Slashdot Mirror
A Rebuttal To Charles Stross About Bitcoin
New submitter buddha379 writes "Over the holidays we discussed a story from SF author Charles Stross called 'Why I Want Bitcoin to Die in a Fire,' just as Bitcoin's price collapsed on news of the Chinese government's cautious approach to the fledgling internet currency. Well known economist Paul Krugman quoted the piece in a NY Times blog post called 'Bitcoin is Evil'. Now, with U.S. regulators reaffirming their hands off approach, U.S. companies embracing it and prices surging again, Bitcoin Magazine returns with a rebuttal called 'Why Charles Stross Doesn't Know a Thing about Bitcoin.' The article notes that like many other popular pieces, Stross' story seems to 'completely miss the point on why Bitcoin is a revolutionary concept.'"
As we've seen, all a government needs to do is make a statement about support/regulation and the price drops in half.
They grow everywhere.
Anyone want some lightcoin or coinye west? Only $1000/coin.
http://slashdot.org/index2.pl?fhfilter=bitcoin
Over the last few months, we've been averaging a little more than 1 Bitcoin story every 2 days. Please - please, stop accepting every submission that has the word Bitcoin in it. At this point, I'd almost like them to start covering the 2016 Presidential Election. Enough.
So what? Why does the price of bitcoin even matter? Bitcoins strength lies in its ability to be used as a payment processing network - and at a fraction of the cost of traditional payment networks (visa, mastercard, paypal, SWIFT, etc).
Everyone is obsessed with the price of bitcoin (and therefore comparing it to a ponzi scheme because of its price) and treating it as a speculative investment scheme or get rich quick scheme. This is actually very detrimental to bitcoin.
But no. Bitcoins power lies in using it as a payment processing network not its price. It does need some more price stability, however, so this crazy speculation needs to stop.
You can tell how powerful someone is by the magnitude of the crime they can commit and be able to get away with.
There is no need for Bitcoin to die in a fire. It is already dying since people are using it mostly as an investment mechanism (they are either brilliant or idiots depending on who you talk to). Real currencies aren't used (to this extent) as an investment. Savings? Sure. But not held and traded like securities or even say baseball cards. Wake the rest of us up when we can easily and transparently (with no fees) use Bitcoins for real life (grocery store, restaurants, Home Depot, etc.).
Keep the speculation bubble growing, am I right? Keep on pushing stories so we remember that right.this.very.second might be a very good time to invest in a few bitcoins, because hey, there's nowhere else they could go but up, right?
How about we shut the fuck up about bitcoin for a month? 2-3 posts a day for almost a year. Enough is enough.
I appreciate the technical contributions and decentralized authority ideas the protocol brings. (I dream of a blockchain based DNS system, login/ID system that can't be corrupted or subverted by violence or legal threats pointed at a host or host organization)
A currency scheme with inevitable built-in deflation and massive windfall for lucky early adopters is, however, as stupid as it sounds. It's already fallen victim to the exact kinds of price instability and fraud/scheming that we expected to see. Libertarian blowhards, still, don't seem to think that those "business killing" regulations have any purpose despite the evidence presented right in front of their noses. They're either chronically naive, think they're supermen that are immune (How's your favorite bitcoin exchange working out for you? Closed? Huh, aint that a bitch), or are the crooks themselves.
More info at TentCityNJ.org/Donate.
Dogecoin is where it's at.
As we've seen, all a government needs to do is make a statement about support/regulation and the price drops in half.
Every other currency is also vulnerable to govt manipulation - What exactly is it you don't understand about this Federal Reserve printing money to buy assets with, which convinces you the fiat currency call The US Dollar isn't being manipulated like a hand puppet?
People continue to accept the dollar has worth, because to come to the sudden realization that it's only worth something because someone else who accepts it also subscribes to the believe it has value is a stressful eye opener. Bitcoin is no better or worse, it just lacks the physical manifestation of a piece of paper or metal.
A feeling of having made the same mistake before: Deja Foobar
Anyone wanting to rebut the carbon footprint of cryptocurrency should invite the other party to stand behind a running armoured car that's being used to deliver cash to an ATM.
You're partially right, but the vast majority of bitcoin users are speculators, gamblers and hoarders. It is not primarily used for transactions. Until this changes, which it probably won't, it is an electricity-wasting ponzi scheme.
...and then gets back to where it started in under a month. Sure the swings are bigger in an unregulated market, but the underlying stability seems to be there.
Is 1563649 a prime number?
Or all they have to do is reduce the value of the current dollar is an illusory tactic that we all call a "stimulus package". Regardless, if the government doesn't have total control over the $money that it's population uses, then it's not money.
Politics; n. : A religion whereby man is god.
TFA doesn't really counter Stross's arguments much (besides arguing about carbon footprint, but really BTC is small potatoes even if you care about such things). The authors instead focus on why his objections just aren't important, and I tend to agree with that.
In terms of actual economics, Stross is much in favor of state control of things, especially economic things (read his blog to get the best insight on his views), and BTC is the opposite of that. TFA primary argument, and one I'm quite sympathetic to is "well, who knows!" Economists argue over everything, and there's certainly no uniform agreement over what makes a good currency.
As Feynman would say "one experiment is worth 1000 expert opinions". BTC is quite worthwhile IMO as an experiment. Personally, I think it's misguided and solves only unimportant problems, but hey, lets run the experiment and find out who's right. If bitcoin really becomes mainstream then it is a good currency, because the best currency is the one people want to use. And if instead it's crap, then it will never realy matter outside of eternal /. stories, and so no significant harm done.
Socialism: a lie told by totalitarians and believed by fools.
But it's not a good payment network if the value of the payment are not stable.
The network exists to 'mine' coins and process transactions. It's cheap because there is a payout for participating in the network split two ways, you get to mine coins, which are worth something and you can charge transaction fees. If there is little worth in the coins, the network will either be tiny and easier to take over and control (if you control the majority of the processing power, you control the entire network) or the transaction fees will increase.
You are right though, New Zealand is the place to be.
Bticoin Mag;
it is impressive. Bitcoin challenges some basic assumptions about what’s possible.
DeLong quoted by Krugman:
Placing a floor on the value of bitcoins is what, exactly?
the Bitcoin people are all exited about the technology and how it's so innovative. They also dismiss the economists.
The economist and other critics ask a simple question that is ignored - What prevents Bitcoin from becoming worthless.
The answer is nothing.
I will not use Bitcoin or its competitors because I do not trust the "currency" or the people behind it.
it isn't worth anything and you're a moron if you buy a substantial amount of them.
I love the fact that I can collapse groups of comments, and sort by types of comments. Navigating the comments is so fun. It's why I come to this site and this new layout makes it so much easier!
No. The power that Bitcoin may or may not have is not at all related to using it as a payment processing network.
People obsess over Bitcoin's price (in dollars, yuan, whatever) because a Bitcoin only has value if people agree it's worth an exchange for goods and/or services, and can reasonably expect to exchange a received Bitcoin for other goods and services.
Right now if I get 100 dollars, or 100 euro, or 100 yuan, or 100 yen, in payment for some services I render or product I sell, I can reasonably expect to go down the street and exchange that currency for hookers (services) and/or blow (goods), within a reasonable timeframe (say 1-5 years in the future.) Right now if I get 100 Bitcoin, I might be able to buy Michael Jordan's $16 million mansion in Chicago in 1-5 years - but it's equally likely that I won't be able to exchange them for anything in 1-5 years.
Most government-backed currencies (with the recent notable exception of the Zimbabwe dollar and several other currencies over the last 50 years) pass this test. Bitcoin, as of yet, does not. Many people would have to choose to use Bitcoin over a government-backed currency (think 60-80% of the population in your local country - in the US, that would be around 200-230 million.) In order to get that many people to switch, there would have to be a significant compelling reason for them to hold their wealth in Bitcoin instead of the government-backed currency. I have yet to see a compelling reason to switch. Not only that, there are high barriers to overcome yet: security, convenience of exchange, and relative durability all spring to mind as specific examples.
Given the above, coupled with the fact that the Bitcoin exchange rate is being manipulated by speculators, and the number of knock-off alternative currencies floating around, why would any rational person think about holding their wealth in Bitcoin at any given moment?
Don't see the article as actually refuting much of anything Stross had to say.
The nicest thing you can say about bitcoin is that it is disruptive and the disruptions have the possibility of not being exceptionally painful. If you think about the primary advantage of bitcoin, making anonymous electronic transactions that are much harder to trace, you have to think it's not going to be good. Then you look and see the first killer app for bitcoin was the silkroad ? It really isn't going to surprise that this technology destabilizes civil society more than it promotes it.
The bitcoin protocol is the best proof system we've yet seen, ever. Some guy 5000 miles away from me can prove that I did something merely by running his mining software. The uses of this are limited only by human creativity and ingenuity. All the time we get complaints here about how every voting system is fraudulent and hackable and can't be verified. Well... congratulations here's a perfect voting system (at least from the point that a vote is received... don't ask me how you verify who you are giving votable satoshis to).
Instead of acknowledging this, I think a lot of people go off on weird attacks of it all based on the market cap being a little higher than Groupon and they missed out. No one comes here every day posting why groupon is a worthless joke. But bitcoin... wow. And the "money made" in groupon is WAY more concentrated (if that matters to ya).
I really think most attacks on bitcoin are from people sad they missed it earlier. I made some money mining well before the ASICs. And I sold my coins and took a profit way way way below where it is now. Then I sat there and watched it hit $60 and wondered what everyone was smoking. Then I looked into what was actually going on in Cyprus and looked at how banking is for people in most of the world and at how bitcoin can really be of use. And I did the hardest thing an investor ever has to do: I ate crow and bought back in, at well above the price I sold at. And I will continue to buy a little each month, no matter the price. People are out there paying $9 to send $50 to someone who then has to trek 10 miles to a Western Union and hopefully retrieve it. Bitcoin does this in less time and for no cost and doesn't depend on anyone else authorizing it. Really think on that. It doesn't sound like much when you have 2 credit cards and a debit card and a line of credit and a jar full of change and a wallet with a couple hundred bucks in it. But it's a really big fucking deal.
The value is not stable, currently, with respect to exchange with real-world currency. But if things are bought directly with it...
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
It is being used as plain money, becoming just a speculative bubble, but its potential is far more than that. The technology is good enough for other uses, like Twister, there is where its value resides.
From TFA:
Bitcoin is more of a hybrid system than a true deflationary system. The gold standard is considered deflationary and Bitcoin is often seen as the digital equivalent of gold. Gold has a limited supply, so it is scarce, just like a digital currency. But real gold can only be subdivided so far. It can only be chopped up so far before it’s nothing but dust. Bitcoin has no such limitations. Theoretically, it can be subdivided into fractions of a coin almost indefinitely, growing as needed with people’s demands. Its current limitation is eight decimal places. Even with only 21 million Bitcoins, that’s still 2000 trillion of the smallest unit. The protocol is designed to be upgradeable, so if we ever need to divide it further we can.
The problem with a deflationary system is not one of divisibility. The problem with a deflationary system is that the value of a given amount of currency is basically guaranteed to increase over time, as the total amount of possible currency has a hard limit--by design, in Bitcoin's case. Unless human civilization starts becoming less valuable as a whole (which is BAD), this is basically inevitable.
That you can chop your Bitcoins up into Nanobitcoins doesn't change the fact that the currency will simply continue to increase in real value. That's like saying you can make a ten-ton boulder less heavy by crushing it into pebbles.
That this is advanced as a serious counterargument to deflation should tell you everything you need to know about the author(s) of this piece.
Obliteracy: Words with explosions
All the government needs to do to make it worthless is to ask the NSA to mine with their resources for a while. That would quickly make the government the richest in terms of Bitcoin, and therefore gain even more power!
Every experiment which ends in a big bang is a good experiment.
By that logic, stocks are vulnerable to journalistic manipulation, therefore stocks are bad.
-Clio
Karma: Bad (mostly from not giving a fuck)
Blog: http://clintjcl.wordpress.com
Wrong. Bitcoins' strength lies in the starbursts in the eyes of it's biggest proponents, who will gladly and patiently explain to you how they'll reform the monetary system, end poverty and make them fabulously wealthy.
Nothing is stronger than a True Believer, especially when they are neo-libertarians on a mission from Ayn.
You are welcome on my lawn.
I know how bitcoin works, but I'm missing a couple elements:
Once the last coins are mined, what happens?
How do you convince people who sold theirs to keep giving away computing power in exchange for nothing? I know that fees can be added, but in a distributed semi-ananymous network, how do you set fee levels such that people will validate little transactions as well as big ones?
And even before all the coins are mined, has anyone calculated yet what is the ceiling for BTC? That'd be the value over which some country's national labs or universities turn on their supercomputers and mine almost everything (publications might bring revenue, but mining apparently does), preventing individuals from getting any return from their hardware, thus discouraging them from participating?
Way to read (well no probably you didn't) a whole article and ignore the bunch of pertinent and on topic technological advances we could discuss and focus on the nominal price of a coin.
Let it go dude.
I have yet to see a compelling reason to switch.
How about no more taxes? Or at least making it easier to avoid some of the taxation.
How inappropriate to call this planet Earth, when clearly it is Ocean.
From the article:
"Nobody has the final say on what economic system is the best. Economists can’t even agree on basic assumptions, which is why they argue endlessly."
That's not a rebuttal. That's a refusal to engage a serious point.
The halving of the price followed the first time a government mentioned BitCoin... As such mentions become more frequent, the effects will gradually stop being as dramatic.
Personally, I still prefer gold — because it is useful by itself: as a non-corroding metal with high conductivity and easy to work. And most people find gold beautiful, whereas it takes a peculiar mind to appreciate prime numbers... Bitcoin is useless without the Internet, but gold has been valuable for thousands of years...
In Soviet Washington the swamp drains you.
They mine for transaction fees
"When life gives you lemons, don't make lemonade. Make life take the lemons back!" -- Cave Johnson
I am Jack's complete and total lack of caring about some POS currency that enriched the jackass who made it at the expense of everyone who came afterwards.
It's a fucking pyramid scheme, and has been from the start.
ENOUGH.
...it will still be unstable with respect to any other currency, since other currencies can also be used to buy real things, and the price of the real things will simply be very different from one day to the next in bitcoin.
Stability has nothing to do with usage and everything to do with expectations.
Are Bitcoins minted in Rearden Metal?
As usual, only the wealthy will be able to evade some of the taxation. The little people will still be taxed no matter what. If not on transactions, then on possessions.
John C. Bitcoin is running for President on the Crypto-Pirate ticket.
The FBI is already one of the largest holders of Bitcoin, since they confiscated the assets of Silk Road.
"Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin
But the thing is... "revolutionary" doesn't necessarily mean "entirely good". I agree that Bitcoin is revolutionary. I also agree that Bitcoin is damaging to society in many ways. Maybe not as doom and gloom as what Stross is claiming, but it's certainly not the ideal that Bitcoin's proponents are claiming.
Is Bitcoin Magazine high capacity? Can it be 3D printed?
What's wrong with taxes?
Or are you one of those people who think that roads, sewers, police, and fire departments are unnecessary for civilization?
Wrong. Bitcoins' strength lies in the starbursts in the eyes of it's biggest proponents, who will gladly and patiently explain to you how they'll reform the monetary system, end poverty and make them fabulously wealthy.
Nothing is stronger than a True Believer, especially when they are neo-libertarians on a mission from Ayn.
Of course, because nicely formulated ad hominem is an excellent logical rebuttal.
Silence is a state of mime.
Bitcoin has fundamental utility, just like Internet companies did in 2000 before the crash, except its price includes manic speculation. I don't want bitcoin to die, nor did I want those Internet companies to die. They all had utility, but manic speculation killed them. Speculation didn't kill them, or even rampant speculation. Manic speculation killed them, speculation without any justification except emotion, herd mentality, or what have you.
In my opinion, Bitcoin will be worth, after a number of years, about a dollar a bitcoin. In other words, what I'm saying is that one bitcoin has about a dollar's worth of long-term utility and [today] 999 dollars worth of speculation.
The two reasons I cite are: 1) Hundreds of groups of people, at least, are sophisticated enough to create a new cryptocurrency, and the interesting world of the future will be dozens of cryptocurrencies being traded like stocks on an exchange. You will be able to buy a basket of cryptocurrencies to minimize risk, similar to buying an index fund. 2) There are many large holders of bitcoin who at some point will want to move on to their next big tech project. They will over the long term bring down the price of a bitcoin to its intrinsic worth to society, let's say about a buck a bitcoin.
If I had risk capital, which I do not because at this time in my life I choose to do less work for less money, I would ride the volatility wave of bitcoin, making a few hundred bucks here, a few hundred bucks there: Definitely not enough money to quit my job. There is no problem with mining bitcoin or using bitcoin at this value, because you go in and out of bitcoin so quickly it doesn't matter. A cynic would say that the long term worth of many assets will eventually die down to zero, for example some highly-valued stock for a technology that is obsolete in 50 years, but I think that the value of bitcoin will fall back down to Earth in more like 5-10 years or less. It will be one useful cryptocurrency among many.
It's just another commodity. He just wants to manipulate the market and buy a few if he can drive the price down with some propaganda first. Wall Street antics.
“He’s not deformed, he’s just drunk!”
What's wrong with taxes?
Or are you one of those people who think that roads, sewers, police, and fire departments are unnecessary for civilization?
Of course they are necessary. I just think that someone else should pay for them.
If by "manipulated" you mean "kept relatively stable", I tend to agree.
Bitcoin isn't "manipulated" at all, hence it's uselessness as a currency.
I don't respond to AC's.
Stocks are terrible at being currency, which is why they are virtually never used as such.
You can't correctly follow the logic if the very first thing you do is ignore it.
Try not to take me more seriously than I take myself.
This is the age of computers, and things are possible (at an implementation level) that were never viable at any previous time in Human History.
Only until the power goes out, and even then, only to the degree that solenoids and various other electromechanical mechanisms can be skillfully interfaced to them. Otherwise, computers are just glorified light bulbs.
But Bitcoins are a cool and somewhat interesting use for computers. If you can't afford good electromechanical mechanisms.
If Bitcoins get lost. Gone forever, right?
How long will it take to lose all 21 million coins?
But it's not a good payment network if the value of the payment are not stable.
The price fluctuates widely because it is thinly traded. As it becomes more popular, the price will stabilize.
>Of course, because nicely formulated ad hominem is an excellent logical rebuttal.
Libertarians are immune to logic and even common sense so what does it matter?
Fun fact: I stopped reading at your first use of the word "sheeple".
Try not to take me more seriously than I take myself.
There is no reason to think that. It has no floor, no control, no way to slow wild swings. Without those 'brakes' BitCoin, any currency really, can swing wildly on pure emotional mood of the day.
The Kruger Dunning explains most post on
I've been involved with bitcoin for a few years now and I'm one of them dirty libruls, not a neo-libertarian.
That a compelling reason for cheap economically ignorant fucktwads who want to ride on everyone elses back until we no longer have a middle class
Of course, why dodge your legal and moral obligations with a currency that can have it's value halved in minutes?
The Kruger Dunning explains most post on
> this crazy speculation needs to stop.
While we're wishing I'd like a pony.
It was a metaphor, not a model. My point was that something being able to be overcome by events is not necessarily bad. The point works for all somethings, currency or not.
-Clio
Karma: Bad (mostly from not giving a fuck)
Blog: http://clintjcl.wordpress.com
Rebuttal to what? Bitcoin fanatics can not answer real economic questions about currency.
How is it a reliable store of value? How to you create a pricing floor?
When Nobel prize winning economist who are experts in the fields ask real economic questions and Bitcoin fans can't answer, there is a problem with bitcoin as a currency.
The Kruger Dunning explains most post on
I probably muddied the point by making 2 points at once.
-Clio
Karma: Bad (mostly from not giving a fuck)
Blog: http://clintjcl.wordpress.com
Exactly. The moment they shut down the silk road site, the entire Bitcoin money supply plus five bucks will get you a cup of coffee at Starbucks.
Information theory is life. The rest is just the KL divergence.
Actually, the government could just get into Bitcoin and collect their taxes in the form of transaction fees ...
So what? Why does the price of bitcoin even matter? Bitcoins strength lies in its ability to be used as a payment processing network - and at a fraction of the cost of traditional payment networks (visa, mastercard, paypal, SWIFT, etc).
A Fraction of the cost, 76 times more annoyance.
I tried to buy a few few bit coins "just for fun" last week. I still can't figure out how to make it happen. From what I understand I have to find someone who lives near me who not only uses bit coins, but wants to sell some, and then arrange to meet them in person, possibly in a dark ally, and then give them guy some cash. Then I have to go release some kind of escrow thing saying that the transaction is complete within 1 hour of the appointed meeting time or bad things happen. After that I wait for the stranger to press his magic button on the escrow, and THEN I get my bit-coins... I think. Simple, right?
https://localbitcoins.com/guides/how-to-buy-bitcoins
People continue to accept the dollar because it can be traded for commodities. Access to those commodities is to some extent governed by the force of the United States armed forces. That is the value of the dollar. People will continue to want dollars because it allows them to obtain what America has access to.
What's wrong with taxes?
Or are you one of those people who think that roads, sewers, police, and fire departments are unnecessary for civilization?
Of course they are necessary. I just think that someone else should pay for them.
Honest. Irresponsible, but honest.
It matters because you cannot use currency whose value fluctuates greatly -- you'll never have the piece of mind necessary to keep it. If you have what is today $10,000 in bitcoins, and you know that tomorrow that could be $15,000 or $3,000, you can't rely on that thing. You can't plan on buying a house or car or even a laptop with bitcoins in 3 months because by then their value could be anything. You can of course use it for speculation and just look to sell it and get rid of it when it's at what you think is a peak, but most people do not want to speculate. So the market will forever be limited.
To put in different terms, bitcoin is hot and volatile, and there is a reason why people like cold, hard cash.
"Every other currency is also vulnerable to govt manipulation"
Nearly all currency have rues and regulation in play to minimize and control manipulation.
Bitcoin can be cut in half with one headline from any major group.
That's one of the difference. Let me know when they have pricing floor, and can hold value.
" that it's only worth something "
no. It's worth something as a store of value. At the bare min. it can be used to pay taxes and debts to the US government
"Bitcoin is no better or worse"
sigh. Please take some advanced macro economics course. Then maybe you won't sound like a drooling idiot that parrots ignorant echo chambers.
The Kruger Dunning explains most post on
"But it's not a good payment network if the value of the payment are not stable."
You're making the same mistake most people make (and the market is making) in regard to the economics of Bitcoin.
In economics, VALUE and PRICE are two different things! The "price" is what it sells for on the market. The "value" is, in general terms, approximately the cost of production and distribution. Since the cost of distribution for Bitcoin is very low, near zero, then the VALUE is approximately equal to the cost of production.
This has nothing to do with the swings in the PRICE of Bitcoin on Wall Street. I mean it should, but apparently it hasn't. Which means: investor beware, you're in an irrational market.
This is how Wall Street destroys some of our best toys. Time to send them home.
I'ts not that we aren't listening, it's that you don't understand macro economics and let your ignorance and ego create a nonsense.
My sig is for people like you.
The Kruger Dunning explains most post on
You think our wonderful investment bankers aren't paying their fair share of taxes? Bitcoin is pretty much designed for tax evasion.
This really pisses me off. Our wonderful investment bankers are defrauding us, our government, and are paying a smaller share of taxes thanks to lower taxes for investment income and dividends, helping terrorists and drug cartels move money, etc.... the list is long. Which world does he live in? The fact that Bitcoin is hard to control is the whole idea. When a few people have so much power, it pretty much automatically corrupts. Look what's happening in the US. The Fed prints money, gives it to rich people, everyone else suffers with higher energy and food prices.
The transaction fees already exist. It's not like the designers never thought about what will happen after all bitcoins are minted.
And even before all the coins are mined, has anyone calculated yet what is the ceiling for BTC? That'd be the value over which some country's national labs or universities turn on their supercomputers and mine almost everything (publications might bring revenue, but mining apparently does), preventing individuals from getting any return from their hardware, thus discouraging them from participating?
A) The maximum number of bitcoins was publicly predetermined from the start. It's 21 million.
B) Bitcoin mining requires specialized hardware to be profitable to mine, so this isn't something that anyone with a supercomputer can just decide to mine effectively on a whim any more.
C) Why would it be bad that most individuals couldn't mine? Bitcoin mining isn't supposed to be an egalitarian "everyone gets free money" system. It's a reward for using your computational power to help secure the system. If a hundred groups with supercomputers / mining machines can mine more than 100,000 people using desktop machines, then the former group pushing out the latter from the market is the way things should be. (However there is a problem if any group colluding gets more than 50% of mining power together.)
so you like the word 'sheeple' I take it?
> Once the last coins are mined, what happens?
Miners also get transaction fees included in the block, so they still have incentive to search for block hashes.
> how do you set fee levels such that people will validate little transactions as well as big ones?
Fees are *user defined*. If you are in a hurry, slap a big fee on it. If you can wait, put a small fee on it. The bitcoin software allows zero-fee transactions if you meet some conditions, and some miners will include zero fee transactions in a block if there is room. In the long run, many small transactions will move "off chain". For example, Coinbase processes bitcoin transactions for merchants, accepting BTC payments on their behalf and depositing local currency to their bank account. Conversely they sell BTC to individuals and pull money from bank accounts to pay for it. When a Coinbase user uses their online wallet to pay a Coinbase merchant, that can be all internal to Coinbase, and never reach the Block Chain. Eventually such processors will arrange to settle with each other in bulk transactions, gathering up many little ones and posting it as one big transaction on the block chain. That both avoids bloating the block chain, and makes small transactions easier to process.
> the value over which some country's national labs or universities turn on their supercomputers and mine almost everything
Custom chips (ASICs) that do nothing but the particular calculation for bitcoin mining are 100 times more efficient than GPU's, and 1000's of times more efficient than general CPUs. Supercomputers are useless for bitcoin mining. The world's top 500 supercomputers combined process 250 million GFLOPS ( http://www.top500.org/statistics/perfdevel/ ). The Bitcoin Network at the moment is running at 78 billion GFLOPs, which is over 300 times faster. Custom hardware and monetary incentive wins big time. The downside is the ASICs are absolutely useless for any other calculation, because it is hardwired into the chip.
As usual, only the wealthy will be able to evade some of the taxation. The little people will still be taxed no matter what. If not on transactions, then on possessions.
Yep it would provide a way to launder capital so as to avoid taxes. For the non super rich, cryptocurrencies offers small online businesses the same opportunity to avoid taxes that is currently exploited by small brick and mortar businesses that handle a lot of cash. If you know three owners of stores with cash registers you probably know at least two tax cheats.
The price fluctuates widely because it is thinly traded. As it becomes more popular, the price will stabilize.
lol wut? is there a school of economic thought that supports this assertion, or is this a theory you've come up with by yourself?
Really he's just pointing out that Stross is arguing more against currency in general and not really against Bitcoin.
You are right about that, and, adding to your point, do you know what makes swings bigger? Lack of speculation. What bitcoin market needs to soft these swings is more people speculating, contrary to popular belief.
You are conflating the "medium of exchange" function (payment network), and "store of value" function of money. Traditional money had to serve both functions because nations only had a single currency to do both jobs. Bitcoin was only designed to do the first function (medium of exchange), which it does very well, because it is all electronic. For a store of value currency, you can use your traditional fiat money, which is exactly what most merchants do. They use a payment processor that accepts bitcoins on their behalf, and gives them local currency deposited to their bank account. The merchant never touches the bitcoins, they just use it as an alternate way to get paid. The payment processor then turn around and resells the coins they accumulate to individual users (CoinBase), or on exchanges (BitPay) to recycle them for the next purchase.
If you want to get all modern, you can use the "chained hash data verification" technology at the core of bitcoin to record property data instead of financial transactions. Hashes don't care about what kind of data you are hashing, so you can put in any kind of data whatsoever. So you can record ownership of stock shares or real estate, and then trade them around in fractions. This would be a separate "Block Chain" than the one in bitcoin which would represent a stable store of value, the other function of money. Let's call those "AssetCoins" because they are based on an ownership record of real assets. The ratio of bitcoins to Assetcoins may vary, but user software can do the conversion for you in real time.
I still think we should twist something like bitcoin, into an actual international payment system. Yes that means you'd need to fix the price of a coin to something so that people will actually use it instead of physical currency or bank account transfers. I like the idea of eating Visa & Mastercard's lunch by lowering costs for electronic transactions.
And it would actually be quite simple to build an alt-coin pegged at each fiat currency. Simply remove the rule for coin creation from giving coins to miners, they should still get to keep transaction fees. And in it's place add a new rule to allow a specific mint key to create new coins.
The technical parts of this solution are fairly straight forward, the administrative part is a bit more complicated. In order to gain trust that 1 coin = $1 USD, you need the owner of the mint key to guarantee the price for buying and selling these coins. With the financial capital to back that up. The mint can add a commission fee to cover running costs, and only deal with large scale transactions to reduce their workload. Some number of larger institutions, like a paypal or amazon for instance, can then offer to trade coins in smaller volumes at the retail level.
Heck you could federate a system like this all the way down to a digital gift card system for the corner store. The basic principal is the same.
09F91102 no, 455FE104 nope, F190A1E8 uh-uh, 7A5F8A09 that's not it, C87294CE no. Ah! 452F6E403CDF10714E41DFAA257D313F.
Because we all know how great Nobel prize winning economists are at predicting and safe-guarding the world economy...
The network exists to 'mine' coins and process transactions.
First, in the interest of full disclosure, I've mined a few hundred BTC (and "sold" 95% of of them at under $100, and over 70% at under $10).
And I still use BTC, even though I don't have a dedicated ASIC mining rig and can no longer actually mine them. Put bluntly, Bitcoin makes national borders and government-sponsored currencies a moot point. Whether it trades at $600 or $1200 today, a pair of trading partners in different countries can save a fucking fortune (in bank fees, not taxes) by buying BTC, denominating the trade in BTC, and converting back to the local currency.
Yes, it has a lot of potential for tax evasion. So does cash.
I can't see your sig, but you sound like an asshole. -1 for you.
So how are you disagreeing with Stross?
He's telling you that the investment bankers are a problem. Bitcoin introduces a new class of people that are a bigger problem. He's not defending investment bankers, he's suggesting that we shouldn't be encouraging that sort of behavior.
Ignorance killed the cat. Curiosity was framed.
I was going to tell you that it's easy, and refer you to localbitcoins.com, but then I saw your link and realized that you didn't really try to comprehend the process at all.
You can't use a credit card because bitcoin transfers are irreversible, and credit card transactions are not, so it would be easy to rip off anyone offering bitcoins for credit/debit card. Localbitcoins exists to put buyers and sellers together to make transactions vie the Internet or in-person. It's done with irreversible methods like bank transfers, Western Union, etc... It's not at all complicated, but it does involve interacting with another person, which might be too much for some people.
On topic: The volatility of bitcoin makes it terrible as a method of money transfer. If you buy on the wrong day, your bitcoin's purchasing power could halve before you're able to complete your transactions. It takes time to receive your coin after you buy on localbitcoins, so it's incredibly risky. I think it would be foolish to use bitcoin for anything that can be done in national currencies, so its use to people not made irrational by Libertarian ideology is limited to black markets.
All the government needs to do to make it worthless is to ask the NSA to mine with their resources for a while. That would quickly make the government the richest in terms of Bitcoin, and therefore gain even more power!
What makes you sure that Satoshi Nakamoto was *not* actually the NSA?
Why does the price of bitcoin even matter?
Because someone might want to buy one or sell one, either in exchange for goods/services or hard currency.
Bitcoins strength lies in its ability to be used as a payment processing network
Why would I accept bitcoins if I can't use them for anything?
This is actually very detrimental to bitcoin.
Yes, exactly, and that's why people who understand economics are talking shit about it.
It does need some more price stability, however, so this crazy speculation needs to stop.
It won't stop, there's no reason to stop, and no way to make it stop even if you wanted it to.
Bitcoin will used up all our power
I love bitcoin articles... We need more of them so I can get more lols from these bitcoin haters.
We have run plenty of experiments with government-run fiat currencies. Every single one, without exception, has become totally worthless, or worth a lot less than when it originally started. In the 100 years since the formation of the Federal Reserve, the US dollar has fallen in value by a factor of 23 as measured by the consumer price index ( ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt ) , an average rate of -3.2% per year. Many nations do worse. For example India has had an average inflation rate of 7.5% over the last 50 years, Argentina has varied from zero to 40% per year over the last 20 years. If bitcoin can improve on this record, it would be a good thing.
I'm almost obsessed with the fantasy of dropping 5K into bitcoin in Feb/March 2013 ($14 per coin) and cashing out in December at $1200 per coin.
Of course that same $5000 if I'd discovered Bitcoins in November 2011 ($2 per coin) and cashed out this December 2013 would have provide a return of over 3 million dollars.
No I'm not obsessed, not one little bit.
Or couse there was a time they were going for 50c per coin,... damn what I could do with 12 million smackaroos.
Not really, they only have what, $27M worth of it? Around 27,000 or so?
The Winklevoss twins (of Facebook fame) have made several declarations that they own approximately 10% of all BTC out there. Since there's only ever going to be 21M BTC, that means they have close to 2M BTC. Which at current value is close to $2B USD. Of course, they acquired this a long time ago (probably around $16 or less)...
Wrong. Bitcoins' strength lies in the starbursts in the eyes of it's biggest proponents, who will gladly and patiently explain to you how they'll reform the monetary system, end poverty and make them fabulously wealthy.
Nothing is stronger than a True Believer, especially when they are neo-libertarians on a mission from Ayn.
Of course, because nicely formulated ad hominem is an excellent logical rebuttal.
In this case it actually is a valid point, because a large part of the value of any currency is based on how many people have Faith in it. Thus, their character is actually part of what determines the value of the coin, and is thus a fair target for attack.
This already happened, and there was only a small drop. I too assumed that the SR bust would destroy Bitcoin, but it didn't happen. I think that's because another site called BlackMarketReloaded, created before the demise of SR, stayed in business long enough for Silk Road 2 to come online. BMR since voluntarily shut themselves down because they were getting too popular, but SR2 was still up last I checked.
I think that as long as software like TOR allows freedom from government surveillance and harassment on the Internet, there will always be places to buy drugs online, so that's not going to be how Bitcoin ends.
It really doesn't.
lol
-WolfWithoutAClause
"Gravity is only a theory, not a fact!"Just imagine if the shit hits the fan, and there are large areas without power, and / or internet access. Your Bitcoin will be worth exactly zero, as you'll have no way to cash them in.
Stross is much in favor of state control of things, especially economic things (read his blog to get the best insight on his views), and BTC is the opposite of that.
No it's not, it just shifts the regulation away from a centralized government source where people (in theory) have a Vote and a Say in the regulation, and puts the regulatory capability in the hands of the people who run the Exchanges. It's a very Ayn Rand type of idea, that the unregulated Free Market will take care of it.
I agree that it's an interesting experiment, but honestly we've seen these same types of systems plenty of times in history. The only real difference is that bitcoin is guaranteed to be finite in supply, and is (at least in theory) not subject to counterfeiting. And before someone starts trying to counter with "But it's electronic" Well yes and so is my credit card or electronic cheque.
Wait a second. Someone else paying for stuff is what taxes are about.
In the situation you're describing, all you're getting rid of is SWIFT. Banks processing Bitcoin payments in your situation can still create Bitcoin money through fractional reserve banking. Basically same as the gold system, but Bit-gold. There is nothing really innovative if you use Bitcoin that way.
If retail transactions are actually done on the Bitcoin network however, things get a bit more interesting, but the Bitcoin network will never scale to those transaction volumes.
:. Ultimate Control Dedicated/VM Servers
You have what is called a fiat problem. Both the banks and the government are standing guard at the door to more exchanges opening up to make buying bitcoins trivial. People have their accounts suspended, Paypal and credit cards allow chargebacks making fraud a real risk to sellers.
If you really want in, you'll find a way. If you don't really care much, it will seem hard and you can jump on when it's all made easy for you (and the price is 10-100x higher)
But is Bitcoin payment processing really that cheap?
Disclaimer: I started mining Bitcoins using the official client with CPUs. However, I don't really buy all of this blue-sky "to the moon" Bitcoin hype. For me it's more of a cool concept to test and mess around with.
Although the Bitcoin concept is revolutionary - if you use it as a payment network - as you can get rid of banking and payment processing industries, with such a peer-to-peer architecture, you have scalability issues that limit the amount of transactions that can be processed. Aside from the elephant-in-the-room technical limits (with the current 1MB blocksize, Bitcoin can process 10tx/s max. The VISA network can process a max of 25000tx/s) , you also have the question of why using Bitcoins is any better than current methods for the customer or merchant.
Fully decentralized peer-to-peer filesharing was hot back in the day because there was no digital content available on the net. It was also very slow on the completely decentralized systems. Now that the content industries have caught on, most people prefer to use those offerings (Youtube, Netflix, Spotify, etc.), due to the convenience and speed of those services.
With Bitcoin, it is the other way around. We have a very well developed retail financial services sector. You can pay people and businesses easily through many different means. The payment processors charges a comparatively small fee for commercial transactions - usually around 3%, and gets lower as volumes increase. Customer don't see this at all as credit card fees are paid by the merchant. From a customers point of view, why would I pay in Bitcoins, if I can much more protection by paying with a credit card? If you don't have any bitcoins, you will have to do a fiat-bitcoin conversion and then the merchant does a bitcoin-fiat conversion back for stabilty? That kills the values proposition of low rates. The spread for the two conversion will already be close to or over the 3% you pay your current payment processor. Not to mention the hassle. You can introduce a processor like Coinbase to optimize the process (and also increase transaction performance by keeping local transactions off-net), but then you've just introduced a middleman that will also charge you fees.
Wiring money overseas will cost customers a bigger fee, but this fee is usually fixed, so batch transfers are usually done. Furthermore, for people with frequent Forex needs, you can open an account with a dedicated Forex company that will give you much better rates and you can probably save on some fees with them as well as they have many local bank accounts in different countries accepting and sending money.
So all-in-all no, I don't think it's all smooth sailing for Bitcoin and once people wake up to the limitation of this particular and novel implementation or decentralized digital currency, it will be better for everybody involved. We will start asking the right questions (eg. is if possible at all to create a decentralized crypto-currency network with similar performance to commercial payment processing networks) and maybe incorporate some of the better ideas from Bitcoins to more practical applications.
:. Ultimate Control Dedicated/VM Servers
Price goes up, stability increases. Rome wasn't built in a day.
We have run plenty of experiments with government-run fiat currencies. Every single one, without exception, has become totally worthless, or worth a lot less than when it originally started. In the 100 years since the formation of the Federal Reserve, the US dollar has fallen in value by a factor of 23 as measured by the consumer price index ( ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt ) , an average rate of -3.2% per year. Many nations do worse. For example India has had an average inflation rate of 7.5% over the last 50 years, Argentina has varied from zero to 40% per year over the last 20 years. If bitcoin can improve on this record, it would be a good thing.
Except that BTC blantantly hasn't outperformed anything. The value of Bitcoin - measured against USD, EUR, CHF, loaves of bread, goats, airplanes or anything - has rocketed up and down on a weekly basis by far more than 3.2%. And the measure of a currency isn't whether you can dig a hole in the ground, bury some notes in a barrel Walter White-style, and dig them up in a hundred years. A better measure would be looking at what short-term interest-bearing US notes have yielded over that time frame, as they have minimal liquidity/fair-value risk, equivalent credit risk and are actually investments, rather than a currency. Critizing USD notes because they are not a good long-term 'investment' is like critizing them for not being attractive wall-paper - you're missing the point.
People want dollars because it buys oil.
Of course, the US can try to discourage countries from moving away from it but you can't do an Iraq on everyone.
You know how George Soros made his billions, right?
You completely misunderstood that argument. His point was that if you think investment bankers don't pay enough taxes now (they don't), that it will get even worse with bitcoin, since they'll evade even the low taxes they currently pay. The word 'wonderful' was sarcastic.
It didn't happen because Silk Road became a trivial part of the Bitcoin ecosystem a long time ago.
Yes (as will the money in your bank for what it's worth). Which is why it's best to have a diverse strategy. There are many scenarios where gold will be nearly useless and in most of them the dollar will be worthless.
As far as I can tell, Stross's argument about Bitcoin being the tool of those seeking to avoid state control is the complete opposite of what BTC is.
BTC may not be government run, but it relies on pseudo-anonymity. BTC, in it's own words, has a "shared public ledger on which the entire Bitcoin network relies" and "all confirmed transactions are included in the block chain".
What gives BTC its pseudoanonymity is the presumed difficulty of linking wallets to individuals. This may be somewhat difficult for the average member of Joe Q Public, but should be easily achievable by groups that regularly mine big data.
I'd say that BTC would be a way to increase government control, not decrease it.
As for the deflationary aspect (one of Stross's other arguments), he seems to be on sound economic ground here. Its rare to find an economist that says supply side monetary deflation is a good idea.
I generally agree with Feynman (he's a smart dude), but BTC ends up being deflationary in the long run. We have real-life experience with deflationary currencies, and it correlates well with negative effects.
I do not think that Bitcoin (or any cryptocoin for that matter) will be a good method for payment transfer until prices stabilize. As long as the price of Bitcoin can swing as much as plus/minus 50% in a day (as it did several times in 2013), no sane person would use it a big ticket purchase.
Because ultimately its worth and value will lie in its exchangeability for REAL currencies. Sovereign governments do not take kindly to their currencies or their sovereignty being threatened.
United States citizens need to consider that transactions for US based events that are not denominated in dollars could be considered barter units and have different taxable implications. Such taxes must be paid in US dollars. So ultimately, you're going to have to cough up real US dollars sometime.
Basically, if the United States Britain, and Japan follows China's lead, Bitcoin would be completely worthless.
I'ts not that we aren't listening, it's that you don't understand macro economics and let your ignorance and ego create a nonsense.
The difference between micro economists and macro economists is that micro economists are wrong about specific things while macro economists are wrong about things in general.
How is getting money from new investors in order to pay off old investors different from a Ponzi scheme? The realty is that its not different at all, that it is in fact exactly what a Ponzi scheme is.
"His name was James Damore."
> Bitcoins strength lies in its ability to be used as a payment processing network - and at a fraction of the cost of traditional payment networks (visa, mastercard, paypal, SWIFT, etc).
It's only fractional the cost for people receiving money. It doesn't cost me anything to send people money using USD.
Your hair look like poop, Bob! - Wanker.
Apparently you don`t understand the role speculation plays in any healthy economy, my friend...
I'm not sure how they are stored in a wallet, but I imagine it wouldn't take long to just delete your wallet (and backups).
Nice straw man. Those things don't require almost half of my income.
Wait, wait, don't tell me, let me guess: your next suggestion will involve me moving to Somalia.
Whether it trades at $600 or $1200 today, a pair of trading partners in different countries can save a fucking fortune (in bank fees, not taxes) by buying BTC, denominating the trade in BTC, and converting back to the local currency.
According to Mt. Gox fee schedule, each conversion will cost you 0.60% (under 100 BTC.) Then two conversions (say, USD to BTC to USD) will cost you 1.20%. A wire transfer through a US bank costs $40 (a fixed fee) and you can transfer as much as you need. Let's say 1 BTC = USD 1000, and you want to send 100 BTC. Then the bank fees will be 40/100000 = 0.04%. The Bitcoin method is 30 times as expensive!
If you transfer less money, at some point BTC method and the bank method will be equally expensive. (Obviously, 40/x = 1.2%, and then x=40/0.012 = USD 3333.) Below that sum you will be better off using BTC; above that you will want to use your bank.
You state this like it's a problem. Why is that?
In the 100 years since the formation of the Federal Reserve, the US dollar has fallen in value by a factor of 23 as measured by the consumer price index ( ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt ) , an average rate of -3.2% per year.
Umm, for the most part, that's by design. Since the Depression in the 1930s, the Fed's general policy has mostly been to encourage gradual inflation. Why? Well, a lot has to do with details of economic theory, but in simple terms, it encourages people to invest and spend money in the economy.
You can disagree with this idea (and there are people who do), but in the case of the dollar at least, it seems to have been effective. Between the Depression of the 1930s and 2008, we had nothing like the series of financial "panics" of the 1800s in the U.S.
When currency value rises (deflation), people hoard cash. They save. There's nothing inherently wrong with that, but it doesn't encourage investment or innovation. Why should I bother taking a chance funding my brother's new small business (or even some crazy guy's cool new idea) if I can effectively increase my assets simply by hiding them under my mattress?
If deflation could occur at any moment, investors are also skittish. At a moment's notice, they could sense things decreasing in value and try to "cash out" of any investments, as happened in 2008. The main reason we don't experience such severe "runs on the market" (or actually runs from the market) every few years is because long-term investors believe that they'll still likely make a profit in the long run, at least due to the gradual rise in prices.
A targeted small rate of inflation makes it so the cash savers don't lose a lot of value, but the investors are encouraged. This is all by design.
Again, you can disagree with this strategy (and there are good reasons to question some assumptions), but that's what the Fed DESIGNED the system to do. You can't come back and say this is an inherent property of fiat currencies, since it isn't.
(And, by the way, all currencies that exceed their natural inherent value are effectively "fiat" -- if it weren't for speculation and some irrational attraction to shiny rocks, gold's value would be a lot lower. Thus, a "gold standard" is not inherently more stable, even if endorsed by a government -- lots of severe financial panics and depressions occurred while many countries were still under the gold standard. Contrary to popular belief, what makes a currency behave differently from a "fiat" currency isn't merely scarcity -- lots of things are scarce, and most of them have little to no value. In the long run and in dire circumstances, neither shiny rocks nor green pieces of paper nor Bitcoins are guaranteed to be of use -- only actual useful commodities that can be traded are.)
You can't get transactions "off the chain" because then I can double-spent a bitcoin. And you'll have to add a "change of ownership" transaction in the global chain eventually.
If you want to buy from LOCALbitcoins.com obviously you will need trade like that. "Localbitcoins" is for trading locally, as you describe.
The most common way is like this:
You do a bank transfer to one of the many trading sites and then do your shopping online like everybody else.
I never said any other currency wasn't vulnerable. I'm pointing out the fact that bitcoin, as a decentralised network isn't immune to manipulation.
Indeed. The only use for Bitcoin (other than gambling) is immediate money transfers that do not need to be anonymous. But I can do those with my credit card already, and at far lower risk.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
It's peace.
Not piece.
Looks like a good money making scheme then.
1) Make statement ensuring a plunge in the value of bitcoins
2) buy up large
3) wait for recovery and profit.
You're safe from insider trading laws and everything else, because there is no regulation or law that cover it.
If bitcoin really becomes mainstream then it is a good currency, because the best currency is the one people want to use. And if instead it's crap, then it will never realy matter outside of eternal /. stories, and so no significant harm done.
It aready _is_ mainstream (not that I think that sets its future in stone. Nokias used to be mainstream, people laughed when you suggested someone else would topple them).
I'd say roughly half (probably more) the people I've talked to amongst family and friends, all non technical people, had heard of bitcoin before. It's traded globally and has an agreed value (even if it does fluctuate wildly).
More interesting, the people who have positive views are the ones who have actually used it, bought and spent as a transport mechanism so never really cared about the exchange rate. The dozen or so who frequented a recently closed ebay-like service (won't name a specific site, but you can probably guess...) compared it to paypal but loved the immediacy of the system.
I did a little more digging and found most used one of a couple exchanges where they could store a balance in local currency (not USD), and convert to BTC instantly (with no fees for $ -> BTC). Top the exchange up with a prepaid visa and they didn't need any personal info (govt.s only seems worried about cashing out to $ maybe?). Hell, most used net kiosks, etc... because they had no idea what a VPN was (but understood the idea of an information trail).
I also asked what they thought of things after their site closed. round half stopped using bitcoin as it was their only need for it, but two separate people said they still use it for the same services locally... Both have a cheap burner android phone (no sim) with their account accessible from the browser, and just use it when they buy something, or to top up their balance from a public wifi hotspot.
I'm mainly interested in seeing where things go on the side of actual use (rather than investment / speculation), as the price fluctuations seem to be better accounted for and less of an issue than I generally hear in news. Extrapolating I could see privately managed cryptocurrencies as a great B2B tool, each group with a shared blockchain. Tweak the system so it doesn't mine additional coin or take transaction fees, have a central party (or system to manage it) with the complete initial coin balance and any credit in / out would be at a constant conversion rate (which could be adjusted each EoFY, i.e. everyone halves their balance and the rate doubles, you could peg it to USD if you want). You would restrict it to only the accepted miner / blockchain servers and maintain a shared transaction list based on an internal credit system between parties.
Bitcoin in my mind essentially produced an open source banking / commerce system. The best thing about a good OSS is its ability to scale and target use cases from personal to group to global with some work and thought about the specific domain.
And most people find gold beautiful, whereas it takes a peculiar mind to appreciate prime numbers...
A piece of gold is yours. If you have it, others do not have it. You can make it into a ring and wear on your hand. You can exchange that ring for something else because that's the only way for another person to get it - and then you don't own it anymore.
A prime number cannot be yours alone, as it is infinitely copyable. I do not need to even talk to you if I want to appreciate a prime number that you happen to have. I can get my own, the same or different (there is no way to know.) You cannot sell me your number even if I find it beautiful (which I do not.)
What is common for BTC and gold is that they are primarily money - tokens that are made for convenience of trading that are universally accepted as such. Gold is also useful in jewelry and in dental crowns; paper bills can be used to burn in your stove; sea shells can be milled into a fertilizer for your garden; shark teeth can be used to make a primitive knife or a club.
The fact that BTC is utterly useless as a good is not really a big deal. Paper money is not very valuable, really, outside of it being money. IMO, BTC is mired in a sea of other problems, starting with early adopter's advantage, then with secrecy of its creation and administration, then with builtin deflation, then with BTC being used as an object of speculation, then with BTC network wanting money for payments, then with mining being impossible for common folks, then with the network being ill-suited for modern business transactions, and so on. These are far more serious issues, and they *will* bring BTC down. It may remain an obscure cryptocurrency for a few enthusiasts, but there is no good reason why it should be adopted by the rest of humanity.
You think BTC will protect you from the crash of USD? Did gold protect you in 1933? Imagine that the USD crashed, and bread is sold for $1M per loaf. How will you be able to sell your 1 BTC for USD one billion? It would be illegal to do inside the country, and it would be impossible to do outside (due to lack of USD, which is likely to be dropped on the floor and Amero printed within the USA.) And how will you, pray tell, import that $1B even if an exchange in Japan has it for you? Through a tunnel under the MX border? It would be foolish to think that the government will not make sure that you do just what they want you to do.
What's your point?
I'm just saying bitcoin goes one step further and can be manipulated by any government of reasonable size, or any hacker who attacks some kind of online wallet host for that matter.
So what? Why does the price of bitcoin even matter? Bitcoins strength lies in its ability to be used as a payment processing network - and at a fraction of the cost of traditional payment networks (visa, mastercard, paypal, SWIFT, etc).
Everyone is obsessed with the price of bitcoin (and therefore comparing it to a ponzi scheme because of its price) and treating it as a speculative investment scheme or get rich quick scheme. This is actually very detrimental to bitcoin.
But no. Bitcoins power lies in using it as a payment processing network not its price. It does need some more price stability, however, so this crazy speculation needs to stop.
Has something changed drastically in the past few months? Last time I looked into it, buying and using bitcoins was difficult and more expensive than using my traditional credit card or paypal.
There is only ONE fact you should consider when thinking about the reality behind Bitcoin. The US dollar will NOT remain a world standard for commerce for very much longer.
So? My money is in Euro and Swiss Francs. The USD is not essential. Touting Bitcoin as a replacement is pure FUD though, written by a true believer with a very small analytical capability. Or by somebody that want to push the clout in order to defraud them a bit more.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
Stross was involved in e-commerce in the early days and his novel "Neptune's Brood" is based on digital currency concepts that had to be investigated in detail before writing if they were to seem in any way believable.
Is a damn misleading way of saying outright rejection.
Way to throw away your credibility as impartial Bitcoin magazine. Then again with a title like that, vested interests are to be expected.
How is getting money from new investors in order to pay off old investors different from a Ponzi scheme? The realty is that its not different at all, that it is in fact exactly what a Ponzi scheme is.
If that's the case, then all stock markets and all private equity investment are a Ponzi schemes.
Tired of being "punished" by the Slashdot $rtbl since 2002. I'm now over at http://soylentnews.org/ .
When a Coinbase user uses their online wallet to pay a Coinbase merchant, that can be all internal to Coinbase, and never reach the Block Chain.
Cool defect there, so I can transfer bitcoins to another Coinbase user, then transfer the same bitcoins to a non-Coinbase user. The Coinbase user gets the middle finger because the non-Coinbase user has their transaction in the block chain first.
Only if you die before the procedure for extracting wealth from people with bitcoins is sorted out. Governments of all types are usually more serious about taxes than any other issue and have a very low bullshit threshold. If they can't work out how much to get from you they tend to consider it as proceeds of crime and take everything they can find.
Ok so let's take Stoss' argument at face value, even though he was obviously being sarcastic.
You're arguing that the solution to them cheating on taxes is to adopt a currency where EVERYBODY will cheat on their taxes? How does that improve things, exactly?
Comment of the year
Rupert Murdoch is that you?
"Bitcoin isn't "manipulated" at all"
Boy you must live in Bizarro world. BTC has been manipulated many times over, how the fuck do you think it managed to have a 1,000:1 conversion versus US currency at one point and time?
Still waiting on Serviscope_minor to wake up to fucking reality and realize that Jessica Price isn't going to fuck him.
Will that work though? I understand your point, as the blockchain isn't updated, but you are still using their wallet and their mathematics, I somehow doubt they'd allow you to double spend their money. I don't think you can have an offline backup of their online wallet for this reason, but I might just be speaking out of my ass.
If the EFTPOS network goes down I can still use my debit card to make a manual transaction at a brick and mortar store (or glass and steel, what ever they make buildings out of these days).
The merchant whips out their carbon copy pad and the zip-zap machine and away we go.
The bank still guarantees the merchant gets their money as long as the signature on the piece of paper matches the one on the back of my card.
Your post is a good example of how ridiculous this ponzi scheme is. The early adopters, in theory at least, have a massive advantage compared with the poor sods that joined much later in this pyramid scheme.
Of course if they tried to cash it all out at once the entire thing would collapse before they get their billions.
Paypal also makes national borders a moot point too.
So do credit cards.
So it's not your BTC then. You're beholden to them to keep it all safe, with no repercussions if they fail to do so, since there is no law or regulations.
That's trust.
This site advertises "bitcoin mining" gear. We'll keep getting crap about this ponzi scheme baited for geek for as long as those advertisements sit on this site.
I suspect that all of the "miners" will migrate to distributed malware doing the "mining" at some point so we may get some rest from the articles then.
I dunno, I think Silk Road kept it more stable than it is now. For awhile, there were lots of people that needed to buy bitcoins to get real goods and one big guy needing to sell them to get real money.
Now you've got much less of that. The speculators, hoarders and idealists have more weight than the actual market, and the price jumps and crashes.
Play Command HQ online
Coinbase can do that, but you can't since the coins are actually in the Coinbase wallet.
Play Command HQ online
The fact that price stability, which wasn't great to begin with, suddenly got a lot worse when Silk Road shutdown suggests this.
Play Command HQ online
When currency is a fiat currency, taxes are a measure of government power, not a means for paying for anything. They are also a guaranteed floor for demand for government currency.
Play Command HQ online
"Go to CNN [for a] spell-checked, fact-checked summary" -- CmdrTaco
Stability will come only if someone with power -- e.g. a state/ country -- stands behind bitcon. Given that supporting BC does not seem to be in the interest of entities that need to tax you or make money off of you, it's hard to see that happening.
Your missing at least these simple and important points:
1. Creditors are not investors.
2. Ponzi schemes involve fraud. Ponzi tells you he's investing your money. In fact, he's stolen your money. The part you're complaining about is merely how Ponzi tries to hide his crime and entice new victims.
3. The government could tomorrow pay off every penny of debt if it so choses without collecting any additional taxes.
Play Command HQ online
We did libya for the same reason. Dollar is king, baby!
Play Command HQ online
Yes, but if you can make a good deal of your purchases with BTC, too, then you don't need to convert it to a national currency.
If the BTC merchant in question has banking capabilities in both countries involved, those currency-exchange fees could also be lessened and made more competitive.
Nice straw man. Those things don't require almost half of my income.
Please show your working as to how your tax amounts to half your income.
No, I totally agree with you. I was just pointing out that the value of money itself (regardless what form it's in) is manipulable.
Politics; n. : A religion whereby man is god.
The artificial limit is currently 7tx/s. A spec change has been proposed, however, that would count the confirmations of so-called "orphan" blocks without compromising any security. This supposedly allows for transactions speeds that are very nearly competitive with your 25000tx/s because it allows the entire swarm to contribute, instead just the largest pool (which is what we effectively have now.)
Litecoin and feathercoin are cryptocurrencies that address the confirmation time, however. I don't personally involve myself with them, but... Your concerns have been raised many times before now and very interesting work is being done on addressing them.
If the BTC merchant in question has banking capabilities in both countries involved, then why would you need BTC for this transfer? As they say in fantasy books, "You deposit your money in any Gnome bank in the country, and you can take it out from the same or any other Gnome bank." The modern world embraced this principle and extended it, so any Visa card owner can withdraw his money from any Visa ATM anywhere in the world (with a small fee if the machine belongs to another bank.)
but if you can make a good deal of your purchases with BTC, too, then you don't need to convert it to a national currency.
Sure, if only you can make a good deal on purchase with BTC. However the moneychangers at BTC exchanges want their pound of flesh, so the prices in BTC are not that likely to be better than under other combinations of payment instruments. Your best bet, probably, is to pay with USD because USD is accepted nearly everywhere without conversion to RMB or whatever local currency the seller may have. It is standard practice for Canadian banks to offer USD accounts to anyone who walks in, just to facilitate cross-border trade.
Of course the price of Bitcoin matters. For a currency to be useful, today's price must be close to yesterday's and tomorrow's price. If the value changes faster than some small delta, nobody wants to retain an account in that currency and any Bitcoin balances will be immediately traded away for goods or another money. Bitcoin balances held only for speculation would have to compete with gold, which has been used this way for millennia.
Lets consider what a bitcoin transaction looks like if neither the buyer or the seller wants to hold bitcoins and neither the buyer or the seller wants to leave their money in a bitcoin exchange.
The buyer transfers fiat currency to an exchange (fees).
The buyer buy bitcoins (more fees)
The buyer transfers the bitcoins out of the exchange (probablly no fees)
The buyer buys the item with bitcoins (probablly no fees)
The vendor transfers the bitcoins back to the exchange (probablly no fees)
The vendor sells the bitcoins (more fees)
The vendor transfers the money out of the exchange (more fees)
Overall this is likely to cost just as much in fees as using paypal or a credit cards.
To bring the fees down to a reasonable level one has to do one of two things, either hold bitcoins or hold fiat currency at a bitcoin exchange. Holding bitcoins is risky because their value is unstable (this has been masked somewhat so-far by the fact that the overall trend has been upwards. Holding fiat currency at a bitcoin exchange is risky for reasons that should be obvious
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
The "value" is, in general terms, approximately the cost of production and distribution.
That sounds suspiciously close to Marx's brain-dead "labor theory of value".
The value of anything is determined by its buyers and sellers. You can spend all you want on producing statues of Alexander Hamilton made out of compressed manure, but that doesn't mean they're worth the shit you put into them.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
I think you will very happy these days and enjoying life deeply and also in love with others
http://eachknowledge.blogspot.com/
It is only a matter of time before the Chinese and/or Russians enforce an alternate currency on the region. PetroKreditz or whatever. Think about it. Their supply lines are shorter, and over land where the Navy cannot project as much force.
Also there's a difference between saving and hoarding. What happens during deflation, in particular severe deflation is hoarding more than saving. Saving is setting aside some percent of your income for rainy day, and for later in life when you won't work. It's a negative feedback mechanism to put it in electrical engineering terms and, as with electrical circuits, it add stability to a system. With deflation what goes on is hoarding. People hold on to as much money as possible, spend as little as possible, because the money will be worth more in the future. That's very different than saving. While fundamentally yes, we're talking about spending less than you make it's a difference in attitude.
Money is only useful if it is spent, if it circulates. Money is not a magical force, it's not an end of itself, it's a theoretical construct to facilitate trade. So it only does it job if it is facilitating trade, and for that to happen it has to flow it has to be spent. Deflation runs directly counter to that since it encourages people, particularly those with more monies that are rich, to hoard as much as possible. Spend only what you need right now, because it'll all be worth more later.
If you read posts from many Bitcoin supporters, you will discover that they actually believe that deflation is a good thing. They think that deflation will make the money in their piggy bank worth more, and thus they like it. They have a poor understanding of the overall economic impact so they believe it would be positive. They also tend to conflate the ideas of saving and hoarding so while Bitcoin encourages the latter, they believe that's the same thing as the former.
What's even funnier to me, is that these are often the same people that get mad about "the 1%". What they fail to realize is that deflation is something that would benefit the rich and the very most and harm the poor the very most. The more money you have, and the less debt you have, the better deflation would be for you. If you've got a massive bank account, more than you need for the rest of your life, deflation is great. You keep all your money in cash, spend it only as you need, and the remaining money gets worth more. You don't need to invest it or take any risk, just keeping cash increases your value.
On the other side, if you owe money, deflation is a big problem. A loan becomes increasingly difficult to pay back as your nominal payment stays the same, but the real value that you are having to pay out increases. It works to keep you poor and to make it more difficult for you to ever become financially self-sufficient.
Really what it comes down to is many Bitcoin supporters just have a very poor understanding of economics. They don't understand the downsides of Bitcoin, because they actually believe many of them to the upsides. Really, Bitcoin is a dream for the rich robber barons. They would love something outside of any government regulation, something that works to make the rich richer, something where there's no recourse if they take money from you, no chargeback that kind of thing. It really isn't something that the rest of us should be that interested in seeing.
The idea of a crypto currency is an interesting one, but Bitcoin is very poorly implemented from an economic standpoint, if nothing else.
You're misunderstanding what this means. Suppose A and B want to trade, and both A and B have their coins held by trusted third party X. A and B tell X to transfer coins from one account to the other. X does so. The transaction need never hit the block chain, because it's held in X's local ledger.
Alter Aeon Multiclass MUD - http://www.alteraeon.com
So both parties A and B have to use the same ban... erm... "ledger". And of course, this ledger then would have to be regulated and policed - you don't want your money disappear if the ledger decides to pack stuff and move into a nice tropical country without extradition treaty with the US.
Oh, and of course this ledger would be able to "borrow" your money for a little while. Since you won't be able to access it while it's on the deposit account.
And at this point, there are no advantages to using bitcoins versus regular currencies.
have you ever tried to transfer 100k USD? Ever heard of anti-money laundering regs? I got caught in those moving savings between banks. You can find your money lost to you for weeks as the bank tries to figure out if you are doing anything with drugs/terrorism/whatever.
"First they ignore you, then they laugh at you, then they fight you, then you win."
Have read this quote all the time in slashdot, but it seems this quotes fits perfectly well in the whole bitcoin situation.
Yes. The school of thought that supports the proposition that the commonly agreed value of anything stabilizes as more people have or use that thing is called "high school".
Wire transfers also incur large conversion fees. Someone in Europe does not want your USD, they want EUR.
I have yet to see a compelling reason to switch.
How about no more taxes? Or at least making it easier to avoid some of the taxation.
So you agree with Stross. The "rebuttal" didn't last long, did it.
Watch this Heartland Institute video
Anonymous Satoshi Nakamoto... ASN. Hmm...
have you ever tried to transfer 100k USD?
Yes. Many businesses do that daily. Many private investors do that all the time. People gather up money for houses or expensive cars. (How did you pay for your house, with cash? I used a wire transfer, IIRC.) Nothing stops you from transferring money. The transactions will be reported, but as long as the money is sufficiently traced you will never hear a peep from anyone.
I got caught in those moving savings between banks
Sorry to hear. But in my experience it's smooth sailing. Banks are not in business of interfering with your money. The government might be, but the banks do their best to keep the government out of your pants. People with money are subtle and quick to anger.
Whether it trades at $600 or $1200 today, a pair of trading partners in different countries can save a fucking fortune (in bank fees, not taxes) by buying BTC, denominating the trade in BTC, and converting back to the local currency.
According to Mt. Gox fee schedule, each conversion will cost you 0.60% (under 100 BTC.) Then two conversions (say, USD to BTC to USD) will cost you 1.20%. A wire transfer through a US bank costs $40 (a fixed fee) and you can transfer as much as you need. Let's say 1 BTC = USD 1000, and you want to send 100 BTC. Then the bank fees will be 40/100000 = 0.04%. The Bitcoin method is 30 times as expensive!
If you transfer less money, at some point BTC method and the bank method will be equally expensive. (Obviously, 40/x = 1.2%, and then x=40/0.012 = USD 3333.) Below that sum you will be better off using BTC; above that you will want to use your bank.
Your analysis ignores the bid/offer spread, which is currently $4 on mtgox, or 0.4%. This is effectively an extra cost for each transaction on top of the exchange fees, only this one goes to the market makers rather than the exchange itself. This changes your break-even point to $800.
"That sounds suspiciously close to Marx's brain-dead "labor theory of value"."
No, it's fucking Econ 101.
"The value of anything is determined by its buyers and sellers. "
No, the PRICE is determined by buyers and sellers.
Look, guy, let me put it a different way. Here's an example: you go in to Wal-Mart and buy an apple for, say $0.25. Then you go across the street to the Piggly-Wiggly and buy an identical apple for $0.35.
Does one of those two apples have more VALUE to you than the other? No. It is only the PRICE that is different.
The spread for the two conversion will already be close to or over the 3% you pay your current payment processor.
The spread on mtgox right now is $4, or about 0.4%. On top of the exchange fees, this means a two way USD->BTC->USD transaction has a net cost of around 2%.
Of course, this leaves the question of how you get your USD to mtgox in the first place...
Don't you have to transfer your coins to coinbase first? So that transaction prevents you from paying them to anyone else.
The way to deal with that is to trade in common currency (USD for oil, for example.) You are proposing that this common currency should be BTC; but it doesn't really change the equation - you still have conversion fees. I worked at a company that sold equipment abroad, and all payments for it were in USD. The trading partner had USD accounts; I have no interest to know how those accounts related to their national currency accounts.
Besides, if "someone in Europe" does not want USD, chances are that he does not want BTC either. USD is convertible and liquid, you can exchange nearly any amount of it instantly, anywhere in the world. You can exchange USD for goods, for services, for other currency, for stock, for contracts, or for whatever else you can imagine. If there is something for sale on this planet, a USD will buy it. The same cannot be said about many other currencies; BTC is just as popular as some African money, at best - and I don't mean Krugerrand :-) Thinking about that, there are more people in any given Central African country that use their national currency than BTC users all over the world.
But let's see what today's exchange rate is, per oanda.com:
Selling 1.00000 USD you get 0.73508 EUR
Buying 1.00000 USD you pay 0.73515 EUR
The difference is 0.00007 Euro, or 0.095%. This is an infinitely better deal than 0.6% that BTC exchanges ask for. Why? Because the Forex market is huge, and competition in it is also huge. On top of that, you pay this fee only once, from your currency to "their." In case of BTC as an intermediary you have to convert twice, so you actually compare (flat wire fee + 0.095% exchange fee) to (zero wire fee + 1.2% exchange fee.) There are very few cases (small sums) when BTC wins - even if your time is worth nothing, and if you don't mind risking it all with BTC exchanges and their arbitrary payment schedules.
Assuming you are talking about Chinas move in the start of December, Bitcoin was clearly in a bubble at the time (the price had risen a factor of 6 in a month). Bubbles are notoriously vulnerable to any signal of the end of the bubble, so we really can't say that this behavior is general. Do we have any non-bubble examples of substantial, sustained drops in the value of Bitcoin following government intervention? Just to put some concrete numbers on the concepts, let's say a bubble is when the price have more than doubled in a month, a substantial drop is more than 20%, and it is sustained if the drop is still there a week later (but feel free to criticize these numbers).
If one side argues concept and the other argues implementation issues, they can easily both be right. Stross was wrong on several levels, but saying that he misses the point of the concept is the stupidest rebuttal one can make.
Not interested in shitcoin.
But it's not a good payment network if the value of the payment are not stable.
The network exists to 'mine' coins and process transactions. It's cheap because there is a payout for participating in the network split two ways, you get to mine coins, which are worth something and you can charge transaction fees. If there is little worth in the coins, the network will either be tiny and easier to take over and control (if you control the majority of the processing power, you control the entire network) or the transaction fees will increase.
I think there are two related problems with Bitcoin. The first is that it is not stable enough. This should slowly reduce as more volume gets into the market and it gets used more widely but it might take several years. It is currently far too easy for bubble behaviour to appear. The currency is inherently international and inherently lacking in government-led stabilisation mechanisms. A currency, and money in general, is there for people to be able to exchange goods and services and needs stability or the only thing it's useful for is speculation. The second thing is that there is not enough volume. For the first problem to go away we need volume/value compared to existing currencies. It could go up to say $100,000 per coin, and we would have a max value of $2,100,000,000,000, but that's still not enough for a widely used international currency. How much in total market value is there for Dollars? Euros? Yuan? Yen? Much more than this, and even they have governments actively stabilising... I may not understand things properly but my understanding is that bitcoin can't easily add fractional parts after the 8 places. For me this is a problem as it provides resistance against it increasing to the 1M+ per coin I think we'll need because you wouldn't be able to use it for everyday transactions.
You are right though, New Zealand is the place to be.
Depends on what you like. I like being able to travel to lots of places cheaply (for the weekend and the like). I like old cities with historic buildings. I like being able to go to conferences whenever I want. I like big, concentrated cities with great public transport (I haven't used my car in over 5 months). So I live in Paris. Wellington would be one of the coolest places on earth if only it were on the Mediterranean coast... The bush is nice but it's not like there are any birds left there. There are too many stupid people for the country to do anything cool, like take conservation seriously (remember the dead possums hunters left on Kapiti?), or take other stances on things like GMO (like was done with nuclear). If your not north of Hamilton then the sea water is always cold. And it's not the only place with nice nature - ever been to Norway's fjords? It's about 5 hours for me to get from sitting in front of my computer to sitting beside a fjord. You'd be hard pressed to do that even living in Christchurch or Dunedin. The cost of living is far too high for the salaries people get - I was absolutely shocked when I was there 3 years ago. I can get the most basic foodstuffs here in France much cheaper than in NZ. Only Auckland University is even remotely prestigious and there isn't enough capital to create a really audacious tech environment. And it rains to much in Auckland. And to top it all off - the damn currency is too small and too volatile!!!
Rupert Murdoch is not on Slashdot.
Oh crap. I don't know how I missed that... I think I had too many beers.
Basically same as the gold system, but Bit-gold. There is nothing really innovative if you use Bitcoin that way.
There's still a difference. In both cases, your last resort, if the "currency" (dollars or bitcoin-rights) is poorly managed, your last resort is to switch to using the "gold" (actual gold or actual bitcoins). The difference is, with bitcoins, you don't have to give up your ability to perform online transactions with no third parties.
It's a small thing, but it radically changes the incentive for the financial companies.
Much like in the stock market, where early investors get huge returns.
Contrary to popular belief, what makes a currency behave differently from a "fiat" currency isn't merely scarcity
You haven't shown this. Consider:
You've correctly pointed out that the only difference between gold and yak tears is that people are irrationally attracted to gold. But you haven't shown that there's any fundamental difference other than scarcity between gold and fiat currency.
If the EFTPOS network goes down I can still use my debit card to make a manual transaction at a brick and mortar store (or glass and steel, what ever they make buildings out of these days).
The merchant whips out their carbon copy pad and the zip-zap machine and away we go.
The bank still guarantees the merchant gets their money as long as the signature on the piece of paper matches the one on the back of my card.
I suspect you meant credit card, and not debit card.
Nice! A different strawman to the usual! Bring on the Koolaid analogy!
Yes Virginia, it is a pyramid scheme.
Look him up on wikipedia and you'll eventually see the connection. Better still listen to the Boyer Lecture he gave.
Also considering he bought an ISP before MS Windows could even got on the net without a third party program he probably heard about Slashdot before you did.
However he pays tax as little as possible.
Nice straw man. Those things don't require almost half of my income. Please show your working as to how your tax amounts to half your income.
I live in South Africa, progressive income tax tables applies. All-in-all, I pay close on to 40% in personal income tax leaving me with 60% to spend.
So, I earn R100, the govt keeps R40. Of the R60 left, I spend R40 on goods and services (not fuel) which includes VAT@14%, which leaves the govt with R40 + (0.14 * R60 = R8.4) = R48.4
This does not even include the fact that I pay property tax separately and that there is a fuel levy (another tax) on each litre I buy. Recently, there is yet another tax that charges me R0.35/km I drive on National Roads (currently I drive about 60km/day on N1/N3).
When I bothered to actually add it up a few years ago (minus the new road taxes), I found that the state gets close to 62% of my salary. In return I get roads, non-functional police departments, broken court systems and corrupt civil servants.
I'm a minority race. Save your vitriol for white people.
I think you need to work on your understanding of how tax brackets function.
he presumed difficulty of linking wallets to individuals
It's the presumed difficulty of linking addresses to individuals......................
A "wallet" is just a data file used by the client, not part of the protocol. Indeed the whole point of having a "wallet" with the keys to many seperate bitcoin addresses rather than just having a single address and associated key is to make it harder for people to track your transactions.
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
If all you're trying to do is to get rid of fiat, then we already have gold (and currencies that can be backed by gold). The gold standard was dropped for good reason.
:. Ultimate Control Dedicated/VM Servers
Um no... the 7tps artificial limit can be removed. The real limiting factor is the size of the blocks that records the acutal transactions.
The 10tps limit due to the max size of the blocks (at 1MB). The average tranaction size is 166bytes. 600 seconds in 10 minutes (average time for each block)
1,000,000/166 = 6024.096385542
6024.096385542/600 = 10.040160643
So the end result is roughtly 10tps.
You can increase the 1MB limit, but then the blockchain gets very big very fast. Right now it is nearly 13GB. Due to the interest in Bitcoins in 2013 (or maybe Satoshi dice), 9GB was added to the blockchain in the past year alone.
To get the same 25000tps performance, you would need to increase the max for each block to 2.5GB (2500MB).
:. Ultimate Control Dedicated/VM Servers
A Ponzi scheme requires constant additional funds from new investors in order to stay afloat. Think Social Security (which is the only Ponzi scheme that gets a free pass.)
Bitcoin has no such need. Bitcoin only has the same need as any other currency - it needs to be traded. If that requirement makes it a Ponzi scheme to you, then every world currency is a Ponzi scheme.
Careful with names containing L slashdot.org/~AiphaWolf_HK slashdot.org/~AlphaWoif_HK slashdot.org/~AiphaWoif_HK
Remember, http://buttcoin.org/wp-content/uploads/2011/06/buttcoin-infograph.png
used as a payment processing network - and at a fraction of the cost of traditional payment networks (visa, mastercard, paypal, SWIFT, etc).
Sure, TODAY. Wait until the big guns move in.
No sig today...
Why did daddy spend all our money on invisible coins? :-(
The network is far from easy to take over because meaningful participation in mining requires a significant up-front investment and relatively small per-month cost, meaning the value would need to plummet not by half, but by 3 orders of magnitude for current players to quit the game, and the cost for new players to enter would NOT fall with bitcoin price drop. In other words, production (and as result risk of majority control) is relatively independent from price.
Yes, for a start-up coin small userbase may mean an up-front risk of 51% attack. Bitcoin userbase is currently too big for the 51% attack, and this situation is very unlikely to change.
----
OTOH, I agree its value is a problem for use as a normal currency. Imagine you have an on-line shop. You bought 100 gizmos for $60/pc in bulk, paying $6000 and offer them for sale for $100 or 1 BTC each, with current Bitcoin value oscillating around $100. Overnight Bitcoin plummets to $30. In matter of minutes your stock of gizmos is sold out, and you have 100BTC worth $3000. You can't restock your gizmos. You must wait and hope your 100BTC gets back to $100, which it may in half a year or never, and until then you have no money to restock your shop.
45 5F E1 04 22 CA 29 C4 93 3F 95 05 2B 79 2A B2
I think you need to work on your understanding of how tax brackets function.
I said "progressive income tax tables applies". If you want to know what that means see wikipedia. In brief, it means that only money in a certain bracket gets taxed at the rate for that bracket. It's clear from your other postings in this thread that you didn't know that. In any rate, my workings were given above, as you asked.
I'm a minority race. Save your vitriol for white people.
That's the advertised ask/bid prices, but what is actually available on the market? Take a look at the ask/bid volume charts and you see that a lot of the times, there is only 1BTC or less keeping those ask/bid prices that close. When you go above those small volumes, the spread increases dramatically. This is mostly due to the absence of market makers. With market makers you get a more consistent spread, but the spread would also be bigger (market maker profits).
:. Ultimate Control Dedicated/VM Servers
I said "progressive income tax tables applies". If you want to know what that means see wikipedia [wikipedia.org]. In brief, it means that only money in a certain bracket gets taxed at the rate for that bracket. It's clear from your other postings in this thread that you didn't know that. In any rate, my workings were given above, as you asked.
I'm well aware of how progressive tax brackets work.
You claim to pay "close on to 40% in personal income tax leaving your with 60% to spend".
What I suspect you actually mean, is that your income is high enough for you to be in the 40% bracket - ie: over R617,000 (which, in itself, probably puts you into the top few percent of income earners in the country). Because if you really are paying "close on" 40% (let's say "close on" is at least 37.5%) of your gross income in tax, then your gross income is ca. R250,000 (=USD72,000) per month.
Ugh, apologies, scratch that above I was using the wrong currency code.
All a site needs to do to accept a bitcoin payment is generate a wallet address for that session and present it to the user - all they need to do to know they've been paid is see the funds hit that wallet on the address they generated for your session.
You don't need to give them your email address, a card number, an expiry date, a security code, your address... they don't even need to know your name.
And good luck getting your dollars out of Mt Gox in a reasonable timeframe. The backlog on withdrawals of non trivial USD amounts is months at the moment
All I want is a secure system where it's easy to do anything I want. Is that too much to ask ~~ Randall Munroe
Pretty much nobody is seriously using it as a currency. Some companies are accepting it in payment, but pretty much all of them will convert the bitcoins straight into dollars. They don't circulate!
If it was used as a currency, in any serious way, economies based on it would suffer! The gold standard was abandoned for good reason. A crypto currency has every single one of these disadvantages.
Seems that the people who created bitcoin are the people who had to invest least in creating them. If they have any sense, they'll have sold off their coins months ago and will be living the millionaire lifestyle. Everyone who buys them is simply providing a gift to the early adopters. Ultimately this seems like a bunch of early adopters attempting to cause a short term devaluation in other currencies for personal gain.
Indeed. The only use for Bitcoin (other than gambling) is immediate money transfers that do not need to be anonymous. But I can do those with my credit card already, and at far lower risk.
Can you send me money with your credit-card to my european bank account? What about countries in africa, south america, middle/far-east etc.?
Anyone who uses the term "ad hominem" isn't to be taken seriously. Grow up or get out.
"Full faith and credit"
Currency is a measure of wealth and the tokens we call "currency" are effectively IOUs, usually issued by a government and circulated between people and companies to facilitate trade.
The dollar bill IOU issued by the US Federal Reserve has a couple of hundred years of "full faith and credit" behind it so people regard it as real money, tokens representing real wealth. The dollar bill issued by the US Confederacy lasted only a few years as a valid IOU and nobody in the modern world uses it in trade; the individual notes have curio value only today.
Bitcoin does not have a history of trustworthiness yet and may never have such. The creation of Bitcoin has made its creators and early adopters quite rich and that's always a bad sign in a currency token system which should be effectively neutral in its effects on individuals.
Take two
If you are in the 40% tax bracket in South Africa, you are earning R617,000+/yr. As an aside, this puts you comfortably in the top 5% of earners.
Your annual tax is around R167,501, which represents about 27% of your gross income. Since I’m sure there are numerous deductions available, that’s a worst-case scenario.
For you to actually pay “close on to 40% in personal income tax leaving your with 60% to spend”, you’d need to be earning upwards of R3,120,000/yr. Good on you if you are, but with an income 6x the typical white SA salary, complaining seems a little churlish.
Yes it does. Bitcoin needs up to 3.6 million dollars of fresh new suckers daily, for the price of Bitcoin to remain the same. Why is this so? Because miners have real costs that have to be paid in non-Bitcoin currencies, so they have to sell some on the exchanges.
Why 3.6 million, or perhaps a large chunk of that? Because, mining is basically a perfect competition situation, nobody can stop new miners from joining, and new miners will stop coming only when the cost of one Bitcoin more than the price on the exchange. This guarantees that mining will be a low profit business, and most of the value will be lost to electricity.
Who pays for that (large chunk) of 3.6 million daily? New suckers.
You've correctly pointed out that the only difference between gold and yak tears is that people are irrationally attracted to gold. But you haven't shown that there's any fundamental difference other than scarcity between gold and fiat currency.
Just because a government can inflate "fiat currency" doesn't mean that they must. Theoretically, the U.S. federal government could pay off all of its debts tomorrow, shut itself down completely (absolute minimal spending to satisfy Constitutional requirements), and then shut down all the presses and coin minting. If they still continued to claim the "legal tender" status for the dollar and only accepted dollars for tax payments, guess what? Dollars would start to become scarce. People would hoard them.
In practice, no government would EVER do this deliberately. Why? Because it would result in a deflationary spiral that would be economic suicide. Instead, most adopt a policy of moderate inflation for the reasons I outlined in my original post. Sometimes it gets out of control for random economic reasons or because governments can't rein in spending. Note that hyperinflation generally is not caused by governments printing money to pay debts in their own currency; it is generally caused when governments owe money in another currency, and as they print more, the value of the local currency plummets in relation to other international currencies, forcing an inflationary spiral to pay debt.
The U.S. debt, on the other hand, is almost all owed in dollars. That's a fundamental difference, though governments can still be stupid enough to ruin economies if they try.
Anyhow, the primary point you've failed to understand is that a precious metal standard does not prevent currency inflation (nor government running the "press" to make more money), as can be learned from reading any history. When governments run out of gold, it's not like everyone throws up their hands and says "Oh well, gold is a scarce resource, and we're out! So... oh well, let's just shut things down!"
No -- first governments switch to less precious metals, historically silver was important, but in the ancient world, currencies were even issued in things like giant iron "coins" (which corroded), just to keep up the spending.
But the next step is seigniorage, where governments start mixing in crap metals with precious ones or simply declaring that coins in a particular metal are worth more than the value of the raw metals. In good economic times, this may work okay. In bad economic times, it too can lead to an inflationary spiral.
You can believe all you want in some "magical" powers of a gold standard, but people will always find ways to screw up things economically with currencies, particularly if things get dire enough. Using gold or any other scarce -- but ultimately small-valued -- item won't fix that. The moment you convert actual "wealth" in useful goods (food, textiles for clothing, essential tools and weapons, etc.) into currency, you're taking a risk and trusting your wealth to the whims of others in power who have more currency than you do. It's only if you have the power and/or control the actual supplies of goods that you can have any guarantee of value.
So what? Why does the price of bitcoin even matter? Bitcoins strength lies in its ability to be used as a payment processing network - ......
Bitcoins power lies in using it as a payment processing network not its price. It does need some more price stability, however, so this crazy speculation needs to stop.
If Bitcoin is too volatile to be useful as a payment method, it is pretty useless. I'm sure you will argue that "as more people use Bitcoin, the volatility will decrease", but historical data shows that to be the opposite of reality. More people use Bitcoin than ever, and it is more volatile than ever. Potentially losing 20% on a currency shift in a transaction is far, far worse than the absolute certainty of paying Visa 2-3% for the same transaction.
Even those who arrange and design shrubberies are under considerable economic stress at this period in history.
The currencies of all major epochs reflected the state of the art of its epoch.
In the agrarian epoch currency was what was grown in or above the ground.
In the industrial epoch currency was minted or printed.
In the digital epoch BitCoin or something much like it seems to fit. The digital epoch needs a peer-to-peer currency as ubiquitous as the network infrastructure that supports it and as transmittable as any other data that flows through that network.
Anyone who has does international business has learned to HATE the nickel-and-diming of international banks (thieves) and the fees they charge for currency conversion. BitCoin or something like it has the potential to put an end to that.
What about interstellar business? We live in the space age and the industrial currencies and the workflows surrounding them will not work in space. BitCoin or something like it will.
Until something better comes along BitCoin will bask in the spotlight, but having first to market advantage means that anything better that does come along will more than like interface with BitCoin in some shape or form.
That'd be the value over which some country's national labs or universities turn on their supercomputers and mine almost everything
The current Bitcoin mining network operates at twenty times the aggregate processing power of the entire TOP500 supercomputer list.
For comparison, today's most powerful commercially available ASIC-based Bitcoin mining rig, the KNC Neptune, pushes 3000GH/s. Using the semi-official conversion of 12,697 Flop/Hash (somewhat fuzzy given that BTC mining involves no actual floating point operations, but that number gives a fair estimate of the processing power involved), we come up with a whopping 38 PFlop/s. That puts the Neptune - a single unit, all by itself - solidly above the #2 supercomputer in the world (and above #1 by some metrics, since the Neptune can actually sustain that while the #1 can only sustain 34 PFlop/s).
No government - Not even the US government - Has the ability to flip a switch and monopolize BTC mining. They would need to buy (or make) rigs just like the Neptune and compete will all the other people running them (admittedly rare, but 1/5th that much power, 600+ GH/S ASIC rigs, have become relatively commonplace). At best, a government willing to throw infinite resources at the project could push the cost of mining above the cost of the electricity needed... Not much of a victory, there, since that government would itself need to use the electricity needed to go block-for-block vs the entire rest of the network, at a net loss.
the thing is that it has absolutely no method of handling offline purchases, no way of handling time sensitive transactions, has no fraud protection, and is based on a deflationary model of currency that encourages hoarding and discourages spending (which is the antithesis of what a currency is supposed to be). The folks that love bitcoin are the same ones that used to stick gold coins in their mattress, and pay employees under the table to avoid having to deal with taxes.
What makes you sure that Satoshi Nakamoto was *not* actually the NSA?
Hmmm, Anonymous Satoshi Nakamoto. Nakamoto-Satoshi, Anonymous. N.S.A.
I think I have a new favorite evidence-free conspiracy theory.
Problem is, just like deflationary currencies, there are people who disagree with the reasoning, or at minimal do not believe it. Something to keep in mind, the gold standard was great for individuals but bad for the economy, and many of the core BTC backers are very cult of individual so they weigh things that help a small number of people (like them) much greater then overall economic health. Deflation is a good example of this... deflationary currencies are wonderful for a certain pattern of investment, but retard the whole economy. People who want that specific investment style (and can't make it with the more complex ones) can benefit even if it drags everyone (including them, but not as fast) down. The irony of course being that depending on the rate of deflation vs economic growth, BTC can still experience inflation.
Heh. It is kinda like how pure capitalist and pure communist systems become indistinguishable over time as natural pressures moved them into certain patterns. The modern system developed over time for various reasons, and one can already see those same pressures shaping active areas of BTC into the same patterns. Financial institutions did not just appear one day after a bunch of people sat down and said 'hey, I know what we need, we need this horribly complicated and corrupt systems because we hate people and wish them to suffer!'.
Well, if exchanges become untrustworthy then people will just use other ones. Kinda like how no one uses paypal anymore because of their known issues with corruption and walking off with people's money without recourse against them. See? The market fixes everything!
Well, if you change 'as' to 'if' and add 'proportionally' to the end, then yes, economic theory supports this.
to reguard bitcoin as a scam until I can pay my bills with them and spend them at all of my local stores!
As soon as they said Accelerando was "one of the best sci-fi novels of all time" I tuned out. The author clearly knows nothing about anything.
Why the laughing? People expect commodity x to trade for $y in a years time, so they price it at $y-(lust a little) now, so it stays relatively stable through the small fluctuations. Can you explain your view of how it works?
Is 1563649 a prime number?
And if the price does not stabilize, maybe people won't agree to use it, eh?
The thing to worry about is conditions where people think the price is stable, attempt to use it as a "store of value", then discover that they were wrong.
It's a good thing that never happens to anything that's in wide use, eh?
Everyone seems to be missing this one, the post at Krugman's blog where he quotes John R Levine: An Ubernerd Weighs In: He's essentially impressed with the technical achievements of bitcoin, and argues that his fellow techies are drunk on the achievement, and missing the fact that it's not really good for much.
Why are new bit coins required to maintain the price of an existing bit coin? New bit coins should be creating inflation pressure. As with all fiat currencies a bit coin has little to no inherent value. Just because it costs someone $50 in electricity and CPU time to mine a new bit coin doesn't mean anyone has to pay that price. The relative value of a bit coin will always rely on demand, if people want to use them and have to compete for them on the market then the value goes up, if not it goes down.
From TFA:
Can you smell the hand waving?
Good luck finding a school of econ that argues "deflation" is good.
(Gold buggery is popular among some cranks outside of Econ, not inside it.)
But... people don't need to keep mining bitcoins in order to keep the value of bitcoins up. Much like if suddenly, there were no more diamonds to be pulled out of the ground, the price of diamonds would go up, not down.
Alpha_wolf was saying that, and it sounds like you're saying he's wrong, and then providing an argument as to why he's right.
Fresh investments are needed because Bitcoin mining network as a whole, has a real world bills to pay. That money has to come from somewhere.
If a miner decides not to sell fresh Bitcoins, it is the same as if he himself invested his cash into Bitcoins. So, new cash has to come from somewhere, and miners have a strong reason to sell. So, it's close to $3.6 million daily fresh cash, or the price of Bitcoins goes down.
The mysterious thing is why this fact that the Bitcoin price on the exchanges causes the total electricity cost of the network to follow it, is not wildly known.
If you RTFA, you'll see the author sneers at Krugman because he said he doesn't like the "sound" of bitcoin, but if you actually read the Krugman post, you'll note that he actually has an argument
Daniel Jeffries (the author of TFA), essentially argues that there are multiple competing digital currency systems and we should let the market choose which one it wants to use.
It's difficult to know where to start with someone this naive, who hasn't been paying any attention to real world events in the last several decades. He's stuck on the idea that people are rational actors, that they don't get carried away by fads ("irrational exuberence"), they don't create bubbles, con themselves that this time it's different, then get really dissapointed when the bubble pops. He's looking for a technical fix for the need for something like the Fed without quite knowing what it is that the Fed is doing...
Try this point: bitcoin is the standard bearer for every digital currency, if bitcoin crashes and burns, no one is going to be willing to trust any of the others. Talk about it's technical advantages until you're blue in the face, no one will listen to you...
"The relative value of a bit coin will always rely on demand, if people want to use them and have to compete for them on the market then the value goes up, if not it goes down."
Yes, and once that supply and demand had determined the price of Bitcoin, then you know how much will miners tend to spend on electricity, and so you also know how much new investments are need for the price to stay the same.
The real world conflates "medium of exchange" and "store of value". I do not automatically spend money the instant I earn it: most of my income is biweekly paychecks and I spend it throughout the fortnight, keeping reserves for monthly and longer-period expenses, and maintaining supplies of cash or equivalent in case of emergency. If I get paid in bitcoins, and they lose half their value over the next week, I'm screwed. If I use some sort of exchange to convert bitcoins to USD immediately, then that exchange must be holding bitcoins, and they're vulnerable to a drop in bitcoin value, so they're going to find some way of getting additional income out of me to compensate for the risk.
Essentially, a currency is useless as a medium of exchange unless it has at least short-term price stability, and that gives it some ability to operate as a store of value.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
Oh yes, felony tax evasion is a great reason to advocate Bitcoin.
Are you for real?
I disagree. Stability will come when the price rises high enough (or stops climbing long enough) for some of those currently holding to release some of their bitcoins, increasing liquidity.
> Bitcoin money through fractional reserve banking.
No they can't unless they hide your wallet from you. Fractional reserve lending depends on being able to hide your *real* account balance from you (which is generally zero).
Doubly so if the US government continues to debase the currency (which at this point it has no choice but to continue doing (and accelerating))
So that's not the money in your bank but an IOU. Infrastructure could be built around Bitcoin to allow the same thing.
you've conveniently overlooked currency exchange fees...
"But... people don't need to keep mining bitcoins"
So, you can buy a machine that prints money and all you need is to plug it in, and you are saying people are not going to do that? Are you crazy?
That IOU is between the merchant and the bank, who have a contract to back it up.
With the volatile nature of bitcoin, who wants to hold on to a piece of paper that may not be processed for a week? The value can halve in a matter of days.
Heck, at that point it's not even BTC at all - you've sold BTC to CoinBase in exchange for CoinBase's private currency. (Which may or may not actually stay pegged to the BTC going rate over time - if they're popular enough it'd be trivial to start charging "bank fees").
Agree and agree. I thought he was right* on that one, but I don't agree it's a bad thing.
*) Well, maybe. Come to think of it, cash is also "untraceable", and our rulers seem to be able to tax that with no problems.
How inappropriate to call this planet Earth, when clearly it is Ocean.
You should also point out that every specie-based currency was also ruined by debasement over time. A gold standard does nothing to prevent governments screwing the currency.
You seem to miss a key point, however: the money supply has little to do with how many physical units of currency exist. Bitcoin only caps the M0, it does nothing at all to limit the M2/M3, and therefore it doesn't prevent inflation.
Socialism: a lie told by totalitarians and believed by fools.
And your bank!
Doesn't change anything. The only way to be at all anonymous with an authenticated bitcoin transaction is on a stolen internet connection. Linking transaction particpants -> IP Addresses -> physical addresses is not a difficult task for a government.
Socialism: a lie told by totalitarians and believed by fools.
I'm thoroughly confused and I suspect you may be too. The thread so far from my understanding:
Alpha_wolf: Bitcoins are not a ponzi scheme because people don't have to keep buying in in order to prevent it from collapsing
You: Yes it is: because bitcoins will take more money to mine, people will stop mining them
Me: You don't need to keep mining them for bitcoins to keep their value
You: People WILL keep mining bitcoins.
You appear to contradict yourself, but the original point didn't make sense to me anyway, so I don't know what you're driving at.
Then they're not mine anymore. I would not be trading BTC, I would be trading Coinbase promises.
IMO bitcoin is just as inflationary as any other currency, if it ever becomes mainstream (which is why I say it solves the uninteresting problems). Inflation has very little to do with the amount of physical currency in circulation (the M0), which is all bitcoin caps.
Socialism: a lie told by totalitarians and believed by fools.
Bitcoin is mainstream when there are forex futures traded in the major markets in similar amounts to other currencies, when there are bitcoin savings accounts, when central banks include it in their reserves, and of course when you can but most everyday goods with it. Today. it is none of these things.
Socialism: a lie told by totalitarians and believed by fools.
The "value" is, in general terms, approximately the cost of production and distribution.
The value of anything is determined by its buyers and sellers.
No, the PRICE is determined by buyers and sellers.
Both the value and the price are determined by buyers and sellers. The price is a rate of exchange mutually agreeable to both the buyer and the seller. At the same time, the buyer and seller each determine the value of the good to them. The price is always somewhere between the value of the good to the seller and the value of the good to the buyer.
Look, guy, let me put it a different way. Here's an example: you go in to Wal-Mart and buy an apple for, say $0.25. Then you go across the street to the Piggly-Wiggly and buy an identical apple for $0.35.
Does one of those two apples have more VALUE to you than the other? No. It is only the PRICE that is different.
All you can really say about the values of the apples to Wal-Mart and Piggly-Wiggly based on your example is that the former values an apple at no more than $0.25, while the latter values an identical apple at no more than $0.35. These values may be the same, or they may be distinct. Since you bought both, you valued two apples at not less than $0.60 combined. Again, the values of the two apples may be the same or different. You probably valued both more than $0.35, but not necessarily; for example, if you knew about the lower price beforehand (and P.W. only had one apple in stock at that price) you could have valued one apple at $0.35 and a second one at only $0.25. The values do not need to be the same even though the apples are objectively identical (c.f. the law of marginal utility).
There is no such thing as an objective value for an apple, independent of the prospective buyer or seller, based on its cost of production or otherwise.
What may be confusing the issue is that competition generally results in a price close to the cost of production and distribution. If people are actually willing to pay that price, then that sets a lower bound on the value of the good to them. However, a good's cost of production can easily exceed its value; that simply means that there is no profitable way to produce it.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
What happens during deflation, in particular severe deflation is hoarding more than saving. Saving is setting aside some percent of your income for rainy day, and for later in life when you won't work. It's a negative feedback mechanism to put it in electrical engineering terms and, as with electrical circuits, it add stability to a system. With deflation what goes on is hoarding. People hold on to as much money as possible, spend as little as possible, because the money will be worth more in the future. That's very different than saving.
So you're saying that saving is setting money aside for a later time when it will be worth more to you, and hoarding is setting money aside for a later time when it will be worth more to you. The difference is so clear... as you say, the difference is all in the attitude, namely your bias against "hoarding".
Regardless of the "attitude", saving and hoarding have the same effect economically. You produced something, earning money, and you chose to save the money rather than claiming an equivalent amount of other goods for personal consumption or as an investment. That makes these goods available to others, reducing the demand and thus prices. If the general tendency is in favor of investment, and these investments happen to be good investments, the economy grows and more goods become available, increasing the supply and thus decreasing prices further. When you choose to spend your savings (or "hoardings") the lower prices are your reward for deferring consumption and making those goods available to others, essentially the interest on a loan you made to the rest of society.
Of course, if consumption and/or bad investments are the order of the day, the opposite will be true, and you should have chosen your own investments rather than hold on to depreciating currency. In either case, manipulating the rate of inflation or deflation by playing with the currency supply can only serve to discourage good investments (under-inflation/over-deflation leading to saving/"hoarding" when there are investments which would grow the economy more) or encourage bad ones (under-deflation/over-inflation leading to investment in underperforming ventures, diverting resources from better investments).
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
actually that is trivial to do.
In the UK, if you have a salary of 125,000 GBP. You pay 50k GBP in payroll taxes. Your employer pays 16000 GBP. This means functionally, your income was 141,000 and we already have 66000 paid in taxes. I need to find 4500 GBP more in taxes, and given council tax and VAT (20%), that is simplistic to do.
I'm not talking about millionaires, just upper middle class incomes.
I can even get close in the UK with much more modest earnings.
salary , 50k GBP.
payroll taxes: 14k
employer contribution: 6k
effective tax before VAT and council : 20/56 = 36%
If you then spend 20k pounds in VAT items (very easy if you support a family), you have another 3.4k in taxes,and let's add 600 gbp of council tax, which brings us to 4k or 9%. I have taken an eminently middle income household and made it pay 45% before other government duties you have to pay (say for car ownership, and the like).
It is TRIVIAL to get to 50% in most of europe without earning very much and you can get damn close in the US at high incomes (without being a millionaire) if you live in cities like NY, with expensive sales, city income, state income, and federal rates stacking quite nastily. But if you are only familiar with the US, which is ultra progressive in it's taxation, you wouldn't realize what rates are like for non-super wealthy professionals in lots of countries.
all of Krugman's questions have been very succinctly answered well before he asked the question. Just because he fails to do any research what so ever is meaningless.
A store of value is as reliable as the people who use it say it is. That is all. That is the store of value of the US dollar, gold, Yen, and the Argentinian Peso. That Krugman and many economists take for granted that the US Dollar is a store of value without ever asking why such a situation exists is hilarious. The exact same logic for US Dollar value exists for bit coins. If people begin denominating their regular transactions in bit coins, they will then have grounded value in real assets, and it is done. As most real assets in the world are denominated in US Dollars, US dollars have a sticky value that allows it to be a store. But this wasn't always the case and reading about some basic monetary history of the US would tell you this.
And I have no idea what a pricing floor is regarding a currency, and having spent the majority of my life doing finance and econ, I am pretty sure that means you are misusing terms. Might you mean a trading band denominated in another currency (like the HKD or CNY)? That is irrelevant. A currency does not need to be easily convertible into foreign currencies or stably converted. Just look at the INR or TRY this last year.
"Both the value and the price are determined by buyers and sellers."
NO, they aren't! Pick up a book on economics. Value has a specific definition, and it is not the same as price! Value is, as I clearly stated earlier, cost of production + cost of distribution. That is its definition. Which, by the way, IS objective.
Value and price are economically DIFFERENT things. My apple example was just an attempt to put it in non-technical terms, for someone who obviously does not know economics.
the problem is you don't understand either the debt ceiling or why it would breach and cause a default.
payment of interest and principal on the debt is not a statutory payment the federal government must make. On the other hand, medicare, obamacare, SS, and several other programs, most of which are welfare programs, are mandatory programs. The government has no choice and must use incoming tax money to pay for them first. If those payments happen to eat up so much tax money in a given month and a required debt repayment (like say, a notional repayment on a bond) then the US government defaults and a whole lot of financial triggers are fired.
The US government could run a balanced budget in aggregate and still have this default problem because payments and receipts do not happen at the same time. This was what the default was going to be, not some grand scheme where suddenly the US couldn't pay for anything. Just the US couldn't on a given day meet it's obligations because tax laws are this big aggregate thing that assume the federal government can issue short term debt (like commercial paper in the private industry or a revolver) to smooth out the differences.
Who wants to take credit cards? Not so long ago, a lot of places didn't.
There will be credit card analogs for Bitcoin. Depend on it.
So Bitcoin mikes a payment processing system, just like Paypal. Too bad it is also a currency, that happens to attract more speculation than real transactions.
So at this point the miners are producing so many coins that it significantly influences the value of existing coins. That devaluing pressure is countered by demand, represented through new money, and or hoarding. I say hoarding because that effectively removes coins from the market for the time being which tightens the demand.
Unless the cost of electricity in producing a coin is very close to the coins current value on the market I would expect that most miners are hedging their bets and only selling some fraction of what they mine to cover costs, produce a bit of profit, and then hoarding the rest.
Yes, I see your point and I agree completely. However, does the small number of benefits that Bitcoin have over gold weighed against the benefits of gold over Bitcoin, justify the use of Bitcoin? Why not just trade in gold instead? (Aside from the obvious fact that the Gold bubble has burst and gold bugs need something else to hype up)
:. Ultimate Control Dedicated/VM Servers
Excerpt:
The Bitcoin-Mining Arms Race Heats Up
Bitcoin true believers will tell you they aren’t—or aren’t completely—about the money. They dream of building a system free from the narrow interests of governments or the wealthy, allowing individuals greater freedom to move their capital around, whether it’s to avoid credit card fees, shop anonymously, or evade repressive regimes.
The fear is that an organization with piles of capital and not much idealism can buy enough computational might to corner the market and box out the individual miner. That may already be happening: Websites such as Bitcoin Watch that track the total computing power of miners have started to show large, mysterious spikes in capacity.
Even some Bitcoin entrepreneurs think mining has become a sucker’s game. Fred Ehrsam is a former Goldman Sachs (GS) trader and co-founder of Coinbase, a Bitcoin startup making wallet software that allows people to trade and store Bitcoins, and which recently raised $25 million in venture capital. Ehrsam is committed to Bitcoin but pessimistic about underfunded prospectors making any money. “This is very much a fad that is going to die soon, if it’s not even dead already,” he says. But that’s not the same as saying individual mining will end. He suggests that the next generation of miners might run their computers for ideological purposes—to support the currency and be a disruptive force in global finance—even if doing so has become unprofitable.
“Mining was supposed to be a democratized thing, but it’s now only accessible to the elite of the elites,” says Chris Larsen, CEO of Ripple Labs, which has introduced a virtual currency called Ripple. It’s similar to Bitcoin but without the mining. (The company gradually hands out increments of the currency to supporters.) “Hordes of brilliant engineers are raising money for mining equipment that regular folks can’t compete with,” Larsen says.
--- end excerpt ---
at http: // www.businessweek.com/articles/2014-01-09/bitcoin-mining-chips-gear-computing-groups-competition-heats-up
And if you think venture captialists with serious engineers can't beat you, what happens if the NSA or China decides that it really, really isn't happy with what folks are buying with Bitcoins... and puts a real supercomputer, or *large* cluster, with tens of thousands of cores on Bitcoin mining? Would you like to trade that in for yuan?
mark
And isn't that how it works now?
Except you fail to take into account all the extra fees required for having a bank account in the first place!
Pretty much every online shop take credit cards.
Just about every offline shop does too. Credit cards can double as debit cards too, you just get your bank to link an account to it. Then you can use it anywhere.
Value has a specific definition, and it is not the same as price!
Indeed. Value does have a specific definition, and I never said it was the same as price. Value influences price, but they're not the same thing.
Value is, as I clearly stated earlier, cost of production + cost of distribution. That is its definition.
Perhaps according to Marx's long-discredited labor theory of value, but not according to any modern economic theory. The fact that you can easily spend a fortune making something that you have no use for and which no one else wants to buy (i.e., which has no value) should make that obvious. The value of a good, to you, is simply the most you would be willing to give up to get it; or if you already have the good, the least you would be willing to accept in trade before you would give it up. This is distinct from the price, which is what you actually gave up or accepted for the good at the time an actual trade took place.
The closest the real world approaches your definition is that no rational person knowingly produces a good which, at completion, will be valued less than the opportunity cost of its production and distribution. But people can be wrong, and goods which have already been produced are often worth less than their original cost.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
No. Upsidaisium.
You are welcome on my lawn.
That's a damned huge "if" there, and I don't see Bitcoin doing it.
The single highest intraday shift in Bitcoin's value was a drop of 76% on November 18, 2013 (MtGox prices), which would be the third worst hyperinflation in history (after Hungary in July 1946 and Zimbabwe in November 2008) if Bitcoin were considered a serious currency.
The long-term trend has been strongly deflationary, with monthly shifts as high as 500% (November 2013); for comparison, the worst a fiat currency has ever done was Japan's deflation of 2.2% in October 2009.
If Bitcoin is trying for long-term stability, it's got a long ways to go.
It may, but my guess is that the pattern is more likely to be one of oscillation again -- bitcoins are released incurring a price drop, then someone sees it as an opportunity and buys and it goes back; same as with hot stocks. Then again that's the same pattern with real currencies, but at a smaller scale. I think what prevents much volatility with real currencies is knowing that they are backed by (non-banana) states, which acts as sort of grounding. A large mass of currency and its users is a stabilizer, kind of like a large mass is very inert, and I can't see BC getting there without acceptance by a large entity, because large entities hate BC -- it seems designed against them.
actually try learning about Bitcoin before blindly quoting from some Forbes article. I suggest you read up on the ability to create contracts that ARE time sensitive and have the ability to release funds once the terms of the contract have been met. Bitcoin has a scripting language (purposely not Turing complete) and the protocol enables much more than you realize. Please stop spreading ignorant half truths.
But they can easily find out all that form the payment alone. Bitcoin is not anonymous.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
Except you fail to take into account all the extra fees required for having a bank account in the first place!
It costs nothing to open a bank account. Why would a bank object to taking money from you? The bank will happily run SQL INSERT with your name on it. The clerks are on salary, so there is no downside.
Some services of the bank may be free or not free, depending on what level of banking you want and how much money you operate with. This is not a concern, unless your cash flow is so bad that you have to drain the account every other day. This is not what happens when you trade internationally; it happens only when you have no job and a large family - hardly a good test case for BTC.
Thank you for the "nicely formulated". I do my best.
You are welcome on my lawn.
"Perhaps according to Marx's long-discredited labor theory of value, but not according to any modern economic theory. The fact that you can easily spend a fortune making something that you have no use for and which no one else wants to buy (i.e., which has no value) should make that obvious."
Pick up just about any college textbook on Microeconomics 101. It will explain to you that "value" has a specific definition, and a specific meaning, and that isn't it.
Quit bringing your psuedo-Marxist economic theories into it. This is plain old capitalist college microeconomics. Try reading about it sometime.
"The closest the real world approaches your definition is that no rational person knowingly produces a good which, at completion, will be valued less than the opportunity cost of its production and distribution. But people can be wrong, and goods which have already been produced are often worth less than their original cost."
But if you attempt to calculate value, you generally find that value will be approximately equal to cost of production plus distribution. This is true because of simple supply-and-demand. Unless the commodity in question is unusually rare, then if the value (its worth in trade for other commodities) much exceeds cost of production + distribution, more will be made and distributed, bringing the PRICE down. If, on the other hand, its worth in trade is much less than the cost of production + distribution, it will not be produced, bringing the PRICE back up because supply is reduced in proportion to demand.
It is easy to show this on a graph.
But the point I was getting at back in the beginning is this: when market PRICE is completely detached from VALUE, your market is irrational. When what a commodity is sold for is completely unrelated to any kind of actual value to society of that commodity (whether you want to go by that equation or some other measure of trade value), your market is subject to bubbles and other such potential disasters.
This is what I was referring to when I stated that market PRICE is not necessarily related to VALUE. When the price of something that is a classical scarce commodity like Bitcoin can fluctuate 50% in a single day, then your price is irrationally detached from value, and you should beware of investing.
Unlike https://en.m.wikipedia.org/wiki/Hawala, https://en.bitcoin.it/wiki/Myths transactions are NOT anonymous.
Casteism
I presume Mt. Gox pays good interest on the money that is locked up in their system?
How do you mean? I've used bitcoin to sign up for subscription sites before - all I had to do was choose a username and password and send the funds to a wallet address they sent which was unique to my session.
How do they go about figuring out anything else about me?
More info here, for example: http://anonymity-in-bitcoin.blogspot.ch/2011/07/bitcoin-is-not-anonymous.html and http://arxiv.org/abs/1107.4524
Bitcoin is not "identity-obvious", but unless extra care is taken, there is a good change that users can be identified and the history of coins traced. An anonymous currency would make that impossible or extremely hard. It seems Bitcoin makes it relatively easy, at least in the current implementation.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
A Ponzi scheme requires constant additional funds from new investors in order to stay afloat. Think Social Security (which is the only Ponzi scheme that gets a free pass.)
Bitcoin has no such need. Bitcoin only has the same need as any other currency - it needs to be traded. If that requirement makes it a Ponzi scheme to you, then every world currency is a Ponzi scheme.
Right. So every insurance is a Ponzi Scheme, every school is a Ponzi scheme, every street, airport...shall I go on?
No, a ponzi scheme is any system which rewards the originators by stealing from an exponentially growing contributor base (which cannot continue of course)
Social security needs only that EVERY PERSON input the same proportion of lifetime earnings for a working lifetime.
INSURANCE, not ponzi.
My default assumption is that no, they don't pay any interest at all. Presuming that Mt. Gox acts like a responsible financial institution is a bad idea. The reason they're backed up in the first place is that they did some probably-illegal shit and the U.S. government froze millions of USD. As a result, few U.S. banks will work with them any more, and the handful which do have put a very harsh limit on the rate at which money can be disbursed from the Mt. Gox account. Mt. Gox is basically passing these restrictions on to their customers. There's some question about how liquid the exchange is thanks to all those seized millions, which (last I heard) had not been unfrozen.
Keep in mind that the site's name originally stood for "Magic the Gathering Online eXchange". It was literally a site for trading collectible cards. (Not physical ones even, the virtual ones in the online version of the game.) It was strictly amateur hour then, and became the biggest Bitcoin exchange basically because it was one of the first to jump on board, not because it ever demonstrated real competence. Bitcoiner standards are really low, and also thanks to the circle-the-wagons mentality lots of them will defend it to the death in places like slashdot comments even though bitcoiner message boards are full of people complaining about Mt. Gox.
"Nothing stops you from transferring money..." - this may be true in the US, but many countries have regulatory controls preventing citizens from easily moving money out of the country (in some cases hard caps exist). The banks in these cases, have no option but to comply with the government's interference. Bitcoin provides a nice alternative in these cases.
In future, a large portion of the informal remittance market may turn to Bitcoin or other crypto currencies if the ability to exchange or purchase is developed sufficiently in the target countries by entrepreneurs.
That's my point. They didn't used to, now they do. Circumstances change, things become commonplace and accepted.
many countries have regulatory controls preventing citizens from easily moving money out of the country [...] Bitcoin provides a nice alternative in these cases
That "nice alternative" would be illegal.
The right thing to do is to demand that the law is changed (or the government.) It is never a good idea to break the law in hope that you won't be found. Governments interfere with many activities - they do not allow murder, they do not allow theft, they do not allow fraud... not everything that governments do is unreasonable, and citizens do not have a blanket permission to break laws if they are seen as inconvenient.
Those hard caps, for example, are intended to prevent export of capital out of the country while not interfering with small time business - travel or purchases. Why would that be desirable? Because if one Elbonian billionaire exports his capital, it won't be invested locally, and what then should 10 million Elbonians do? From the POV of the billionaire, it's certainly easier to just buy stock at one of the exchanges in NYC and be done, instead of buying factories and laying down the railways and modern roads. But the latter benefits Elbonia. The former benefits foreigners.
I don't remember a time in the last 15 years that this wasn't common place.
Maybe USA is just finally catching up with the rest of the world in that regard.