inclined individuals this is not a problem, but clients integrated into larger stacks like ecommerce systems or even banking/payroll systems.. well... those tend to change much more slowly and requiring an update in order to be able to use the currency is not a small deal.

Which is one of the weaknesses of bitcoin, the currency and the implementation are intertwined.

Re:Crap, the sky is falling

[Anonymous Coward]

When you cant buy a week's of groceries (real food not ramen) for two people and stay under $80.00 you have a economic crash happening.

Maybe that is more a problem of the city you live in, but where I am, we spend about $40-50 a week on groceries in the Midwest for two of us, and only more if we go out to eat... unless you don't count chicken, vegetables, and fruit as real food either.

Re:Crap, the sky is falling

[Anonymous Coward]

Weimar Germany. Economy went to shit because of the currency, not vice versa. And that currency was widely held Internationally, like the dollar today.

But is replacing the theoretical risk of dollar crash with the certainty of Bitcoin crash (two extreme crashes in value so far this year) really an improvement?

Re:Crap, the sky is falling

[roman_mir]

I don't know, after all inflation and restructuring.... pretty old

Re:Crap, the sky is falling

[pne]

Fiat is by definition not real money and instead an abstract controlled (inflated) by the politicians

Can any money be "real"? Isn't money by definition an abstraction that we use because we don't want to keep swapping deer hides for horseshoes?

Re:Crap, the sky is falling

[roman_mir]

No, gold is real money. Fiat means 'by law' or 'by decree', real means that the people use it without anybody forcing them, they just see it as money and gold fits that very well.

Also as to 'price' of gold or value, today it costs mining companies about 1100-1200 USD to mine an ounce, so that's inflation. All these people saying: there is no inflation, are they insisting that inflation only limits itself to the gold mining sector?

How about the stock market at 15000, you think that's based on actual economic activity? :) No, it's inflation, that's where inflation is going right now, the stock market, the bond market and the housing market again.

Re:Crap, the sky is falling

[bws111]

Legal tender just means a creditor has to accept it as payment of a debt by the debtor.

Untrue. Legal tender means it is legal to OFFER payment in cash. However, nobody is required to ACCEPT your cash payment.

Re:Crap, the sky is falling

[Anonymous Coward]

On the other hand, the minimum wage expressed in silver is about the same as the early 1980s, so it can't be that bad...

And it could have nothing to do with the fact that in that time production has only doubled while industrial demand has grown much more, on top of which investment demand has grown too...

And funny how you didn't use gold, where in the 60s minimum wage would have gotten you about an eight of a gram... and it would get you about that much now too.

Re:Crap, the sky is falling

[bws111]

"Legal tender" does NOT mean that 'people have to accept (it)'. Legal tender means it is legal to offer cash for payment, but nobody is required to ACCEPT your payment in cash.

Re:Crap, the sky is falling

[roman_mir]

Measured in US dollars gold today takes about $1100 to $1200 to mine to get an ounce, so it's not as far away from it's current spot price as you may think. In fact there are many 'economists' who say that gold is in a bubble completely neglecting the cost of its production (which went up considerably in the last 10 years due to 'noneixsting' inflation, non-existing if you take gov't word for it). They are even saying that gold mining companies will go out of business in this 'gold bubble' because price of gold in US dollars will go down.

So wait, price of gold in US dollars will go down, which will crash the miners but the metal is in a bubble? Realise the absurdity of that. If gold costs that much to produce that companies are shutting down production, then prices should be going up, not down :) supply demand in action, because of the price of gold as measured in US dollars is not going higher as it should due to the cost of production (JPMorgan is using every trick in the book to attempt and manipulate the nominal price) the companies that mine it stop mining it. This means the supply is shrinking, and indeed, in the physical market the premiums are HUGE, never seen before, that's because there is NO physical gold at the 1400 or 1500, nobody can deliver it to you (this includes silver). There is 100 times as much 'paper gold' as there is physical, so all it takes is 1 large delivery request........ There are many many things here I could write for days probably, the Cyprus situation, GS 'premonitions' and existing short positions while sending 'sell' signals. Basically the real money that cannot be printed is a serious threat to the fake monetary system of the world.

I suggest simply paying attention to what China is doing to realise what is real and what is not.

Re:Crap, the sky is falling

[ArcadeMan]

...name me a paper currency that lasted longer than 80 years on this planet without a major restructuring, without collapsing?

Does Canadian Tire money count?

Re:Crap, the sky is falling

[FireFury03]

Untrue. Legal tender means it is legal to OFFER payment in cash. However, nobody is required to ACCEPT your cash payment.

"Legal tender has a very narrow and technical meaning in the settlement of debts. It means that a debtor cannot successfully be sued for non-payment if he pays into court in legal tender."
http://www.royalmint.com/aboutus/policies-and-guidelines/legal-tender-guidelines

So ok, no one is required to accept the payment, but they are essentially required to write off the debt if you offer payment in cash, whether or not they actually accept it.

Re:Crap, the sky is falling

[Anonymous Coward]

No, gold is real money. Fiat means 'by law' or 'by decree', real means that the people use it without anybody forcing them, they just see it as money and gold fits that very well.

I can buy groceries with dollars, even though they are not forced to take them (it's not a debt). But I can't pay for them in gold. In fact, there's almost nothing I can buy with gold, unless I convert them to currency. So which one is real again?

Re:Crap, the sky is falling

[roman_mir]

Does Canadian Tire money count?

- sure, why not? :) BUT that money started only around 1960s or so.

Re:Crap, the sky is falling

[bws111]

It is whatever the goverment says it is. In the UK is apparently 'required' that you accept it. It the US, it is not.

"This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy."

Re:Crap, the sky is falling

[julesh]

Fortunately, it's only mining software that needs to be updated. Anyone just handling ordinary transactions doesn't really need to worry.

Re:Crap, the sky is falling

[gl4ss]

Which touches on a long term problem. As bitcoin support/bridges slowly work their way into other systems, upgrading clients becomes a bigger and bigger problem. For technically inclined individuals this is not a problem, but clients integrated into larger stacks like ecommerce systems or even banking/payroll systems.. well... those tend to change much more slowly and requiring an update in order to be able to use the currency is not a small deal.

Which is one of the weaknesses of bitcoin, the currency and the implementation are intertwined.

if/when it inches it way it will be done by few central players who sell it as service, so that 99% of businesses wouldn't be running their own bitcoin. that's pretty much how businesses which accept bitcoin already work.

Re:Crap, the sky is falling

[bill_mcgonigle]

Can you please explain the $1.25 -> $25 calculation. Do you have a source for this information?

It's just arithmetic, but perhaps I can explain how to do the calculation. In 1964 a quarter was 90% silver. It weighed 6.25 grams, so 5.625 grams of pure silver. data source.

Five quarters ($1.25) was therefore 28.125 grams of silver. A troy ounce is 31.1 grams, so minimum wage was almost exactly 0.9oz of silver.

The 52-week range of silver has been between $21.12 and $35.30 - currencies are fluctuating wildly with the current financial crisis, but even within that chaos, an equivalent wage would be between $19.00 and $31.78 for the past year. $25.39 is the middle of that range. We also know that the market price is manipulated (like LIBOR and other benchmark rates) since paper funds can't fill their physical orders, so one can consider that price to be depressed to some degree (how much is unknown because it's not a real market).

So, how many of the current financial problems (cost of education, cost of health care, cost of gas, cost of food, etc.) would really be problems if the wages had held steady? The obvious explanation is that those prices are all rising together with monetary inflation and it's just wages that are falling relative to it, causing the economic suffering.

If you follow the 20th Century wage chart, from the beginning to 1971, when the US went off the real-money system, wages rose (in terms of real money) right in step with productivity improvements. Since 1971, productivity has continued to increase steadily, but wages have been flat (the difference goes to the financial sector, on net). If the slope of that chart is extended out to present day, it intersects at about $29/hr, fairly consistent with the real-money methodology. $29 has been the price of 0.9oz of silver in the past year, so with the caveat that prices bounce around from day to day and week to week, on an smoothed basis it's right in the zone of where we should be, or a bit lower.

People aren't taught in school that the Federal Reserve is a private corporation owned by its member banks, with its board and president composed of representatives of the biggest multinational banks. Even though its charge is to protect the value of the US Dollar, the USD has lost 98% of its value over the past century (this year marked 100 years of Federal Reserve control of the currency). However, if anybody suggests that the Fed's policies, which have fabulously enriched the financial sector, led to this currency failure for any reason other than pure chance or bad luck, then they are labelled a 'conspiracy nut'. To avoid being called names, pure faith in their virtue is required and any skepticism must be jettisoned.

Which brings us back to bitcoin...

Re:Crap, the sky is falling

[Anonymous Coward]

Well, except that bitcoin hasn't survived even more than a few years without falling over?

Sorry - an anonymous system, built by an anonymous hacker, operated at the discretion of a handful of servers, run by people with no accountability, let alone visibility... bitcoin is a scam and anyone who puts money into it deserves to lose their money.

Re:Crap, the sky is falling

[julesh]

This isn't an issue of "two different currencies". What other time in history has a government issued a new currency, exchanged the "old currency" for the "new currency", and *let you keep* the "old currency" when handing you new currency?

The inability to deal with prolonged netsplits sanely is a fundamental limitation of the Bitcoin protocol.

Erm. That is not even approximately what's happening here. There is no old or new currency, no exchanging happening, and no inability to deal with "netsplits" as you put it -- there is a built-in algorithm that is used to resolve cases of chain forks. It is unfortunate that some of the older mining software out there won't recognised the existence of the fork and will therefore happily carry on working on the broken incorrect chain, which may therefore cause some buggy older clients to report transaction success or failure inaccurately, but the chance of this actually affecting anyone's actual money is actually tiny. Other than the miners who haven't updated, who will lose their mining fees. But as they're the equivalent of bankers in this system, nobody actually cares about them...

Re:Crap, the sky is falling

[Anonymous Coward]

Assuming your numbers are correct, why do you think people should be compensated at a rate proportional to the value of silver? Is silver a substance that people use very frequently? Are we fighting werewolves and I didn't know about it? Why wouldn't it make sense to compare the amount of food/water/transportation available, instead of some random substance whose value is mostly determined because of its scarcity, rather than intrinsically like guns, gasoline, food, or clean water?

Re:Crap, the sky is falling

[Anonymous Coward]

(not the op)

you can get historical silver prices here : http://www.kitco.com/charts/historicalsilver.html

It's also not quite so alarming if you consider the rapid rise in precious metals since the end of 2003.

Re:Crap, the sky is falling

[julesh]

When I tell people who area concerned about the poor that the 1964 minimum wage was just under an ounce of silver per hour (~$1.25) and that today's value would be around $25 per hour, their eyes glaze over in disbelief.

Or maybe it's just that they've realised that what's happened is actually that the real-terms value of silver has increased substantially over the last 50 years and that you're therefore talking bullshit.

Re:Crap, the sky is falling

[bill_mcgonigle]

median wages grew to compensate and more

Median wages did grow from 1913 to 1971 - at a rate relative to the increase of productivity, and relative to a stable currency, that was fantastic. Many people were lifted out of poverty and the middle class soared.

Since 1971, on an inflation adjusted basis, median wages have been nearly flat, despite a continuance of the productivity increases.

I'm not sure if you're mistaken, or you feel that wages *should* be flat in light of increasing productivity. The usual view is that improved productivity should lead to higher wages and/or more leisure. If you feel that people should be working harder or for less money when productivity improves, I'd like to hear the basis for that view, especially if it's not just warmed-over Calvinism.

Re:Crap, the sky is falling

[Anonymous Coward]

You should read more carefully again.

They may refuse it, in which case they can drag you to court, which will order you to pay what you owe them plus probable damages and other extras. In legal tender. Now this they can't refuse (unless they want to write if off).

Most of those places with "policy" will usually just work it out with you quietly and take what you have, because the alternative is dragging it through the court to get it in "what you have" anyways.

Re:Crap, the sky is falling

[julesh]

When you compare Bitcoin fluctuations with 'real world' currency fluctuations as somewhat the same - which major currencies has recently lost 2/3rds of value overnight like Bitcoin did? If you had significant money in Bitcoin the sky was falling. Its value behaves exactly like very speculative stocks.

A couple of months back I posted that the value of BTC looked reasonably stable to me in the vicinity of $100. It's still in that vicinity. There may have been a bubble in the interim that has now burst, but anyone with sense should have seen that coming and avoided purchasing while it was overvalued.

Re:Crap, the sky is falling

[Anonymous Coward]

Exactly! This is Apple OSX all over again. They used to claim that they were "immune" to viruses, when the truth was they were too small to bother with. Once they got big enough to be interesting, the virus writers rained all over their parade. Same thing with bitcoin. Its too small to make any claims comparing it against a real currency (one that has billions or trillions of dollars in circulation, used by 100's or millions or billions of people).

And the thing is, even as small as it is and how young it is, it is clearly more unstable that typical currencies. And please, spare me the "but I know of one currency that blah blah blah" - one example does not define a trend. The trend is that real currencies are much more stable than bitcoin. Its rate of flux and other problems that have cropped up (servers being overwhelmed, servers discontinuing service, etc) is several orders of magnitude worse. Given the number of issues over such a short period of time for a very limited "currency" - its a hoax.

Put your money there if you wish - I could use the good laugh when it evaporates...

Re:Crap, the sky is falling

[bill_mcgonigle]

that the real-terms value of silver

How do you define "real"? In terms of a paper currency? Certainly not in terms of any other commodity that's on the market, right?

There's no great reason for silver to be more valuable this year than it was 1964. I'm interested to hear reasons if you think it should be.

Re:Crap, the sky is falling

[satuon]

Well, the government's budget is way higher it was in 1971, so maybe that's where all the difference that should have been went.

Re:Crap, the sky is falling

[bill_mcgonigle]

I checked two [bls.gov] separate [westegg.com] inflation calculators

Yes, they both use CPI, the government-generated inflation calculation that shows no problems with the government's behavior.

Whihc is fine unless you find interesting that the CPI methodology keeps changing to reflect a lower standard of living (e.g. substituting hamburger for steak in the basket of prices), ignoring the price of energy, etc., while the claim of low inflation is trumpeted in the newspapers. Check out what CPI looks like if only the BLS methodology in place from the late 70's to the early 90's is continued as it was previously calculated.

It's not news that people can lie with statistics. It's incumbent upon people who use statistical indicators to verify the validity of those indicators before using them as proof of anything.

Re:Crap, the sky is falling

[bill_mcgonigle]

OK, you are an "end the fed" loon. I can pretty much ignore the rest of your comment then.

Haha, that's awesome. Thank you for proving my point that "pure faith required, abandon all skepticsm" folks are out there.

Re:Crap, the sky is falling

[Anonymous Coward]

If by "reasonably stable" you mean "daily fluctuations about 30%", right.

Just imagine living in the world, where if you pay your rent in the morning, it's $1300, but if you wait until noon, it's $1000. And in the evening it's $1200, and next morning it's $900, ...

Re:Crap, the sky is falling

[berashith]

This is the realization of Bill Hick's people who hate people political party.

Re:Crap, the sky is falling

[bill_mcgonigle]

On the other hand, the minimum wage expressed in silver is about the same as the early 1980s, so it can't be that bad...

I assume you mean the very short term spike in silver prices when the market was cornered? Use a 52-week average and re-run the number.

And it could have nothing to do with the fact that in that time production has only doubled while industrial demand has grown much more, on top of which investment demand has grown too...

Shall we figure in every 10c to $1 coin in circulation being made of it? That's a massive amount of silver.

And funny how you didn't use gold, where in the 60s minimum wage would have gotten you about an eight of a gram... and it would get you about that much now too.

What? No way, man. The price of gold was fixed at $35/oz until 1968. Minimum wage would have netted 1/28th of an ounce of gold, or 1.11 grams. The 52-week range today is $1322-$1803. That works out to $47-$64 today.

Minimum wage today, would, as you point out, buy about 1/8th of a gram of gold. Don't mix up grams and ounces - you need to divide by 31.1 to get grams. Do 1.11g/.15g (actual USD price today at $7.25/hr), and you get a ratio of 7.4x more earning power in 1964 than today - not the same.

Re:Crap, the sky is falling

[Anonymous Coward]

Pray tell, why does anyone need a private corporation in charge of a national currency? WTF?! The "Federal" in Federal Reserve is on par with snail-mail scam that's often made to look like it was official government communications. The Fed is not under government control.

Re:Crap, the sky is falling

[bill_mcgonigle]

Assuming your numbers are correct, why do you think people should be compensated at a rate proportional to the value of silver?

Silver has been the 'people's money' for thousands of years across various societies because it has most of the properties of good money. Gold is slightly better, because it does not tarnish, but it's so rare that it's hard to have sufficient liquidity for gold.

But silver is just a benchmark - we could use something else. Perhaps bitcoin even. The US used gold and silver from 1781 to 1971 and "good faith" from 1971 to 2013 (be careful to avoid chronological ethnocentrism).

Regardless, what people should not have to endure is falling purchasing power from their wages as the productivity of the marketplace improves, which is what we have by using the fiat version of the USD.

Re:Crap, the sky is falling

[Skreems]

When you cant buy a week's of groceries (real food not ramen) for two people and stay under $80.00 you have a economic crash happening.

This is asinine. What makes $80 the limit? Why not 90? Why not 75? And what year and location are we talking about? Because in 1910 that seems excessive, while on the west coast that mark was passed over a decade ago.

Re:Crap, the sky is falling

[Anonymous Coward]

there's a rather major flaw in your logic.

The US has been on fiat currency for how long? So the real worth of the silver in the coin would actually be worth less than the coin itself is valued. See the whole penny thing where when the copper in a penny became worth more than a cent, they changed to copper clad zinc. Now the value of the zinc in a penny is becoming worth more than a penny, so they want to just eliminate the penny.

Rather than saying that an ounce of silver was worth $1.25 because of quarters, why not look up what the cost of an ounce of silver was?

Re:Crap, the sky is falling

[hedwards]

Actually silver is used far more often than you might think. Nearly 100% of all the silver mined in any given year is actually used. Some of it is used for jewelry and coinage, but a huge amount of it is used in industrial applications.

Not that I'm suggesting that we back the currency with it, that's a good reason not to back the currency with it as nearly all of it is already being used.

Re:Crap, the sky is falling

[bill_mcgonigle]

Uncle Ben, I keep trying to explain this to you - just because technology is improving, does not mean that the purchasing power of wages for commodities (heat, food, clothing) should be falling. People will only accept bread & circuses policies for so long.

Re:Crap, the sky is falling

[pla]

Fortunately, it's only mining software that needs to be updated. Anyone just handling ordinary transactions doesn't really need to worry.

Just so you know - You have that exactly backward.

Re:Crap, the sky is falling

[Anonymous Coward]

Total disaster, never happens in real world, not virtual one. Except for all the times when 'real world' currencies undergo devaluations, revaluations, forced exchanges, just plain old inflation, all the things that lead to currencies collapsing.

You can remember your currency collapsing during your lifetime?

Ask the Greek or Irish or Cypriot or any one of the other euro using countries.

Re:Crap, the sky is falling

[FireFury03]

And what would happen if all the gold being hoarded in vaults were dropped onto the market to be used for *useful* stuff?

Anyway, supply and demand doesn't mean that the price will stay above the production cost - it could easilly be that there is too much being produced at this time - yes, producers of any product have problems if the buyers value the product less than the cost to produce it.

Re:Crap, the sky is falling

[FictionPimp]

What makes gold valuable to a common man? Is gold food? Is gold shelter? Sure gold has modern applications in electronics and other areas, but gold is just like paper money in most cases. It is simply something we think is valuable so it is valuable.

If the world governments collapsed tomorrow, gold is not money. Bullets, oil, food, matches, etc. These are money. Gold is like bottle caps. It's currency because we needed something limited and abstract to trade when carting a hundred pounds of grain was no longer feasible.

Re:Crap, the sky is falling

[Raenex]

By the way, that's a big reason as to why I only sees gold as real money, something that cannot be 'revalued' by gov't in a heartbeat.

Anything can be used as "real" money, as it's all entirely a fiction of society in the first place. Some objects make better currency than others.

Gold has its own problems. A big one is that nobody ever really trades gold, they always trade paper notes that represent the gold, and you're back to paper currency (or the electronic version of it) again. Another problem with gold is that there really isn't enough of it around to be used as an everyday currency.

You also mentioned Cyprus, and that kind of bank taxation could have just as easily have happened with gold, unless you kept it safe yourself, which you could have done with paper currency too.

But go ahead, keep on acting like a gold bug and talk about "real" money.

Re:Crap, the sky is falling

[bill_mcgonigle]

You're right, that's part of it that I left out. When the government spends in deficit, the Fed "prints" more USD and buys bonds with it.

If the total number of units of the USD (let's call it D) is worth some valuation (call it V), then each unit of USD (i.e. $1, call it P for purchasing power) is worth the ratio. So, P = V/D. As D increases at a rate greater than V, the value of P decreases.

If a commodity, say coffee beans, has a value of B, and the price of coffee is C, then C = B/P. As P decreases, then C increases.

The coffee bean farmers in Guatemala certainly aren't going to give us a discount because our printing presses are running at full speed.

Now, this is partially untrue, since the Breton Woods agreement set the USD as the world reserve currency, since it was a paper analogue for gold. The US has enjoyed being able to "print world gold" for 40 years now, but over the past several years many of the world powers have moved to exchange their currencies directly, rather than through a USD intermediate. As this trend continues the artificial value of the USD (40-60% by some estimates) will continue to fall, making things seem more expensive to US purchasers.

There are measures put in place to halt this, though. Saddam Hussein was moving to price his oil Euros and Gaddafi was organizing a gold dinar for African oil sales. Oh, but WMD's.

Re:Crap, the sky is falling

[Anonymous Coward]

Well, now you only have to provide a proof of this drop in purchasing power of wages.

Re:Crap, the sky is falling

[LordLimecat]

Bitcoin just brings a taste of that experience to the first world!

Re:Crap, the sky is falling

[LordLimecat]

the old bills will not be accepted after that

That is not accurate to the best of my knowledge. If you bring a 1945 bill in, im pretty sure it would be accepted, and decirculated. They stop issuing the money, and it gets pulled from circulation, but your buffalo nickle is still valid currency.

Anyways, even if I am wrong on this, it happens on the scale of decades. Bitcoin is undergoing every single problem a currency can have, in the span of 5 years. Bubbles? Check. Bursts? Check. Splits, devaluation, runs, and old currency rendered invalid? Check.

Im sure its a wonderful investment tool, I cant imagine a world commerce based on it. Would rather keep my money in a sock under my bed.

Re:Crap, the sky is falling

[thoth]

The only effect of your client producing blocks too big is getting them not accepted by anyone else.

So what's the incentive for everyone else to upgrade their client software and help you (0.8 clients) out?

Several other posters keep mentioning other currencies have done this (reissue new currency) but entirely miss the point that it was a central authority that forced the issue. Given BitCoin has no central authority and can't require this kind of upgrade (oh the irony that BitCoin needs a central authority to coerce its network to upgrade) how is this going to work?

It seems to me people that want to use the 0.8 client will need to stage a compute power takeover. If I'm running a bunch of nodes on an earlier client, why do I give a crap that the coins you produce aren't recognized by my nodes? Given an ultra selfish libertarian/randian anti coercion attitude, how will you reconcile the cooperation needed so 0.8 clients are accepted? If I'm invested in a lot of hardware or miners on an earlier client, I can't see how I give a flying crap about helping the new client out. Right?

Re:Crap, the sky is falling

[julesh]

If by "reasonably stable" you mean "daily fluctuations about 30%", right.

No, by "reasonably stable" I mean "there are indications of the kind of market support that would mean I could be reasonably confident of buying at this value and being able to sell at a similar or higher value at later time periods in the order of several months (although I may have to wait for appropriate market timing to do so)."

This is different from "stable" by which I would mean "there are strong indications that the market would support the value at or above the current level in the long term, i.e. over a period of years, and I would be unlikely to have to wait for market timing in order to avoid significant losses".

Note that I would not currently consider many currencies to be stable. USD is perhaps the only candidate.

Re:Crap, the sky is falling

[LordLimecat]

Double digit inflation can be measured by the cost of goods. Virginia state college tuition has gone up a few percent in the last 6 years. Chipotle burritos have gone up perhaps 20% over 10 years (~3% / year-- burritos used to be $5.50, now theyre $6.50). Milk has gone from ~ $3/gal to $4/gal-- $33% in about 10 years, 3.3% / year.

Can you find me anything that has increased in price at more than a few percent a year over the last decade?

If no, pipe down about "the fed downplaying it" as if we're all idiots who dont spend money in the real world.

Re:Crap, the sky is falling

[julesh]

Some people believe the values of precious metals are being manipulated by either governments (who typically have large holdings of them) or mining cartels (who have obvious means to benefit). Others suggest increased industrial use coupled with a higher median income in the developed world versus cost of day-to-day living have driven demands higher and that production has lagged behind this. Whatever the reason, there is little doubt that the cost of both silver and gold has increased faster than that of most other goods.

Re:Crap, the sky is falling

[Anonymous Coward]

When you cant buy a week's of groceries (real food not ramen) for two people and stay under $80.00

That's still feasible. Eggs, bulk rice, whole chicken, pasta, frozen veggies, dried beans...there's plenty of food available that makes ramen seem expensive. Find other people on a similar budget. Carpool. Buy in bulk. Join a co-op. Once you get enough people involved, you can source even closer to the farm.

Oh, were you only talking about microwaveable 5-minutes-or-less food? Yeah, that stuff is expensive.

Re:Crap, the sky is falling

[Anonymous Coward]

Total disaster, never happens in real world, not virtual one. Except for all the times when 'real world' currencies undergo devaluations, revaluations, forced exchanges, just plain old inflation, all the things that lead to currencies collapsing. I mean name me a paper currency that lasted longer than 80 years on this planet without a major restructuring, without collapsing?

No. You name enough good reasons why we should all switch to what is, by your own statements, a currency whose ecosystem is just as flawed as what we have now.

That's what I'm getting sick of. The Bitcoin loyalists constantly bleated on about how Flooz: The Next Generation would save teh worldz and fix all problems with currency and make unicorns real and make everyone happy, for very very specific and abstract definitions of "all problems". Then very obvious and very real flaws get brought to light by both people and reality, and the only response from the Bitcoin groupies isn't to admit there might be something that needs fixing, it's to quickly and desperately handwave and abstract the problems to real-world currency problems as if that's supposed to make us feel better about wasting our time implementing this magical fake currency with all the real, concrete, affects-the-average-joe problems real currency has while only (theoretically) fixing wildly-abstract, must-be-a-macroeconomics-professor-to-understand, not-even-proven-to-be-real problems the supporters of the new currency claim are suuuuuuper important.

So that's my beef with this. Stop handwaving real-world problems and complaints away as if there's some intrinsic Goodness(tm) to Bitcoin that needs to be disproven, treat Bitcoin as something that must be proven before we'll follow you down this rabbit hole. And seriously, "Fuck you, real currency has the same problems Bitcoin has, so Bitcoin is still better" really ain't gonna get new people backing your cause or taking the time and effort to support your currency.

Re:Crap, the sky is falling

[thoth]

This is a technical problem, I am pretty certain it will be addressed

Oh it's way more than a technical issue, I think this issues stretches all the way to the core philosophy of BitCoin. To sum up: how to you "force" a software upgrade into a system with no central authority, and indeed is designed and aimed towards anti-authority types? Wouldn't a forced upgrade by exactly the kind of *coercion* these people are always going on about?

What's the incentive for folks to upgrade? In the pure selfishness randian libertarian anti-authority mindset, why would I exert any effort to *help* the new clients out? Their blocks aren't recognized - BFD to me, I don't care at all. *My* blocks are and that's all I care about. Right?

I see how BitCoin handles this as crucial, and they are fucked either way they go. Force an upgrade - this means arbitrary changes can be coerced in, death knell to the currency (today's upgrade might be client bug fixes, tomorrows forced upgrade might introduce government control, cryptographic weakening, anonymity breaking). Don't force an upgrade - future bugs, errors in implementation, etc undermine confidence and threaten to bring down the currency. People that want the 0.8 client to reign will need to stage a compute network takeover.

Should be fun to watch this play out.

Re:Crap, the sky is falling

[mrscorpio]

According to a Google search, which brought up wiki.answers, it was $1.29 for an ounce of silver in 1964. Not sure what the 52 week high/low was. Which makes sense, because 1964 was before we went on fiat currency (1971), so currency and spot metal prices should be very similar before then.

Re:Crap, the sky is falling

[magic maverick]

The point you, and the GP anon, are missing, that this is not a protocol upgrade, but merely a software upgrade. The older versions of the software didn't quite follow the protocol correctly, the software upgrade is correcting this. No one is forcing anyone to upgrade, but, if you don't you may face problems.

Specifically, because the network determines the chain, if 51% of the network are producing blocks that, while match the protocol, cannot be accepted by older client versions, and if you are using an older client, then you'll problems as larger blocks are produced.

The BitCoin devs can't force an upgrade, if the majority of the network stayed with the outdated clients (the buggy ones that can't accept larger blocks), then either larger blocks produced by the minority will be rejected, or else cause the buggy clients to crash. So, a chain fork is possible, but most miners will be perfectly happy to upgrade (and already have).

Re:Crap, the sky is falling

[FhnuZoag]

You can look at the buying power of the USD in terms of commodities, yes, and to make it fair, you look at commodities that people actually normally spend money on, like groceries and rent, rather than stuff that is the preserve of speculators like gold and silver. That's how inflation is calculated.

Silver is more valuable, because if you sell your silver and buy stuff with it, you can buy a lot more stuff these days. $1.25 in 1964 would have the buying power of approximately $8.78 in 2010 dollars, according to CPI inflation measures.

Why pick silver? Why not pick gold? Houses? Cellphones? Water? Oh right because you had better use the specific good that backs up your ideology, I guess.

Re:Crap, the sky is falling

[FhnuZoag]

Too bad you don't understand what the word 'most' means.

Re:Crap, the sky is falling

[Wonko the Sane]

The problem was old clients did not allocate enough Berkeley DB locks in order to process every valid combination of transactions. Newer clients correct this problem, and users are recommended to upgrade.

If they can't upgrade, then all they need to do is add a configuration file to the directory containing the database with the right MAX_LOCKS setting.

There are no force upgrades here, no forking of the currency - just correcting a misconfiguration that we didn't notice until recently.

Re:Crap, the sky is falling

[Raenex]

But silver is just a benchmark - we could use something else. Perhaps bitcoin even.

Why would you use any of those things instead of looking at basic necessities? Why don't you compare the price of a loaf of bread or a gallon of milk, for example? I don't give two shits about gold or silver.

Re:Crap, the sky is falling

[damm0]

This is the part I don't understand- why does the block chain size need to enlarge? The system could just go on with block chains no larger than 1MB, could it not?

Re:Crap, the sky is falling

[ankhank]

Gasoline.

Re:Crap, the sky is falling

[justthinkit]

Costco, 36-can box of soda, went from $9 a box to $10.50. Overnight. A month ago.

Re:Crap, the sky is falling

[LordLimecat]

Right, and Chipotle increased its burrito prices from $5.50 to $6.25, overnight. 6 years ago. You have to look at that increase a year, 2 years, 3 years from now. If it doesnt change over the next 2 years, that would be a ~5% increase. 3 years? ~3%.

Re:Crap, the sky is falling

[Richy_T]

Nice plan. Except your government will continue to print money, devaluing your sock.

Re:Crap, the sky is falling

[Richy_T]

Up against what?

Re:Crap, the sky is falling

[j-beda]

there's a rather major flaw in your logic.

The US has been on fiat currency for how long? So the real worth of the silver in the coin would actually be worth less than the coin itself is valued. See the whole penny thing where when the copper in a penny became worth more than a cent, they changed to copper clad zinc. Now the value of the zinc in a penny is becoming worth more than a penny, so they want to just eliminate the penny.

Rather than saying that an ounce of silver was worth $1.25 because of quarters, why not look up what the cost of an ounce of silver was?

According to http://www.silverinstitute.org/site/silver-price/silver-price-history/1971-1978/ it looks like it was about $1.75/oz

Re:Crap, the sky is falling

[roman_mir]

Gold is valuable to a common man by being universally accepted as money for thousands of years while being immune to government inflation, it can't be printed. Paper can be printed, ounces of gold cannot be printed and gold is accepted, many on /. don't understand the simple facts of life. You personally don't need to understand it or even believe in it, believe in this: in the last global war many currencies died off but gold was accepted everywhere. Believe this: central banks in wealth producing nations are accumulating gold reserves.

Re:Crap, the sky is falling

[j-beda]

that the real-terms value of silver

How do you define "real"? In terms of a paper currency? Certainly not in terms of any other commodity that's on the market, right?

There's no great reason for silver to be more valuable this year than it was 1964. I'm interested to hear reasons if you think it should be.

I don't know any specific reason for it being "more valuable" but certainly the world economy, industrial practices, mining rates, and social structures are all pretty different now than they were 50 years ago. Being such a valuable industrial material, it would be surprising to me if the value of silver was NOT different now compared to then.

Re:Crap, the sky is falling

[iluvcapra]

Even though its charge is to protect the value of the US Dollar, the USD has lost 98% of its value over the past century (this year marked 100 years of Federal Reserve control of the currency).

That's sort of by design. It is not the Fed's job to erect an inviolable, electrified fence around the real wealth of bondholders. That'd be rentierism, and it isn't in the national interest -- it might be in yours, but the United States doesn't run the currency for your benefit.

The Fed's present mandate is to maintain a stable level of inflation and maximize employment, through the dread 1978 Humphrey-Hawkins Act. Employment has generally prevailed over price stability as a primary concern, and when most Americans are net debtors, inflation is not cumulatively adverse.

I am quite aware of the history and organization of the Federal Reserve System, it does not trouble me. All you have here is warmed-over anti-bank populist tropes that have been presented, in one form or another, for the last two hundred years under any number of banking regimes. The Banks are always screwing over somebody, they're all in league, and the Bad Things that are happening now are in fact part of a premeditated strategy to ruin producerist woobies, such as the Farmer, the Small Businessman, and the Pensioner.

Re:Crap, the sky is falling

[roman_mir]

A big one is that nobody ever really trades gold

- you mean since 1971. Yeah, since 1971 this planet is on a single paper currency, this has never happened before, this experiment is failing, so you are going to observe the consequences of paper failure.

they always trade paper notes that represent the gold

- bank notes are 1:1 ounces, but if a bank prints more of them than there are, then it's theft. People dealt with that for a long time, today you can have a gold backed debit and credit cards.

Another problem with gold is that there really isn't enough of it around to be used as an everyday currency.

- common misconception. What you have is billions of tons of paper (and zeroes in computer systems) and thousands of tons of gold. We are only talking about revaluation of paper against gold, the same amount of gold that exists today can represent 1 dollar or 1 quadrillion dollars, the nominal paper representation is irrelevant.

You also mentioned Cyprus, and that kind of bank taxation could have just as easily have happened with gold, unless you kept it safe yourself, which you could have done with paper currency too.

- ah, yes, that DID happen, have you heard of MF Global? Incidentally MF Global was ran by Jon Corzine, former Democrat US Senator, former NJ Governer, former CEO of GS. That should give you a serious pause, how about that? A seriously government connected banker steals ASSIGNED people's gold bars (gold bars that have serial numbers that are assigned to specific account holders), the people were mostly farmers, who hedge against bad earnings with supposedly insurance firms like MF Global. Of-course nobody is going to jail for that, just like nobody is going to jail for Cyprus.

So what is the LESSON that is learned? Trust government more, trust fiat more, trust protected monopoly banks more?

Hmmm.

Re:Crap, the sky is falling

[roman_mir]

And what would happen if all the gold being hoarded in vaults were dropped onto the market to be used for *useful* stuff?

so all the central banks and all the individuals around the world would all of a sudden decide to get rid of it?

It is possible if for example we discovered a simple and very effective and cheap way to convert say... dirt to gold, sure. Other than that what will happen must sooner than your scenario is people doing that to US Treasuries. Basically when that happens the value of whatever is dumped that way plunges, it's a panic selling, in panic selling whatever is being sold goes down in price, even if you are selling magic wands.

Anyway, supply and demand doesn't mean that the price will stay above the production cost - it could easilly be that there is too much being produced at this time - yes, producers of any product have problems if the buyers value the product less than the cost to produce it.

- OK, it's hard for me to explain the point I guess, the point is that this is not a bubble situation where the cost of production is so close to the current spot price in the market and there is no speculation in the underlying paper value of the mining companies.

The speculation in paper gold but the complete disregard of the paper value of mining companies with their extremely amazing PEs (6, 5 for many companies, you can buy the company with its 5 years of earnings, it's crazy) it shows that there is no such thing as a bubble in that sector, the majority of people are extremely bearish on gold and its entire underlying sector. This is a bull market and the crowd is behaving exactly as it is supposed to behave in a bull market.

Re:Crap, the sky is falling

[Richy_T]

Guess what, people can cooperate without coercion. Is your world view shattered?

Re:Crap, the sky is falling

[iluvcapra]

According to that chart the US has had almost 10% inflation for a decade -- it's ridiculous, or at least if it were true, it would call into question the utility of such a measure. If such a measure were accurate, that would mean that real wages have not just been stagnant, but had been declining in excess of 5% a year, and that the median wage-earner's real wealth has been declining precipitously since the 1980s. I guess you can make the numbers look that way, but it's subjectively nuts.

They substitute hamburger for steak because people don't buy enough steak for it to be an adequate model of the consumer basket -- it's a luxury good and it doesn't behave like a proper staple commodity, it's bought when it can be afforded, it's subject to regional and seasonal price changes, and purchasing decisions related to it were not correlated to inflation. From the Boskin commission report:

5. The BLS should study the behavior of the individual components of the index to ascertain which components provide most information on the future longer-term movements in the index and which items have fluctuations which are largely unrelated to the total and emphasize the former in its data collection activities.

This could result in the down-weighting or even elimination of data collection for certain cities and a revision of the commodity structure of the index which would consider some goods as having a national market, sampling a larger number of items but with less regard to geography, focusing on geographical differences only for more "local" commodities, such as fuel costs, rent, personal services, and fresh produce.Currently, the BLS collects a large number of price quotes on bananas, because they are inexpensive to collect and their prices are quite variable, even though these variations are not related systematically to the underlying trend-movements in the CPI. At the same time, less attention is paid to less variable but more likely to change (disappear or be redesigned) and harder to measure commodities, such as surgical treatments, consumer electronics, and communication services.

They changed the CPI calculations in the mid 90's because the CPI's method up to that time was completely unscientific and based on arbitrary, non-evidence based preconceptions about what people shopped for. Meanwhile they eliminated food and energy from the core CPI because they concluded these prices were far too volatile to aid in policy making, and in the end food and energy are just inputs into other processes which are eventually priced by the CPI. They also made the very wise decision of eliminating house prices from the calculation, substituting equivalent rent. The consensus among economists is that the CPI was overestimating inflation throughout the 80s.

I'm not going to say there can't be more room for improvement, but I think you're wrong on this point, and your account of how the CPI works is glib and biased.

Re:Crap, the sky is falling

[justthinkit]

Given that companies are always trying to minimize price hikes (by using, for example volume/weight shrinking but price stays the same strategies), this price hike is massive. No other way to describe it.
.

We are arguing anecdotally. I'll be the first to stop. You win.

Re:Crap, the sky is falling

[Richy_T]

It's all pretty much done weeks ago. What's coming up is simply the changeover deadline. People who needed to upgrade had an incentive to do so (it was beneficial to the Bitcoin network, in which they are invested) and so did so.

Your control-freak fantasies to the contrary, free people can cooperate pretty well.

Re:Crap, the sky is falling

[Anonymous Coward]

There are no vending machines or parking meters that will accept the latest coins issued by the Gov't where I live. Seems like an update to me.

Re:Crap, the sky is falling

[Anonymous Coward]

High Tech industry, computer chips etc which increase demand for silver and other rare metals?

Re:Crap, the sky is falling

[FictionPimp]

My point is if SHTF and I'm in a no government survival situation the economy has collapsed and government is struggling and soon to follow, then gold is useless to me. What is useful is food, heating oil, gas, rounds for hunting/self defense, clean water. I'd rather trade my goods for those things then for gold, which will not help me survive in any way (besides spending time finding another sucker to take gold).

Is it valuable now? Sure. I own a small amount of gold and it is part of my investment strategy. But gold is only valuable because we believe it is valuable.

Re:Crap, the sky is falling

[Anonymous Coward]

You've based your analysis on a set of incorrect facts.

e.g. Bitcoin is not small, he market is around half a billion USD. It's not anonymous, it is the most transparent monetary system every created, everyone can see every transaction! Also, it is all open source.
  You seem to have your own (incorrect) ideas about how the block chains work, and you've based conclusions on your wrong ideas.

More subjectively, you don't understand bitcoin users, (almost) nobody out there wants it to replace another currency, or is using it to store their life savings.

   

Re:Crap, the sky is falling

[magic maverick]

Legal tender means that if I have incurred a debt with you (e.g. I ate at your restaurant), you either accept legal tender, or accept nothing. You don't have to accept cash (or cash above a certain amount) before I incur the debt.

Take a gas station (from your quote above): If the gas station requires that I pay before I fill up, then they can restrict payment to cash notes below twenties. But, if they accept payment after, then I can incur a debt, and they either accept my payment in a hundred, or accept nothing. They don't have to accept my payment in legal tender (cash), but if they don't then the debt is essentially cancelled.

Re:Crap, the sky is falling

[Raenex]

you mean since 1971

No, I mean well before that, and you know it. When were people last commonly exchanging actual, physical, standard units of gold around?

bank notes are 1:1 ounces, but if a bank prints more of them than there are, then it's theft. People dealt with that for a long time, today you can have a gold backed debit and credit cards.

Yes, there's a very, very long history of such theft, so why do you think things would end any differently? Why are you confident in your "gold backed" cards? The world runs on credit, credit = debt, debt = money. I'm sure you've seen the YouTube video. This credit cycle always ends in some kind of crash and re-adjustment.

We are only talking about revaluation of paper against gold, the same amount of gold that exists today can represent 1 dollar or 1 quadrillion dollars, the nominal paper representation is irrelevant.

Bizarre, so you explicitly want a gold-backed standard and the trading of notes. You end up with the same inflation via re-evaluation that you decried earlier.

A seriously government connected banker steals ASSIGNED people's gold bars (gold bars that have serial numbers that are assigned to specific account holders) [..] So what is the LESSON that is learned?

For you, apparently none, because you believe in your "gold backed" credit/debit cards.

Re:Crap, the sky is falling

[Anonymous Coward]

Well, it's around $1 bln. at current rate, actually, but that's not the point. Compared to your savings it's pretty big, compared to economies of other currencies, it's at the level of a small island economy.

But that number doesn't say much about BTC's economy. Now daily trade volume at ~$30 mln/day level (half of which is on currency exchanges) says more. Not very big for global currency. Apple's daily revenue is around $400mln/day, for comparison.

On transparency: do you (or anyone) know, for example, who were the players in the last BTC bubble burst? Somebody made quite a bit of money on that, and no, even if someone has suspicions on who could be the perpetrator, there's no way to find it out.

Only a small percent of BTC wallets have known owners, and nobody can know whether it was MtGOX owners throttling servers and shouting "OMG, we're DDOSed!" while putting bids in moments when DDoS conveniently slowed down, or if it was really a DDOS, some lucky guys and lots of unlucky ones.

Re:Crap, the sky is falling

[roman_mir]

In a scenario where provisions become scarce, what do you think keeps more value, paper currencies or monetary metals?

Of-course I agree with you that when all shit hits the fan you just want to survive, you need food, energy, shelter, weapons and ammunition, however that's a situation where you have ALREADY converted your gold into those things you need to survive and that's a situation where you are not interested in EXCHANGE with other people.

Imagine this: you are 1 person with a store of food, there are 1000000 people around you with no food at all.

If you are going to trade for anything with anybody, you are probably going to do it only to get something you really really need, maybe somebody has antibiotics and you don't have any. Maybe somebody offers to work for you and you want an extra pair of hands.

Does money mean anything when other people have NOTHING of value?

You are missing the entire POINT of money. Money is not the goal in ITSELF, gold is money, but gold is not the point in itself.

Gold is money that helps you to buy things from other people in a more efficient manner. But you only trade with other people for GOODS and SERVICES that they provide, not for money, not for gold!

You take other people's gold for your products and services keeping in mind that later on you will be able to buy with that gold products and services that other people can provide you with that you WANT.

If other people have nothing at all that you want then you don't need their money, whatever that money may be.

This is the part where the entire education establishment is shown to be the failure that it is: it completely failed you.

You have no idea what money is.
You have no idea what trade is.
You have no idea why people trade with each other.

That's a huge educational gap, but the power establishment doesn't want you to understand anything about money and trade, so it's institutionally intentional.

Re:Crap, the sky is falling

[Agent ME]

If too many transactions happen within a certain amount of time, then a block will be larger than 1mb. If the 1mb limit is kept, then those transactions would have to wait until the next block. If that block hits the 1mb limit and so on for a while, then you have transactions that never get finalized. Dropping random transactions isn't a great plan. (Technically, miners could prioritize transactions by the voluntary transaction fee the sender includes, but I don't know if that behavior is widely implemented or standardized yet.)

Re:Crap, the sky is falling

[roman_mir]

The sock IS the investment.
If you open your sock drawer you'll see a bunch of assets that have appreciated in nominal price (you have cotton in your socks) while dollar lost huge amount of value in the same time span that you have accumulated your sock investment portfolio.

Re:Crap, the sky is falling

[DragonWriter]

Gold is valuable to a common man by being universally accepted as money for thousands of years

Gold hasn't been "universally accepted as money for thousands of years". For one, its not universally (or even particularly commonly) accepted as money now, and even in most of the time when it was in theory usable as money, most transactions were barter transactions that didn't use money and most transactions that did use money didn't use gold, they used silver, copper, or representational currencies.

Paper can be printed

Yes, paper currency can be printed, and gold can be mined. Its true that the constraints on the volume of production of paper currency are different than they are for gold (one is social, the other is technical), but just as social constraints can break down, so can technical ones (consider what happened to Aluminum, once considered a precious metal.)

Believe this: central banks in wealth producing nations are accumulating gold reserves.

Sure, lots of gold reserves are held by major-nation central banks (plus the IMF, which is essentially a proxy for major powers). But that just means that a those entities -- the same ones that control major fiat currency -- have the capacity to disrupt the price of gold, just like you seem to fear their power to manipulate prices of the fiat currencies they issue.

Re:Crap, the sky is falling

[IamTheRealMike]

Actually that's not the case. For apps running on your phone, they are using simplified payment verification in which the contents of the blocks are not validated (the block headers themselves are). So they are agnostic to the kind of issue that led to the unexpected hard fork. Yes this kind of consensus failure is pretty disastrous but it didn't actually affect many end users, and will only get rarer in future as testing improves.

Re:Crap, the sky is falling

[Anonymous Coward]

Half the world (more actually) was running V7. They were given 2 months to upgrade. In two days, we have the upgrade deadline.

I don't see the difference between your "Oh my God" scenario and reality.

Re:Crap, the sky is falling

[DragonWriter]

They may refuse it, in which case they can drag you to court, which will order you to pay what you owe them plus probable damages and other extras. In legal tender. Now this they can't refuse (unless they want to write if off).

The other piece of this is that evidence of a tender of payment can, depending on the basis of liability, stop any additional damages from that point for interest, etc., that would be due for non-payment.

Re:Crap, the sky is falling

[Anonymous Coward]

You don't have to upgrade. You can add a few lines to a configuration file and the old software will continue to work. However, compared to the new version, it is slow as shit and thrashes your hard drives and will only continue to get worse as block sizes grow.

Re:Crap, the sky is falling

[Yebyen]

AC sibling comment is right, but I think he's neglected to point out exactly what you've already mentioned that explains the difference between payments that must be accepted and payments that can be refused.

Valid and legal offer for debts when tendered to a creditor -- in other words, you do not need to accept my money for goods or services, and provide them, in that order. If you are operating a restaurant for example, and you've provided the service (or goods) first, on honor as many restaurants do, in order to put a price tag on it and settle the bill all at once... now you've brought the check to the table, I'm obligated to pay that debt, since your prices were clearly marked and I accepted the service. You are required to accept my legal tender (even if it's pennies) at this point, or you can take any other form of payment that you're willing to accept, if it's a credit card or bitcoin or some other "non-tender". If I offer pennies and you refuse, I can always argue that I offered to pay the bill, and you can't say I didn't try to discharge the debt. That is what's intended by the treasury statute you quote, in USA at least.

If you are operating a Chinese Buffet or take-out (for example) and you are demanding payment before services are rendered, you are free to refuse the service to anyone who can't pay in only nickels, if that's your wish, or anyone for any reason. It's not a debt incurred for me until you've allowed me through the door, when I sit down and accept the food, to start eating it. If you refuse the service for any reason, then no debt means no tender. If you bring me food and I'm not happy with it, I can refuse the delivery and again, I don't owe you anything. No tender required.

Re:Crap, the sky is falling

[roman_mir]

No, I mean well before that, and you know it. When were people last commonly exchanging actual, physical, standard units of gold around?

- 30-40 years ago as coins and this century in grains of gold.

Yes, there's a very, very long history of such theft, so why do you think things would end any differently? Why are you confident in your "gold backed" cards?

- this is my risk I am taking with a specific bank that I deal with. I have some of my money in that bank specifically so that I can use the credit card around the world.

The world runs on credit, credit = debt, debt = money.

- wrong equation, debt does NOT equal money :)

Debt is not money, debt is promise of money in the future. Promise of money may or may not be fulfilled.

If you are productive and you make the money to cover your debt, then you can repay your debt. It does not create or destroy money to owe a debt, only actual productive work creates money.

Bizarre, so you explicitly want a gold-backed standard and the trading of notes. You end up with the same inflation via re-evaluation that you decried earlier.

- no, I don't want anything, my point is that saying that "there is not enough gold" is invalid.

It's an invalid point, because you are comparing what? Tons of gold to gazillions of dollars in existence? As I said, your dollars will be revalued to represent your gold holdings. So if there is 1 Trillion dollars and 10 tons of gold, then you have that relation of dollars to gold and there is enough gold.

Division, a simple math concept, works like a charm.

You end up with the same inflation via re-evaluation that you decried earlier.

- revaluation of your dollar to your existing gold reserve is not inflation, it's adjustment of real price of your money.

Inflation is printing of more currency that is not backed by anything. If on the other hand, you acquire more gold later on your currency increases in value. Nobody forces you to print more of it.

But I am NOT advocating for paper currency or 'gold standard' of any kind at all, I am against gold standard or fiat, to me gold itself is money.

Today using gold as money is easier than ever before in history given our ability to move information as electrons around. You don't need to walk around with gold bars, though you actually can.

For you, apparently none, because you believe in your "gold backed" credit/debit cards.

- I keep most of my money out of banks :)

Re:Crap, the sky is falling

[Anonymous Coward]

You are misreading the text. It says it must be accepted for debts. If there is no debt involved, i.e. when you are buying something or paying for a bus fare, then the vendor is allowed to set terms for what they accept. But once someone lends you money, they must accept legal tender.

Re:Crap, the sky is falling

[AK Marc]

He said USSR, so probably from one of the satellite nations.

Re:Crap, the sky is falling

[FictionPimp]

This only works when we are well off enough to care that we might need trade in the future. I understand well and good the purpose of money and what it is. I understand the purpose of trade. I can also tell you I would never accept gold for trade if I was in the situation described above. It would hold no purpose for me. If you have services I need, I'd give you my goods/services for them (trade). If you simply want what I have, but have no goods or services I need, then I have no need of gold. So gold is worthless in this situation. You could have millions of pounds of it, I wouldn't trade you for it.

Now when we get to a point where life is 'comfortable' (infrastructure is being rebuilt, stores being created, farming for more than staying alive, etc) then maybe I'd care about objects that represent wealth. Before that however, I'd be much more inclined to take something totally useful as use it as currency. Maybe 5.56 rounds. I can use them to feed my family, I can use them to defend my family, and I could trade you those for medicine so you could continue to do the same.

Re:Crap, the sky is falling

[Richy_T]

Ah, so the low value paper you stuff the sock with is to help your investment keep its shape. I like your plan.

Re:Crap, the sky is falling

[AK Marc]

Price inflation, including energy and other things excluded in government numbers, exceeds wage inflation.

Re:Crap, the sky is falling

[Darinbob]

Sounds to me like the bitcoin "solution" was to adopt a sequestration model. Delay the problem with the naive assumption that everyone will be highly motivated to fix it before things go nuclear.

Re:Crap, the sky is falling

[AK Marc]

Even though its charge is to protect the value of the US Dollar,

Do you have a source for that? The stability of the dollar and value of the dollar may sound similar, but are quite different things. "The US Congress established three key objectives for monetary policy in the Federal Reserve Act: Maximum employment, stable prices, and moderate long-term interest rates. The first two objectives are sometimes referred to as the Federal Reserve's dual mandate." I couldn't find anything that indicated they are supposed to protect the "value" of the dollar, just the stability of the economy (employment and price stability).

Re:Crap, the sky is falling

[Anonymous Coward]

It's more like the govt has issued a note for a new denomination, but that note won't physically fit in some peoples wallets. But new wallets are available for free. And yes, you can keep all the other denominations.

Re:Crap, the sky is falling

[roman_mir]

As I said, you only trade with people if they have something you need. If ALL that they have is gold and they have nothing else, they produce nothing and they own nothing but gold, while you have food and other supplies, then you are the one with all the wealth. They lost their wealth somehow, they have a past store of value but not the wealth.

For example there was a huge infestation and most food was destroyed except for food that you stored in your basement. Before that moment money made sense, after that moment the question is: what except for food do you need? You can exchange your food for other things, so food is your store of value.

But that's an unsustainable situation, food does not last for a very long time and if everybody else is starving and not doing anything about it, you'll be the last person with all that food (and with all of their gold) because they are all going to die from hunger.

Again: gold is money, money is only needed when you want to TRADE with other people, not when you have everything and they have nothing and produce nothing that you want.

Money as a concept stops working in that situation, only barter works. Whether gold is part of that barter, yes, I would say it still is, it always was. During the wars people used paper money to start fires in their stoves and gold was still a store of value, medium of exchange and unit of account.

Here is why you WOULD still take gold, by the way, your food will go bad eventually unless you eat all of it. If gold is the ONLY thing that people have at the moment and nothing else, I suppose you can either give them the food that will go bad anyway or you can trade it for gold. They have nothing else, what are you going to trade for otherwise?

If they have nothing you want, you won't trade with them at all. If you are going to trade, you will require something. The best thing that will not go bad and can be used LATER is gold, not cash (by that time all cash is more worthless than clean sheets of paper).

Re:Crap, the sky is falling

[viperidaenz]

Start naming please.

Re:Crap, the sky is falling

[Anonymous Coward]

Since there is no central authority, or at least there's not supposed to be one, the implementation which is used by the majority defines the protocol. The implementation differs between client versions in a way which causes incompatible blockchains. This is therefore a protocol change. The only reason why this isn't a big deal to most people is that the protocol change is benign. The concept of what's happening is still that the devs changed the protocol by changing the client such that it is incompatible with older clients. And THAT is a big deal.

Re:Crap, the sky is falling

[viperidaenz]

Where I'm from when new currency is issued, the Reserve Bank will accept old currency forever. The time limit is only for other people having to accept old currency as legal tender.

Re:Crap, the sky is falling

[viperidaenz]

You said the increase was flat. How do you "working harder for less money"?
If productivity is increasing and it is not due to workers working harder, perhaps due to increases in automation - you know that whole computer thing that sprang up in the 70's, then "working the same (or less) for the same money" makes perfect sense.

Re:Crap, the sky is falling

[Anonymous Coward]

Convenient that you picked a Quarter and not a Penny. If you want to know the real value of the dollar compared to the 1960's you must compare to a metal of stable value, not one that fluctuates wildly on pure speculation. Copper is the metal you should compare with as it's value has been relatively constant for a century, rising and falling in near lockstep with new building construction rates.

A 1960 penny was 95% copper.

$1.25 worth of 1960 pennies is today worth $2.77. [Your source]

Your "98% of it's value" nonsense is horseshit.

Re:Crap, the sky is falling

[Raenex]

30-40 years ago as coins [Krugerrand]

Were they ever commonly exchanged as currency? Or has it always just ended up as collectors items?

this century in grains of gold

There's your utopian society operating on gold. People ruining the environment and barely surviving and others starving. That's not to say gold is the fault, as society obviously failed before that, but it hasn't lead to a good outcome, either.

I have some of my money in that bank specifically so that I can use the credit card around the world.

So in other words, you don't trade in physical gold, only gold promises in exchange for real money, the kind that is actually accepted around the world.

no, I don't want anything, my point is that saying that "there is not enough gold" is invalid.

You can't argue a system is valid and preferred and then simultaneously claim you don't want it. There is not enough gold to go around, only paper promises of gold.

Debt is not money, debt is promise of money in the future. Promise of money may or may not be fulfilled.

Money, whether gold or fiat paper or promissory notes, is only useful as a medium of exchange if it can be converted to something I actually need in place of some shiny metal -- that is, a debt that can be exchanged for something of value.

So if there is 1 Trillion dollars and 10 tons of gold, then you have that relation of dollars to gold and there is enough gold.

But this is just the gold standard all over again, a complete failure if you actually cared about gold. "This time for sure!" ?

to me gold itself is money.

Except you don't actually use it. You're using the electronic version of gold promissory notes.

Today using gold as money is easier than ever before in history given our ability to move information as electrons around.

I could have said the same thing about the printing press.

Re:Crap, the sky is falling

[dbIII]

Since it went up relative to the Australian dollar (which was 15 cents more not very long ago) I'd say it would have had to be going up against everything.

Re:Crap, the sky is falling

[Anonymous Coward]

That is a really disturbing image. Like Violet Beauregarde but more plastic surgery and more often.

Re:Crap, the sky is falling

[Anonymous Coward]

i've got something like 500€ lol

Re:Crap, the sky is falling

[CodeBuster]

I think that Bitcoin or schemes like it will always be with us from now on because they serve well a niche that until recently was poorly served by physical cash: the black market. Just consider the many advantages of Bitcoin transactions, legal and otherwise. They're anonymous (or at least they can be if done right), easy to verify, difficult to reverse and require no centralized clearing authority. The design of the Bitcoin system also makes it extremely difficult or even impossible to counterfeit. So you see, these types of distributed electronic crypto currencies will always have value to those who wish the convenience of electronic transaction without the transparency that's attached to official channels. They may not become mainstream for these same reasons, among others, but sites like Silk Road need a way to clear transactions without everyone being identified and arrested and Bitcoin provides a means to do that.

Re:Crap, the sky is falling

[Anonymous Coward]

All in wog countries that nobody gives a shit about.

Re:Crap, the sky is falling

[Hognoxious]

Probably not Chechnya, or he'd be blowing shit up rather than posting shit on the intarwebs.

Re:Crap, the sky is falling

[bkk_diesel]

You have some interesting thoughts, and it's clear that you've put some energy into your opinion, but I'd like to point out a few things.

Bitcoin is currently a small curiosity, it's only just becoming big enough to attract the interest of the real sharks, and I'm not convinced the creators have the resources, motivation or interest to keep the currency fair and secure once serious money becomes involved.

You might consider that this is an excellent argument for starting to play around with (dare I say "invest in"?) bitcoin. If even a small percentage of the word's commerce, or even e-commerce, is transacted with bitcoin, the opportunity is virtually unlimited while your risk is limited to whatever you put into it (a couple hundred bucks? You'll never miss it).

Many of the exchanges are still pitifully insecure (run on VPSs !), the infrastructure is not well managed (witness problem above), and the creators probably never expected it to take off or really thought through the implications.

The part about exchanges may be true, but you don't have to keep your bitcoin or cash with an exchange - you can keep it in your own wallet. As for the creators not having thought through the implications, I'd like you to consider the words of respected security researcher Dan Kaminsky who says that normally when a security researcher looks at this sort of thing it looks good on the surface, but once you start to scratch a little deeper you realize how poorly thought out the whole thing is. Kaminsky claims that bitcoin is rather the opposite- it looks pretty bad on the surface but once you start digging you realize that it is really well thought out. (source: slide 3.

Once there is serious money involved, lots of people are going to want to change the rules. If Bitcoin becomes popular it will be easy to coopt, devalue, and tax until it is just another currency, probably tied to a particular corporation or government. There's absolutely nothing you can do about that as a user of bitcoin. If the developers decided to change the direction of the currency you have your life savings in, devalue it, create a new block chain, you don't even have a vote on the matter.

This and much of the rest of your post is actually quite wrong as already addressed quite well by slashdot user "seizer". I would also encourage you to do some more reading about bitcoin - it's fascinating.

Re:Crap, the sky is falling

[Richy_T]

Not necessarily. It has been stable against the pound for a couple of months now (and the UK economy has similar issues to the US). Bear in mind it's not impossible for other currencies to be even more borked.

Re:Crap, the sky is falling

[dbIII]

That grasped straw doesn't change a sign that is is not "collapsing" but instead is yet another sign that it isn't doing so at this moment.

Re:Crap, the sky is falling

[FictionPimp]

The best thing that will not go bad is ammo, not gold.

Re:Crap, the sky is falling

[xiando]

built-in deflation

This is .. not entirely correct. Bitcoin is currently subject to 10% yoy inflation and this will stay about the same (decrease slightly) until 2017. We are talking 2029 until this "deflation" kicks in. That's not next week or next month, we are still about 16 years until this "inflation" claim becomes true. See http://btccharts.everdot.org/misc/bitcoin_inflation_vs_time.png or just look into it if you don't get it.

Re:Crap, the sky is falling

[Richy_T]

True. Collapse is too strong a word at this point, I agree.

It's not looking good though.

Re:Crap, the sky is falling

[Anonymous Coward]

The cool thing about inflation is that I'll be able to pay off my Federal student loans with their own devalued currency! Payback really can be payback...

Re:Crap, the sky is falling

[Rato Ruter]

Start naming please.

Just for the sake of participating, I'm from Brazil, 34yo, and in my lifetime - until about my 15th birthday in fact, before Real - we had 6 currencies I can remember: Cruzeiro, Cruzado, Cruzeiro Novo (New Cruzeiro), Cruzado Novo (New Cruzado - this one might have come before the previous), Cruzeiro Real, Real (which we have until today)

Re:Crap, the sky is falling

[KingBenny]

no one trading it on the exchanges will mind if it crashes below $50 again i think, we'll find out soon enough

Re:Crap, the sky is falling

[Serious Callers Only]

If it is traceable, how have all the recent thefts gone without any arrests? Perhaps it's not as hard as you think to remain anonymous while using bitcoin or even stealing it? For my money and transations I expect a ledger of all transactions with verified identities - very much like the current system run by banks, and bitcoin is a long way from that. It is popular for illegal transactions and targeted by thieves for that reason. Apparently the bitcoin developers, and tries to allow anonymity - this is a huge mistake in a digital currency. If somethng is anonymous it is not traceable in my opinion, because tracing transactions to anonymous wallets is completely useless in the real world. Comparisons with paper cash simpyl don't interest me, because I rarely use it nowadays, and it's already been replaced with a reliable electronic system, which lets me transfer money within hours and with a record of all transactions which is actually useful to me and shows verified participants.

A gov could shut down bitcoin tomorrow by banning it - this takes very little effort on their part and no money - for example the us has just shut down one of the biggest exchanges (mtgox) for money laundering. As to cornering the market, one person owns

Re rules, my point was precisely that the default set of rules are beyond your control as a single user. The rules of the game can change at any time, changed by the developers or someone putting pressure on them, and there's nothing you can do except try to set up your own competitor.

Re:Crap, the sky is falling

[dbIII]

It's described as "rallying" for the last month or two but the US economy still has a very deep hole to climb out of. Either way my post was just to point out that it's not a "collapse" at this point. It's risen 15% against the Australian dollar in the last couple of months and there's nothing wrong with the Australian economy at this point thanks to a mining boom.

Re:Crap, the sky is falling

[AK Marc]

I prefer to compare Silver to things in mining towns during booms. There were short periods where Iron was worth more than silver in mining towns. After all, iron could mine you more silver, but silver couldn't.

Re:Crap, the sky is falling

[stenvar]

Actually, CPI almost certainly overestimates, rather than underestimates, inflation.

In the 2020s bitcoins will run out anyway

[Viol8]

Making the whole thing nothing more than an interesting academic exercise. Anyone who thinks bitcoin is the new gold or even frankly a replacement for ordinary money transactions is utterly deluded.

Re:In the 2020s bitcoins will run out anyway

[KiloByte]

Compared to pieces of paper that a politician can devaluate with a single signature if there's another budget issue (and there always is)? Bitcoin's advantage is a strictly limited ability to print money.

Re:In the 2020s bitcoins will run out anyway

[Anonymous Coward]

Bitcoins are not consumables. They can be reused infinitely. They do not "run out".

Re:In the 2020s bitcoins will run out anyway

[aaaaaaargh!]

In the 2020s bitcoins will run out anyway

What do you mean by that? I thought that the very idea of bitcoins is that at some time no more can be produced, thereby causing deflation.

Re:In the 2020s bitcoins will run out anyway

[Anonymous Coward]

Exactly! This thread is nothing more than blue-skying to try and divert attention away from the very obvious fact that there wasn't enough liquidity in the Bitcoin python to swallow the Cyprus cow. Now that particular bout of indigestion is over the beast has re-shrunk a lot in size.

Re:In the 2020s bitcoins will run out anyway

[fuzzyfuzzyfungus]

Bitcoins are not consumables. They can be reused infinitely. They do not "run out".

They are data, though, and we all know how good at keeping backups people are...

Re:In the 2020s bitcoins will run out anyway

[Anonymous Coward]

Deflation is not inherent to Bitcoin. While the money supply is strictly limited, the value of each Bitcoin does not have to go up over time. The protocol could be amended to include a fixed devaluation per time held, with the subtracted value paid towards the miners. This concept is basically already in the Bitcoin system, because miners will demand processing fees as fewer (and eventually no) new bitcoins can be mined. One could write into the protocol that all spending has to include a transaction fee of at least 1-0.95^y times the gross transaction value, where y is the fractional number of years since the value has last been transferred.

Re:In the 2020s bitcoins will run out anyway

[Anonymous Coward]

but but, we can generate large numbers with computers now.. do you hear me, with computers! therefore it obviously is a gold replacement!!!1

+1 if i had it to give it.

Re:In the 2020s bitcoins will run out anyway

[fuzzyfuzzyfungus]

Making the whole thing nothing more than an interesting academic exercise. Anyone who thinks bitcoin is the new gold or even frankly a replacement for ordinary money transactions is utterly deluded.

Yes and no: By design, 'the' bitcoin block chain will ever only have a limited number(20-odd million, I think...) of bitcoins associated with it. However, there is nothing mathemagical about this one, rather than the zillions of other possible ones.

If people were so inclined, any number of bitcoin-protocol chains could be run concurrently(subject only to computational constraints), each providing another chunk of the things. Of course, given how many of bitcoin's biggest fans are cyber-goldbug deflation enthusiasts(sometimes with nontrivial BTC reserves to provide financial as well as ideological motivation) I wouldn't be terribly surprised if an attempt to do that would be deeply unpopular, and that the value of non-canonical bitcoins would be nearly zero.

The situation is perhaps closest to what a fiat currency would look like if it were impossible for anyone(even the issuer) to counterfeit mint years and serial numbers: The supply of '1985 US dollars' or '$20 bills with serial numbers below XYZ' are fixed and slowly dwindling through attrition. Nothing prevents the creation of new bills each year, or printing bills with higher and higher serial numbers; but(in the case of bitcoins) there is nobody to say 'regardless of print year or serial, all of these things are equal', so the value of each printing, relative to other printings, and to other currencies and assets, is free to float.

It'd be messy(since nothing except total consensus would ever make bitcoins from different block chains totally fungible); but if people wanted there to be more of them, there could be more.

Re:In the 2020s bitcoins will run out anyway

[Anonymous Coward]

"Bitcoins" are kept in the blockchain. That means that there's tens of millions of "backups" all over the world. What people customarily mean by "bitcoins" is actually the private keys to sign them over other people (your bitcoin "wallet" contains not bitcoins - they're in the blockchain - but the decryption keys that prove that you own them).

Backing up decryption keys is not hard. If you use a deterministic wallet, you just need to remember a passphrase, making it even easier.

Re:In the 2020s bitcoins will run out anyway

[Anonymous Coward]

Alternate cryptocurrencies are so deeply unpopular, they got their own subforum on bitcointalk.org ...

Re:In the 2020s bitcoins will run out anyway

[fuzzyfuzzyfungus]

It isn't that backups are 'hard'(though in complex situations they can be harder than they look), it's that people don't do them, or don't know that they were doing them wrong until it comes time to find out the hard way. They also forget passwords, get hit by trucks, and otherwise suffer from unexpected data loss.

My thesis is hardly that 'zOMG, all the bitcoins will disappear!!!'; but that there will be attrition over time, with greater attrition if they gain traction with the relatively clueless.

Re:In the 2020s bitcoins will run out anyway

[pla]

Try 2140, not 2020. Your larger point may stand, but the specific urgency of it happening in the next decade - Or even without our lifetimes - does not.

Re:In the 2020s bitcoins will run out anyway

[Lumpy]

So if my computer crashes, I can call someone and get all my bitcoins back?

No? Well then it's a scam.

Re:In the 2020s bitcoins will run out anyway

[fastest fascist]

If you burn your cash, can you call someone to get it back? At least you can have backups of your Bitcoin wallets.

Re:In the 2020s bitcoins will run out anyway

[Anonymous Coward]

It's retards like you that make money so funny. Electronic or otherwise.

Re:In the 2020s bitcoins will run out anyway

[AmiMoJo]

Consider this. Since there a some limit on the maximum number of Bitcoins any that are lost are gone forever. Wallet file misplaced or destroyed, coins stolen but unspendable (because although they are anonymous they are traceable), or simply sitting on forgotten hard drives somewhere.

Governments can print new notes to replace old ones that no longer exist or are presumed lost. Bitcoin has a hard limit.

Re:In the 2020s bitcoins will run out anyway

[stinerman]

That's a feature, but it's not a good feature to have (for Bitcoin). A currency's success is measured by its ability to facilitate commercial transactions, not by its ability to make you rich simply by holding it. That's what *investments* are for. Currency isn't an investment and shouldn't be.

The fact that there could never be any more Bitcoins ever again would encourage speculation and hoarding, which is not what you want from a medium of exchange.

If you're worried about currency devaluation and put some of your money/time into Bitcoins, that makes sense as a hedge against inflation (ie. an investment), but nothing more.

Re:In the 2020s bitcoins will run out anyway

[DaveV1.0]

A) That is why people keep money in banks, B) Yes, you can, sort of. In the U.S. you gather up the burned remnants of your cash and send it to the U.S. Mint where they have an entire department consisting of people whose job is to go through such remnants and determine how much money they can actually identify and then that amount will be returned. Now, what happens if someone figures out a way to break the encryption? What happens if someone steals and makes public many of the decryption keys? What happens if someone makes an affordable quantum computer that can produce the keys in trivial amounts of time? The problem with using math as a currency is that a math trick can destroy the value of the currency.

Re:In the 2020s bitcoins will run out anyway

[Anonymous Coward]

Actually, in some cases you can. As long as there is something identifiable left from the money, you are eligible for replacement in many jurisdictions, although you will probably also pay quite some restoration costs. Money that has been burned doesn't necessarily disappear from circulation.

You can also quite easily save most of your own "real" money from burning: Storing it in a bank account of a somewhat trustworthy bank might be a perfectly acceptable solution.

Re:In the 2020s bitcoins will run out anyway

[bill_mcgonigle]

So if my computer crashes, I can call someone and get all my bitcoins back?

No? Well then it's a scam.

Do you hold all your cash in person or do you use a trusted third party to hold most of your cash (digitally)?

Re:In the 2020s bitcoins will run out anyway

[Anonymous Coward]

Yes. Of course you can. Other common accidents include putting large quantities of (paper) cash into a washing machine and accidentally crushing (metal) cash into an unrecognisable blob. In each case the issuers will investigate and replace your money for a modest handling fee, the same way they'll exchange obsolete denominations and fix other administrative fuck-ups. This is a perfectly usual service which comes for free with your use of a fiat currency.

Thank you for your enquiry about how your world works. Other exciting topics you might want to learn about today: "Life and personhood: Not actually the same thing" "Sometimes when people tell you their problems they're looking for sympathy and not solutions" "How to transition your corporate VoIP solution to IPv6".

Re:In the 2020s bitcoins will run out anyway

[fastest fascist]

Replying to your what-happens:

If someone breaks the encryption:
Hard to say, exactly. Assuming a full breach of SHA256, things would be pretty bad, the worse the longer it takes for the breach to be publicized. Once it is, the consensus would likely be to cease accepting Bitcoin transactions until a fix is issued - likely moving to a different algorithm, and considering all or some transactions since the breach retroactively invalid. There would be a lot of drama over this, understandably, and I don't know how long such a fix would take to implement technically. It would be a big deal and Bitcoin might not survive it, but that's not a given. Then again, being able to break SHA256 at will would be quite remarkable and would have serious repercussions for a lot of people quite apart from Bitcoin users. I'm not at all convinced breaking Bitcoin would be the best way to use such a trump card.

If someone steals and publicizes "decryption keys":
I assume you mean people's private keys used to control their bitcoins? This is like any other theft - if someone steals large amounts of cash and decides to redistribute it, robin-hood style, the victims are left without their money and some other people have more money than before, and a moral dilemma to go with the funds.

Quantum computers:
I'll point you to the Bitcoin wiki entry on the issue: https://en.bitcoin.it/wiki/Myths#Quantum_computers_would_break_Bitcoin.27s_security

Re:In the 2020s bitcoins will run out anyway

[fastest fascist]

Also, you can, of course, let others store your bitcoins for you. It's just not a particularly good idea at this time, since there is not, and in fact can not be, any company reputable enough to act as a bank for bitcoins. In my view, anyway. Later on, assuming Bitcoin continues to gain traction, I expect that problem will be remedied. The simplest solution would be for an existing financial institution to start offering Bitcoin banking, although I expect bitcoin deposits won't have the same kind of legal protections as fiat deposits do for quite a while to come.

Re:In the 2020s bitcoins will run out anyway

[Lumpy]

His claim is that bitcoins are backed up and cant be destroyed.

Re:In the 2020s bitcoins will run out anyway

[BlueMonk]

I used scripts available from https://www.bitaddress.org/ to make paper backups of some of my bitcoins (offline). And I made sure that the private key wasn't stored anywhere else. This way, I have some of my bitcoins stored on an exchange, some stored on devices I own and some stored just like paper money. It's unlikely that all 3 of these are going to have a catastrophic failure in 2020, so even if everyone else's bitcoins "run out" I will likely still have some of mine. I'll sell them to you for the right price. And if there's enough demand, I can split 2 bitcoins (the smallest amount I have stored in one of these mechanisms) into enough pieces for everybody in the world to have multiple Satoshis. And it's up to the market to decide how much a Satoshi is worth.

One way I can imagine all 3 mechanisms would fail is if bitcoin's cryptographic security is compromised in a way that an updated client would not be able to resolve. (If the very foundations of cryptography are broken, such as might occur with quantum computing.) How big a concern is that, generally? I think there will be a lot more than just bitcoins to worry about if and when that happens.

Re:In the 2020s bitcoins will run out anyway

[xiux]

There is no inherent limitation binding the smallest denomination to 1 billionth, that is just an arbitrary decimal place chosen for the time being.

Re:In the 2020s bitcoins will run out anyway

[petermgreen]

The protocol can only be ammended if you can get everyone who matters (most of the miners and major exchanges) to agree to the ammendments. Otherwise you get a damaging fork. Little fixes like increasing the maximum block size to allow for more users or fixing obvious bugs are pretty uncontraversial and likely to be accepted. Changing the core rules on which bitcoin was based is likely to be a much harder sells.

As for transaction fees they only apply to bitcoins that are moving arround. They don't apply to bitcoins that are lost or hoarded (and there is no way for anyone other than the owner of the bitcoins to know the difference between lost bitcoins and hoarded bitcoins.

Re:In the 2020s bitcoins will run out anyway

[Anonymous Coward]

They're implementing a solution already: pay to shared hash (P2SH). It allows coins to be locked up in m-of-n transactions, so you could for example require a signature from two of three banks to move the funds. That way if one bank is compromised, the money is still safe. It also makes trusted computing easier. Institutions could also offer additional protection plans (by buying insurance) in exchange for fractional reserve lending or a demurrage fee.

Of course, actually setting up these businesses and establishing trust is a problem Bitcoin needs to solve before going mainstream; grandmas shouldn't be expected to secure a cold-storage paper wallet.

Re: In the 2020s bitcoins will run out anyway

[bobbied]

Seriously? You do realize that "coins" where invented as a way to make standard sized bits of metal (gold, silver etc) that could be traded with less examination required. Look for Cesar's face on one side and his horse's on the other and you knew you where holding a known quantity of gold... Bitcoin is not even close to that.. (Not that a dollar coin is worth a dollar's worth of gold anymore..)

Re:In the 2020s bitcoins will run out anyway

[Richy_T]

In the same way I ran out of fingers in 1970.

Re:In the 2020s bitcoins will run out anyway

[Anonymous Coward]

Even ignoring the fact that Bitcoins are almost infinitely divisible, there is absolutely nothing preventing the creation of a new Bitcoin chain in the future. It is a trivial exercise for some software to manage multiple currencies if that were to happen and the initial risk would be placed on the first miners to get involved in it, same as with the original Bitcoin chain.

If you were to just try to think of a solution to your perceived issues, you might find they are easier to solve than you thought.

Re:In the 2020s bitcoins will run out anyway

[Anonymous Coward]

So? What's your point?

Re:In the 2020s bitcoins will run out anyway

[medv4380]

Incorrect. That decimal place is based on the size of bitcoins. There is literally only so many segments they can be chopped into. Saying you can chop a bitcoin smaller than it's smallest piece is like saying you have a 32 bit integer with the value of 4294967296 or a Double smaller that 2^-1074. It literally can't happen.

Re:In the 2020s bitcoins will run out anyway

[DragonWriter]

Then again, being able to break SHA256 at will would be quite remarkable and would have serious repercussions for a lot of people quite apart from Bitcoin users. I'm not at all convinced breaking Bitcoin would be the best way to use such a trump card.

Since breaking Bitcoin isn't exclusive of any of the other uses for having broken SHA256, there's no reason that it not being the best use of that ability makes it any less likely that it would be one of the things that the SHA256-breaking-entity would use it for, even if you assume that the actor breaking SHA256 will want to maximize return.

Re:In the 2020s bitcoins will run out anyway

[Anonymous Coward]

You can't even count as high as the number of possible keys using an ideal 100% efficient computer powered by every bit of energy contained in the sun. Good luck finding key collisions in that large of a space.

Theft of private keys is a real threat, but one which any significant holder should mitigate by storing their coins at an address backed by a key that is never exposed to the internet.

Re:In the 2020s bitcoins will run out anyway

[fastest fascist]

Yes, and that's true, although in a pretty technical sense. Bitcoins are entries in a public ledger, the blockchain. They are quite resilient to destruction. The private encryption keys that allow one to transfer ownership of those coins, however, can be lost. The coins remain, but are for all practical purposes unspendable.

The AC in question was making a technical point about the difference between bitcoins and encryption keys. They did not claim personal backups aren't necessary, or that the blockchain is of help to a user who has lost their keys. I'm not sure it was a very pertinent point - the original claim was that bitcoins would "run out". They won't, but it's not because the blockchain is what it is. It's because there's no reason the software can't be modified to allow arbitrary divisibility. As long as even a fraction of a bitcoin is usable, any amount of trade can be conducted with it by dividing the coin up into smaller pieces.

Re:In the 2020s bitcoins will run out anyway

[Anonymous Coward]

I mentioned that the concept already exists: The only incentive to miners will be transaction fees when no more new bitcoins can be mined. All I'm proposing is a formalization of the transaction fees based on the time the bitcoin value has last been in a transaction. This is public information recorded in the blockchain. A hoarded bitcoin would be subject to inflation. It would still have its nominal value while it is hoarded, but since you could only spend it by paying the transaction fee, at which point the devaluation is realized, its actual value would decrease over time.

Indeed I wouldn't expect a protocol modification like this to gain widespread acceptance. My point is that even with a strictly limited money supply, the currency can still in effect be deflationary by design, which is good.

Re:In the 2020s bitcoins will run out anyway

[DaveV1.0]

Quantum computing, motherfucker. Look it up.

Re: In the 2020s bitcoins will run out anyway

[dobster]

Really? The 8 significant decimal places leave a lot of room when no new bitcoins are created any more.

Those disastrous forks

[Chrisq]

Those disastrous forks can be a real nuisance.

No more like naked blind short selling

[Anonymous Coward]

Sound a lot more like blind naked short selling trick, than splitting of currencies.
In Naked Blind Short Selling, a stock is sold on the promise the share will be bought/borrowed in future, and it never is. So two copies of the shares exist, the one that was sold (and never existed) and the one that actually exists. The non-existent one that was sold, is there on the books.

Eventually the short is filled or reversed, and the fake asset removed by manual intervention. Here it ended with block 225461. The v7 block-chain becomes invalid because its shorter than the v8 version, so its not like it would be valid.

Or perhaps like Bernie Madoff, buying and selling shares that didn't exist, or Wallstreet and the crash of 2007/8... in that case the Fed decided to turn the fake asset into a real one by buying the insurance company and paying out on failed bets. Thank f*** that bailouts aren't possible in BTC!

Damn

[MadKeithV]

Damn, I thought this was going to be the last forking warning against posting Bitcoin stories on Slashdot.

Re:Damn

[hodet]

I don't know, but if crypto currencies and everything surrounding their evolution is not "news for nerds" then I don't know what is. Beats the hell out of another Apple or Samsung story.

Re:Damn

[Angrywhiteshoes]

Try reading slashdot one day, without ever reading the comment section. Your perspective on the site will change and it will be less annoying to visit.

Argentina, Iceland, Hungary, Ukraine,

[Anonymous Coward]

"What is the actual 'real world' basis for this sudden notion that major 'real world' currencies can collapse any time?"

There's quite a few currency collapses, you really don't need to go back far, Argentina was the last major one in 2002, since then Iceland, Hungary, Ukraine, Zimbabwe, quite a few African ones.

http://en.wikipedia.org/wiki/Argentine_economic_crisis_%281999%E2%80%932002%29

It's the usual problem with fiat currencies, they spend more than they earn, they print money to cover it, the currency collapses.

When the US had a meltdown in 2007, they did a massive currency swap with the Eurozone. The effect of that meant that the US central bank had euros to sell as well as dollars, and could sell euros and buy dollars to prop the currency up if panic ensued. You came a lot closer than you realize, I find your comment somewhat glib, based on ignorance of how bad 2007 asset collapse was.

Re:Argentina, Iceland, Hungary, Ukraine,

[Anonymous Coward]

When the US had a meltdown in 2007, they did a massive currency swap with the Eurozone. The effect of that meant that the US central bank had euros to sell as well as dollars, and could sell euros and buy dollars to prop the currency up if panic ensued. You came a lot closer than you realize, I find your comment somewhat glib, based on ignorance of how bad 2007 asset collapse was.

ok, fair, I find it glib to compare the fluctuations and risk we are seeing in major currencies as anywhere near the same as the extreme Bitcoin fluctuations we are seeing, there is an order of magnitude difference. Even if you take Iceland (which I wouldn't count as a major currency, but still lets take it), the value loss of 50% happened "gradually" over 2 years (as graphed on wikipedia). This is highly dramatic, yes, but Bitcoin lost 80% of value in 3 days (!) in April this year. And have had multiple crashes like that.

Re:Argentina, Iceland, Hungary, Ukraine,

[gl4ss]

too bad none of those are actual major world currencies. putting zimbabwe and iceland crashes on the same sentence doesn't make that much sense either..

Re:Argentina, Iceland, Hungary, Ukraine,

[Anonymous Coward]

Weimar Germany, 1921 - 1924. And that *WAS* a major world currency. Situation is actually very similar to ours. The currency was well regarded internationally, and many people held it outside Germany (like the US dollar today). Inflation took off after the government printed massive amounts of currency to pay off war debt.

You are a fool if you think the same thing couldn't happen here. The dollar will not remain the world's reserve currency forever.

Re:Argentina, Iceland, Hungary, Ukraine,

[MyLongNickName]

Gotta love how libertarians keep blabbing about "fiat currencies" and how the currencies can collapse "at any time". While technically true, currencies collapsed under gold standards, and probably at a rate faster than what you see in today's economy. What folks don't seem to understand is that money has no value in and of itself, but is based on a population's ability to produce goods and services. Whether you use bitcoins, greenbacks, electrons on a hard drive or gold doesn't change this truth.

By definition, money is simply a means of exchange... tying it to an arbitrary material is silly. In the old days, countries manipulated currencies through artificial means and like today when those means run their course, bad things happen.

So, gold, paper or electrons, a country's prosperity is tied to the competence of its government. While this is a scary fact, it is the truth.

Re:Argentina, Iceland, Hungary, Ukraine,

[roman_mir]

By definition money is store of value, means of exchange and unit of account. Fiat currencies have nothing to do with gold standard.

Gold is the money, gold standard means that there is an equivalent amount of notes (not fiat money, but redeemable bank notes), so you can get the weight of gold back for that paper from the bank. It's like using deposit box keys where you store gold as medium of exchange. Gold as money doesn't 'collapse', but currencies that are supposedly backed by gold can collapse because the entity issuing them can print an unlimited number of them and then just say: sorry, we don't have the gold to redeem for your paper.

That's what Nixon did to US dollar, rather than allowing the dollar to revalue from 35 bucks to 100 or so that it would under those conditions, he defaulted on the money.

Baseless US dollar now is 42 years old. Under normal circumstances I would say it's at 50% of its life span, under the current circumstances I must say it's closer to 98% of its life expectancy.

Re:Argentina, Iceland, Hungary, Ukraine,

[Anonymous Coward]

My Great Grand Father lost more currency value then you want to imagine by insisting on holding the Weimer Currency. I am guess just under a 1/2 billion in today's dollar valuation, also he lived in sweden, so it wasn't like he had to own weimer's money. It didn't ruin him but it cost him most of his wealth. So I know that the Weimer wasn't some fly by night currency people bought it and held it just like you might hold Europes, Yen, etc. The lesson I've taken from this is that paper money is meaningless always invest in real companies and things. I don't know if holding stock in Germans biggest companies would mean we'd still own stock today but it possible. My dad also lost value due to inflation. We where cleaning out my grandfathers house when we came across some Swedish bonds given to my father as a 16th birthday gift. Since they only paid interest for 10 years, they weren't worth the hassle of redeeming due once again to inflation. My dad when he first saw them again said. "Couldn't they have bought me stock in volvo or some other big company."

Re:Argentina, Iceland, Hungary, Ukraine,

[Anonymous Coward]

When the US had a meltdown in 2007, they did a massive currency swap with the Eurozone. The effect of that meant that the US central bank had euros to sell as well as dollars, and could sell euros and buy dollars to prop the currency up if panic ensued. You came a lot closer than you realize, I find your comment somewhat glib, based on ignorance of how bad 2007 asset collapse was.

[citation needed] and I'll go google this, because if this is true, then everyone who wants to Euro dead is evil. This currency swap you're talking about sounds like stabilised a few things in the financial markets nicely - for the US especially. Now try the same with 17 distinct governments (the size of the Eurozone) instead. I assume both sides printed unbacked money and swapped it - green toilet paper exchanged for blue toilet paper, but it helped to keep the illusion going for another decade or so. Sure, the Euro has its deficiencies, but they can be patched up until they're gone, instead of deleting everything and sing kumbaya or "ding dong the Euro is dead" and leave it at that.

Re:Argentina, Iceland, Hungary, Ukraine,

[Anonymous Coward]

(Same AC here) And here's the citation. It refers to the 2007 swaps, and some new ones. /me strokes imaginary beard

Re:Argentina, Iceland, Hungary, Ukraine,

[Anonymous Coward]

but currencies that are supposedly backed by gold can collapse because the entity issuing them can print an unlimited number of them and then just say: sorry, we don't have the gold to redeem for your paper.,

Or because they couldn't keep up to date on the price ratio between silver and gold when using both... because in the real world demand and production of commodities commodities change.

Re:Argentina, Iceland, Hungary, Ukraine,

[Anonymous Coward]

But it slowly recovers after such crashes, so who cares?

Re:Argentina, Iceland, Hungary, Ukraine,

[squiggleslash]

By definition money is store of value, means of exchange and unit of account.

No. Means of exchange and unit of account, yes. Store of value? No. That's a fundamental misunderstanding which leads people to run around pretending that low rates of inflation are a conspiracy and that the world will end if we don't switch to the gold standard.

It's a medium of exchange and unit of account only. We print up sheets of paper (and mint coins) solely to make the transactions easier, but to a certain extent you and I can create and destroy money - actual dollars - in the time it takes for me to say "I'll sell you this TV for $100" and you to respond, "Sure, I'll owe you, is this IOU OK?" The Fed (and the banks it regulates) doesn't even have a monopoly on money creation.

You get scared because it seems to you obvious - despite being wrong - that if something can be used to transfer wealth it would follow that holding on to it would mean you keep that wealth. But money isn't wealth, it isn't value. And you holding on to it doesn't benefit anyone, it just means you make it more difficult for others to engage in transactions (because you're holding onto the unit of exchange) until someone else creates more money - which, ironically, you then crap your pants about.

Re:Argentina, Iceland, Hungary, Ukraine,

[AthanasiusKircher]

By definition money is store of value, means of exchange and unit of account.

Things only have "value" if (1) other people need them, or (2) you can convince them that having those things will allow them to get other things that they need. The first type of value leads to direct barter; the second leads to a medium of exchange... a currency... "money." What form that "money" takes is up to the people in power who hoard it or give it out and can convince other people to accept it.

Gold is the money, gold standard means that there is an equivalent amount of notes (not fiat money, but redeemable bank notes), so you can get the weight of gold back for that paper from the bank. It's like using deposit box keys where you store gold as medium of exchange. Gold as money doesn't 'collapse',

Gold could easily "collapse" if no one wanted it. If I'm starving out in the middle of the desert, and you offered me some food and fresh water or a bag of gold coins with a thousand times the value of the food, which do you think I'd take?

Anything relatively rare can function as money, but only if people actually believe that anyone else would take it. Your "shiny rocks" don't have any more inherent value than someone else's "green pieces of paper," since neither is particularly useful to humans absent some sort of power structure that endows that "money" with value.

Suppose the world economy completely collapses and all of your fiat currencies go in the toilet. You have 17 gazillion tons of gold in your own personal vault, but nothing else. I have a few crates of canned food and a pile of random rare old bottlecaps that I like to collect. I start telling people I'll accept these particular rare bottlecaps in exchange for food. Pretty soon people in my town understand that those bottlecaps have value, because I -- who have control of food, something people actually need -- accept them as currency.

Now you come to town and try to buy food or other essential goods with your gold. Do you seriously think anyone will sell anything to you? Nobody wants your shiny rocks. The person in power likes rare bottlecaps, and that's the only "money" that matters now... aside from actual food.

The idea that "shiny rocks" have any inherent value is just as stupid as the idea that "green pieces of paper" have inherent value. If you can't see that, I don't know else to say.

Re:Argentina, Iceland, Hungary, Ukraine,

[roman_mir]

Obviously billions of people never needed convincing that they just accept gold as money, including today. All of the comments left that say that gold isn't money because in the stores they don't take gold, well, first of all they do take gold, I have a gold backed debit card. Secondly it took a serious offence by governments to achieve the goal of 'cashless society' and it took a serious slight of hand done a number of times, including 1913 introduction of the Fed and 1917 allowing the Fed to monetise Treasury debt and 1925 allowing the Fed to monetise bad UK debt owed to France, which started the bubble that collapsed eventually in 29 and in 1971 Nixon just defaulted on the gold dollar and that was it. I guess USA had a very large amount of kinetic energy, a very large store of credit that people gave it.... the interest rates today are still extremely low, there is no relation between real credibility of USA as a debtor and the interest rates, the only thing that still keeps the charade going are the central banks around the world (just in these 2 month, Japan, EU, Australia, Poland, Mongolia have reduced their key interest rates that are set by the central banks and bought more US Treasuries to devalue their own currencies, which hurts their own people).

So gold has been in use as money for thousands of years, but all paper currencies end up dead in less than 80, that's just history, nothing else.

As to your empty island, well that's the real money - what you need to live, to survive. All money that is not food and not just things we need to live are representation of value. The real value is in whatever allows us to live.

Do you need a crate of US dollars on an empty island, a box of gold or a ton of food? Anybody in their right mind will take food, but that's exactly it, we need money so that we can buy thing that keep us alive, and money itself is useful when we trade with OTHER people.

If there were NATIVES on that island, which do you suppose they would rather accept in lieu of some FOOD that you desperately needed? Green pieces of paper or shiny yellow pieces of METAL?

As to bottle caps - they are subject to inflation. Gold is not measured by how pretty the bars are or what is minted on the coin, gold is measured by purity and weight. That's all it is - actual amount, not a random number written on a random piece of paper.

And yes, people did buy and sell food and other things with gold when there were shortages. Guess what, when FOOD is in tight supply, everything else fails but gold is still used to exchange, this is as true today (central banks are acquiring thousands of tons now) as it was during any time, but especially during hard times, like times of WAR.

Paper works as long as the society is not in a war, as long as the economy is growing faster than politicians create inflation.

Gold works when everything fails, everything else fails, gold remains the only true money.

If you don't understand difference between limited amount of metal that cannot be created just by desire of politicians and pieces of paper that can printed in any quality as long as they can find trees and paint, well, I can't help you then.

Maybe a 100 trillion Zimbabwe dollar note would help.

Re:Argentina, Iceland, Hungary, Ukraine,

[Anonymous Coward]

It doesn't have any more "inherent value", but what it does have is actualy scarcity. Those green pieces of paper don't. Gold-backed green pieces of paper can always be devalued, but if people don't like it they can just trade in gold. This puts pressure on the government not to just print money to pay bills.

Re:Argentina, Iceland, Hungary, Ukraine,

[Wildclaw]

. Situation is actually very similar to ours.

Hyperinflation generally happens because the government lack the ability to properly tax the amount of resources that it needs/wants.

In Weimar that happened because the government had debt denominated in gold which it couldn't repay without taxing the economy to destruction.

In the US, the debt is not a real problem as pretty much all the debt is denominated in dollars. With a 1:1 ratio between printed currency and debt repayed that isn't really a scenario for hyperinflation.

If you want to bet on hyperinflation in the US, I would go either with failure of taxing regime (USSR collapse) or collapse in production capabilities (Zimbabwe) as being more likely scenarios for hyperinflation.

Re:Argentina, Iceland, Hungary, Ukraine,

[Princeofcups]

What folks don't seem to understand is that money has no value in and of itself, but is based on a population's ability to produce goods and services.

That's the theory, but that is no longer the case. The value of currency is whatever currency traders are willing to pay for it. I worked for traders when the markets took the Mexican peso down to nothing. What a feeding frenzy. It's only a matter of time before the world markets "cash in" the US dollar the same way.

Re:Argentina, Iceland, Hungary, Ukraine,

[Anonymous Coward]

Gold could easily "collapse" if no one wanted it. If I'm starving out in the middle of the desert, and you offered me some food and fresh water or a bag of gold coins with a thousand times the value of the food, which do you think I'd take?

That straw man is tossed around a lot, but that's not the real world we live in where "nobody wants gold". In this world, billions of people desire it, as well as many large cental banks that hold it for it's store of value. Just because a small minority don't want it doesn't mean 'nobody wants gold'. A majority of the world's population don't see it the way you do.

Re:Argentina, Iceland, Hungary, Ukraine,

[wierd_w]

That isn't the argument I was seeing above.

The basic argument was more like this:

Improvements in production allow production increases, which should drive down the prices of goods. (Which makes the currency more powerful, since more real goods exchange for the same currency amount.)

However, that is not what happened over the past 40 years. As production increased, the amount of money in circulation dried up, while those still employed did not get a wage increase. (This is because the companies that implemented the production increasing techs, used the increased production surplus to devalue the labor of their employees, terminated them, and then froze wages. As a conequence, where there were "X" employees making above min wage, and engaging in the market, there were now X/Y employees, and the monetary value held by those employees was *NOT* increased by Y to compensate! Fewer people were able to engage in the local market at the same rates, so the integrity of the market was undermined.) When you throw in gloablization, and offsetting of these deleterious effects through currency drains on other country's markets, (like china is doing), the total situation is untenable in the long run.

HAD wages increased to match the reduction of employment, then money would still have been exchanging hands, and the unemployed people would have been able to seek alternative employment, or self employment, to get access to that currency. That didn't happen though!

Instead, as the currency contracted under this burden, there was essentially a shortage of currency in the local market. (Deflation). To combat this, the FED printed money like a stuck hog, and gave it to the govt to spend, as "stimulous".

However, because US currency was still "quite healthy!(tm)" In foriegn markets, (due to offsetting the "drop in domestic sales with increased foriegn sales, such as with drugs, music, software, etc.), this inflation pump devalued foriegn holdings. Cue the tipping domino.

Basically, money that sits in a mattress (or a cayman islands bank account) and does not get spent is deadly to an economy. A business that sits on huge piles of money does the same thing, as does a CEO who accumulates and does not spend.

The only tool available is to inflate the currency, to devalue what is in the matress. Doing so has consequences.

I would rather see legislation passed that forbids large corporations from hoarding liquid assets, above a certain percentage of their physical assets.

Re:Argentina, Iceland, Hungary, Ukraine,

[Richy_T]

Even "Real companies" are tricky since dividends have gone out of fashion.

Re:Argentina, Iceland, Hungary, Ukraine,

[roman_mir]

Oh, he'd take gold over many things, he talks the talk, but when it comes to walking the walk at the end people know what the facts are. Thousands of years of history prove that gold is money, there is no other thing like it that worked as money for as many people for such long stretches of time.

Re:Argentina, Iceland, Hungary, Ukraine,

[Anonymous Coward]

Usefulness as currency is inherent value. There are a lot of things we appreciate that would suddenly lose value if you were starving in the middle of the desert, for example a flat-screen television. There are also a lot of things which can become extremely valuable or extremely cheap depending on the situation, for example water. You just have to accept that value is context dependent, and part of that is to appreciate the intrinsic value of things that can be used as currency in today's societies.

Now it's a really shallow analysis to try to equate gold with dollars. Both are useful as currency because they are accepted as standard, and have a generally stable supply. However the reasons for this are wildly different in the two cases!! It certainly is not stupid to think that gold has more intrinsic value than dollars as it takes a LOT of real-world energy and effort to extract gold, while infinite numbers of dollars can be generated by the federal reserve at zero cost. The overall supply of gold is guaranteed to be stable by the laws of nature, while the supply of dollars has great historical precedent to steadily and eventually become completely over-inflated.

Re:Argentina, Iceland, Hungary, Ukraine,

[Anonymous Coward]

he talks the talk, but when it comes to walking the walk at the end people know what the facts are

Exactly comrade! That's why I laugh at libertarians and small government "starve the beast" types. They talk the talk, but they never walk the walk. Where are the Ron Paul or Gary Johnson voters? Where are the patriots rising up with their guns to take back government?

Re:Argentina, Iceland, Hungary, Ukraine,

[roman_mir]

Store of value? No.

- right, that's why there are no savings but only debt, that, combined with taxes and regulations is why savings that are used as investment capital moved to other parts of the world.

which leads people to run around pretending that low rates of inflation are a conspiracy

- rethink that statement, did you really mean low rates of interest?

Low rate of interest in a low savings environment is a conspiracy, but it's a conspiracy that is out in the open, it is the Federal reserve and other central banks that have a 'mandate' to create inflation.

"I'll sell you this TV for $100" and you to respond, "Sure, I'll owe you, is this IOU OK?" The Fed (and the banks it regulates) doesn't even have a monopoly on money creation.

- you did NOT create money in that example, you created debt and debt can be restructured without any new money coming into being.

Real money is created by production, debt is not real money, debt is a promise, a promise can be written on a piece of paper, but that's not money, that is most commonly known as a bond.

You get scared because it seems to you obvious - despite being wrong - that if something can be used to transfer wealth it would follow that holding on to it would mean you keep that wealth. But money isn't wealth, it isn't value. And you holding on to it doesn't benefit anyone, it just means you make it more difficult for others to engage in transactions (because you're holding onto the unit of exchange) until someone else creates more money - which, ironically, you then crap your pants about.

- I don't know WTF you are trying to say about me being scared, how about the people that are really scared: paper pushers, that are scared of real money of real interest rates?

Gold is valuable, so is steel, so is oil, so is grain, so are coffee beans. But gold is the only item of these that has been used as money consistently, though other items on that list have been used as money as well throughout history.

When you hold a PROMISSORY NOTE, that is when you know you only have something that may or may not be of any value at all.

When you hold gold or oil or grain or steel or coffee beans, they will always have value (as long as it doesn't get spoiled, that's why gold is always preferable). So if you hold real products and real money then you actually are ABLE to store value.

Now that may scare YOU. You may be scared that some people are actually capable of storing real value and not allowing inflation to destroy it, but it does benefit the society by providing somebody with savings that can be used to start and finance a business enterprise. Not promissory notes, not bonds, not dollars, but actual real things and the easiest ones to convert to anything else are things like gold and maybe silver, but even aluminium works, that's why people with lots of money even store aluminium.

Re:Argentina, Iceland, Hungary, Ukraine,

[DragonWriter]

Weimar Germany, 1921 - 1924. And that *WAS* a major world currency. Situation is actually very similar to ours. The currency was well regarded internationally, and many people held it outside Germany (like the US dollar today). Inflation took off after the government printed massive amounts of currency to pay off war debt.

Insofar as Germany paid off wartime debt (including reparations; which, in either case, is "not very far"), it did so largely by external borrowing, the new debt from which it simply repudiated. There certainly was hyperinflation in Germany, but it wasn't a result of anything it did to pay off war debt (and, since much of the debt was denominated in gold, it couldn't print money to pay it off, anyway.)

You are a fool if you think the same thing couldn't happen here

Its certainly possible that the US could lose sizable tracts of economically-vital territory and a sizable fraction of its working-age male population and acquire a substantial, non-dollar-denominated debt simultaneously in a war in which most of the worlds leading economic powers were aligned on the opposite side, and then be caught up in a major global economic collapse...but not particularly likely.

The dollar will not remain the world's reserve currency forever.

Sure, so? The dollar losing that status wouldn't imply a Weimar-style collapse.

Re:Argentina, Iceland, Hungary, Ukraine,

[DragonWriter]

Gold is the money, gold standard means that there is an equivalent amount of notes (not fiat money, but redeemable bank notes), so you can get the weight of gold back for that paper from the bank.

No, that's not what "gold standard" means. Gold standard means that notes (which are money) are redeemable for gold (which is also money) at a fixed rate. It doesn't mean that the gold backing the currency exists in equal quantity to the notes.

Gold as money doesn't 'collapse'

Crashes in the relative value of the commodity lead to crashes in commodity backed money, and this certainly has happened with gold. (The influx in supply from Spain's New World colonies is a particular example.)

Baseless US dollar now is 42 years old. Under normal circumstances I would say it's at 50% of its life span, under the current circumstances I must say it's closer to 98% of its life expectancy.

And the support for either of these estimates of life expectancy is...what?

Re:Argentina, Iceland, Hungary, Ukraine,

[DragonWriter]

Thousands of years of history prove that gold is money, there is no other thing like it that worked as money for as many people for such long stretches of time.

Actually, pieces of paper have been used by far more people as money, both because there were less people when gold was used directly as money, and because fewer transactions used any "money" at all.

Re:Argentina, Iceland, Hungary, Ukraine,

[roman_mir]

Yes, fixed rate of exchange between bank notes and gold reserves require that there is enough gold to cover the notes. If there aren't there may be bank runs.

Crash in relative value is not the same as crash of fiat. Relative value price fluctuations are a fact of demand supply curve, fiat doesn't recover after a crash because if currency is backed by nothing but faith, then once it crashes even if you limit the supply afterwards, nobody wants the fiat at all.

As to the life span of the dollar: no paper currency in history lived past 80 years, so at 42 years that's 50%. However in that stretch of time the dollar lost over 98% of value and the process is accelerating. There is no formula that will tell you what will happen in the future precisely, when exactly the events will unfold and what will be the exact sequence, but call it intuition.

You can definitely say that this is purely speculation on my part but I feel strongly about it.

Re:Argentina, Iceland, Hungary, Ukraine,

[Anonymous Coward]

Tying it to an arbitrary material that isn't both easy to take delivery of anywhere in the world and scarce is silly. Tying it to Bitcoins would ensure accounts were settled frequently and the problems that develop due to lying about ownership of the backing asset are eliminated.

Re:Argentina, Iceland, Hungary, Ukraine,

[AthanasiusKircher]

Gold works when everything fails, everything else fails, gold remains the only true money.

Only because the "gold wackos" hoard it and keep trying to convince everyone else to hoard it.

I completely agree with you that gold has a longer history of being valued as a currency.

Basically, it all comes down to exactly what I said -- if the people in power like "shiny rocks," gold will still be accepted as currency. If they don't, it won't. It's that simple.

I'm NOT saying that it's likely that all the powerful people in the world will suddenly stop liking "shiny rocks." But clearly gold's value has fluctuated over time as people have temporarily changed their investment strategies, both to and from the "shiny rock strategy."

Also, please re-read my comment and note that I specified a RARE type of bottle cap, so it would not be subject to inflation. Choose whatever the heck you want: the first edition of Rush Limbaugh's first book is the new currency. I don't care.

If you have power and control over significant resources, you can dictate what functions as currency. Gold is only a solution as long as you keep convincing those people that it is... otherwise, it has little inherent value. Any other random rare item could function just as well.

(And yes, before you start in about how fiat currencies are not limited in the way that rare bottle caps or the first edition of Limbaugh's book are, let me note that I never said dollars were the SAME as gold in every way. They aren't. However, fiat currencies and gold operate on the same ultimate basis of value, though, in that they are only valuable because people are willing to take them in exchange for other goods that they actually need -- and that requires a collective social "faith" in the inherent value of an item of ultimately little real value.)

Re:Argentina, Iceland, Hungary, Ukraine,

[roman_mir]

Only because the "gold wackos" hoard it and keep trying to convince everyone else to hoard it.

- actually quite the opposite. People are accumulating bonds and dollars, should I call them 'paper wackos'? Who do you think ends up in a better position due to inflation? What happens to 'paper wackos' when the inevitable bond market collapse and thus dollar collapse happens? The house of cards in the housing market (not really a pun, just a coincidental turn of phrase) collapsed eventually, it was fiat money printed, chasing approximately the same number of assets (houses) and a belief that there can be such a thing as 'consumer based economy'. Well, people didn't really learn anything, so they still believe that but now instead of houses a new stock market bubble and of-course the bond bubble are being inflated.

Who is going to be worse off at the end, well, I am not an oracle, but I already placed my bet.

- if the people in power like "shiny rocks,"

- quite the opposite, you are still under the wrong impression. People in power HATE gold, people in power want to stay in power by creating inflation and expanding their power with 'money' that they never have to work for, they never have to save, it's not their money, it's not real money. People in power want to squish every alternative to their preferred way of taking your purchasing power away from you, and that's how it's done - with inflation.

I'm NOT saying that it's likely that all the powerful people in the world will suddenly stop liking "shiny rocks."

- as I said, they hate real money. As a famous banker said some time ago: give me the control over nation's currency supply and I don't care who comes up with what laws.

But clearly gold's value has fluctuated over time as people have temporarily changed their investment strategies, both to and from the "shiny rock strategy."

- gold is not investment, it's money. A dividend paying business is investment, gold is money. You don't invest in money, but you can store value in real money (but not in paper).

specified a RARE type of bottle cap, so it would not be subject to inflation

- bottle caps are not universally accepted, maybe only among collectors. Gold is understood and recognised by people, bottle caps are not. At the end any bottle cap can be manufactured, you can't just manufacture gold like you can any other product, you have to mine for it and that means you have serious physical constraints on the new amount that you can get.

If you have power and control over significant resources, you can dictate what functions as currency. Gold is only a solution as long as you keep convincing those people that it is... otherwise, it has little inherent value. Any other random rare item could function just as well.

- no, you are still confusing fiat with people's choice.

fiat currencies and gold operate on the same ultimate basis of value, though, in that they are only valuable because people are willing to take them in exchange for other goods that they actually need -- and that requires a collective social "faith" in the inherent value of an item of ultimately little real value.

- while I agree with you that everything depends on whether we ultimately accept it or not, I am only looking at history of this world and making a rational argument based on that history, nothing else.

Re:Argentina, Iceland, Hungary, Ukraine,

[stymy]

But people do need government-issued money. It's the only way to pay taxes. So that gives it some inherent value.

Re:Argentina, Iceland, Hungary, Ukraine,

[DragonWriter]

Yes, fixed rate of exchange between bank notes and gold reserves require that there is enough gold to cover the notes.

No, they don't, and, in fact, historically the former has almost never implied the latter, because its not generally worth the additional overhead costs and counterfeiting risk to issue notes at all if you are doing it at full reserve.

If there aren't there may be bank runs.

Yes, bank runs are pretty much always a risk whenever you have banks holding reserves (whether in the customer deposits or cold reserves backing circulating notes); full-reserve banking is a potential solution to that, of course, but not the usual one, and certainly not a necessary one that is implied by the mere issuing of fixed-exchange-value notes.

Crash in relative value is not the same as crash of fiat.

Its exactly the same. Sure, the exact cause may be different, but a collapse in value is a collapse in value regardless of whether its because someone has found a vastly more efficient way to extract and refine a particular metal, converting it, pretty much overnight, from a precious metal to something much more pedestrian, as happened with aluminum in the 1880s, or because the government whose fiat backs a currency has ceased to be as credible as it was a month before.

As to the life span of the dollar: no paper currency in history lived past 80 years, so at 42 years that's 50%.

The dollar is increasingly not a paper currency, so even if that was a valid basis for estimating the likely lifespan of a "paper currency", it wouldn't seem particularly applicable.

However in that stretch of time the dollar lost over 98% of value

Not by any reasonable standard; 82.6% measured against the basket of goods usually used to measure inflation.

You seem to be measuring against gold (as the 98% number matches what you'd get against gold prices from 1971), which is a mistake.

and the process is accelerating.

No, its not. Over the period since the dollar became a pure-fiat currency, the most rapid gold:dollary price ratio increases were in all in the 1970s; the ratio spread about three times as much in the first decade as it has in the just-over-three subsequent decades.

You can definitely say that this is purely speculation on my part but I feel strongly about it.

Not only is it speculation, but it is speculation starting from false premises.

Re:Argentina, Iceland, Hungary, Ukraine,

[Anonymous Coward]

This is the key point that so many miss. Gold is basically just another fiat currency.

Re:Argentina, Iceland, Hungary, Ukraine,

[CodeBuster]

You're arguing over whether the cat should be black or white when all that really matters is that it catches mice. The money commodity is chosen and accepted by the marketplace because it's vastly more efficient than barter. Indeed, markets cannot grow beyond a certain size or complexity without the standardization that a monetary commodity brings. As you said, the commodity that is ultimately chosen as the money is not important so long as everyone agrees upon the choice. Throughout history money has been at various times and places sea shells, salt, copper, iron or even large circular stones with holes drilled in them, it just depends upon what's available. However, gold and other precious metals have been common choices, where available in sufficient quantities, because they're rare and yet easy to recognize and difficult to counterfeit. Gold in particular also had other advantages. It didn't rust or otherwise degrade and it was easy to divide as necessary to provide the necessary units of account. So even in your example the gold, where it available in sufficient supply, would probably displace your bottle cap money in much the same way that contact with Europeans and other outsiders led the Yapese to abandon Rai stones in favor of more convenient alternatives.

Re:Argentina, Iceland, Hungary, Ukraine,

[Hognoxious]

All of the comments left that say that gold isn't money because in the stores they don't take gold, well, first of all they do take gold, I have a gold backed debit card.

Which of course is exactly the same thing as the sales assistant getting the little scales out while you fiddle with your leather pouch.

What does it say on the ticket? X dollars or Y grams of gold?

You might as well claim they accept Euros in New Zealand because a Belgian credit card works there.

Version inflation?

[Anonymous Coward]

Since when do we drop the leading "0." from the bitcoin-qt version number? Is that a thing now?

Bitcoin, an important part of my money education

[Anonymous Coward]

I credit Bitcoin with giving me a further education on currencies.

My first revelation in this regard came to me when I realized there were two banks issuing paper money in HK ( before it became part of China ).

Then I came across the Bank Of Scotland notes ( which are British pounds printed by the Bank of Scotland ).

Then my grandfather mentioned that here in Canada the banks each used to print money. Essentially paper money is just like a cheque... or IS a cheque.. signature and all.

Then travelling I traded a good $5 bill for a practically worthless $50,000,000,000 ( i.e.billion) Zimbabwe dollar note ( that had an expiry date even ) from a fellow traveller.

Ha.. and in some countries it seems like a good ( or even not so good ) fake US$ bill is pretty much valid currency.

It all comes down to:
      Money, like most things, is only worth what __other__ people are willing to give you for it.

p.s. I would have a lot more respect for Bitcoin if the mining process actually served some real use instead of mainly wasting electricity - maybe help scientists look for asteroids heading to earth or monitor solar flares, or look for earth-like planets or work with seti or...

So upgrade the clients to version 8.

[tlambert]

So upgrade the clients to version 8. Problem solved.

Or are we worried about updating the bitcoin clients we've installed on our criminally trespassing/theft of services botnets?

Re:So upgrade the clients to version 8.

[Chrisq]

So upgrade the clients to version 8. Problem solved.

It worked so well for windows, didn't it?

Extra value!

[Anonymous Coward]

As a digital coin collector, I am extremely excited by these rare, limited edition "forked" bitcoins that will soon no longer be tender. I am trying to gather up as many as I can.

ASDFnz is a liar

[ras]

ASDFnz writes "It has been just over two months since the bitcoin block chain was rocked by a near disastrous fork causing the bitcoin price to crash. ..."

Right. Near fucking disastrous. You can see the effect right here, after clicking the "DRAW" button. At least, if you look very hard, and squint just right, you might just be able to pick up the crash that happened 2 months ago.

Actually, I can't see a bloody thing. ASDFnz is a liar.

Re:ASDFnz is a liar

[Anonymous Coward]

2 moths ago, price was 240. Now it's 120. That's half the size it used to be. I think the trouble is you have trouble seeing the screen with your head up your ass. Enjoy your nerdcoins.

Re:ASDFnz is a liar

[fastest fascist]

There's no indication the fork and the price crash are related.

Re:ASDFnz is a liar

[Thavilden]

Around March 12 you can see one day where the value drops slightly, but it's disingenuous to call this "rocked" when just a month after that you have the halving of the value of a bitcoin.

Re:ASDFnz is a liar

[tantrum]

2 moths ago, price was 240. Now it's 120. That's half the size it used to be. I think the trouble is you have trouble seeing the screen with your head up your ass. Enjoy your nerdcoins.

2 months ago bitcoin was at 46, now it is 118 :)

The was a sharp in this period, but overall it has been growing steadily so far.

Re:ASDFnz is a liar

[Anonymous Coward]

...but you don't *want* your currency to go up in value. That's called deflation and it's an awful property for currency to have.

Re:ASDFnz is a liar

[Anon-Admin]

So let me get this right, Deflation is bad and inflation is good?

If I have a currency that is worth less tomorrow than it is today then it is a good thing?

Sorry, I like the idea of a deflationary currency. It encourages saving, thrift, and money management where as inflationary currency encourages spending, and waist.

The whole idea that inflationary currency is good for the economy is based on the idea that it artificially forces spending as no one wants to hold onto it. Believe it or not that is a new idea, for thousands of years the world ran on deflationary currency. It was good then and it is still good now.

Re:ASDFnz is a liar

[FhnuZoag]

For thousands of years mass starvation was common, infant mortality was huge, the majority of people were chattel slaves living on a barter system, while the tiny minority of aristocrats lived in decadent luxury as their gold magically became more valuable through no effort of their own. Yeah, that'll be a *great* thing to go back to.

Yeah, reward saving - when large proportions of the population live a precarious enough existence as it is, with *nothing to save*, and would under a deflationary system see the debt they have instead automatically increase over time.

Re:ASDFnz is a liar

[Anonymous Coward]

Lots of inflation is bad, but a little bit encourages people (or corps) with large hoards of pure money to invest it in economically productive things.

When currency is deflating, on an individual basis it becomes "profitable" to hide it in the matress because it will be worth more tomorrow than today. While you could argue that this "encourages thrift" in terms of an individual saving, in practice when everyone does that economic activity shrinks.

Re:ASDFnz is a liar

[Anonymous Coward]

While it's easy to generalize "inflation can be bad under certain conditions" to "inflation is bad" and, from there, come up with the inverse corollary that "deflation is good," this is a vast oversimplification and a bit of a false dichotomy. Monetary policy is a much trickier subject than that, and disasters can arise from either inflation or deflation. The flip-side of stagflation is a liquidity trap.

Re:ASDFnz is a liar

[Anonymous Coward]

... and for thousands of years the world just sort of plodded along, almost at a standstill compared to how things are going today. Not that I'm saying inflation is 100% the cause, but I really don't see how the "for thousands of years" line of reasoning supports your preference for deflationary currency at all.

Re:ASDFnz is a liar

[Richy_T]

I was watching during the fork and during the crash. They are unrelated.

Re:ASDFnz is a liar

[DragonWriter]

Sorry, I like the idea of a deflationary currency. It encourages saving, thrift, and money management where as inflationary currency encourages spending, and waist.

You seem to want a pure store of value; what inflationary currency encourages (and deflationary currency discourages) is using productive investment in useful assets as a store of value. A deflationary currency encourages using the currency itself as a store of value, and discourages investment in productive assets.

Believe it or not that is a new idea, for thousands of years the world ran on deflationary currency.

No, it didn't. Economies haven't really "run on" any kind of currency for "thousands of years"; until very recently, in most of the world most transactions were barter and currency use was fairly limited, and the currency used (precious metals, grain, etc.) were not the kind of thing that had a hard production cap (more resources devoted to production would lead to more production) or other features which guaranteed that they would be deflationary.

It was good then and it is still good now.

Even if what was used as currency "then" was good then and is still good now, wouldn't the correct response be to return to what was used then, rather than to invent something new that has radically different basic features to what was "good then"?

Rather obvious isn't it?

[Viol8]

It means only a tiny fraction of the worlds population can ever possess any. What fucking use is that if its to be taken seriously as an online currency?

Re:Rather obvious isn't it?

[Anonymous Coward]

If there were only one bitcoin, that would still not make it nonviable as a currency. Essentially you trade fractions of the total money supply. You might as well express them like that.

Re:Rather obvious isn't it?

[thegarbz]

With 21million BTCs dividable into 100million satoshis each I think the world will have plenty of artificial bits to spread around.

Re:Rather obvious isn't it?

[Meneth]

And if we need more division, we can always update the client software.

Re:Rather obvious isn't it?

[dj245]

With 21million BTCs dividable into 100million satoshis each I think the world will have plenty of artificial bits to spread around.

Really?

There are about 1.18 trillion paper/coin USD in circulation. Let's estimate that 60-75% is held outside the US nowadays (this is a difficult number to calculate so it is basically an educated guess). There are about 350 million people in the US, so we have roughly (1.18 trillion *100*0.4) / 350million or 135,000 physical currency units per person ($1350.00). This seems low, but this represents physical currency, not money in bank accounts.

Now compare to bitcoin. If we assume 1 billion ("the world will have plenty") people use it, then we have (21 million * 100 million) /1 billion or 2,100,000 currency units (Satoshi) per person.

But wait, shouldn't we compare apples to apples? Let's include ALL USD, including all USD that are electronic. That's the M2 indicator, which is currently around $10trillion. If we assume that 1 billion people all over the world are sharing USD currency, that comes out to 1,000,000 currency units per person. So the Satoshi has only about double the curency units per person (assuming 1 billion people) that the USD has. BUT the US creates more money, and Bitcoin "loses" money over time (it is deleted, forgotten, hard drive crash, etc).

Bitcoin as it currently stands is the IPv4 of currency. If it becomes popular, I can easily imagine not having enough divisible units to go around.

Tulips anyone?

[WinstonWolfIT]

Or beanie babies? Anyone? Anyone?

Re:Tulips anyone?

[Anonymous Coward]

Carrots.

Re:Tulips anyone?

[H0p313ss]

Or beanie babies? Anyone? Anyone?

I may be overly cynical today, but my guess is that the Bitcoin crowd are so clued out that the tulip reference goes right over their heads.

Re:Tulips anyone?

[Anonymous Coward]

No, we hear it constantly from everyone ad nauseum, and it's SOOOO clever every time. Dutch tulips, bubble burst, bubbles are bad mkay. Got it. I strongly encourage you to keep your savings in goods with no speculative component.

Re:Tulips anyone?

[Richy_T]

Yeah, because this is the first time any of us have ever heard it mentioned. (Rolls eyes)

Re:Tulips anyone?

[H0p313ss]

speculative

If I wanted something as reliable as Bitcoin I'd do all my investing in Las Vegas.

Re:Tulips anyone?

[H0p313ss]

Yeah, because this is the first time any of us have ever heard it mentioned. (Rolls eyes)

Ah well... like dey sey, de nile is not a river in Africa...

You forking bastiges!

[erroneus]

I can't believe those forking bastiges. What will they do with the 7.x users? Just leaving them to dongle like that?

(I'm going to sexist hell)

Re:You forking bastiges!

[Megane]

You farging icehole bastage!

Let me see if I understand this

[davidbrit2]

Basically, the long block chains are $2 bills, and the 7.1 client is Taco Bell. Is that about right?

Re:Let me see if I understand this

[rjhubs]

Car analogy please.

Long block chains are like double decker buses and the 7.1 client is like a taco bell drive throught with only 9ft of clearance?

Misleading use of language to make it look legit

[dbIII]

Neither of them is any more a currency than limited edition my little pony plates. They are a capped number enthusiast item traded among enthusiasts.

Samzenpus

[Anonymous Coward]

This Samzenpus just gets less credible each time he posts. And why has someone added "scam" to the tags? This whole website becomes less and less objective by the day.

Last forking warning

[wonkey_monkey]

Or you'll have me to forkin' answer to.

Re:Last forking warning

[TeknoHog]

Ah, so "fork" is the new "fsck" or "frak", and I was just getting used to those... it's like the language is forked.

Re:Last forking warning

[Anonymous Coward]

they're not forks as such, rather attempts to rediscover whatever F**K means in all those censored forum posts.

Thailand, Indonesia, Ruble, Turkey, America

[Anonymous Coward]

Oh and Thailand in 1997, followed by Indonesia (dropped 83% of its value), South Korea... (remember the Asia crisis?), the post soviet Russian ruble collapse, Turkey Lira collapse went right up till 2001, in 2004 they had to knock *six* zeros of the end of the bank notes!

America had it's collapse of the continental, courtesy of the states printing money:
http://en.wikipedia.org/wiki/Early_American_currency

"Continental currency depreciated badly during the war, giving rise to the famous phrase "not worth a continental".[10] A primary problem was that monetary policy was not coordinated between Congress and the states, which continued to issue bills of credit."

Sound familiar?

Re:Thailand, Indonesia, Ruble, Turkey, America

[Hognoxious]

Do you have any examples that aren't small and insignificant countries, dictatorships, and that happened recently?

2 months ago

[Anonymous Coward]

The crash was not caused by a fork. The crash was caused by over-valuation coupled with the largest DDoS MtGox had ever experienced. The trading system slowed to the point that user's sell / buy trades weren't going through and it caused a panic. MtGox was taken down while they upgraded network infrastructure to deal with the shitty DDoS people. When they came back up, other exchange's had already begun the dive. It dove and corrected repeatedly, until it panned out and has been relatively stable since.

The article is bullshit.

Re:2 months ago

[tompaulco]

The crash was not caused by a fork. The crash was caused by over-valuation coupled with the largest DDoS MtGox had ever experienced. The trading system slowed to the point that user's sell / buy trades weren't going through and it caused a panic. MtGox was taken down while they upgraded network infrastructure to deal with the shitty DDoS people. When they came back up, other exchange's had already begun the dive. It dove and corrected repeatedly, until it panned out and has been relatively stable since.

The article is bullshit.

AC is correct. The fork was two months ago. When the fork happened, the price on the historical chart is not even perceptible. Heck it may have gone up that day from all I can tell. AFTER the fork, the price climbed to 4 TIMES the value of before the fork, and is currently trading at more than double that price. So the article is just an out and out lie and FUD. We should not consider any more submissions from this submitter.

Re:2 months ago

[Richy_T]

It as also caused in part by a huge spike in price due to government actions in Cyprus causing a huge inrush of fiat money. So expect to see a few more of these.

Re:Wow... now I'm never doing bitcoin

[Anonymous Coward]

Shill poster. There is no such thing as crashing the market by crafting transaction packets. In markets of other currencies however, even a whisper can be enough.

Re:Misleading use of language to make it look legi

[Anonymous Coward]

Well said - capped number enthusiast trading item. I like the term. They also can't be a real currency because they won't blend.

Re:Seen any rancid assholes lately?

[Anonymous Coward]

APK and Unknown Lamer.

"one-off"?

[Anonymous Coward]

a one-off tax is what it was.

So far. But it has only been 2 months. I will concede your point in 10 years IF it has not happened again, but that seems very unlikely.

Why have a single BTC rather than many?

[Anonymous Coward]

By simply translating the output of the hashing algorithm by a fixed constant, equivalent BTC networks can be created that each chase different hash targets (where BTC chases zero). Would it not be better to have a distributed currency market where multiple BTC like currencies can be traded, risks may be split and people may vote with their wallets as happens with real currencies?

Re:Why have a single BTC rather than many?

[Richy_T]

Sure. There's alt-coins out there. I'm a bit skeptical of all of them (some more than others) but wish them luck. There's plenty of room at the table.

"Immune"?

[Anonymous Coward]

Apple never said they were "immune" to viruses. The closest was to say they were immune to PC viruses and that OS X had had many fewer than Windows PCs.

Mac OS pre-X had viruses in the late 1980s and early 1990s. (e.g. INIT 1984, Scores, nVIR, MDEF, CDEF). If memory serves, Scores was a big impetus behind some anti-virus laws in the US in the late 1980s.

Beanie Babies..

[wbane]

I really like the concepts and implementation of bitcoin.. but the whole movement reminds me of the Beanie Babies explosion.

The fad gets popular. Lots of people get on the bandwagon. Knockoffs and too much silly varieties dilute the brand. Fad dies. People left with unopened Beanie Babies in storage boxes hoping/thinking those goofy little stuffed animals will be worth something again.

Bitcoin is an awesome experiment in virtual finances. But it's rocked with inconsistencies with different groups trying to contribute/regulate/organize things and in doing so that they are becoming part of the problem, not the solution. I honestly expect bitcoin to go down the drain at some point with alot of these bitcoin mining rigs gathering dust or maybe working on something worthwhile like Folding@home or Seti@home projects. It's just sad about the amount of power all those rigs consumed trying to mine virtual money. Just seems like a waste. My 2 cents.

Good luck QT client

[Anonymous Coward]

i switched to a web wallet because the my bitcoin data directory is eight gigabytes in size. plus, my computer is too slow to process the big block sizes bigger than 256 kilobytes. but it has been fun using the 7.1 client.

good luck with version 8.1 QT client.

one more thing... everytime I see the word fiat I think of Italian automobiles http://www.fiat.com/ Just saying

Incitament

[Anonymous Coward]

Be careful guys. This article may be a scam. The new bitcoin clients will not generate any incompatible blocks since the problem was completely identified. See the official description http://bitcoin.org/chainfork.html The author of the article may be speculating that this will destabilize the bitcoin value for his own profit. At least he has incitament if does not possess bitcoins.

Re:Misleading use of language to make it look legi

[viperidaenz]

If I blend the backups with your wallet file key, the bitcoins in it are effectively destroyed forever.

Summary text has the version # wrong

[Anonymous Coward]

Version 0.8.0 is the minimum required. There is no version 8 yet.

Mystery calculation....

[Anonymous Coward]

I've read up a bit around Bitcoin. The mysterious software mints bitcoin units in exchange for gazillions of computer cycles, solving some unspecified but complicated "problem". Are the clients helping to calculate something useful, or unknowingly contributing to illegal decryption attempts or some other dubious activity. Does anyone really know? Please share if you know.

worgl-experiment

[NewYork]

I believe http://www.lietaer.com/2010/03/the-worgl-experiment/ is a better solution than Bitcoin

Virtual Fiat Currency

[Anonymous Coward]

Hopefully, bitcoin has a fix in the wings... temporary and permanent ... it is truly a virtual fiat currency ...

Medieval thinking, medieval problems

[Anonymous Coward]

So we're soon to have "Bitcoin A", minted to the old standard, and "Bitcoin B", which can't be handled by a significant fraction of payment processors? If logic holds, Bitcoin B will start trading at a discount to Bitcoin A, and it's up to the buyer to know and keep track of whether they got Bitcoin A's or Bitcoin B's.

Having multiple varieties of what is nominally the same coin in circulation, requiring money-changers to supply traders with the correct coin, is reminiscent of the Middle Ages. There aren't a lot of modern cases like this because of demonetization, although the Iraqi Swiss dinar comes somewhat close. Very appropriate for a currency based on medieval monetary theory.

Automatic devaluation of US dollar if not spent

[NewYork]

Automatic devaluation of US dollar if not spent within a month or so.
https://goo.gl/LKYtv