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Why Bitcoin Is Doomed To Fail, In One Economist's Eyes
Hugh Pickens DOT Com writes "Economist Edward Hadas writes in the NYT that developers of bitcoin are trying to show that money can be successfully privatized but money that is not issued by governments is always doomed to failure because money is inevitably a tool of the state. 'Bitcoin exemplifies some of the problems of private money,' says Hadas. 'Its value is uncertain, its legal status is unclear, and it could easily become valueless if users lose faith.' Besides, if bitcoin ever really started to take off, governments would either ban it or take over the system says Hadas. The authorities might be motivated by a genuine concern about the stability of a shadow monetary system or they might act out of self-preservation because tax evasion would be too easy in a parallel economy. 'Part of the interest in virtual currencies like bitcoin is that their anonymity can provide a convenient cloak for criminal activity. Part is technological — this is a cool idea. And part is speculative — gamblers bet that bitcoin's value will increase,' concludes Hadas. 'Truly private money is an inferior alternative to the money that comes with the backing of a political authority. After all, no bank or bitcoin-emitter can be as public-minded as a government, and no private power can raise taxes or pass laws to unwind monetary excesses.'" Could be there's something good about money that can't be manipulated by law. Some people at least think there's plenty of value in Bitcoin and similar currencies, despite the risks. And those risks at present probably aren't enough to comfort the unfortunate Welsh fellow who (HT to reader judgecorp) "has realised he threw out a hard drive containing 7500 bitcoins, worth £4 million at today's prices. It is now under four feet of garbage in a landfill site the size of a football pitch."
He's just pissed he didn't mine bitcoins when it was still practical.
An economists view on this issue means about as much to me as an astrologist's. The whole subject of economy is a joke.
Money has never been a tool of the state, except for collecting taxations and using it for the people. It is their tool and the people's tool but never was "the government owns the tool".
Just as gold and silver standards which was always "privitized" and was never a "tool" that was "centrally owned" by one figure.
We've played this game before.
I look forward to the first Bitcoin Panic, it should be interesting to see what happens...
I think Bitcoin is the future. Finally we have deflation instead of inflation. Economists are always afraid of deflation because it will cause people to massively stock up their money. But most people don't behave according to what is most wise according to economic law, if they have plenty of money, thell spend it, to hell with the future.
Surely the value will drop and stabilize as governments require insight into transactions and that you pay taxes over Bitcoins earned, not a problem.
Privately issued currency was quite normal before the 20th century. It's just that they all eventually failed or were forced out of circulation. This is one area that government can provide some stability against inflation and outright scams. But Bitcoin is no different than those other currencies, and don't think for a second the behemoth US federal government is going to allow competitors.
“A government big enough to give you everything you want is a government big enough to take from you everything you have.”
Everything described here is what makes bitcoin a superior form of money, not inferior.
Liberty in your lifetime
Seems like this economist is too fond of governments to be really objective. The last quote in the summary was specially awful. No bank or financial institution will ever be able to do as much harm to a population as a bad government.
That said he has a point regarding government interests in taking virtual currencies down or controlling them. The thing is, technologies evolve, and albeit bitcoin may find its end in government interventions, sooner or later other alternatives that are even harder for governments to control will appear. It was the same with file sharing and it will be always like this. People resent control and given the means to avoid it most will.
btcd has a much better codebase. readable. comments. lots of test coverage. and btcwallet is its own app. you can connect btcwallet to btcd remotely... even over tor...
github.com/conformal/btcd
He's right, but in the wrong way. All currencies are doomed to fail. As long as people are willing to exchange something for something else, both have value. Most FIAT money has value because governments are willing to exchange it for taxes, so then it has value to almost everyone. When a government collapses, or people lose faith in it, it's currency becomes worthless. Seashells are no longer values as currency, but they once were. Gold/Silver have boom/bust cycles. BitCoin had value because of SilkRoad, and the silk-roaders were willing to accept it for... something. Frankly I'm surprised BitCoin still has value after SilkRoad's demise. If something significant replaces SilkRoad, BitCoin will remain valuable. Until then bitcoin's going on momentum. May crash soon, may not. Will crash eventually.
Here's to losing my Karma Bonus again....
The actual concern of any real economist is now that Bitcoin has PROVEN to be more dependable than any fiat currency in the world, that we could enter a new dark age of hoarding because it's even more deflationary than gold itself. Luckily, I think a whole new economy of distributed autonomous service-backed share trading systems will proliferate before that happens so as to dissipate much of the value tied up and stored in the BTC market cap. I predict we'll see BTC well over 10K per coin before that happens, (or, ten times it's current real world value,) though any denomination in dollars is soon to be meaningless as USD hyper-inflation is just around the corner, it seems.
Money is by no means "inevitably a tool of the state." Of course, the state always acts to seize control of the mint or printing press, but money (e.g., gold, silver) would of course exist regardless of the state.
And if money is a tool of the state, why do we allow a private banking system to issue our money?
No Inflation Taxation without Representation
Sorry, but their reporting always supports the agenda of the US government. They may hide behind "liberal investigative" domestic reporting but they are government stooges and support any military industrial folly.
"has realised he threw out a hard drive containing 7500 bitcoins, worth £4 million at today's prices. it is now under four feet of garbage in a landfill site the size of a football pitch."
dude, i want to know where this landfill is! for £4 million, you can automate the searching process or pay idiots to do the work for you! sensitive metal detectors can sure cut down the searching process. plus, think of all the other hard drives you will find and could sell on ebay as "used". ;D
Anons need not reply. Questions end with a question mark.
Maybe he should give up virtually mining for bitcoins and start literally digging for them.
http://www.bbc.co.uk/news/uk-wales-south-east-wales-25134289
"no bank or bitcoin-emitter can be as public-minded as a government"?? Hahaha.. is that a joke? The government is hardly "public-minded." The government is just self-interested as any other entity plus they have a monopoly on violent force..
Could be there's something good about money that can't be manipulated by law.
Yea, except, there is no such currency in existence and never will be. I don't think you really understand how the world works. If you think BitCoin is a good idea, I KNOW you don't understand how the world works, but I would love to sell you a few things at a really cheap rate. Come on, don't let everyone else take advantage of you and leave me out just cause I'm honest about stealing your money.
Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
Yes, Bitcoin will probably undergo a dramatic failure at some point, but government-backed currencies also fail, usually due to terrible management by the government.
The only difference is that when a national currency fails, it is usually due to the stupidity (or just plain callousness) of a handful of powerful people, whereas when Bitcoin fails, it will be due to the collective stupidity of large numbers of people.
Centuries of history tell us differently, because throughout much of history, "money" was either stuff that was intrinsically valuable to people, or it was slips of paper referring to actual, valuable stuff stashed away in private vaults. In fact, it is governments that usually deprive money of value for the purpose of financing wars and welfare.
Mostly what that says is that Hadas already views governments as entities separate from the people and has given up on democracy and reason. I still think that in the long term, the people tend to make good decisions and vote in representatives that do the right thing.
Besides, people can come up with new ways of doing things faster than governments can catch up with laws and enforcement to try to stop them. And when governments get too pushy, the people just ignore them, as they do when it comes to drugs, and taxes in much of the world.
I'm just waiting for the first tax audits of BitCoin users who get dinged for not having paid capital gains tax. I give it a few years.
'Bitcoin exemplifies some of the problems of private money,' says Hadas. 'Its value is uncertain, its legal status is unclear, and it could easily become valueless if users lose faith.
Cash's value is uncertain, its legal status is ... well, not unclear, but situationally dependent in a pretty bad way[1], and like anything, it becomes valueless if nobody wants it.
1. In the US, at least, while it's legal to use arbitrarily large amounts of cash in any legal transaction, it's not legal to use it for drug deals, money laundering, etc.. Sounds reasonable so far, but there's a whole boatload of policy and precedent to the effect that having large amounts of cash constitutes evidence that you were using it for drug deals, money laundering, etc., which combined with civil forfeiture, means that having large amounts of cash permits the state to seize that cash, unless you can prove that you were doing something good with it. Short of being an employee of a bank, vending machine company, etc., that's pretty hard.
"it could easily become valueless if users lose faith"
Was "it" referring to US dollars, or was "users" referring to Christians?
Ezekiel 23:20
Hadas most trenchant point is that governments will oppose Bitcoin if it becomes successful. He's correct, and his analysis is isomorphic with "The neighborhood thugs will rough you up if you conduct business without paying them protection".
This is an important concern; but not a reason to stop.
Because of that, it's destined to fail. No different from the dollar or euro.
Since all States are doomed to failure, their currency will follow. When was the last time that Roman coins were used as legal tender?
The economist (http://www.economist.com/node/21551492) had an interesting article a while back on the Somali Shilling. here is a currency that is not backed by a government (the government does not exist) but has held its value remarkably well. This goes to show that government backing is not totally necessary for a currency to thrive.
Due to its mathematical design, bitcoins are similar to a comodity, not a fiat currency.
The selling feature of Bitcoin is that it is not backed, nor traceable by, governments. That's the main drive behind this boom - very little trust remains in the US government, or in many others. That covers the Silk Road-type drug-trade users - they have a very good reason not to trust the currency of a government that has declared war on them. That covers the technological side - tech-savvy people tend to be much less trusting of any government, and we in particular were betrayed by their widespread monitoring. And it even covers the investment bubble - the marketplace wants US monitoring of damn near everything to stop, and anything that steps in to fill that need will find a ready consumer base and investor backing. Those are the three groups *he* identifies as behind the Bitcoin boom, and each one is motivated, directly or indirectly, by a fear and hatred for the American government (note that it's specifically the government, not the American people, that are the target here).
Bitcoin will die as soon as we can get similar guarantees of security for official, government-backed currencies and banking systems. Oh, and not just from America - a currency that is secure not just from the issuing country, but all others.
Yeah, even if Bitcoin dies (I can see a big enough crash destroying the brand, and any currency is only as strong as the collective desire to use it), something else will come up to replace it.
he threw out a hard drive containing 7500 bitcoins,
Oh. This money is not kept in vaults, but on Seagates and WDs.
Keep a copy of SpinRite around....
And a USB-to-RLL/IDE/PATA/SATA connector for when standards and interfaces change.
Fools.
Even with the relatively still small subset of the population that is participating in it, they have made BitCoin untenable as a currency. It's simply too volatile. Over the last few hours, the 'value' has increased by 20%. Now that *sounds* to BitCoin advocates like awesome news, but it means I can't negotiate an annual salary or a reasonably establish terms for a loan or really much of any sort of long term planning.
While people may rail against a central bank manipulating a currency, the aggregate behavior of any fixed currency without some regulatory hand has been too volatile for day to day use. People complain that the QE is going to, bound to lead to hyperinflation, but thus far that has not happened but we have seen hyper-deflation in terms of BitCoin overall and a lot of extreme booms and busts along the way. People are right to worry about QE going to far, but jumping on the gold or bitcoin bandwagon is betting on systems that have objectively demonstrated in practice worse behaviors than what has been observed in the central banks.
XML is like violence. If it doesn't solve the problem, use more.
Bitcoin has proven itself of no such thing yet. It hasn't existed yet even for five years.
Wake me up when a country that uses it widely recovers from a full-on economic recession.
THEN it will have proven itself dependable.
File under 'M' for 'Manic ranting'
"it is now under four feet of garbage in a landfill site"
For anyone considering the idea of trawling through the landfill site the four foot of garbage isn't really the problem, it's that the description doesn't even narrow it down to anywhere in Wales specifically.
FED and ECB are private entities owned by private member banks. Government has no authority, but tax you.. for example, they need to borrow the money they want to issue from FED.
All money is based on the belief of its usefulness in future transactions.
Different thou, if someone threathens you with a mortgage agreement and losing of your home..
suddenly the will to find more officially sanctified money is of great interest.
they might act out of self-preservation because tax evasion would be too easy in a parallel economy [...] no private power can raise taxes or pass laws to unwind monetary excesses.
Way to miss the point, Ed.
The governments of the world have proven themselves much too irresponsible to manage fiscal policy. We-the-Fuckin'-People have, therefore, decided to take that power back from the government.
When a government can't keep its own spending in check, "raise taxes" does not count as a valid response, whether or not they have that power by virtue of having the biggest guns. The interests of the world's governments have drifted so far away from "public-minded" as to make your entire suggestion laughable. No, we obviously can't trust most private entities to act in our best interests - But I could name literally a hundred that do a hell of a lot better job than any world government.
The federal reserve and the ECB need to cease to exist, ASAP. No more of this "implicit taxation through inflation" crap - If governments can't play on the same monetary field as the rest of us, they need to go away and have something better able to live within its means replace them.
In other news, overnight bitcoin just went up another 10%.
It hasn't existed yet even for five years.
This bears repeating. Even if BitCoin had shown remarkable stability over this period, it would still not be enough.
Secondly, BitCoin has failed dramatically to demonstrate said stability. It's shown just the opposite.
A completely unbiased view has been presented. (Hint: Economists work with and for governments.)
As for following the money.. good luck with Bitcoin et al :-)
in other words, state sanctioned VIOLENCE.
FTFY
Shoes for Industry. Shoes for the Dead.
Mr. Hadas seems not to know at least US history too well. Non-USG money worked widely for a long time. So has money from other places where coins were used outside their national areas. The coins had value of course. Fiat money (greenbacks, Continentals, etc.) "works" where there is a state with power to impose a currency, and not otherwise, but government power ultimately doesn't work too well. Black markets and alternatives are too easy.
On the whole, though, what has worked long term has been something of value used as a currency, or backing it. Use of something hard to make but
without other source of value than its existence as a curiosity means it gets closer to usability than, say, Hula Hoops as a currency, but there's not much
to say that the world might tire of Bitcoin and say "feh. So what?" and refuse to accept these numbers as having any value at all.
In principle a dollar is backed by part of the US GDP. As long as that habit of thought continues, it'll have value. At some point though if US debt gets big enough people might well ask what value pieces of paper have and conclude the same thing. Then, state power or no, the currency becomes useless. It's happened before.
at least bitcoin produces some type of mechanism for faith in it to even exist at all
What mechanism would that be? Do you refer to the notion that because it is not a fiat currency that it must be better? There's also a fixed quantity of helium in the world, why not use that as currency? That means gold must have tracked the average cost of things pretty closely... no wait, it hasn't. Well at least gold has always gone up lately so it's predictable in the deflationary effect, well except the rather sharp decline since the beginning of 2012. Or do you think that because it has the potential for anonymity roughly equivalent to cash that it has value? The two problems there are that, in practice, people would rather have a very clear claim to ownership than anonymity, and the transactions are actually more traceable than most cash transactions.
all other currency's faith is derived through "well everyone else is doing it."
I hate to break it to you, but that's true of *EVERY* currency that has ever existed, bitcoin included. Ever since growing beyond the feasibility of straight barter systems, our economies have relied on consensus agreement upon an arbitrary assignment of value to some 'thing', whether it be gold, silver, bitcoin or some made up but explicitly managed thing backed by a stable organization like most modern currencies in the developed world.. If walmart started accepting bitcoins exclusively, then bitcoins 'value' would increase, that's precisely because 'everyone else is doing' is the *singular* important thing in any 'currency'. If 90% of the people willing to accept bitcoin as 'payment' lost their faith, it would crash (and in fact enter a death spiral landing in zero).
XML is like violence. If it doesn't solve the problem, use more.
Bitcoin is just alternative currency. There are plenty of that around - most of them are pegged to some other currency though, but they are, for the most part alternative currency.
Think: Gift Cards (Amazon/Apple/Steam/Google/etc), alternative store currency (Canadian Tire Money), etc. Then there's non-traditional currency, like WoW Gold.
If anyone says Bitcoin isn't a "money" they're plain old lying. It can be used to facilitate trade (which is the purpose of currency).
Of course, there are a few fundamental problems with Bitcoin, but there are problems with all currencies.
When any economist, banker, etc., says Bitcoin is doomed, the real reason is them saying is "we haven't figured out a way to make money on it yet". No currency is invulnerable to making money by doing things of little value, Bitcoin included. It just means the quants haven't sat down to figure out schemes to exploit to get bitcoins for little effort. Either it's because the entire bitcoin market is too small so the benefits of skimming 1/1,000,000th of a Bitcoin from every transaction is barely worth the effort, or other reason.
That's the real message.
We have no idea what Satoshi's success criteria were. so how can Bitcoin be a failure?
Perhaps the aim was for Bitcoin to be routinely used by almost everyone in the world -- in which case, yes, it'll probably fail, but that would have been an outrageous target.
Perhaps the aim was for it to become useful to a few thousand niche users -- in which case it's already a success.
Perhaps the aim was just to see what happens -- in which case it can't fail.
Bitcoin is what it is -- and it's interesting to watch.
Let's pick this nonsense apart.
> "Economist Edward Hadas writes in the NYT that developers of bitcoin are trying to show that money can be successfully privatized but money that is not issued by governments is always doomed to failure because money is inevitably a tool of the state.
Money is a tool of trade, valuable because it is sanctioned by its users in society. The success of money is determined only by whether people other than the holder accept it.
Bitcoin seems to be riding a hype, but doing okay just in terms of growing acceptance as a payment scheme for actual products and services.
> 'Bitcoin exemplifies some of the problems of private money,' says Hadas. 'Its value is uncertain, its legal status is unclear, and it could easily become valueless if users lose faith.'
Uncertain value and becomes useless if users lose faith? Sort of like fiat currencies? Except without "quantitative easing" causing inflation to kick the can on fiscal failures from decades of overspending.
The legal status is an open question, and a valid concern. Personally I think it's probably a red herring, but I'd keep an eye on the legal landscape if I was going deep in this.
> Besides, if bitcoin ever really started to take off, governments would either ban it or take over the system says Hadas.
How? What is his criteria for "take off"?
> The authorities might be motivated by a genuine concern about the stability of a shadow monetary system or they might act out of self-preservation because tax evasion would be too easy in a parallel economy.
Didn't this guy just say it would be less stable than official sector currencies? Anyway, tax evasion may be harder with Bitcoin since transactions are public record.
> 'Part of the interest in virtual currencies like bitcoin is that their anonymity can provide a convenient cloak for criminal activity. Part is technological â" this is a cool idea. And part is speculative â" gamblers bet that bitcoin's value will increase,' concludes Hadas.
Part of the interest in legitimate trade is that it provides a convenient cloak for criminal activity.
I think Bitcoin has less anonymity than the author asserts, and protecting privacy on Bitcoin is non-trivial for the average user.
> 'Truly private money is an inferior alternative to the money that comes with the backing of a political authority. After all, no bank or bitcoin-emitter can be as public-minded as a government, and no private power can raise taxes or pass laws to unwind monetary excesses.'"
Gold. It's private, not backed by any authority other than natural scarcity, and was the dominant reserve currency for hundreds of years before modern fiat currencies. We have only had our modern fiat currencies since Bretton Woods in 1971 years and it is already unravelling.
I'm all for valid criticisms of Bitcoin e.g. criticisms of the mathematics behind the artificial scarcity or a murky legal landscape. This guy's comments strike me as vacuous.
"He's either a total idiot or a propaganda puppet."
Come now, come now. Surely he can be both.
HELP MY ACCOUNT HAS BEEN HACKED BY AN ILLIBERAL ART STUDENT SET TO DESTROY THE INTERWEBZ!
It is precisely because of articles like this one, from Federal-Reserve-connected-journalist-economist, That BitCoin WILL Succeed!!!! Because they don't get it!!! ... They've missed the point! ....and that is GREAT a democratic, not corrupt, independent private currency.
BitCoin is here!
BitCoin is growing!
BitCoin is becoming a trend setter!
BitCoin is NOT going to stop!!
The bottom line is that BitCoin is a democratic transaction currency that is not manipulated by the corrupt central bankers and their government minions. So lots of online transactions will be done with BitCoin... How wonderful
Expect to see more articles like this one, as the central bankers and governments scramble to suppress BitCoin but DO NOT be deceived for BitCoin is a good thing.
First, a brief correction: the author of the op-ed is not an economist. He's a journalist and former financial analyst who writes on economics topics for the NY Times.
Second, the op-ed makes a number of errors:
1. He asserts without evidence that non-government currency is inherently inferior to government currency, without defining the purposes for which it is supposedly inferior and in what ways. Medium of exchange? Unit of account? Store of value?
2. His argument relies upon his unsubstantiated belief that "no bank or bitcoin-emitter can be as public-minded as a government", and that "no private power can raise taxes or pass laws to unwind monetary excesses". This ignores the signficant body of research on the not-so-public-mindedness of public officials. It ignores the fact that the "monetary excesses" he needs to unwind are frequently caused by government monetary policy, rather than being inherent to currency. It also ignores the fact that Bitcoin's cap on supply was designed precisely to avoid such monetary excesses. Perhaps Bitcoin's design in this regard is deficient, but the author apparently could not be troubled to make any argument detailing how.
3. He criticizes "private money" such as Bitcoin for having uncertain value, and for its potential to lose value if users lose faith, despite these problems applying to state-backed currencies as well. It's not as if we've never seen runs on banks, unexpected inflation or even hyperinflation with government fiat currency.
4. He further criticizes Bitcoin for its alleged anonymity and thus a potential for tax evasion, neglecting the fact that Bitcoin is less anonymous than the goverment paper currency known as "cash".
5. He repeatedly makes the argument that because we've had state-backed currencies for a long time, they must be superior. This neglects the possibility that effective non-government currencies were not feasible at scale in the past simply due to a lack of technology (crypto and global instant communications). And it neglects the possibility that the future of currency is not either-or, but both.
This is what happens when the poltical-media establishment tries to shoehorn a story about technology and economics into the same tired left-vs-right, government-as-perfection vs. government-as-catastrophe narratives. You get an incoherent, poorly researched, poorly argued mess. The author may end up being right that Bitcoin won't last, but he's not given us any sound argument to support his claim.
I don't think you have any idea of the current network size, the top 500 supercomputer in the world don't have a chance against the current network. The NSA probably have a few super computer... so who care. And even if they managed to get equal to the network... they would mine half of the remaining and already half is mined... so 25% for the NSA and those super computer would stop spying on us :)
...and once it gets (and its inevitable people) linked to a 1. worldwide child porn ring 2. high-viability murder-for-hire 3. terrorist act that kills many citizens in some random country or 4. large scale drug operations, it will be legislated away with the blessings of the state-run media, the banking system, and the average person in the street as something exotic and hard-to-understand-and-therefore dangerous.
so play in the sandbox while you can, its not going to be around for long....and for you people who say nothing can stop it? lol wait til they make it a 3rd degree felony to have a wallet on your harddrive.
never bring a twinkie to a food fight.
A more modern definition (update) to Aristotle’s definition of money.
acceptability; people have to be willing to accept in in exchange for goods and services
durability; it has to withstand the test of time and the elements (not easily corruptible or destroyed)
divisibility; dividing it results in smaller proportional values
homogeneity (uniformity or standardization); a unit of weight or other measurement produced in Canada looks and behaves the same way (has the same properties) as a unit produced in India or elsewhere
portability (high value-to-weight and value-to-volume ratios); probably self explanatory
relative stability of supply; is its supply stable considering population increase?
optimal scarcity (and hard to counterfeit);
Sorry but you can't have it both ways. No government controls Bitcoin, so government wants to control it. That's what government does. And they can control it if they choose to. And before you start in on a "you just don't understand man!" screed about Bitcoin and how the establishment is powerless to stop it because reasons, remember that marijuana grows out of the ground and they made that illegal too.
reguard bitcoins a letigitimate instead of the scam that they are when I can spend them at all local stores!
The summary lists the good things about bitcoins, but leaves out some important ones...
- Truly international. As opposed to most other systems, which have some friction when moving money between countries
- Free! You only pay for the bandwidth, and the CPU for verifying hashes (not talking about mining)
- Universally accessible. I suppose the article touches on this, but it's quite important that it's available to anyone who wants it. Not like credit cards which can shut down someone like wikileaks at will. You don't need a credit history etc to pay on line
using helium directly wouldn't quite work.
anyhow, plenty of currencies relied on the currency itself having(_being_) inherent usability value like copper, silver gold etc.
http://www.tomdahlstedt.se/oldswedish.htm
20 kilos of copper is a bit much to haul around for a trip to the shop though!
world was created 5 seconds before this post as it is.
Seriously?
Keep it Clean! :D (learn about cannabis and you at thecleangame [.] net)
What the economist doesn't consider in his argument that "currency is a tool of the state" is that states cannot control currency; take the USD usage outside of the US. In many countries there is an official currency that is in reality superseded by USD (Cuba, many African countries, etc). The local governments hate it but they can't do anything about it because citizens trust more us greenbacks than they do in worthless local currency. When volatility of bitcoin goes down (as it will when there will be more regular transactions and people using the currency) there will inevitably be people trusting more in bit coins than Ina government printing ever more debt and printing ever more notes (essentially debt to consumers). Bitcoin wins
Artificial intelligence is no match for natural stupidity
It more like a stock due to the volatility.
As soon as he starting saying things like right-money I realized what a joke this guy was. A hyper-partisan at best and completely ignorant of monetary history at worst.
I wonder how he squares his ideas with the fact 99.9% of "Government backed" money has failed (gone to zero) in the past 1000 years.
Bitcoin won't fail unless the Internet and electricity fail; but it will hurt some people. It seems to be rather bubbly right now. In fact the linked article has a story about a guy who had some bitcoin lying around on his drive that he had forgotten about, and traded them for "a flat" which is like a condo in America I assume.
The original tulip bubble also had a story about somebody exchanging one bulb for a house.
People still cultivate tulips. They just don't think they can build fortunes on tulip speculation.
A wildly fluctuating currency like BTC doesn't function well as a store of value. That's one way it will "fail". The stories of wallets gaining in value will be replaced by wallets falling in value. You can't quote prices in BTC because of this. People will immediately want to know the price in Pounds, Dollars, or some other more stable currency. Transactions will convert in and out as quickly as possible to avoid losses, then you start asking yourself "why bother with the conversion?".
It would be interesting if this unfettered market could actually conjur up something with stable value; but it probably can't. BTC is likely to remain on the margins, and heavily driven by speculators because of this. Calling that "failure" depends on your PoV. IMHO there's a room for it, but not in my wallet.
A while ago, a friend of mine came up with his own currency called Aeoni. The original version was the best: One Aeon was equal to one hour of whatever kind of work you like to do. You could trade them with friends as a formalized barter system, on a one for one basis, which avoids the legality problems that supply and demand can create. Later on, he decided that people could charge however many Aeoni they wanted per hour, and that was when the system fell apart.
The bitcoin already crashed multiple time read this forbes articles (http://www.forbes.com/sites/timothylee/2013/04/11/an-illustrated-history-of-bitcoin-crashes/) everytimes calling the end of the bubble.
If a lightning strike can take out your hard drive then what.
No proof you have any bitcoins, no way to retrieve the bitcoins?
What happens when the government say's "But you earned 2000 bitcoins last year and now owe us the tax on the dollar value?"
"it is now under four feet of garbage in a landfill site the size of a football pitch."
WHERE?? WHICH ONE, DAMNIT!!
98% of all bitcoin transactions occur outside of the US. The US tried to control it and failed. US corporations were pressured to not have any dealings with bitcoin; not to buy or sell it or set up exchanges. Now the US is irrelevant when it comes to bitcoin, which is obviously doing just fine without the US's involvement.
The US will continue to send all of its cash and profits overseas due to having outsourced everything. Its consumer-based economy will continue to shrivel as the largest segments of its population have less and less money to continue the cycle with. Eventually, even the most biased US economists will realize that it doesn't matter what they think or say, because, like a larger version of Microsoft, it's all over for the US except for the long drawn-out grinding down of its financial inertia.
Silk Road was only down for a month or two, following the arrest of one individual.
http://www.forbes.com/fdc/welcome_mjx.shtml
"On Wednesday morning, Silk Road 2.0 came online, promising a new and slightly improved version..."
Implicit taxation through inflation? First, inflation is extremely low on the entire western world. Second, inflation only eats away at you if you are sitting on currency as assets, which is a terrible thing to do. If most of your wealth is being productive somewhere, changes in the medium of account shouldn't matter a bit.
Now, having zero inflation, or all the way into deflation, is not a good thing for an economy. We have this fundamental problem called Money Illusion. It's been measured in a whole lot of studies, just look it up. As long as there's money illusion, in practice, economies work better when economies grow in a predictable manner, which implies some mild inflation. Without said inflation, velocity drops, and with it economic activity. We really, really, don't want a shrinking GDP. A central bank is a compromise to make sure that someone, in some way, is actually altering the money supply to achieve that objective. What we need though is a way to make sure central banks are making less decisions that look like reading entrails, and more that are empirically testable and forward looking.
Government money fails because governments can't be trusted to meet their contractual obligations. The US dollar has had a pretty good run, but once FDR stole our gold and Nixon broke the Bretton Woods treaty, its eventual demise became inevitable.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
Well, the problem with bitcoin is in the post. A lost HDD = 4 million GBP lost. I don't really feel like backing up my money and managing them like a litter of baby kittens. The only two reasons to use them that I can come up with are
1.) Paying for something illegal that you want untraceable. (or avoiding taxation which is also illegal)
2.) Speculation.
Neither is a compelling reason for me to do the massive amount of extra work required to maintain a reliable "wallet" compared it to a normal currency.
James Howells mined the virtual currency on his laptop in 2009 when it was trading for pennies, but today, one Bitcoin is valued at more than $1000. The hard drive containing this sizeable fortune has been tracked to a landfill in Newport, where it lies buried under four feet of rubbish. However, according to experts, the storage device is pretty much impossible to retrieve.
Perhaps difficult, but not impossible, if somebody is determined. How many people would be willing to sift through garbage for a year looking for a few million bucks?
Have you read my blog lately?
The confusion many people make is between the Bitcoin network, which consists of nodes, software, custom hardware, and a big datbase, and "bitcoins" the unit of measure in the database. The network has value because it performs a useful function - delivering payments quickly and cheaply. The demand for using that network in turn gives database entries value for the part they play in delivering payments. But without the rest of the network, the database would be useless.
Thus the data itself doesn't have much value, any more than a random Excel spreadsheet does, in and of itself. If you *use* a spreadsheet as part of a venture capital deal, it now has value through use. Similarly the Bitcoin database (the block chain) only has value so long as it is used. When people stop using it (along with the rest of the network) the value will be zero, like old game software. Since use is rising quickly, so is the value. Since the number of units in the database is growing slower than usage, then the price per unit will also go up.
At least, this shouldn't concern you any more than using US dollars would.
With the current state of the US dollar, if you just "put it under your mattress" for a while and then pull it out to spend it? You've lost a considerable chunk of its buying power. All the government has really done is mask the reality of things. The fact is, your US dollar is backed by an exponentially increasing amount of debt and an arguably misguided faith in the long term viability of the currency.
I'm not going to link to all sorts of studies or graphs to make my point here. I'm sure you're capable of using Google yourself. But suffice it to say there's plenty of information out there showing you how most salaries haven't really gone up in decades for equivalent job positions/titles, yet inflation has. The recent outcries to raise the minimum wage (Maryland just voted to raise it to $11.50 in stages over the next couple years) are really a symptom of this problem, although not a solution -- since raising the minimum just means raising the entire pay scale across the board by an equal amount (if not immediately, inevitably over a short span of time - to fix the suddenly narrowed gap between doing basic labor and doing something far more advanced or demanding).
While yes, Bitxcoin values are wildly fluctuating at the moment, it's bound to settle down as it gets more established as a viable currency. When you don't have a whole lot of retailers willing to accept it for transactions, it's going to get treated more like a stock or investment property than a currency. But not a day goes by that I don't hear about at least one new merchant accepting it. There's a Jeep dealer in Kansas City, MO who lets you buy a new car with Bitcoin, and an antique shop in the French Quarter in New Orleans has the "Bitcoin accepted here" sign in its window. I don't think this is just going to fade away.
> some economists have horrible visceral reactions to Bitcoin because they they have firm stakes in how the status quo works
I think it has more to do with losing their investment of time and money to understand the current system. Bitcoin makes them as dumb as everyone else who is new to it.
that is the key to understand both. One printed trillions keeping the same value of everything, the other raised 100 times its value in few months. If people lose faith in any of them, they could lose value. And, at difference with he bitcoin, US is doing everything to make people lose faith in the dollar, and abandon it as international standard.
If they aren't reported lost then how would they know if I didn't just put them under my mattress? If they have been reported lost, can they be reinstated later when they are found?
The value of Bitcoin fluctuate depending on demand/supply.
Currently the supply of bitcoin is low and only slowly increasing (only 25 BTC per mined block are shared across all the users of the mining pool which successfully validated the block, and the total number can be computer around 12 mio).
Currently the demand is expanding (bitcoins can be used as payment medium in an ever increasing number of shops. The days where Silk Road was the main place were you could buy/sell using BTC are long over [and in fact, during some time, Silk Road was down due to being seized by authorities. At that time the BTC market barely noticed]. Also BTC are in demand by traders [although again given the low impact of various pump-n-dump attempts, traders don't have as much an influence today as back then] ).
Hence currently the price is globally heading up (with more or less some small very localised perturbations).
But globally, BTC evolve according to demand/supply AND ONLY demande/supply. (Unlike fiat currencies which can be manipulated by printing more or less bills by the controlling state).
If some coins stop circulating (either because you destroyed the harddrive cointaining the private keys to spent them, or simply because you forgot about them, or because you're hiding them as a reserve for later) the total number of "coins currently available on the market" will get a bit lower (a bit under the current 12 mio). Because of that, simply following the demand/supply rule, the price of bitcoin will increase a little bit.
If suddenly you brought them back into circulation (you remembered that damn password, found the old laptop that you though was thrown away, or simply decide to use your reserve) the number of circulating coins increases, and because of the slightly increased supply, its price decreases a bit.
Now the "magic" of bitcoin is that its a decentralised currency.
- In a centralized currency, the issuer can massively print new money. Or destroy gigantic amount of bills. Such large scale variation of the supply can cause big changes in the value of the money, and thus the state can manipulate its own money. Create inflation or deflation depending on needs. Thus value of money is not only influenced by pure demand/supply rule in the market, but also very directly by government and politics.
- In a decentralized currency, *nobody* owns the system and nobody in particular decides, instead all agree. (Nobody will accept your mined block if you granted yourself 1000 BTC instead of the current 24+fees)
Also, most of the people only own a small part of the whole amount of bitcoins. So any "bitcoins pulled out of circulation" by 1 single individual will only concern a very small amount, a small fraction from the whole stash, and thus barely have any registrable effect (the theoretical effect of you not spending your 100 BTC on the value of the whole 12 mio will be smaller than the noise).
A single individual (or government body) can't influence much the value of bitcoins. (For influence to be successful, that would require massive coordination of a sizeable proportion of all bitcoin holder. Which would be near to impossible given how much the money is spread).
The only influence of bitcoin going in and out of market that can be sizeable is the total influence of all bitcoins getting lost.
If over the first 10 years of bitcoin lifetime 1 million total of coins get completely lost for ever, the overall price will jump up by 5-10% accordingly.
So it's a situation of "the market will heal itself".
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
That's insane. Bitcoins have proven no such thing. Not even close. The volatility in the value people assign to bitcoins is a thousand times worse than that of current major fiat currencies. For some reason you seemed to have equated the speculative bubble Bitcoin is in as being good only because its value is going up; you can't imagine how that can be bad and you are ignoring the fact that volatility of this nature goes both ways. How can there be any confidence in BTC if it's value can (and has) be cut in half, or worse, in mere seconds?
This assumption that bitcoin's value will only go up is just nuts.
Moreover, even if bitcoin fails as a currency, it still works very very well as a means of money transfer. {...} And, if you don't keep your money in bitcoin (which does mean you have to trust a thirdparty "exchange"), you don't have to worry about exchange rates either. Just have the bitcoin changed directly to the currency of your choice, and withdrawn immediately from the exchange.
Which is reason number 1 why bitcoin could theoretically *crash* but won't probably *die*.
If suddenly for some reason the price of bitcoin went back to 5$, that would make traders *REALLY* sad, but shopper and merchant won't notice that much.
Shopper will still buy bitcoins and send them, merchant will still receive and cash them. Perhaps they'll notice that the amount of btc they are exchange is much higher than before for the same good. But that's about it. And shopper won't have the "magical change(*)" effect of bitcoin.
But still, bitcoins have a nice reason to flow around, and would still be cheaper than alternatives (some friend complained about the huge monthly fee that their bank requires for a credit card. Simply shopping online with bitcoin is much more affordable).
That's also why I don't believe that altcoins will ever crash, they're too valuable as an exchange medium and will always be in demand. At worst, the dominant position will come and go as newer/better alt-coins come and go. (who knows, maybe in 5 years Litecoin would be the dominant medium. Or Primecoin. Or something we haven't though about yet. But I could bet that decentralized currencies will be still around not only in 5 but in 15 or even 50 years).
(*): You need to buy stuff with bitcoins (my last example: a new Humble Bundle is out !!! Has your favorite game on sale !!!). You go on localbitcoin, find someone to exchange bitcoins with, buy some and then shop with bitcoins. You get some change bitcoins left into your wallet, because you bought more on localbitcoins than you used. You forget about your webcoin. A few months later you need more shopping (a web-shop that accept bitcoins has nice electronic gizmo on sale), you open wallet again to check how much change left you have and how much more bitcoins you need to buy... holy fuck, the BTC price is gone up! your change now is worth more in dollars than what was the case before!
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
If you need to exchange in and out of stable currencies on either end of the BTC transaction, then, while the BTC transfer may be nearly free, you end up paying your tithe to the moneychangers in exchange fees.
(Or simply the other bitcoin users if you go for a localbitcoin solution)
If I'm willing to muck about doing things online, I can easily circumvent Visa/Paypal by setting up moderately large personal money transfers through my bank for free.
Yup, me too. But not everyone lives in a SEPA country.
If you send money internationnally, you'll still get fees, and you'll still get money-change fees to convert your EUR into whatever the tager merchant use. (Or, in some situations, you can't even change the money due to strange policies in target country. Bitcoin took of in China because of complex restriction on USD/CNH trades)
In most developed countries outside the US, where the credit card industry has a stranglehold on individual-level finance, typically debit cards with near-zero fees are used (instead of cutting the credit monopolies in for 2.5% of every sale).
Again, that depends on your EC cards being accepted around. Again: not everybody lives in europe. (and even within EU, I've been regulary stuck with a bunch of cards, none of which is accepted by the merchant terminal, even if the terminal advertise the same brands of cards).
The low transfer fee feature of BTC is not particularly unique or novel --- anyone willing to put in the trouble needed to spend and accept BTC can find plenty of alternate low-transfer-fee mechanisms.
Still, that's one alternative more.
Other features of BTC are more interesting.
Yup. Pseudonimity can be appreciated by some. Publicly verifiable transactions, too. Non reversibility will be really appreciated by merchant who have been burned by back-charges. Impossibility to block would be appreciated by anyone who got a frozen Paypal account. etc.
The "I want to trade freely as if we were all Europeans living in SEPA countries" is only 1 aspect.
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
> "no bank or bitcoin-emitter can be as public-minded as a government,"
On the contrary, banks and governments can ignore the people, when they are too big or powerful. Bitcoin, and businesses that use it, have to compete on service and security else people will move to a better option. You can't ditch your government without a whole lot of effort.
The Euro and Dollar are the largest world currencies. In the last 10 years the Euro has varied from $1.17 to $1.59, and made that rise in 2.75 years (+11.8%/year) The steepest drop seems to be 4 months from Jul to Nov 2008, when it dropped from $1.59 to $1.25 (-48.5%/year rate).
Admittedly, bitcoin has a long way to go to reach that level of stability, but currencies are not as stable as you think.
http://finance.yahoo.com/echarts?s=EURUSD%3DX+Interactive#symbol=;range=my;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=on;source=undefined;
1) use massive budget spending to fund an organization to stage a 51% attack on the network. The NSA has the capability to do this. They can coerce private industry to develop ASICs in larger volume production than what currently exists, and shutdown any other ASIC reseller.
That won't be easy.
The required hashing power is ridiculously high:
- Current hash power of the whole network is 6 Peta-hash/s (OMGWTF: it was still counted in Tera-hashes back when I looked).
- At the current trend of hashrate/difficulty increase, by the time the NSA puts their evil plan into production, they'll probably need to deploy several exa-hashes.
Next-gen mining machine are presumed to go into the Tera-hash range by unit. To control the whole network the NSA would need hundreds of thousands of them (if not million).
Also about shuting down:
- Good luck. As if the NSA had any power to shut down foreign ASIC makers.
- In fact its the opposite. I doubt that the USA alone has enough foundries to support the necessary production of chips. Very probably, its going to be the NSA which would have to beg foreign foundries to help the churn out the necessary chips.
And do you want to shut down the rest of the industry:
- re-purposing as much foundries as possible to make your massive number of ASICs would require diverting them from the current production of other useful stuff.
I don't think the last few remaining foundries would appreciate being forced to make miners and stop producing the CPU that all foreigners are still producing and make the lose market share.
Last but not least:
- this only affect bitcoins (and the other less popular SHA256^2 based coins).
- this will not affect the number 2 coin: Litecoin (and the other coins using Scrypt, which is notoriously bad on ASICs due to memory requirement)
- this will not affect primecoin (which is based on prime number factoring)
- this will not affect coins based on SHA-3 like Yacoin, nor Quark (uses all the SHA-3 candidate at the same time).
- this will not affect all the other coins that will pop-up with original proof-of-works between now and then.
2) give power to police services to setup busts on individuals looking to sell/buy Bitcoins for cash, and shut down Localbitcoins.com or any other website that provides such services.
Good luck to the *NSA* managing to shut down a site operated in *Finland*. Ever heard the word Jurisdiction ?
One of the biggest exchange, Mt.Gox, is Japanese.
It would be a cat-and-mouse game if sites like Localbitcoins were only in the Tor network, however this increases the difficulty to 'cash out' so it could effectively devalue Bitcoins.
A. in the USA.
B. the current population in the USA has been burned already enough by the NSA. Tor usage will probably rise anyway in the future, and barrier of entry will get lower too.
coerce ISPs to install multiple Bitcoin p2p nodes with preferential network conditions so non-sanctioned p2p nodes connect to them first within the data centre and monitor which IP addresses are sending or receiving Bitcoins.
Yup, that worked so well with peer-2-peer download back then... except not.
These node will get blacklisted.
US citizen could simply use web-wallets and similar.
The rest of the world either ignores or moves to tor.
The author makes one solid implied argument: the state has the ability to resort to threat of violence, detention, financial ruin, seizure of assets over its citizenship.
Which would be the best way for the USA to substract themselves from a growing and thriving market.
The US needs to ask them self:
- do they want to exclude themselves from what is apparently here to stay? Do they want to take part in it?
(See how well shuting down the internet has worked for dictatures)
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
In a word, seignorage, the profit made by a government by issuing currency, esp. the difference between the face value of coins and their production costs. No government would sacrifice that.
It has many of the properties of gold, without being tied to matter.
It is not the monopoly money that the world currently runs on. If/when the monopoly-money bubble pops, the world crashes, and anything is good. But governments currently own enough actual gold and high-end trade-engineering enough to control the price of gold. Not (yet) so with Bitcoin.
impo.
...Federal Reserve is a private institution.
Coming up later: why bitcoin will make everything else obsolete within three years, in some other economist's eyes.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
The average lifespan of nation is 250 years. Better liquidate your fiat currency and put it into something that will weather the coming storm.
what is a football pitch? is it 100 yards long? 1st down and 10. :)
`Economist Edward Hadas writes in the NYT that developers of bitcoin are trying to show that money can be successfully privatized but money that is not issued by governments is always doomed to failure because money is inevitably a tool of the state'
Then why is control of the US dollar under the privately owned Federal Reserve Bank?
> We have no idea what Satoshi's success criteria were
It's clearly stated in his original paper (http://bitcoin.org/bitcoin.pdf):
"What is needed is an electronic payment system based on cryptographic proof instead of trust,
allowing any two willing parties to transact directly with each other without the need for a trusted
third party. Transactions that are computationally impractical to reverse would protect sellers
from fraud, and routine escrow mechanisms could easily be implemented to protect buyers. In
this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed
timestamp server to generate computational proof of the chronological order of transactions. The
system is secure as long as honest nodes collectively control more CPU power than any
cooperating group of attacker nodes."
If the actual Bitcoin network meets the above criteria, it is a success.
Bitcoin is in simple terms an "artificial gold" (or any other commodity). It has artificially imposed scarcity, some exchange value, and is not tied to an individual (not traceable, can be lost etc). If you look at it that way - it only has value so long as those using it agree it has value. At least gold has also practical uses in technology/industry and in fashion.
Don't know if it's doomed to fail, perhaps not. But I don't own any gold and for the same reason do not plan to own any bitcoin. YMMV
We have no idea what Satoshi's success criteria were. so how can Bitcoin be a failure?
I fear for your employer. "How could I fail? Your criteria for succeeding at work were not specific enough."
If not he's full of shit
I am just wondering, if people start to to shift to use Bitcoin, how would governments continue to operate? I see this on a long-term of course but don't governments operate based on the taxes of people. Companies may benefit and also the people but on the long term, neglecting the government from the economy is impossible?
The main problem I have with Bitcoin is that it's value changes so much. Many other readers have also expressed this concern. I feel what needs to happen is we need to give one of the Bitcoin forks a set price that we don't change so we can use it as currency rather than as stock. To decide Bitcoin itself needs to have a final value would cause a huge crash as many people see Bitcoin as stock to be traded and profited off.
'Truly private money is an inferior alternative to the money that comes with the backing of a political authority.
Authority to govern comes from the consent of the governed.
So anything that's true about "government money" is also true for private money.
These are my friends, See how they glisten. See this one shine, how he smiles in the light.
The main problem with Bitcoin is the same as with gold (libertarian's other favorite currency) - because the supply is fixed, there is no way to stabilize or otherwise regulate the currency's value. Why is this important? Because things can fall out of equilibrium due to bottom up nonlinear consequences which are otherwise quite impossible to control.
HADAS QUOTE: "The currency’s issuer is an unknown computer programmer"
FALSE --- The currency has no "issuer" as the currency is issued by computers connected to the internet run by volunteers (i.e.: miners) that are rewarded for their computing power to process transactions in mining proceeds of Bitcoin. There is no central issuing entity. There is no need and actually the system is theoretically impossible for a central control over the currency. The author's statement here is factually, logically and literally incorrect.
HADAS QUOTE: "Right now, bitcoin is tiny; at the current exaggerated exchange rate"
FALSE ---- "Exaggerated exchange rate" should be stated as "market rate", because the current rate is what the market is paying for the currency. Just like any other floating currency. The currency has no central price control. All Bitcoin pricing today is set by the market, by buyers and sellers in 100% market driven exchanges. Note that the term "Exaggerated" in the author's article is very misleading.
HADAS QUOTE: "the total projected volume of “coins” is worth less than the gross domestic product of Mongolia"
FALSE ---- the existing issued volume of Bitcoins already exceeds Mongolia GDP
FALSE ---- Author refers to "projected volume". "projected" it is defined in the Bitcoin system at 21 million coins by 2030 and then no more new coinage. This market cap at today's market prices far exceeds Mongolia GDP.
HADAS QUOTE: "Similarly, truly private money is an inferior alternative to the money that comes with the backing of a political authority."
DEFINITION REQUIRED: What is "political authority". I find it quite bizarre to use this term and not "the state" or "the market" but instead to choose "political authority". How often do you read the term "political authority" when referring to any governmental state?
So my questions to HADAS are:
1. Did you actually research and then fail to understand the Bitcoin architecture?
2. Or did you not even bother research the subject before producing your expert false statements?
3. Or were these statements intentional propoganda?
Please do explain Mr. Hadas, it would be much appreciated.
Slashdot is censoring again!!!
For every economist, there is an equal and opposite economist.
The Fed has just legitimized bitcoin. Probably this is because it's even easier to track than USD, and what they have always wanted is for people to switch to digital currency that is easy to track.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Take, for example, the Zimbabwe dollar - it's a very sound investment, because it is issued and controlled by the government.
I don't care, I bought a bitcoin back in March, and just sold half of it for almost 10 times what I originally paid.
If the other half I still have drops in value, I'm still well up on the deal.
And to those who say "it's just numbers in a computer somewhere, it has no value!", all I've done is convert it to a slightly bigger number in my bank account, which is also just a number in a computer...
"money that is not issued by governments is always doomed to failure"
Really? How about gold. How about personal checks? How about Credit Cards? Anything used for bartering?
And does money issued by governments guaranty success? I think not.
And how do you define "government" anyway? Do you mean the people that rule, or the set of rules they govern by (or the big sticks they use to enforce their rules)?
If thousands of people world wide start banding together and start using some new form of money - controlled by computer code that can be read (and challenged) by anyone, in what way is this not the start of a new monetary "government"?
I trust the code more than I trust the crooks that control the current monetary systems.
Bitcoins will eventually fail because there's no control - but current monetary systems will probably fail first due to "appalling management", "lending and speculating wildly", "failure of leading institutions", and other "monetary accidents".
Title is rather misleading.
Really? Your employer doesn't tell you what's expected of you?
Being quite a large company, my employer has a fairly heavyweight goals management system, in which you and your manager set expectations, then measure yourself against them during the following year.
And there are at least 2 other similar, less well known sites which have been around for a while, and I know that as someone that has never even used Tor. The general feeling is that Silk Road v2.0 is suspicious and could be an FBI honeypot or scam site though. Really anyone using these services is taking a serious risk because the Snowden links show we can't trust their stated evidence chain, it certainly appears that Ulbricht made a number of huge noob mistakes which allowed him and by extension his site to be tracked down through good old fashioned police work, but we don't know for certain that they haven't improved previous academic work on tracking hidden services. Tor was never meant to be all that strongly anonymous, with 3 hops / a public network / relatively low latency it can't be, it's just a censorship evasion mechanism.
I have bought several bridges and I am offering shares of ownership to a lucky few hundred investors who can get in on the ground floor. The bridges' value cannot do anything but increase in value and great wealth is to be had - guaranteed!!! . After five years the purchasers will be able to trade the these BS (Bridge Shares) freely to cash in on their investment and likely retire on the great wealth coming their way.
Contact me - I. M. Ripov at Her Majesty's Prison at Dartmoor after 2PM Wednesdays
Cash's value is uncertain
Its value is that you can pay taxes with it. Have fun figuring out VATs when doing business in bitcoin.
analogy
Bitcoin within a global public ledger should be a financial instrument we need ... I wondering how a black pool could be done though ...
A lot of posters would do well if they researched the difference between money, money substitutes, currency, credit and fiat bank notes. They are not the same, even though you think that US federal reserve note in your wallet is 'money'.
When a kid's selling lemonade, you don't buy it because you expect it to taste good.
Bitcoin is a techie gimmick that is currently a fad. It's mysterious backstory creates a faux ambiance like treasure stories. Quantities are artificially limited, with no way of knowing when that might be manipulated, no one to hold responsible. It will be allowed to run its little experiment until the Masters of the Universe figure out what's most compelling about it, then they'll start up their own game with all the usual erotic advertising and propaganda wars, and Bitcoin will inevitably sink out of sight and memory.
In the meantime, enjoy the rollercoaster.
Because they are never wrong amiright?
Today I think they have about the respectability of less than a weatherman on a local news channel.
Prospective students should change their majors to something more reasonable like the "Dark Arts" or "Voodoo".
Seems to me the basic boiling down complex problems to very simply principles and mechanisms doesn't work so well.
Reminds me of the joke physics joke about a cow an a vacuum: "First assume the cow is perfectly spherical..."
Too funny...this story predates urban legend (as a term). Imagine how many mattresses full of GrandPa's cash currently reside in a landfill or burn pile...now it's hard drives...but the moral remains the same...cash is too risky...put your money in the bank...where it's safe.
One fact that not considered is the fact that the Federal Reserve is a private entity....so USD is a private currency....
Keep in mind that bitcoin is absolutely dependent on chips and electricity, you cant print it on paper, it depends on networks, routers, satellites and complex computer resources. Also when it comes to flops power and crypto resources government agencies are at the top. You cant expect to beat the nsa on crypto resources so government takeover is much easier than you would expect and would not require legal measures to collapse the system.
cool idea, good intentions, but it is just not realistic.
Can anyone tell me where, in today's world, there is a government that issues its own money? I guess Valenzuela is one country that doesn't have a Central Bank. I can't think of any others. America sure doesn't issue its own money, it loans it (from the Federal Reserve). Just to be fancy I'll throw in a fancy word - Fiat. There you go! Which Bitcoins are also. /Stolzy
Thank you for your personal definition but I will go with the dictionary one thanks.
I really hate this "let's make it difficult to communicate just so I can trick others into misunderstanding what I mean and make it look like I've won an argument" shit that has been disgorged from the ugly end of US politics.
You can be a better person than that.
"no bank or bitcoin-emitter can be as public-minded as a government"
Ask the public in a totalitarian state, how public-minded their governments are.
Not all conservatives are stupid,
but it is true that most stupid people are conservative.
- Hume
Right now most bitcoin millionaires are either looking for a way to unload their fortunes or hoping to become bitcoin billionaires..
Liberty.
Yes, it's a fiat currency, called into being by somebody, not backed by anything, only tradeable for what other people will offer you. But the important difference from government fiat currencies is that it's designed so there's a limit on how much of it can be made, unlike traditional fiat currencies which were limited by the amount of cheap metal available for coinage, or modern fiat currencies which are limited by the number of zeroes you can fit on a piece of paper, i.e. limited only by the greed of the government and the people's unwillingness to overthrow them. It's not like Zimbabwe dollars which have had at least 30 zeroes dropped of them, leaving what a friend of mine referred to as "homeopathic quantities of money". Sure, Satoshi acquired a bunch of the coins for himself up front, and potentially he could still be mining more, but the number of them is never going to get above 22 million or whatever.
Bitcoins could still lose most of their value, like those once-valuable Beanie Babies, but they can't hyperinflate.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
I do not have the time or interest to correct your misconceptions about BTC I would suggest you educate yourself on each point you made by goggling each point as a question and you should then rewrite your piece or go to the BTC Foundation and worry those folks with your irrational fears worded as negations I.E. if you are teachable.
Another attempt to get around currency.... We've seen it before and hopefully, it will be soon forgotten. To place a monetary system completely within a privatized (business) environment only provides that business the benefits and pitfalls.... Going from "physical" to "virtual" money will never fly in as much as the billionaires of the world would love to tell you otherwise WHY? Because they control the market, the playmakers and the deal brokers - it's their game.... and most normal folks don't play in that arena. We simply sit by and watch their money pile up higher and higher & bitcoin would be no different
I always find it bizarre when people make claims about money be backed by valuable goods - the normal trope being gold. The value of all money is in it's liquidity, that is psychological group think. Currency of any sort is fundamentally backed by human labor. That is, the willingness of someone to use their time to do something, so you don't have to. Currency has take many forms from sea shells to mineral rocks to modern day paper - most transactions are currently digital now, therefore making money effectively digital. The key part to the perceived value is the control of the supply. Bitcoin has a know upper limit on supply (~22M) - so the thing that will drive value will be exclusively demand to use and hold the currency as a token for value/labor. When I was mining with GPUs my computed break-even was ~$4 - that is if the value dropped below $4 at the then difficulty (the current difficulty is about 300 time more), the cost of running the cards was better spent was spent buying coins directly. So people are expending energy to compute the token.
Bitcoin is exposed to a number of risks that can shake confidence. Bitcoin's trust model is built around crypto-hash-technology, so if that compromised through technological innovation or weakness the currency could quickly collapse as forged coins could enter the network or be easily stolen.
To understand the possible price behavior of a new currency like bitcoin, use the quantity theory of money; MV = PQ.
Sudden price rise and hoarding is to be expected, not deflation: http://zeroprofits.blogspot.com/
No, it's correct, you are not. You are just pretending to misunderstand what is written there for your own convenience and do not appear to care that you look very stupid in the process. Your personal definition fails the obviousness test and relies upon taking a portion of a line out of context.
Most reporters miss the point. BitCoin's strength is not as a currency, it's too slow. It takes at least 10 minutes to confirm a transaction. You're not going to wait 10 mins to buy a coffee at Starbucks. BitCoin will not go away because it serves as an internet payment system. It's way less to pay because wallet-to-wallet it costs a fraction of a dollar, no matter what the amount. It's an incentive for internet sellers because there's no chargeback threat and they save 4% in fees otherwise charged by system like PayPal. ofcourse they could shift the 4% as a discount to the buyer as an incentive to shop with BitCoin.
How convenient for your pyramid scam then.
That's my point - no matter what twisted weasel verbal acrobatics you attempt your assertion completely fails the test of obviousness. I can't just take beer or bitcoin to any random vendor and negotiate a purchase.
I grasped your reason for being misleading all right - you are attempting to dumb down the concept to fool prospective marks. If I didn't get fooled then why should I get fooled now?
You are a very good example of why the kiddies should beware of confidence tricks baited for geek. I wonder if you'll get out of bitcoin before the bubble bursts and some of the perpetrators start doing time? Are you getting practice at playing the stupidity card for that so you can convince a Judge that you really believed the line you were selling to the kiddies?
You've put in a lot of time and debased yourself a lot here so how can you possibly be a disinterested party?