Slashdot Mirror
Why Charles Stross Wants Bitcoin To Die In a Fire
Hugh Pickens DOT Com writes "SF writer Charles Stross writes on his blog that like all currency systems, Bitcoin comes with an implicit political agenda attached and although our current global system is pretty crap, Bitcoin is worse. For starters, BtC is inherently deflationary. There is an upper limit on the number of bitcoins that can ever be created so the cost of generating new Bitcoins rises over time, and the value of Bitcoins rise relative to the available goods and services in the market. Libertarians love it because it pushes the same buttons as their gold fetish and it doesn't look like a "Fiat currency". You can visualize it as some kind of scarce precious data resource, sort of a digital equivalent of gold. However there are a number of huge down-sides to Bitcoin says Stross: Mining BtC has a carbon footprint from hell as they get more computationally expensive to generate, electricity consumption soars; Bitcoin mining software is now being distributed as malware because using someone else's computer to mine BitCoins is easier than buying a farm of your own mining hardware; Bitcoin's utter lack of regulation permits really hideous markets to emerge, in commodities like assassination and drugs and child pornography; and finally Bitcoin is inherently damaging to the fabric of civil society because it is pretty much designed for tax evasion. "BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states ability to collect tax and monitor their citizens financial transactions," concludes Stross. "The current banking industry and late-period capitalism may suck, but replacing it with Bitcoin would be like swapping out a hangnail for Fournier's gangrene.""
So, it has come to this.
You're a temporary arrangement of matter sliding towards oblivion in a cold, uncaring universe
Whether or not Charles Stross is correct is irrelevant; BitCoin is bigger than Jesus.
“Control the coinage and the courts -- let the rabble have the rest.” Thus the
Padishah Emperor advises you. And he tells you: "If you want profits, you must
rule." There is truth in these words, but I ask myself: "Who are the rabble and
who are the ruled?"
-Muad'Dib's Secret Message to the Landsraad from "Arrakis Awakening" by the
Princess Irulan
The link to Fourier's gangrene on Wikipedia is totally unnecessary, and the article includes an image that is decidedly not safe for work.
Captcha: unclean
Too bad you can't just have bitcoin killed like the last 4* out of 5 presidents who made any attempt at ending the fed.
*Andrew Jackson was just too stubborn and mean to die by being assassinated.
This article has been flying around for the past couple of days, and it's so riddled with misconceptions and pure falsehoods about Bitcoin that this guy should be laughed out of his job.
You know what has a carbon footprint from hell? The whole payments industry, and industry that could go away overnight if retailers, service industry, and wholesalers switched to digital currency.
Anti-malware software simply hasn't caught up yet, but sucking someone's power for pure financial profit sure is better than sucking someone's power to barrage others with email. Sure, there's still evil here, but Bitcoin itself is not the problem: there will always been viruses doing something.
Bitcoin's lack of regulation is not a Bitcoin deficiency, but rather a legal one. Blame government for treating Bitcoin as a commodity instead of as a currency, subject to the same laws as cash. Oh, wait, it basically is subject to the same laws as cash, except it's a whole lot easier to carry and the government can't create more of it out of thin air (which is a good thing, if you want your money to have the same or better purchasing power tomorrow as it did today).
At least he didn't give the argument "There isn't enough Bitcoin to go around." I'm sick and tired of defending that. There's 21 quadrillion units of Bitcoin (That's enough for 3000 satoshis per person on the planet), and it would be very easy to convince miners to further subdivide it.
This author reads like the worst kind of Keynesian: the kind that misleads and lies about alternatives, rather than attacking the principles and stability of the system itself.
Colin Dean Go a year without DRM
How lone before we substitute that silly block chain with work units from BOINC or Folding@home? Lack of inherit value in the currency was another complaint, wasn't it?
All rites reversed 2010
...oh, and who is Charles Stross and why should I give a shit?
I liked the comment explaining where Internet Libertarians come from:
And if you grow up in your parent's basement, then you are shaped by an environment where the fundamental constraints on what you want to do are shaped neither by scarcity nor malignance, but _by genuine good intent_. Your relatives probably don't wan't you to spend all day smoking pot and playing video games; in some cases they will over-estimate just how much of a bad thing that is. And even if they _are_ right, it's not like anyone facing such hectoring is going to admit it.
Pretty much every libertarian position can be understood in that frame of restrictive but benevolent authority being the root of all 'real' problems. It's a rare parent who literally tortures their kids, so torture is, at best, not a 'real' issue, not a priority. But many make them do stuff for their health, so mandatory health insurance is a big deal. Pretty much no parents kill their child with drones, many read their diaries. And so on.
So to libertarians, Bitcoin is like wages from a fast food job as opposed to an allowance; lets you buy what you want without someone else having a veto. Only money that doesn't judge you can be considered entirely yours...
http://rocknerd.co.uk
Me too. I don't like gold, but I like Bitcoin. I guess we've split the party 50/50.
"I can't give you a brain, so I'll give you a diploma" - The Great Oz (blatently stolen sig)
"Bitcoin's utter lack of regulation permits really hideous markets to emerge, in commodities like assassination (and drugs and child pornography)."
None these existed before?
Get up!
I thought the whole purpose of currency is as a store of value. It's not an effective store if the amount of that store's unit count can be varied at will the way it is with Federal Reserve money. And how is it different from the gold standard? Sure, mining gold gets harder as the supply runs out too.
Huge crabon footprint, hideous markets, damage central banking, hide transactions from government, tax evasion, ... I mean, if this has a case against Bitcoin, why doesn't he list some negatives about it?
Geeze! What a shitty essayist!
BitCoin is bigger than Jesus.
How so? Google returns 124 million results for Jesus Christ and 40 million for Bitcoin.
It's also a commodity. There is nothing to stop someone else from starting their own currency, just as there was nothing to stop BtC from appearing out of nowhere its own line of "value" . As BtC get more expensive and mining get harder we can expect to see "me too" currencies whose "selling" point is to early adopters you can get in on the ground floor and whose "trading / accepting" point is, it hasn't hit its deflationary peak yet, so accept it, it will be worth more tomorrow than it is today.
What's good for the goose is good for the gander. This is the real fundamental flaw in all unregulated fiat currencies. Fiat currencies are worth something because , by law, there is a governed amount of money and no other competing monies which themselves are not also so governed.
With Bitcoin, not so much. The exodus to "other" Bitcoiny type currencies hasn't happened yet, but there's no reason to think it won't and ever reason to think it will.
Oh wait, I spoke too soon. Or not soon enough. Or something.
http://www.coindesk.com/litecoin-silver-bitcoins-gold/
Every time there are arguments made like this I remember something I read in the late 90s. It was a scholarly book by a broadcaster (I believe it was about HD TV) that had a section about why Internet video wasn't going to take off. It stated things like "postage stamp-sized video," jumpyness, bad audio... all those problems that were inherent in the early versions of Quicktime and MPEG.
The flaw in the argument comes in the unspoken assumption that what they are looking at is a final version. I personally don't think bitcoin will ever "replace" monetary systems across the world and there is a lot of reasons to hope that it doesn't, but a lot of these arguments make the assumption that no adjustments will ever be made and the ideas and tech. will never improve. And that just *doesn't* happen.
Indeed - that was my first reaction. How dare the price of things go down over time! If you care about the poor, you should make everything more expensive by giving (certain) people more free money to spend.
So the above poster doesn't even know Charles Stross is a writer - that's a pretty HUGE sign that they didn't read the thing that is being suggested as full of holes.
I agree with some points, but in general he seems to be only somewhat correct.
First of all, BitCoin is not anonymous. BitCoin is pseudonymous. Once mining dies out (which also solves a lot of his other qualms), you need to trade bitcoins some way. You have to exchange your real money to bitcoins. ALL transactions are public which means it's really easy to start profiling people. In the future it's probably easier to trace a person's bitcoin transactions than normal ones.
Another who understands that "deflation" is simply a conspiracy by the Trilateral Illuminati, who meet in Davos each year to develop new methods of sapping our vital bodily fluids.
I hate being a grammar nazi but, this Stross guy being a writer, I think it's warranted. Lack of mastery in his own craft makes me distrust his research a bit, even if it's a bit of an ad hominem on my part.
to damage states ability to collect tax and monitor their citizens financial transactions, as seen both in TFA and the Slashdot summary, lacks possessives and looks just plain bad.
> Bitcoin's utter lack of regulation permits really hideous markets to emerge, in
> commodities like assassination and drugs and child pornography;
Emerge? Yeah, lets ban Bitcoin before those markets turn up.
Well, not infinitely. They have a smallest possible base unit, the satoshi, which is 0.000 000 01 BTC. Still far more divisible that US dollars and pennies.
My first guess would be someone who hates Libertarians.
They are currently divisible to 8 decimal places, but it shouldn't be that hard to tweak the client software to allow smaller transactions if needed.
That said, it's like a COBOL programmer from the 1970's worrying about a Y2K bug. We're still a long way from needing that kind of precision.
"BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks"
This is a GOOD thing, a very VERY good thing. Central banking is designed to only make a very very small number of people insanely wealthy and powerful. Only power hungry scumbags bent on world domination would be against this.
Do not look at laser with remaining good eye.
Bitcoin comes with an implicit political agenda attached
Whose?
Libertarians love it because it pushes the same buttons as their gold fetish and it doesn't look like a "Fiat currency".
One, any currency is a fiat currency. People have to agree to use it, be it beads, dollars, bitcoins or polished turds. Just because you have a problem with libertarian views (I do on some), does not mean an insulting argument is valid or appropriate
Mining BtC has a carbon footprint from hell as they get more computationally expensive to generate, electricity consumption soars;
Printing and minintg currency has a big carbon/environmental footprint as well.
Bitcoin mining software is now being distributed as malware because using someone else's computer to mine BitCoins is easier than buying a farm of your own mining hardware;
It is always easier to steal someones wallet than work for it. There will always be those that try to do just that. Your point?
Bitcoin's utter lack of regulation permits really hideous markets to emerge, in commodities like assassination and drugs and child pornography;
This one really gets my goat. These markets (whether hideous or not), exist already, regardless of the currency. It doesn't matter if you by crack with blowjobs or acid with BTC, the market is there.
and finally Bitcoin is inherently damaging to the fabric of civil society because it is pretty much designed for tax evasion. "BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states ability to collect tax and monitor their citizens financial transactions," concludes Stross.
The blockchain is public. Once a wallet is tied to an individual, all its transactions are public, be they income that is untaxed or 'hideous market' purchases. Even years down the road, if a wallet I used to buy ecstasy in 2012 is tied to me in 2042, that purchase is now and forever tied to me (as well as all other transactions done with that wallet).
Silence is a state of mime.
Since libertarians are sort of getting to be the "new Jews" (i.e. a misunderstood community targeted on the basis of what their enemies say about them), here's a recap: 1. Libertarians favor peace over war. 2. Libertarians don't want to run other people's lives (or have their own lives run by other people) 3. Libertarians don't trust government because it is made up of individual people and don't understand why those who don't trust individuals trust government. Libertarian views on bitcoin are divided, much like views on everything else. Trying to say "bitcoin is a libertarian ideal," is the same as saying "war is a government ideal."
So you are going to pay for a loaf of bread with your American eagle gold coin? Awfully expensive bread, because I'm not making change. A lot of libertarians are pretty dumb going nuts buying gold and silver, you are buying it at the highest inflated prices and IF the economy collapses it will drop in value like a stone. so your $1000 an ounce gold becomes worth about $5.00 an ounce as trading coins.
Worst investment in your life is gold and silver right now because it is overinflated.
Do not look at laser with remaining good eye.
An ex-software developer turned sci-fi/horror author.
I personally love his Laundry series (modern day Lovecraftian/spy horror stories) and haven't read too much of his other stuff.
You should really hand in your geek card if you haven't heard of him.
You're a temporary arrangement of matter sliding towards oblivion in a cold, uncaring universe
I think it is less that people deserve a price on their head, and more their own fault for not being able to outbid the entity that wants them dead. After all it is the individual's fault if they are not rich, well, unless the government or banks or immoral rich people have somehow stopped them, THEN it is all their fault.
This story is so Tinfoil hat.
www.facebook.com/DareDefendOurRights
www.fairtax.org
I, know, you hate videos but have a look and you might learn a thing or two about Bitcoin.
http://www.youtube.com/watch?v=Cs6F91dFYCs
ayottesoftware.com
For starters, BtC is inherently deflationary ... Less money chasing stuff; less cash for everybody to spend (as the supply of stuff out-grows the supply of money).
BtC maybe deflationary but so is the price of say PC components too. The real value of computers has declined exponentially since the 1970s yet the market is booming. Anyone knows that most PCs will sell a lot less next year than today yet people buy PC's. There's a great book called Less than Zero about this. I think bigger problems of deflation come around business cycles when wages don't adjust but deflation does not have to be the nightmare everyone is afraid of. In fact deflation is the whole purpose of economy, to get more stuff with less resources.
Mining BtC has a carbon footprint from hell (as they get more computationally expensive to generate, electricity consumption soars). This essay has some questionable numbers, but the underlying principle is sound.
Lack of deeper abstract thinking. Carbon footprints are moral masturbation because anything you produce has carbon footprint, either in fixed or marginal costs. By trying to regulate the end products, the author falls to economic calculation problem. As long as the externalities of pollution are paid by those who produce them it doesn't really matter for which purpose the carbon is produced. Saying one product is preferable to another is just politics. You can redistribute money for whatever things (research, medicine etc.), but that's beside the point.
There're valid points about problems but I think it's quite one-sided article. The reality has much more dimensions to this. I can see both good and bad sides of having an anarchist crypto-currency, just like piracy. On other hand it prevents the big institutions from rent-seeking (in piracy, making things cost more than their marginal and fixed costs and with crypto-currency excessive taxation), on the other hand it comes with all the problems anarchy comes with.
Exactly - real Libertarians buy guns!
Dark Reflection
Inflation: where the cost of stuff goes up every year and you can buy less with it - ie the worth of your currency goes down. Consider that we've had inflation for decades - you can no longer buy a car for $1000.
So deflation means the opposite - your currency goes up in value, so you can buy more stuff. Of course this means the people who own things would have things (typically property) that are worth less, and they don't like that. So we have inflation-based economics that uses words like "growth" to make it seem you're getting a good deal whilst at the same time handing out large chunks of yield on investment to ensure their money assets don't go down in value overall.
The poor, meanwhile, can keep begging for payrises just about equal to the rate of inflation so they can stand still, at best.
So you decide if deflation would be good for a while. (my opinion - we need a bit of both fluctuating around a nice balance to keep things stable)
I have to agree with Stross, YAC is not going to help the bottlenecks currencies produce. As he alludes, all currencies take on a life of their own, mostly parasitical to the actual "economy" they're supposed to be "means-of-exchanging." What we need is what I'm calling "direct logistics" (DL) where supply and demand are directly connected a la a Leontief-like input-output matrix. The means no pricing vis-a-vis a currency, but simply the actual, direct supply and demand statistics. What you can "purchase" (more like procure) would be based on your "batting average," which the IO-matrix would figure out based on how well you're making the IO-matrix hum, which, in turn, would be dependent on how many "networks" you were involved in in a positive way. In the best DL world, resource usage would be rationed and, hence, a huge chunk of the IO-matrix would be devoted to getting more out of less, i.e., recycling and more-with-less consulting, since resource allotment would be merit-based. A further dream would be for all means of production to be "open source," i.e., anything and everything would be open for anyone to peruse and possibly improve . . . just like, theoretically, open-source code.
I am not a Libertarian and I actually have a strong belief in strong regulations of multi-national corporations that wield too much power, but I agree 100% with the idea that taking currency out of the hands of massive governmental regulatory bodies is a positive thing. You can believe that governments themselves hold too much power or you can believe that corporations hold too much power and are puppeteering the regulators (like I do based recent events in the financial sector), either way removing that branch of government seems positive to me.
I agree the "gold bugs" are a little misguided. Gold if you use it as a wealth store at all is purely about playing a 'long game' that is it almost always recovers its original value at some point if you hold it long enough. You would have to exchange pretty close to the same number of oz in gold for the cash required to get a similar quality house built in 1813 as you would in 2013.
If you have amassed a great fortune you want to preserve across generations gold might be a workable way to do it. It might even work fairly well if you plan to buy before a panic and don't expect to sell until 10 or 15 years later when the recovery is complete.
The notion that having gold is going to anything for you during mass panic is silly. Because you right nobody is going to trade something useful like food or transportation for a mostly inert metal.
Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
Once we reach the 21 million cap, bitcoin will have a nearly 0 carbon footprint. I don't see a problem with bitcoin deflation. Gold deflates too. So what? It's not like everyone is forgoing investment in the traditional economy in order to horde gold and bitcoin even though those options both currently exist.
the more popular alternatives like BitCoin become, because people will want to divorce themselves from the monetary system the Govt has in place, who wants to pay tax to a corrupted government that does things like arm criminals like mexican drug smugglers and islamic rebels that could potentially be terrorists, or bailing out banks when they gambled away other people's money on bad investments and the banks did it with the blessings of the Govt when they repealed the Glass-Steagall Act, and Barney Frank & Chris Dodd helped too with their bad financial policies, who wants to pay taxes to a bunch if corrupted incompetent criminals that try to pass themselves off as a legitimate government,
i hope i win the lottery because i would use the money to leave the USA quicker than you can say Jackie Robinson
Politics is Treachery, Religion is Brainwashing
BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mindâ"to damage states ability to collect tax and monitor their citizens financial transactions
He says that like it's a bad thing. Government monitoring it's citizens' financial transactions is the fast track to tyranny. Now that they're in the process of centralizing health care, how long will it be before people's transactions for alcohol, tobacco, fast food, etc., is tracked, and possibly declined because their health isn't good enough?
Taking guns away from the 99% gives the 1% 100% of the power.
I like how he threw drugs in with assassination and child pornography. I'm sure the rest of his opinions are valid, though.
-- sudon't
Air-ride Equipped
..to put the genie back in the bottle. Stross is complaining about the Titanic's navigation system after it hit the iceberg. If the politurds from around the world had not trashed their own currency systems, bitcoin would have never taken root. If the fiat currency systems were sound and could garner the confidence of citizens, the value of BTC against them would not be rising. In a sense, Volker, Greenspan, Bernanke and their ilk are the force behind the creation of bitcoin. If BTC is taking us to hell on a rail, they are the ones who laid the track.
Technological progress has merely provided us with more efficient means for going backwards. -- Aldous Huxley
...worthwhile BitCoin post on /. , ever.
you can no longer buy a new car for $1000.
OK, OK, I'll stop with the pedantic dickweedery now ;)
No colour or religion ever stopped the bullet from a gun
Bitcoin is inherently structured as a pyramid scheme. Users who adopted it early had an easy time obtaining BTC, and they're incentivised to recruit others so their stockpile has value.
Start reading Accelerando (printed/kindle version if you prefer it), then you can check more of his work. Maybe is not an authority about how the near future will develop, but at least wrote a lot about that.
You forgot ductility. Combining this with its nobility and you have the best gilding material -- for spaceships as well as palaces.
Also, its conductivity. Though bested by silver & copper, these both tarnish.
I come here for the love
but do you need to like it?
not really.
it doesn't really make taxing any harder than cash anyhow. taxing depends on companies keeping their books in order and if they are not, then they get penalized.
I mean, drug trade works just fine with old dollar bills doesn't it...
world was created 5 seconds before this post as it is.
I have only bought a tiny amount of gold and silver myself, but this was always the view I took of it. It isn't that I expect it to become a common currency again; or that I expect to get rich off it, but its a little fall back that will always be worth something in a worst case, or maybe something that can be used as collateral for a loan in a pinch. A small hedge against other calamities...and if I never use it and it just gets passed on to family, then I imagine I will have lead a comfortable enough life.
So if the price cuts in half or more, even if it drops down to the $300/oz of my teenage years, Hopefully it does that while other things (like pay or retirement accounts) rise; if not; at least it may take less of a fall than other things. Getting $300 for a coin you paid $1200 or more for is a loss.... but compare that to stocks you paid $100 for and are now worth nothing at all, or just pennies.... and which bet turned out better?
Maybe gold isn't a money maker, but, its not a bad diversification or hedge bet against even bigger losses.
"I opened my eyes, and everything went dark again"
I don't like any kind of money, but I still value it.
I'll give you a case of ramen for a box of 9mm.
As I've had it explained to me, the problem with deflation is that it encourages hoarding and discourages investment.
I don't understand the stigma against basement dwellers
They're efficiently using the space in the basement. There's no need for them to move out into another McMansion. I haven't heard of a basement dweller taking on home loans he couldn't afford and contributing to the housing bubble. Not going outside much also reduces their carbon footprint
Basement dweller/living with parents is actually a very logical course of action in today's economy. People and governments have been spending beyond their means. Somebody has to cut back. It might as well be people who enjoy doing it.
His point about lack of regulation allowing disgusting markets is valid. However, I suggest tolerance for this is partially the result of bad regulation creating disgusting markets of its own.
The inability to regulate is what drew me to bitcoin originally, its why I said "Aha! This is great" and what made me want to support it, even if it might be doomed to fail (I am not convinced one way or the other actually, which infuriates some people who have less btc than me who hang on every swing while I shrug it off.... making money was never why I was interested in btc)
Thing is, for all this talk of regulation being good, its also done absolutely terrible things. Terrible things, which drive people like myself to say "good, fuck the regulator scum". Their regulations created the gang problems in this country with their monumentally stupid drug war. Tally the body count on that boondoggle and then complain to me about assasination markets that have never verifiably produced a body.
All the while "regulation" has created the most perverse markets ever, driving safer drugs off the street, and making the worst abuses the most profitable.
Regulators can't be trusted and are typically blind to the destruction they leave in their wake. If bitcoin should die, I, for one, will support the next cryptocurrency that makes regulation hard or impossible. Its what the track record of regulators deserve.
"I opened my eyes, and everything went dark again"
Deflation causes people to hoard their money because it's basically an investment to keep it. That's not something that helps the economy (need them to spend money). Of course the poor are exempt from all that.
Because you right nobody is going to trade something useful like food or transportation for a mostly inert metal.
Yes they are. If you have food and think you can part with a little in exchange for something that will be worth something when the crisis blows over, why not? I have a nice painting in my living room which my granddad got from someone in exchange for some food during the "Hongerwinter" of '44. In a crisis that threatens the value of money itself, people might be more inclined to take gold instead of cash in cases where large sums change hands. What happens in a (Mad Max kind of) crisis is not that gold drops in price, but that the price of food and other essentials goes up. And gold is not all that unwieldy; plenty of places here sell 1-gram "coins" currently worth about 50 euro.
GP is right though that it's better to get gold during the good times, when prices are low. If the crisis has already hit, you're too late.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
I have. It would suck. The rich can avoid debt and sit on their wealth while it accumulates. The poor however can watch as their mortgage increases with value alongside their wages rather than gradually getting smaller. Deflation encourages hoarding wealth and inflation encourages investment and wealth creation. Ideally you don't want a huge amount of either, but a small amount of deflation is certainly better for the economy than deflation.
The idea that someone who owns a £10 million property would hate deflation is nonsense. If he thought that cash would get a better return than property he could sell the asset and hold cash instead. Look at the median networth of an American. It's pretty much sweet FA so who cares if their savings are going to go uup by a couple of % a year when their debts will as well and they often have debts that outweigh savings. Deflation is no use to anyone who isn't able to accumulate, or hasn't already accumulated, money.
Mining BtC has a carbon footprint from hell
This is precisely why I refuse to use Bitcoin. Its requirement to perform energy-wasting computation is a serious design flaw.
Of course some mining work is necessary -- we need 3rd-party validation of signatures and transactions, and we need a financial incentive to perform those calculations. Unfortunately, Bitcoin also requires the mining process to perform useless calculations, which take the vast majority of the mining time.
This makes Bitcoin highly susceptible to irrelevance, once new digital currencies are developed that have a more elegant and efficient design.
>The notion that having gold is going to anything for you during mass panic is silly. Because you right nobody is going to trade something useful like food or transportation for a mostly inert metal.
And they'd trade it for pieces of green printed paper instead? I think one of the ideas is that if anything happens that seriously damages the value of the dollar, or even just raises the likely possibility, then you won't be able to buy much with dollars. On the other hand silver, gold, etc. have their price established by an international market, and as such the street value won't change much if, say, the US government decides to start printing money to pay off the debt or something.
At the end of the day the only value any currency has is what what other people will give you for it, a value with a loosely correlated with scarcity. As such fiat currencies tend to retain value so long as the government backing it doesn't start printing too much more money. And precious metals will tend to retain their value until a cheap and easy way to concentrate them from seawater is developed. Gold and silver have an advantage in that most people have a general idea what they're worth. Gemstones... not so much. Hell, people pay through the nose for diamonds, and those things are almost as common as gravel.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
current going rate is 2, 9mm rounds per package of ramen. or 2 packages of Shrimp flavor ramen.. the shrimp ones are just gross..
Do not look at laser with remaining good eye.
Indeed.
Things like inflation and deflation are not bad things. They are frequently a symptom of bad things, tho.
One could argue that not being able to increase (or decrease) the money supply is a bad (limiting) thing, but on the same token clearly being able to increase (or decrease) the money supply can (and so frequently does) also lead to bad things.
The current massive inflation (don't believe the "official" CPI numbers) is a symptom of bad monetary policy, a policy that is used to continue the perpetuation of largest ponzi scheme the world has ever seen: The United States Public Debt. Both the FED and government even admit that its a ponzi scheme every time the debt-ceiling issue comes up ("If we cant borrow more money then we will default on our debt.") The baby boomer generations government lived so far outside of its means that the debt is now unpayable, and no its not a rich vs poor issue. Its a big government and the resulting excessive influences issue (that of course benefits the have's over the have-nots -- thats how big government works.)
This is why bitcoin is attractive to so many people, but the fundamental problem with bitcoin remains that while the setup certainly prevents printing arbitrary amounts of currency, its still itself a completely arbitrary thing. We are free to choose to use it (to the extent that its legal) but we are also free to choose to not use it. As for myself.. let me know when I can pay my taxes with it.
"His name was James Damore."
We got into it to rape it for the money we could, no one expects to keep a "portfolio" of virtual currencies.
"If any question why we died, Tell them because our fathers lied."
Whose main protagonist technically has no income, but lives well because other people pay his bills and provide him goods and services for free in exchange for his ideas. He also has an ex-wife who is an agent for the IRS, which claims he must have income - and therefore owes taxes on it - because he lives well, and are trying to collect. She goes through extraordinary lengths trying to get him to pay.
She...comes off as not a very nice person.
.
Prisencolinensinainciusol. Ol Rait!
Nothing "looks like it" about bitcoin, it was designed as a weapon against world financial system. Highest coal of bitcoins in to eventually supersede all worlds currencies(achieving such a goal is entirely different matter tho). That pretty much means rewriting world economy. Bitcoin is designed to take control out of governments hands, the entire system is self regulatory and designed to resist tampering from governments or anyone really.
“Let me issue and control a nation's money and I care not who writes the laws.” Mayer Amschel Rothschild (1744-1812), founder of the House of Rothschild.
I wonder, what if nobody really controls money?
Bitcoin doesn't get harder to generate so much as the pool of coins is shared between more parties...
As for the carbon footprint, new mining hardware is intentionally more efficient than the previous generation, and if the rewards from mining become smaller than the cost of electricity people will stop doing it.
Similarly as the dedicated hardware gets more advanced, mining on GPUs and especially CPUs becomes completely useless, so even with thousands of nodes you will never make any worthwhile amount. The returns from using malware to mine bitcoins must be pretty tiny today, even with huge numbers of infected systems.
And illegal goods/services have been provided for money long before bitcoin even existed, bitcoin just provides a new way to pay for them because of its perceived anonymity... In reality its probably still easier to trace than cash, and the existing methods for combatting such sales will still work too.
http://spamdecoy.net - free throwaway anonymous email - avoid spam!
How dare the price of things go down over time!
There is a good reason that modern economists pretty consistently oppose deflation.
How would you react if your cash was going to be worth more a year from now? You'd probably avoid spending unnecessary cash on anything. You'd also be more reluctant to invest, because you know that if you get, say, less than a 2% return you'd do better holding cash. So what you're going to do with your cash is hoard it, as much as possible.
So far so good - you've encouraged saving, right? But there's a problem: Everyone else reached the same conclusions that you did and responded more or less the same way. In deflation-adjusted terms, that lowers corporate sales (because consumers are avoiding purchasing), it lowers sales to corporations (because their sales are down and they're also trying to hang onto cash), it dries up the job market (existing corporations won't hire under those conditions, and new businesses have a hard time starting because they can't get sales), banks demand much higher interest rates (because you have to now beat deflation), and slowly but surely the gears of the economy grind to a halt.
By contrast, with modest inflation, everyone is encouraged to do something with their money, so goods and services circulate more, so more work needs to get done, so more people are employed and doing more work when employed. And it's relatively easy to prevent inflation from adversely affecting you: Hold assets that aren't cash (securities, real estate, etc), and adjust the prices you demand for anything you sell (including your labor). And yes, those conditions are very different from hyperinflation, where nobody wants to have cash because it will be worthless by next week: You want cash to move, but not move so quickly that nobody can plan ahead, which gives you a target of 1-2% inflation, which is exactly what we have.
I am officially gone from
There's a whole lot in the summary that is just wrong or out of date. First off, the energy consumption for bitcoin mining is becoming more and more efficient, especially this year thanks to the addition of ASIC circuits for the job. Also there are several alternative currencies that are trying to address this with alternatives, including Peercoin and Primecoin.
Next, the news of malware for mining Bitcoin is not new at all - it's been happening for well more than a year. And the defense is the same as always. Really this is an issue of malware, not an issue of Bitcoin. There is also malware out there to steal credit card numbers and bank account information - that's not a strike against credit cards or bank accounts.
Finally a lot of this is a matter of opinion. The author thinks a deflationary system would be terrible - many of us think it would be wonderful. This is actually addressed in the Bitcoin FAQ with a link to a real article on the theory so you can consider it and make up your mind rather than starting with a preconception off the bat. If you conclude that a deflationary currency is bad, don't use it - meanwhile let the rest of us use what we think would be best. If you like the cryptocoin concept but don't like deflationary currencies, there are altcoins that do not have a capped supply.
As for other points of the libertarian agenda - again, if you don't like it, don't use it. I support your right to pick the system you think would work best, and I think I should be allowed to do the same. "it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness"
Secession is the right of all sentient beings.
In a sense bitcoin is regulated by it's design in a way only a computer system can be. There are fewer rules that can be easily bent to political will because the design of the system enforces it's own rules; making it decentralized, like Gold. Gold being a physical item, it has been easier to control and regulate but don't let that make you think bitcoin is immune from lawyers. nothing is. It has little regulation so that appeals to the economic anarchists (libertards) but in reality, it's strongly rigid nature by design is a basic form of regulation that can not be tampered with, unlike anything that has ever existed before.
The reason many people like bitcoin isn't just a political agenda, it's a response to the corruption and power control over a monetary system has over people over the history of civilization. An attempt to take away the human element that eventually ruins all systems with concentrated power.
I read about bitcoin before it got going and I never did anything with it but observe. I'm surprised it made it this far without terrorism turning it into another Prohibition "war" but I'm still waiting for that expected outcome... unless it can get powerful enough influence before the banks declare it a threat, our masters will forbid it.
Democracy Now! - uncensored, anti-establishment news
The only real currency in this world is power.
The more power you have, the more you can take away from others ("borrow"). The US dollar is only backed by power of the US government to coerce people and other nations, nothing else.
Bitcoin has no such backing. It is worthless.
"it's like a COBOL programmer from the 1970's worrying about a Y2K bug.
So Bitcoin is like a short sighted jerk who doesn't understand software engineering?
2,099,999,997,690,000 is the max units. that's 300,000(approx) coins poer person assuming 7 billion people. So fer every person born, the value if bitcoin goes up. This means it's harder for new arrivals to earn the same value
Every time you move the decimal, the people receiving bit coins for services/goods immediately losses value for their services and goods.
If I charge half a bitcoin for a service, and that causes a split, then how may BitCoin you need to buy something doubles, effectively halving the value of the service I preformed.
Some reference
Max number of BitCoins smallest unit: 2,099,999,997,690,000
Max umber of US Currency smallest unit: M0: 120,000,000,000,000 M1: 240,000,000,000,000 M2: 1,200,000,000,000,000
That does not take in all currency in the world converted to pennies. WHich you shoud far a reasonable comparison, becasue BTC is global.
Don't know what M0, M1, M2 (There isn't an M3 anymore) is? Then stop talking about currencies until you study up. I mean, you can't even have a reasonable discussion about currency without that knowledge. No don't go to wikipedia, and learn the definition of just those thing,. There are a whole set of rules, coefficient, behaviors, etc you need to know about.
Not that you can't know, just that you should at least study what they are and apply critical thought to them for a few years.
The Kruger Dunning explains most post on
Banks being discouraged from loaning is a good thing, as shown by the most recent financial crisis which had as its biggest intermediate cause excessive poor quality loans. Everybody was hurt, banks and people encouraged to take loans they couldn't afford, and the world in general as the side effects expanded.
Loans are profitable to banks without regard to either inflation or deflation. With deflation, they get back more dollars than they loaned out, and the dollars they get back are worth more. PROFIT!. (The increased risk is that in case of default, the asset translates to fewer dollars.) With inflation the situation is more difficult, to profit they're relying on being able to borrow (from savings accounts and the government) at a rate lower than that at which they lend.
What's best for banks is a stable currency. What's very bad is a volatile, unpredictable currency that makes planning impossible.
Contribute to civilization: ari.aynrand.org/donate
I'm a libertarian myself and I always advise everybody against buying gold. Silver *maybe* if its in small denominations, and even then only keep tiny amounts of it.
Bitcoin is interesting though. I don't advise investing into it, but it is a currency worth holding on to if you can mine it. I've already made purchases with bitcoins myself (all coins that I mined using GPU's purchased for gaming.)
Careful with names containing L slashdot.org/~AiphaWolf_HK slashdot.org/~AlphaWoif_HK slashdot.org/~AiphaWoif_HK
Tax evasion? Taxes are robbery anyway.
So I guess you don't use roads, sewers, police, fire departments, or any other government service that taxes go to pay for. I am not saying that there is not a lot of waste but with no taxes there are no government services. Tax evasion just passes the burden to those who pay taxes.
Deflation encourages hoarding wealth and inflation encourages investment and wealth creation. Ideally you don't want a huge amount of either, but a small amount of deflation is certainly better for the economy than deflation.
s/deflation/inflation
You nailed it, so i was going to mod you up, but as you are already at +5 i thought it would be more useful to point out the typo.
Most of your economic analysis is correct, but you've slipped on one point:
banks demand much higher interest rates (because you have to now beat deflation)
Interest rates generally go the opposite way than you state --- interest has to increase to cover inflation, since the dollars paying back the loan in the future will be worth less. However, the rest of the economic effects --- that everyone else is interested in spending money --- offset this, and make taking loans for starting up new businesses worthwhile.
It supposed to be a free currency.
Some people have a terror of freedom. Stross is apparently amongst them.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
Bitcoin's utter lack of regulation permits really hideous markets to emerge, in commodities like assassination and drugs and child pornography; and finally Bitcoin is inherently damaging to the fabric of civil society because it is pretty much designed for tax evasion.
[sarcasm]All perfect examples markets and activities that weren't there before the Bitcoin...[/sarcasm]
Privacy is terrorism.
The carbon footprint of regular banks is much bigger, they have massive buildings, IT systems to process transactions, etc...
Sounds good. Wrong though. Banks have large systems because their transaction count dwarfs BitCoin's. They rely on one very expensive computer setup because it's **designed** for the job, unlike some gameboi's home PvP system. Think Tandem, high throughput specifically for transactional processing. All in all, they do much more for less if you understand the entire picture.
Their massive buildings are for the human side of the issue and are dwarfed by the number of homes the distributed system resides in.
The link to Fourier's gangrene on Wikipedia is totally unnecessary, and the article includes an image that is decidedly not safe for work.
I've actually seen (and smelled) a case of Fournier's Gangrene.
What you're looking at on Wikipedia is a little misleading, as it is actually the aftermath of a surgical procedure in which necrotic tissue has already been stripped away. The typical appearance of a case would involve something more like painful and massively swollen testicles, with discoloration that may initially be reddish but rapidly changing to bluish/greenish color, with a foul odor. Externally visible tissue breakdown will eventually start to happen, but most cases end up in surgery well before that happens.
On the other hand its a means to get around the oppressive states of today that track currency, and with it, all transactions, and things arbitrarily prohibtied.
The drug market is not the problem, prohabition is.
No, bit coin is not perfect, and it also has some fundimental flaws like a limit on how many bitcoins can be mined, the ability to lose them, and it doesn't address larger social issues.
but it also has its advantages, like not having a major player than can shut you down for political purposes, like what happened with wikileaks.
In the worst case you will give your gold to anyone who trades it for a loaf of bread.
"When I first heard Daydream Nation it quite frankly scared the living shit out of me." -- Matthew Stearns
Why are these arguments based on Bitcoin replacing Fiat? Paypal did't wipe out the dollar, it just made something more efficient. It's like saying Bitcoin is going to replace Gold, Silver and any other means of which to exchange value. That's crazy, what's not crazy is Bitcoins usefulness and utility.
I lost interest in bitcoin roughly a minute after I read about it first, when I realized that the first people to build large mining rigs would be our new overlords. That's not better than all the land being owned by landed gentry for centuries.
"When I first heard Daydream Nation it quite frankly scared the living shit out of me." -- Matthew Stearns
Heh... you're assuming that Bitcoin is going to be wildly popular and every person on the friggin planet (even the ones who don't even have electricity now let along stable Internet access) are going to be using it to make ALL of their currency transactions.
I'm sure that's a problem that the Bitcoin Foundation would love to have, but I doubt that it will be something that will happen during our lifetime. I hope that I'm wrong, and that what I just said will make as much sense as a "640k will be enough for everyone" statement 20 years from now... but I doubt it.
"Every time you move the decimal, the people receiving bit coins for services/goods immediately losses value for their services and goods. If I charge half a bitcoin for a service, and that causes a split, then how may BitCoin you need to buy something doubles, effectively halving the value of the service I preformed."
That's not how it's supposed to go... BitCoin decimal shifting is meant to deal with scarcity and defaltion... Bitcoin as a currency should raise its value first, at a more or less predictable ration (not this crazy shit we have now) like other currencies but a bit faster.
Then when it starts to be not so convenient, the decimal is shifted to allow smaller transactions... no one looses anything from the shift, and it's totally different from the money devaluation we have with inflationary currencies.
Yup, and if things are that bad that I am trading gold for bread, what would I be doing without even the gold? Trading fists for bread? One thing I can guarantee is that, if that day comes, I wont magically be 20 again.
"I opened my eyes, and everything went dark again"
"BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states ability to collect tax and monitor their citizens financial transactions,"
This is a rather bold two faced statement from a guy who has his protagonists doing exactly that. Did he forget he wrote "Accelerando"? WTF man!
Her fingers twitch, and his ears flush red; but she doesn't follow up the double entendre. "You don't feel any responsibility, do you? Not to your country, not to me. That's what this is about: None of your relationships count, all this nonsense about giving intellectual property away notwithstanding. You're actively harming people you know. That twelve mil isn't just some figure I pulled out of a hat, Manfred; they don't actually expect you to pay it. But it's almost exactly how much you'd owe in income tax if you'd only come home, start up a corporation, and be a self-made ?"
It all starts at 0
Exactly, it makes no difference. When the gold is gone for the first loaf, you are back to fists for the second.
"When I first heard Daydream Nation it quite frankly scared the living shit out of me." -- Matthew Stearns
That's bunk. If deflation was accepted and was occurring at a normal rate, mortgages could be structured to accommodate it- like having a negative finance rate.
love is just extroverted narcissism
Read the "Neptune's Brood" - it's about as close to a treatise on interstellar economics as you can get in science fiction. He definitely knows what BTC is and he provides a rational critique of it. I happen to agree with him, btw.
This is very true, but, that is kind of the point of a hedge isn't it? Yes its possible for many things to happen but, the more ways you have to catch yourself when you need it, more likely that one of them still holds.
"I opened my eyes, and everything went dark again"
The poor however can watch as their mortgage increases with value alongside their wages rather than gradually getting smaller.
The debt + interest, in BTC, will be numerically fixed. However your salary will be shrinking as the value of BTC increases. You will not be able to ever pay that debt, probably.
If you wonder why the salary has to shrink: the business has to buy resources (such as raw materials and your labor,) and to sell the product. As BTC deflates, the price of the product decreases - and so the cost of production has to decrease too.
This is psychologically painful to go to a yearly performance review where the only question is how much your salary will be cut, while nobody is going to cut your debts. This effect has to result in rejection of BTC as money - at least because you cannot accept a debt that increases in value faster than you repay it. The lender will also see not much advantage in lending you his BTC and taking risk if, for half the interest, he can just keep them and watch their value grow.
No, and this comment displays the real problem with a lay person's view of 'money'. They believe rising prices are somehow necessary, or they represent rising 'values'. They do not.
Everything is relative. If your salary is going up that means everything else is going up as well, and what happens is that everything else goes up faster than your salary transferring your wealth to the wealthy.
Price != value.
The small wealthy elite holding the overwhelming majority of society's wealth --- the ones with spare cash to invest --- spend a negligible fraction of their holdings on TVs. Assuming that business investors allocate their money according to the same logic as Joe Workingclass buys TVs is awfully ignorant. You're even wrong (on average, which is what matters for the overall economy) about Joe Workingclass: when people have less access to easy money (lower employment, lower pay), they hold on to their old TV longer instead of getting a new one. The working poor are the ones trampling each other to death to save a couple bucks at Black Friday sales, before which electronics sales sag as people are waiting for upcoming deals.
Anyway, BTC, like dollars, are highly unevenly distributed. Folks holding most of the BTC are holding it for speculative investment purposes, not living paycheck-to-paycheck and thinking about a new TV to numb the drudgery of existence. Deflation will mean that people who've got lots of dollars/BTC --- meaning they can buy a spiffy TV today, without putting a dent in their wealth hoard --- will tend to hold on to the BTC in hope of future gain, rather than spend/circulate it.
Deflation encourages hoarding wealth and inflation encourages investment and wealth creation.
What a load of shit.
That's really irrelevant though as the discussion was if "deflation would be good for a while". With deflation, it's difficult to get people to spend money because the "something valuable" will be cheaper if they buy it later. Keeping the inflation rate at around 0 is a viable alternative.
So deflation means the opposite - your currency goes up in value, so you can buy more stuff. Of course this means the people who own things would have things (typically property) that are worth less, and they don't like that.
It doesn't actually. What deflation is is currency destruction.
Of course it's more difficult to get people to spend money when they know that their earnings won't be stolen from them through inflation as the time goes. But there's nothing bad at all in the fact that it's difficult. It's not that it should be easy. But zero inflation is indeed a viable and ethical alternative.
He's mad that his clan's global banking hegemony is getting a taste of its own medicine.
Can't argue with that, and I'm not saying that a bit of gold as part of financial security portfolio is necessarily worthless. My point is directed toward those who support gold hoarding for the event of economic meltdown, war, and the like.
"When I first heard Daydream Nation it quite frankly scared the living shit out of me." -- Matthew Stearns
to damage states ability to collect tax and monitor their citizens financial transactions
All the more reason to use it! Remind me again why the government needs to know what I, as a free, law-abiding citizen, do with my finances.
In the end they will lay their freedom at our feet and say to us, Make us your slaves, but feed us. - Fyodor Dostoyevsky
With deflation, it's difficult to get people to spend money because the "something valuable" will be cheaper if they buy it later.
Like computers. No wonder they failed so epically.
Wait, people won't spend their money because it will be worth more later or people won't take pay cuts because they think they're getting less.
Which is it? I'm confused.
Meh, don't bother answering, the speculation is pointless. Bitcoin don't care. It's either coming or it's not.
Thought experiment:
Alice, Bob and Charlie constitute a complete economy, each have one T-dollar.
It is determined that there are not enough T-dollars for their growing economy, it is decided to increase the number of T-dollars by one.
What is the fair way to distribute this T-dollar?
Know how it happens currently?
The government gives that T-dollar to Charlie.
Every time.
You are not Charlie.
Truly, bitcoins are very unevenly distributed.
The difference?
If you have a lot of dollars and spend some, the government gives you more.
Really real Libertarians steal them. Making people pay for things is nanny-state interference and infringes the creator-imbued right to do whatever you goddam want.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Deflation causes people to hoard their money because it's basically an investment to keep it. That's not something that helps the economy (need them to spend money).
On the contrary, it can help the economy. If you want to grow the economy sustainably (and not just boost short-term metrics) then you need to expand its productive capacity through capital investment. You can't do that if everyone is focused on immediate consumption, so the first thing is to convince people to hold back on consumption and start saving instead. Deflation has that effect.
Once people have started saving, they can either hold onto the money or invest it somewhere. If they choose to hold onto the money, they may not be going out and actively picking profitable ventures, but neither are they using up any of the surplus production that money represents. Their "hoarded" money isn't competing with others' money for goods and services, which makes others' money that much more valuable. You can think of that as a sort of general loan, not of money per se but of purchasing power, part of which will go toward consumption and part of which will go toward investment. The portion of the decrease in prices (deflation) which results from those investments is the interest on the loan.
The interesting thing about a deflationary currency is the potential investments with nominal returns less than the rate of deflation, i.e. those which would naively seem to be profitable if it weren't for the deflation. If the change in prices is due to a policy of reducing the currency supply or a sudden, unexpected change in the demand for cash, that could be an issue, but when the deflation reflects changes in the natural price of money in the market—changes in the supply of goods and services relative to the (fixed) supply of money—then any investment which fails to beat the rate of inflation is a subpar investment, and would reduce economic growth, not increase it. The investments which don't take place due to inflation shouldn't take place, because they take productive capacity away from more profitable investments, even if the alternative is simply "hoarding".
If the deflation does happen to be due to a change in the demand for money, rather than economic growth, then that indicates an expectation there will be more need to spend money in the future more than there is now, which once again means that putting that money into lower-return investments now would be a costly mistake—it would mean wasting limited resources in the present when there will be more valuable uses for those resources in the future.
On the other hand, if the deflation is due to manipulation of the money supply, then that just comes down to sending false signals, and an economic loss should be expected. Deliberate deflation gives people an incentive to hold their money rather than make investments which would be better for the economy, just as deliberate inflation leads people to make investments whose low returns actually reduce overall economic growth.
To illustrate how currency inflation leads to malinvestment, let's say that annual growth in terms of purchasing power, the total supply of goods and services, is 3%. The money supply increases by 5% over the same period. Between the two, you should expect prices to increase by about 2%. Let's also say that there's an investment which pays 4% nominal returns. While obviously not the best investment out there (the average should be 8% based on the growth and inflation rates), it looks reasonable on paper—that's a 2% net increase in purchasing power, which is far better than the 2% loss you'd get from simply holding on to the money. However, the contribution to economic growth is actually -1%; 5% of that 4% nominal return came from the increase in the money supply. It only looks profitable because the economy was growing by 3% at the same time. Making this investment, or any other investment with less than 8% nominal returns, wil
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
You don't move the decimal, you merely allow finer divisions. If I can buy a coffee for a dollar and the US Govt suddenly introduced 1/10th cent coins (not gonna happen but bear with me), coffee would still be a dollar.
Oops. Didn't realize you were quoting. You might want to look into the <quote> tag
The rich can avoid debt and sit on their wealth while it accumulates.
If you earn money and simply sit on it, then you're not receiving any goods or services in exchange for what you've produced. In the mean time, others gets to enjoy the proceeds from that production. In effect, you've made them a loan of your purchasing power; the increase in value is merely the interest on that loan. It's certainly better than making sub-par investments with returns below the rate of deflation, which would slow economic growth. If you are competent at spotting the investments with above-average returns then you would still invest in them to get an even better return despite the deflation.
The poor however can watch as their mortgage increases with value alongside their wages rather than gradually getting smaller.
If history is any guide, under deflation wages increase faster than prices, so while the real value of the mortgage is indeed increasing, its value as a fraction of your paycheck is decreasing. Inflation has the opposite effect.
Deflation encourages hoarding wealth and inflation encourages investment and wealth creation.
You've got that backwards—or rather, sideways. The axis to look at is not inflation vs. deflation, but rather the degree to which the currency supply is manipulated. A monetary policy which causes deflation (or reduces inflation) by reducing the money supply discourages good investments and thus destroys wealth. A monetary policy which causes inflation (or reduces deflation) by increasing the money supply encourages malinvestment and thus destroys wealth. A neutral monetary policy (i.e. a fixed money supply), regardless of the rate of inflation or deflation, encourages good investments while discouraging malinvestment, and thus creates wealth.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
Ending tax evasion would be easy -- just tax nothing but land. I mean, good luck hiding that, right?
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Yes, BitCoin has some similarities with gold, but I don't think that is the core reason people, including libertarians, are interested in it.
Libertarians (and most people for that matter) recognize the benefit of competitive provision of goods and services in the voluntary framework of property rights. Establishing a monopoly is a bad recipe for providing a quality service. Money and banking are not exempt from such considerations, and we see the effects of bank cartelization around central banks.
I'm not going to argue the various advantages or disadvantages of BitCoin (energy consumption), but I do recognize that there are trade-offs. That's the point when people get to choose which money they want to rely on. BitCoins offer advantages in return (peer to peer transactions).
Aside from that, I want to address two incorrect claims from the author:
1) money that doesn't inflate is bad (presumably compared to money from central banks):
Both economic theory and historical evidence debunk this claim. See George Selgin on the track record of the Fed on its self-declared goals (price stability, anti-cyclical effect, employment).
Also, see Mises/Hayek on the negative effects of monetary inflation and credit expansion, namely bubbles and accretion of power to the early recipients of money and the well-connected (Cantillon effect).
2) lack of regulation opens up shady transactions:
This is logically incorrect. It's not the lack of regulation, but the relative anonymity of BitCoin which opens up such possibilities. Cash and other commodities can be used to the same effect despite being regulated.
Again, different systems of currencies offer different trade-offs for people to choose, that is the beauty of experimentation and innovation.
These comments are mine; I do not speak for my employer.
Alcohol & ammo are better things to stockpile for trading "after the fall" than gold.
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One who endorses state violence against others is not one who "would not wish any harm or hindrance to other people"
I'm sure politicians will accept bribes funded in BTC as readily as any other currency. Government corruption to serve the interests of the wealthy is not improved by switching to another monetary system which also entrenches large wealth disparities and the interests of the wealthy.
True. Did someone claim Bitcoin will solve all the ills of the world? I believe I must have missed that.
I thought it was implied in your own comment
The difference? If you have a lot of dollars and spend some, the government gives you more
that unevenly-distributed dollars were somehow different from unevenly-distributed BTC in government-corrupting-power to favor the rich. I apparently misinterpreted what your words meant; can you re-phrase what you were trying to say?
Funny you would say that, I started brewing mead recently and had a similar thought about the "liquid gold".... a bottle of alcohol may in fact be worth more; longer than gold. Maybe its time to make a portion of my basement the "Wine cellar".
course after reading that article about old wines, and how any really old wine is going to have the taste of asparagus in it (due to how it ages chemically)...and I can't imagine why anyone would ever want such things foul liquids....much less to pay more for the privileges of experiencing them.....
Seems liquor may be the better choice.
"I opened my eyes, and everything went dark again"
Someone please explain how Bitcoins are deflationary if they are (as I understand it to be so, please correct me if I'm wrong) infinitely divisible?
You see? You see? Your stupid minds! Stupid! Stupid!
Money and power will always lead to corruption. However, if you have a bitcoin, you keep a bitcoin and if you spend it, it's gone. With the dollar, the government prints them, robbing wealth from savings and gives them to the connected. It doesn't fix everything (or maybe even much) but it's an improvement.
Which is to say, if you're hoping that anything, including Bitcoin will lead to some insta-Utopia, you are misguided and likely to do something harmful.
The small wealthy elite holding the overwhelming majority of society's wealth --- the ones with spare cash to invest --- spend a negligible fraction of their holdings on TVs
And they spend a negligible fraction of their holdings because of fear of or encouragement by inflation.
Minor inflation vs. deflation is not going to have any significant impact on allocation of resources. Any extreme of either is of course a problem. But to argue that minor deflation is bad and minor inflation is good is nonsensical.
and that's though I'm quite a fan and usually consider your writing quite insightful.
True, that does happen with many consumer products - when a new version is going to be cheaper soon, they'll hold off on purchasing.
I see your understanding of macroeconomics is based on pulling conjectures out of thin air. Yes, interest rate changes of fractions of a percent make a difference in major currencies, when averaged out over a whole economy, You might not personally jump to shift assets if inflation/deflation varied between -2% to +2%, but that does indeed result in "significant impact on allocation of resources." I suppose as a BTC enthusiast, subconsciously set on downplaying fifty percent changes in value over a few days as minor wiggles, that you might not think much of it --- but once you're talking about billions of dollars, owned by the ultra-rich and managed by armies of accountants, a percent here or there can cause quite a bit of commotion.
A case of 24 packages of beef ramen for a 50rd box is about right then.
I'll trade you 6 Chili flavored Ramens for 1 shrimp.
Talk about gross
Faster! Faster! Faster would be better!
They want to tax you - they want to get a piece of whatever action is going on to be able to pay for all the stuff they do, which taken as a whole is at least theoretically to your benefit. Watching the flow of funds is a relatively easy way for them to get it.
That's the reason.
Whether it's right, wrong, fair or unfair is a pile of different issues. Blame governments, blame an idealogy, blame corporate tax evaders, blame "tax havens", blame money laundering, blame whoever - but that's how it's ended up at this point.
You are in a society where if you don't like it you can start to change it if you can be bothered to get off your arse and vote as the first step. Later steps are also possible without a chance of getting gunned down by secret police.
The original book called Utopia makes the point very clearly that any Utopian ideal is the last possible place you would want to raise your kids. A utopia requires perfect citizens and kids take time to become them. It's a warning and not an ideal.
So I suggest you learn at least that much before hassling others about their ignorance and telling them they have a lot of learning to do. It appears that you have not even started at the high school end of the subject. I haven't got much furthur, but you don't have to know much about a subject to see somebody getting things so badly wrong that they could fix it with three hours of reading.
My quad-core i7 CPU takes about an hour to verify the block chain. ENIAC ran at 50 kIPS, and my CPU runs at 82,300 MIPS, thus assuming ENIAC had the same word length and instruction set (it didn't) it would take 188 years. Accounting for word length and instruction set puts it in the thousands of years range.
IBM punch cards are 7 3/8 x 3 1/4 x 1/143 inches in size, and hold 120 bytes of data each. My copy of the block chain is 13.9 GB, so it would need 115.9 million punch cards. Assuming you can store the cards in boxes like we used to, that take up about 4 x 8 x 18 inches each when stacked on shelves, and hold 2,500 cards/box, we need 46,000 boxes. A room height set of deep shelves can hold 24 boxes vertically (8 feet), and we can fit 1.5 stacks of boxes per linear foot of shelving, thus we need 1288 linear feet of shelving. Including aisle space and shelves on both sides, we get a width of 5 feet x 644 feet of rows = 3,200 square feet of floor space, which needs to be built to the standards of library stacks, since it is effectively a solid mass of wood, just like densely packed books are.
This many punch cards would be the equivalent of 185,000 board-feet of lumber, sufficient to frame about 20 conventional houses.
Unless they need it. Or the item can generate more value than waiting the extra time would be worth. Or a bunch of other reasons.
Yup, all those people living paycheck-to-paycheck will hoard their money. Oh, wait, no they won't. It will go to food, clothes for the kids, the mortgage payment, and utilities, just like it does now.
People can only hoard discretionary income, and we generally call that "saving for the future", a less pejorative name for the same thing - deferred spending. There's no point in saving if you are not going to use it someday, since you can't eat or live in a bitcoin.
Roads and Sewers - Apparently you have never seen a subdivision or shopping center where the developer puts in those features.
Police - I guess you have never heard of private security either
Fire Departments - If insurance companies didn't get a free ride from government funded fire departments reducing their losses, they would pay for them themselves. It ends up being a shift in how the firefighters get paid, but they would still be around.
Parks - See developers again, or charitable fundraising to buy land and build a park.
See, what people like you forget is that if there are less government taxes, there is more money available for people to buy what they want, including private versions of the public "services". If it turns out people don't want to pay for something when given the choice, that means the government was actually working against the public will.
Apparently you have never seen a subdivision or shopping center where the developer puts in those features.
How do you get between those shopping centers and subdivisions? On public roads built and maintained by taxes. Even maintenance costs tax money. Who maintains the intra-city highways?
Police - I guess you have never heard of private security either
Do you really want to go back to the time of private police like the Pinkertons? They upheld the law for those who paid them the most. Private security is afforded by companies not individuals. How does a middle or lower income person pay for their policing? Who pays for the courts? Is it going to be "you only get as much justice that you can afford"? If someone killed you who would catch the killer and put them in jail with you not around to pay the police?
Fire Departments - If insurance companies didn't get a free ride from government funded fire departments reducing their losses, they would pay for them themselves.
Or fire insurance would just go away like it does now in areas with no fire protection. There are quite a few insurance companies and they would have to get together to create a fire department or an number of fire departments which would increase costs due to duplication.
Parks - See developers again, or charitable fundraising to buy land and build a park.
Developers pay for parks initially and hand them over to the local government for maintenance.
Who pays for schools? Look at the cost of private schools and think about how many middle and lower income people that can afford it. It bet very few.
What you seem to forget is that the more people pay into the same pot the lower the costs. A perfect example is the US healthcare system which was funded by private insurance and the Canadian Health care system which is funded publicly. The costs in Canada are much lower than the costs in the US.
Another part is that, as individuals, people are very short sighted. Why should an individual invest in a project that could take 20 years to build (like the the Big Dig)? As individuals we look at what wee need right now. Large public projects would never happen.
I am all for spending tax money better but doing away with taxes is not the answer. No Taxes = no government = anarchy = the death of millions. We only survive because the government keeps us from becoming angry mobs.
I see your understanding of macroeconomics is based on pulling conjectures out of thin air. Yes, interest rate changes of fractions of a percent make a difference in major currencies, when averaged out over a whole economy, You might not personally jump to shift assets
Wow, nice strawman. Did you go to school for that?
The point as is blatantly obvious in each of my responses as well as the post to which I responded, is SPENDing, also known as BUYing or purchasing, etc., as in how you allocate your personal resources.
You have to be an idiot or an economist totally out of touch with the real world to believe 2% deflation is some fearsome boogyman.
One thing about inflation is that it's much easier to make slight pay cuts without giving offense. Humans can get really averse to losing something, so an actual pay cut is going to be taken very badly. Not giving a raise as inflation continues is the same as a pay cut, but lacks the psychological impact. Sure, people will see it as a pay cut intellectually, but it won't feel as bad.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
Banks (in the traditional sense) really have no good reason to exist without lending money. Economically, they match people with money to lend with people who want to borrow money, but avoiding the actual personal contact. Discouraging them from lending in general is pointless (as opposed to discouraging them from making bad loans, which is a difficult problem but beside the point).
Banks will always lend at a positive real interest rate (or so go the projections; there have been times when many home mortgage interest rates were below the rate of inflation), but in times of deflation they need to lend at a higher real interest rate than the rate of deflation (for the purpose of pulling numbers from you-know-where, we'll assume they need 2% higher). Assume 3% inflation. The bank must lend at 5% or more, but the loan will be paid off with inflated money, so the borrower will have an effective 2% interest rate. Now assume 3% deflation. The bank must lend at 2% to be worthwhile, we assume, but the borrower is going to have to pay that back with deflated money, for an effective interest rate of 5%. That's going to dissuade a lot of economic activity.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
compare macro and micro economics please, then come back.
You have no idea what Libertarianism is, do you? Stealing is a violation of the non-aggression principle, for one.