On the Practicalities of Counterfeit-Proof Physical Bitcoins

fsterman writes "What do you get when you cross physical one-way-functions, a distributed and secure datastore, with physical Bitcoins? A viable alternative currency for micro-nations and dictatorships with hyper-inflation." Whatever your thoughts on bitcoin, it's interesting to think about the infrastructure and production cost of the tokens we use as money more generally.

Comments

Why do dictactorships have hyperinflation?

[JoshuaZ]

A major reason why dictatorships (or for that matter sometimes non-functioning governments of other forms, e.g. the Weimar Republic) is because of economic pressures as well as undisciplined monetary policies where they try to solve problems by just printing more bills. Bitcoin makes that impossible, so the end result will be that those governments will either not use such a limited currency, or will use it up until the point they want to print more where they will then either abandon the cryptocurrency or declare that some other currency must have some exchange rate with the Bitcoins and print more of those. That's before we get to the issue that functioning governments have legitimate reasons to adjust the money supply. So the summary's claim that this would appeal to countries struggling with heavy inflation doesn't really make sense.

Re:Why do dictactorships have hyperinflation?

[NapalmV]

A dick-tatorship could easily mandate that all existing computers (including privately owned PCs, tablets, smartphones etc) shalt run mining software 24/24h, with the results to be surrendered to the government. In fact they could mandate that you run a specific, government made piece of software, on all your devices, or else.

Re:Why do dictactorships have hyperinflation?

[VortexCortex]

A major reason why dictatorships (or for that matter sometimes non-functioning governments of other forms, e.g. the Weimar Republic) is because of economic pressures as well as undisciplined monetary policies where they try to solve problems by just printing more bills.

Oh really? What evidence do you have that this isn't by design. You are now aware that there is more data for the null hypothesis against your claim of undisciplined practices.

Re:Why do dictactorships have hyperinflation?

[CrimsonAvenger]

So the summary's claim that this would appeal to countries struggling with heavy inflation doesn't really make sense.

No, this isn't about "appealing to countries". It's about "appealing to PEOPLE".

Bitcoin is (possibly) a useful alternative to the individual citizens of countries that are trying to solve economic problems by printing money.

It is not, on the other hand, a useful alternative for the governments that are just printing money....

Re:Why do dictactorships have hyperinflation?

[PopeRatzo]

Bitcoin is (possibly) a useful alternative to the individual citizens of countries that are trying to solve economic problems by printing money.

It is not, on the other hand, a useful alternative for the governments that are just printing money....,

No, you're right. In fact, since a great deal of what passes for "prosperity" in developed nations is the direct result of governments "just printing money".

Even if we could stop inflationary policies, I'm not sure most of us would want to, since it would mean a protracted worldwide economic downturn. For better or worse, the debt-based fiat currency is the air we breathe, economically. If you're going to buy into the notion of constant, ever-increasing growth, then you are stuck with the insanity of what our central banks have been doing.

Re:Why do dictactorships have hyperinflation?

[jythie]

Talk about a first world solution.... BTC is a toy for elites, a luxury experiment for groups of people who are already living on solid economic footing. If one is living in a dictatorship with hyper-inflation, chances are they are going to have bigger concerns and are not going to have access to the infrastructure BTC needs to work.

Re:Why do dictactorships have hyperinflation?

[elucido]

Bitcoin is already divisible so there are more Bitcoins than dollars. Mining will cause more to generate far into the future so what are you talking about?

Re:Why do dictactorships have hyperinflation?

[ShanghaiBill]

they try to solve problems by just printing more bills.

Keep in mind that the "problem" they are almost always trying to solve is "keeping themselves in power". These governments are trading long term economic growth for short term popularity.

Re:Why do dictactorships have hyperinflation?

[sourcerror]

or for that matter sometimes non-functioning governments of other forms, e.g. the Weimar Republic

They had to pay huge amounts of money for reparations. It had nothing to do with being non-functioning.

Re:Why do dictactorships have hyperinflation?

[Anonymous Coward]

It's an alternative to the dictator's coin. It's for the PEOPLE to escape the control of the dictator's monetary policy. It's not for the dictator.

Re:Why do dictactorships have hyperinflation?

[fsterman]

Did you read the article? Physical bit coins are a solution for people that don't have the infrastructure required to make BTC work.

Re:Why do dictactorships have hyperinflation?

[Jane Q. Public]

Bitcoin makes that impossible, so the end result will be that those governments will either not use such a limited currency, or will use it up until the point they want to print more where they will then either abandon the cryptocurrency or declare that some other currency must have some exchange rate with the Bitcoins and print more of those.

This, except for that very last part. It isn't possible to tie a non-inflationary currency via a fixed exchange rate to another currency, then inflate that other currency. That is a contradiction. You can do one, or the other, but not both.

Most of the time, the governments in these hyper-inflationary states are printing more money in order to spend more money or to save their own asses, at the peoples' expense. (Just as, to a lesser degree, the U.S. government has.) So they would simply not allow the non-inflationary currency, or abandon it when they saw it didn't suit their purposes.

It's far past time we kicked these adherents of failed and discredited Keynesian theory out of government economics. Sadly, Janet Yellen, new Fed chief, is a staunch Keynesian and a fan of the "new" Phillips Curve, which was demonstrated pretty thoroughly to be wrong about 20 years ago.

We already have stagflation under Obama: high inflation (government inflation figures are just plain B.S.) and high unemployment. If Yellen has her way, we could have high inflation, high unemployment, AND high interest rates.

Be afraid. Be very afraid.

Re:Why do dictactorships have hyperinflation?

[Jane Q. Public]

"Even if we could stop inflationary policies, I'm not sure most of us would want to, since it would mean a protracted worldwide economic downturn."

If I may say: I think you've been listening to too many Keynesian economists. The idea that inflation is good is just so much snake oil. The people it benefits are government, banks, and Wall Street. It harms just about everyone else.

HEALTHY markets are zero or negative inflation. Take computer-related equipment: every year, you get more bang for the buck (even when you consider they're inflated bucks). That's called deflation.

For nearly 300 years, inflation was essentially zero in North America, and we had a healthy economy (arguably the healthiest in the world). That changed when the government started meddling. It is ridiculously easy to demonstrate this.

I don't share your stance, which seems overly pessimistic to me. We need to end the Fed, and re-instate a hard money standard. Just those two things would fix many of our ills.

(Re, the Fed: why should we pay interest on every dollar printed? That's just one of the ills it introduced.)

Re:Why do dictactorships have hyperinflation?

[Jane Q. Public]

"Bitcoin is already divisible so there are more Bitcoins than dollars. Mining will cause more to generate far into the future so what are you talking about?"

Just no.

First, saying "Bitcoin is already divisible so there are more Bitcoins than dollars" is like saying "Dollars can be divided into pennies so there are more dollars than Deutschmarks." It doesn't make any sense.

Bitcoins are divisible in the same sense dollars are: you can divide them into fractions (like quarters, dimes, pennies). That is all. The only difference is that Bitcoins can be divided more easily into smaller parts than dollars. It goes far beyond 100ths.

As for mining: the way Bitcoins were divised, there will forever only be so many Bitcoins. Mining gets harder over time, in the sense that fewer Bitcoins will be mined for the same amount of effort, until it gets (quite literally) to zero. And that limit is not as far off as you seem to think. "... cause more to generate far into the future" is just incorrect.

Re:Why do dictactorships have hyperinflation?

[PopeRatzo]

If I may say: I think you've been listening to too many Keynesian economists. The idea that inflation is good is just so much snake oil. The people it benefits are government, banks, and Wall Street. It harms just about everyone else.

Of course you're right, but if you think that Keynes says that "inflation is good" then you haven't read him very closely.

For nearly 300 years, inflation was essentially zero in North America, and we had a healthy economy

And then the Europeans came.

That changed when the government started meddling. It is ridiculously easy to demonstrate this.

Yes, that changed, and brought the greatest economic expansion and shared prosperity in all of human history.

You want to bring a continent to superpower status in 200 years? Then you better have these policies to goose the economy, because a "hard money standard" ain't gonna get you there.

The problem is not just the Fed, but who the Fed believes they serve (hint: it's not the people).

If you want a global economy (and I don't, by the way), then you need central banking. If you want a "lazy-fare" "free market" supply-side capitalist economy, then you need the post-Greenspan Fed.

I believe that the purpose of the Fed is the purpose of the US economy and of economic policy for the last 30 years: to redistribute wealth upward. And it's doing a great job toward that execrable goal.

Re:Why do dictactorships have hyperinflation?

[CrimsonAvenger]

"lazy-fare"

Laissez faire".

See me earlier comment about trying to spell things if you've only heard the word and not read it.

Re:Why do dictactorships have hyperinflation?

[Jane Q. Public]

"Of course you're right, but if you think that Keynes says that "inflation is good" then you haven't read him very closely."

It isn't that. But Keynes was an interventionist, and government intervention deliberately keeps inflation well into positive figures. So it's "Keynesian" only in an indirect sense. Interventionism was obviously a pre-Keynes idea but he adopted it as part of his gospel.

"And then the Europeans came."

Haha. No. I was referring to historical inflation rates in America, colonial times to present.

It wasn't until after the creation of the Fed, and significant government intervention, that inflation started to rise. About that chart: from 1665 to 1913, inflation was essentially flat except for little blips around wartime when the government borrowed money to finance the wars (the labeled boxes). But it always went back to normal afterward. Until 1913 that is. The dashed lines mark 1913 (creation of the Fed and direct government-Fed intervention), 1934 (internal U.S. gold standard abandoned) and 1971 (Nixon tosses out the Bretton-Woods system, which was effectively a gold-standard-by-proxy).

The point (backed by evidence) being: inflationary monetary policy benefits government and investment bankers. However, it also provably eats away at productivity and savings, which are measures of "true" wealth in an economy.

"The problem is not just the Fed, but who the Fed believes they serve (hint: it's not the people)."

Agreed. But you won't change that, because of who the Fed is. The chair might be appointed by the president, but the Fed itself consists of private investment banks, partly owned by foreign interests. It has never been their genuine intent to "serve the people". Louis McFadden was chair of the United States House Committee on Banking and Currency from 1929 to1931. This is what he said about the great market crash of '29:

"The Great Depression was not accidental. It was a carefully contrived occurrence. International bankers sought to bring about a condition of despair, so that they might emerge the rulers of us all."

If anybody should have known, it would have been him. By the way: after this pronouncement to Congress, McFadden was shot at (according to witnesses) on at least two different occasions. A few years later he died of poisoning after attending a banquet.

"Yes, that changed, and brought the greatest economic expansion and shared prosperity in all of human history."

No, it didn't, if you are talking about the changes since 1913. Most economists today believe that historically, government intervention has been a drag on the economy, not a benefit. Even "mainstream" economists, not just Austrians, have come to accept this, at least for the period of 1920s-1930s. As for the economy after that: you certainly cannot credit the mainstream (largely Keynesian or "neo-classical") economists who advised government. They pretty consistently got things wrong. Often 180 degrees wrong.

Don't make the "correlation=causation" mistake. It is as likely, or perhaps even more likely, that the government could afford to intervene more, as the economy expanded. Not the other way around.

"If you want a global economy (and I don't, by the way), then you need central banking."

I don't either, but I still disagree. You don't "need" central banking. But central banking certainly makes it easier to force a "global economy" on people, whether they want it or not.

"If you want a "lazy-fare" "free market" supply-side capitalist economy, then you need the post-Greenspan Fed."

"Supply-Side" is a discredited Keynesian economic principle espoused by Art Laffer. Many people may not realize this, but Laffer is a dyed-in-the-woo

Re:Why do dictactorships have hyperinflation?

[Anonymous Coward]

This, except for that very last part. It isn't possible to tie a non-inflationary currency via a fixed exchange rate to another currency, then inflate that other currency. That is a contradiction. You can do one, or the other, but not both.

Governments can try to force people to take an exchange rate within their boarders. For example the USA government could say it's illegal to accept more one dollar for every euro. Now it would be a fucking disaster and every bank would instantly sell their euro for dollars abroad if possible. Otherwise, they would just take the hit and euro would quickly become unavailable in the USA. Also, it would probably hurt the US dollar. If you want see more about this type of insanity. Look at the collapse of the pound sterling.

It's far past time we kicked these adherents of failed and discredited Keynesian theory out of government economics.

While am not a fan of Keynesian economics, I would like to point out that his theories are not understood by almost anyone "advocating" it. The first problem is that Keynes what governments to save money in good time to spend in bad times. You can see that idea simply isn't popular with any government. 2nd the spending needs be made to encourage private business to spend money and not by simply inflating the currency. I am going to say the main problem with Keynes was that he though the government wanted to act sanely.

Re:Why do dictactorships have hyperinflation?

[Jane Q. Public]

I am pretty sure he was making a pun. Not a typo.

Re:Why do dictactorships have hyperinflation?

[Jane Q. Public]

I'm tossing this in because I think you might find it amusing. I stumbled across this on the last page of the Nov. 4 2013 issue of TIME. It is a recent interview of Greenspan, apparently motivated by the imminent release of his new book.

Q: So how do you propose we measure something as irrational as fear?
"I prefer to call it nonrational. You measure it indirectly by looking at spreads of interest rates, both by credit rating and by the maturity of the bond. Today, 30-year U.S. Treasury bonds yield more than 5-year notes by the greatest margin in history. Long-lived assets are very heavily discounted. It should be a normal recovery. But it is not, because of the high degree of uncertainty."

[If I were giving the interview, I'd ask how we could be anything but uncertain with Obama at the helm.]

Q: Knowing what you know now, what you have done differently during your time as chairman of the Fed?
"It's not the type of asset -- subprime mortgages or stocks -- it's whether it's leveraged. I always knew debt was important. If I could go back and recalibrate my psyche and fully understand how toxic debt really is, that would have been very helpful."

[As government goes vastly further into debt than ever before... But more to the point: how could he really not know that over-leveraging is bad? He honestly thought over-leveraging some assets was okay, but not others? Sheesh. And this guy was Fed chair.]

Q: Is your book suggesting that the way out of the economic malaise is to cut social benefits?
"... Part of the way out is to slow down benefits. Very much to my surprise, benefits are crowding out savings of the society; the data are very clear in this regard."

[Very much to his surprise? What? Who did not know this? Some of his comments are really quite amazing to me. In my opinion, this illustrates just how ridiculously out-of-touch D.C. has been for a long time. Too long.]

Q: Your write that one thing that would have prevented the crisis was expanding the capital banks had to hold in reserve. Do you have a figure in mind?
"Yeah -- whatever you think of, it's higher. The critical issue is contagion. You can have a financial system with banks making all kinds of horrible loans, but if they're well capitalized, all of the losses go to the shareholders."

Well. Welcome to Microeconomics 101, Mr. Greenspan. I only wish it had not taken 26 years for you to catch up with just about everybody else who passed their sophomore year in college.

But here is one I can get behind:

Q: So you change your opposition to banking regulation?
"Of course. I was wrong. You have to regulate the system. My concern about regulation is that it's more vindictive than curative."

Re:Why do dictactorships have hyperinflation?

[Jane Q. Public]

"Governments can try to force people to take an exchange rate within their boarders."

That's not the issue here. The point is that it's a logical contradiction.

Let's say X is a constant, and is always equal to 5. It is not logically (or physically) possible to say "From now on, Y will be equal to X. But we're going to change the value of Y as we see fit."

It just doesn't work. It's not possible.

While am not a fan of Keynesian economics, I would like to point out that his theories are not understood by almost anyone "advocating" it.

Well, here we agree.

I am going to say the main problem with Keynes was that he though the government wanted to act sanely.

No doubt.

Re:Why do dictactorships have hyperinflation?

[Jane Q. Public]

To clarify my example, as related to GP's comment:

Since X is relatively constant, you can either tie the value of Y to X (an exchange rate), or inflate the value of Y. But not both.

Re:Why do dictactorships have hyperinflation?

[Aristos Mazer]

> high inflation (government inflation figures are just plain B.S.)

Citation needed. I know of no economic source, government or otherwise, that demonstrates this. Can you provide sources?

Re:Why do dictactorships have hyperinflation?

[PopeRatzo]

See me earlier comment

See my earlier comment about the proper way to modify pronouns to show possession.

I was making a joke with the "lazy-fare" son. It's like "welfare", except for lazy rich people who want profits without actually producing anything of value. See, "rent-seeking".

Re:Why do dictactorships have hyperinflation?

[PopeRatzo]

There is no such thing as a "free market" in which the government does not intervene. Remember, markets do not exist in nature. They are only a function of laws. Laws to enforce contracts, to address grievance, to assign public lands to corporate purposes, to make sure the product to you buy is the product you were sold.

The Keynes question is the extent to which government can intervene at the meta level. The problem is, Keynes preceded globalization, so what's being done in his name today has little to do with his theories. Same thing happened to the theories of Marx in the 20th century. People used his name to do a lot of crazy shit and it went bad.

And now, we're going to see the same thing happen to the theories of the Austrian guys. Maybe the problem is the fact that economics is the softest of sciences and it's getting softer by the day.

Yes, we agree, but I'm less able to be objective or make good arguments because I'm so pissed off. It didn't have to go this way, and we're doubling down on all the wrong things. And it's impossible to find anyone at the top, either economically or politically, who's willing to admit that they are part of the problem. It's always, "poor people just have it too damn good" or, "we need more people working more hours for less pay". We used to be citizens, and now we're a "labor force", imperfectly suited to the desires of the 1%. This can't end well.

Re:Why do dictactorships have hyperinflation?

[PopeRatzo]

My concern about regulation is that it's more vindictive than curative.

The problem is, that any regulation that would really be curative would be seen by the 1% as "vindictive".

When you look at the Fed's behavior over the past 30-plus years, you have to ask yourself, "Who benefits?"

The answer is not, "those poor people getting benefits".

There have been some very big winners over the past thirty years. Big, big winners. And they're not people collecting social security and they're not people getting food stamps and they're not people graduating college.

When you answer the question, "Who benefits?" from the insane policies of the Fed and federal regulators, you will also have the answer to, "Why did it happen this way?"

Who is Mrs Greenspan? Who are Bernake's pals? Who has lunch with the governors of the Fed? Who is in the pages of Fortune magazine? Who is your enemy? (hint: Your enemy is not a member of a public employees union, or any kind of union, and does not receive food stamps or unemployment or social security or disability or Obamacare . Your enemy is not walking a picket line outside of a Wal-Mart or sitting in an Occupy drum circle or a Tea Party townhall.)

Re:Why do dictactorships have hyperinflation?

[DerekLyons]

A major reason why dictatorships (or for that matter sometimes non-functioning governments of other forms, e.g. the Weimar Republic) is because of economic pressures as well as undisciplined monetary policies where they try to solve problems by just printing more bills. Bitcoin makes that impossible, so the end result will be that those governments will either not use such a limited currency, or will use it up until the point they want to print more where they will then either abandon the cryptocurrency or declare that some other currency must have some exchange rate with the Bitcoins and print more of those.

Actually, even non-dicatorships and fully functioning governments will come under pressure to abandon Bitcoin - because of the deflationary nature inherent in it. That places sharp limits on how large an economy it can support. This is also why pretty much everyone has moved away from the gold standard and hard money and onto fiat currency. The modern world economy simply could not exist if money was tied solely to how much shiny metal was sitting in a vault. Nor could it long survive being tied to a limited supply of nano-BTC.

Re:Why do dictactorships have hyperinflation?

[Jane Q. Public]

Your enemy is not a member of a public employees union, or any kind of union, and does not receive food stamps or unemployment or social security or disability or Obamacare.

Well, as even Greenspan acknowledged, they are A problem. The negative effects government benefits have had on the economy are nothing short of horrific. But they are not THE problem, by any stretch of the imagination. On the rest of that we are agreed.

(In truth I have some issues with public employee unions, too... I have seen what they have done to our local government and economy first-hand, and I have done quite a bit of reading on the Wisconsin debacle. But that's a discussion for another day.)

Re:Why do dictactorships have hyperinflation?

[PopeRatzo]

The negative effects government benefits have had on the economy are nothing short of horrific.

They may only be "negative effects" if the purpose of an economy is to produce the greatest profits for the 1%.

Re:Why do dictactorships have hyperinflation?

[Jane Q. Public]

"They may only be "negative effects" if the purpose of an economy is to produce the greatest profits for the 1%."

Not so. As Greenspan pointed out, government "benefits" have replaced savings for much of America. That is an astoundingly bad thing.

The true wealth of a nation, in a broad sense, can be measured by its production capacity + savings. Today, our savings are shot and production capacity has been one of the lowest points since pre-WWII. You can thank government monetary policy (inflation) for much of the savings loss, and traitor corporations that have shipped much of the production overseas for a lot of the dismantling of our own production capacities.

That's finally reversing, but it has been slow.

Re:Why do dictactorships have hyperinflation?

[Vitriol Angst]

discredited Keynesian theory
Citation needed. Preferably from some non-hack promoting Globalism, within a libertarian think tank promoting economic models that parrot failed third world nations and free market pixie dust.

The "stagflation" under Obama is due to not taxing people with money to play for all these government services, and not forcing companies to invest profits.

If this government printed a lot of money and handed poor people -- that would create demand because they'd have something to spend. The OPPOSITE is creating the economic malaise; printing lots of money and handing it to banks. The only reason it has some settling effect on the markets is because they've got trillions of dollars to depreciate from the 2008 bust due to speculation with the Credit Default Swaps.

We aren't implementing Keynesian theory right now -- it's as if you were blaming Unions for keeping American non-competitive, while we've had a 900% increase in productivity and no such increase in wages. You are whipping a dead horse that got fatally wounded in the 1980's.

It's as if you were saying high taxes and limits on large companies were causing us not to have jobs. What about our current market isn't 100% in line with what Corporatists suggested?

Re:Why do dictactorships have hyperinflation?

[PopeRatzo]

As Greenspan pointed out, government "benefits" have replaced savings for much of America.

How do you know that the reason the savings rate has gone down since the '70s is benefits? And why would you take the word of someone who has been so wrong about everything else?

And savings rate is higher today than it was in the mid-2000s.

You can thank government monetary policy (inflation) for much of the savings loss

So, it's not because of benefits, is it? Maybe benefits are just taking up some of the slack in people's lives as monetary policy erodes their savings and ability to save.

And don't forget, look at who has benefited from these policies. Not the "savers", that's for sure. You might also say that savings have suffered because of the fact that increases in income among the 1% (more like the 0.2%) have eroded savings. Why save if you're always getting huge raises?

Re:Why do dictactorships have hyperinflation?

[mythosaz]

With a potential of 21,000,000 bitcoins, each divisible into 100,000,000 satoshi, that gives us something like 300 thousand satoshi per man woman and child on the planet.

Even if half of all bitcoins are destroyed in hard drive crashes, and the world population doubles, there's still over 100 thousand satoshi per man woman and child on the planet.

Compare this to dollars, all 1.23T of them in circulation, which works out to only 17,571 pennies per person on the planet.

Re:Why do dictactorships have hyperinflation?

[wolfemi1]

It's far past time we kicked these adherents of failed and discredited Keynesian theory out of government economics. Sadly, Janet Yellen, new Fed chief, is a staunch Keynesian and a fan of the "new" Phillips Curve, which was demonstrated pretty thoroughly to be wrong about 20 years ago.

Wait, what? The "new" Phillips curve has only been around since 1995, so I'm not sure how it could have been demonstrated to be wrong before then.

http://en.wikipedia.org/wiki/P...

We already have stagflation under Obama: high inflation (government inflation figures are just plain B.S.) and high unemployment.

What on earth makes you think we have high inflation?

Re:Why do dictactorships have hyperinflation?

[wolfemi1]

HEALTHY markets are zero or negative inflation. Take computer-related equipment: every year, you get more bang for the buck (even when you consider they're inflated bucks). That's called deflation.

No, no, no. You cannot parcel up "deflation" and "inflation" on a per-market basis, then use that to determine the strength or weakness of a currency.

A deflationary currency is a bad thing; you simply have to remember that an economy thrives on people buying things from each other, and breaks down when they stop doing so. It's a bit more complicated, obviously, but primarily you need to be concerned when people have an incentive not to do so.

Deflation causes a breakdown in this in that it becomes acceptable to get "returns" (i.e. increase in worth) for a currency by simple stuffing it in a mattress. This is very harmful, not least because it's a positive feedback loop; the more people stuffing currency in their mattresses, the smaller the money supply, and the faster the currency deflates. See the Great Depression for an example.

For nearly 300 years, inflation was essentially zero in North America, and we had a healthy economy (arguably the healthiest in the world).

If by "essentially zero" you mean "inflation and deflation of double-digits year over year", I suppose that's half-true. It doesn't make for a stable economy, though. And just for kicks, you should look for all of the "Panics" that happened in 19th century America, you might be surprised at the number and their severity.

We need to end the Fed, and re-instate a hard money standard. Just those two things would fix many of our ills.

This is very, very much not the case. Why do you think the "Great Moderation" happened? Why do you think that not a single nation in the world is using a "hard money" standard anymore?

Re:Why do dictactorships have hyperinflation?

[wolfemi1]

Let's say X is a constant, and is always equal to 5. It is not logically (or physically) possible to say "From now on, Y will be equal to X. But we're going to change the value of Y as we see fit.

I think there's an error, in that you're not using a consistent definition of "value". You can offer an official EXCHANGE RATE of, say, dollars to Argentine Pesos (and that's not really a random example), and then inflate a currency. In the long term, this doesn't really WORK, since everyone who can will just buy dollars with pesos and bankrupt your exchange office because there's no equivalent trade back to pesos, but it's not tautological.

Re:Why do dictactorships have hyperinflation?

[Jane Q. Public]

"How do you know that the reason the savings rate has gone down since the '70s is benefits?"

I didn't claim one caused the other. Only that benefits have largely replaced savings."Crowding out" doesn't necessarily mean one causes the other. It just means that one has been replacing the other. Completely leaving aside any speculation about what the cause is, the effect is still a bad thing.

"And why would you take the word of someone who has been so wrong about everything else?"

Greenspan didn't create the statistics, he just mentioned them. But since you brought it up, yes, part of my point was: why is Greenspan just now learning these things? He was chair of the f*ing Fed!

"And savings rate is higher today than it was in the mid-2000s."

But look at it over a longer time frame.

"So, it's not because of benefits, is it? Maybe benefits are just taking up some of the slack in people's lives as monetary policy erodes their savings and ability to save."

I didn't claim it was "because of" benefits. But the fact is, benefits are way up, and savings are way down.

"And don't forget, look at who has benefited from these policies. Not the "savers", that's for sure."

I'm not disputing that. It was part of my point.

Re:Why do dictactorships have hyperinflation?

[Jane Q. Public]

To clarify what I was trying to say:

I can see how you might have interpreted my comments as saying that benefits have been "the cause" of savings going down. That may not be so. Or it may. I don't know. But that isn't what I meant to say.

Only that when benefits replace savings, you have a problem.

But aside from any effect they may -- or may not -- have on savings, government benefits simply do not -- cannot, in fact -- have a positive effect on the economy. Every $1 dollar of government benefits costs at least $2 of taxpayer money. And most taxes are paid by the middle class.

Do you expect Federal employees to work for free?

Re:Why do dictactorships have hyperinflation?

[Jane Q. Public]

"I think there's an error, in that you're not using a consistent definition of "value"."

I'm using the classic macroeconomics 101 definition of "value": production cost + distribution cost. This can also be defined as "what it is worth in terms of other common commodities". They are very similar.

So Bitcoin has a relatively fixed "intrinsic value" in economic terms. (Ignore "stock market value", which is an unrelated concept. In economic terms that is really a price, not a value.)

Yes, Bitcoin value changes, but only by a little over time. As such, it works like an anchor, much like gold dollars used to.

You can't set an exchange rate between your currency and something of fixed value, then inflate your currency. It just doesn't work. You'd be creating "value" (production) out of thin air. It isn't possible.

But yes, in the sense you mean, you CAN do it... for a short time, until everyone buys out all the goods and production capacity in your country and leaves you with nothing but worthless paper money.

Re:Why do dictactorships have hyperinflation?

[Anonymous Coward]

Haha. No. I was referring to historical inflation rates in America, colonial times to present.

The post-WWII rise and the use of a linear scale is throwing your perception off. If you re-scale the graph such that the vertical axis is 0-10, or re-plot on a log scale, it becomes obvious that the wartime "little blips" represent annual inflation rates of 50%-100%, and the noise on the graph represents year-over-year price changes of as much as 20%.

Specie-backed money is good for keeping long-term inflation down, but is a short-term disaster; conversely, fiat money is predictable in the short term, but leads to long-term inflation.

Re:Why do dictactorships have hyperinflation?

[Anonymous Coward]

With a potential of 21,000,000 bitcoins, each divisible into 100,000,000 satoshi, that gives us something like 300 thousand satoshi per man woman and child on the planet.

Even if half of all bitcoins are destroyed in hard drive crashes, and the world population doubles, there's still over 100 thousand satoshi per man woman and child on the planet.

300K / 2 = 150K
150K / 2 = 75K
75K is less than 100K, you fucking innumerate dumbass

Compare this to dollars, all 1.23T of them in circulation,

I have no idea where you got that number from but even without trying to google it I'm completely certain that $1.23T is only the number of physical dollars in circulation, you fucking dumbass. The dollar is both a digital and physical currency.

which works out to only 17,571 pennies per person on the planet.

There is no fundamental law of the universe which says that pennies are indivisible. We've divided them before, we can do it again if we need to. Read this, imagine a guru slapping you upside the head for being a fucking dumbass, and be enlightened:

http://en.wikipedia.org/wiki/Half_cent_%28United_States_coin%29

Note that we're actually long overdue for discontinuing the penny -- when the halfpenny was removed from circulation it was worth about $0.10 in today's dollars.

But wait, I haven't finished mining your post for dumbassery! You bitcoiners are truly an inexhaustible supply of stupid. Here's the thing: Nobody actually has a desire to replace every currency in the world with the USD, but even if everyone on the planet decided to do that, we could make more dollars as needed in order to keep the dollar's purchasing power stable. This would result in a lot more than 17571 pennies per person by the time it was all said and done. Unlike bitcoin, the USD doesn't have an arbitrary fixed cap pulled from the ass of an anonymous dumbass libertarian ideologue. Nor is its creation rate constrained by an arbitrary mathematical function pulled from the same ass. Yay dollars, they're way more flexible than bitcoin! If anybody actually wanted one world currency, dollars would be a much better choice than bitcoins.

If only we could have counterfeit-proof

[Anonymous Coward]

Slashdot, so devs couldn't create fake Beta versions of it.

Jeopardy!

[Anonymous Coward]

category: clusterfucks for $200

Metro, Unity, GNOME 3, Beta.

Production cost

[NapalmV]

I don't get it why they keep saying that "if 1 penny costs 2 pennies to mint then we shouldn't make them anymore". Unless the government looks at "printing money" as a source of revenue. Which they shouldn't if you're looking at money as a transaction facilitator and nothing else. What happens is that it costs us 2 penny to mint 1 penny coin that will subsequently change hands via payments several million times before it gets too degraded (physically) and has to be retired. Thus the minting cost per transaction for that penny is actually very small. What you're really paying is the cost of the convenience of having pennies available for transactions, and judged per transaction it ain't looking that bad.

Re:Production cost

[Anonymous Coward]

Because if it takes two pennies to make one penny, you're going to run out of pennies pretty fast, mister smarty-pants.

Fuck pennies, what use are they? The real problem is that the cost of using them exceeds the rounding errors they fix in the transactions for which they are used. They're at best a beta currency anyway.

Re:Production cost

[justthinkit]

Good point. Let's dig a little deeper, shall we? The Fed *pays* for the minting of coins, whereas the Fed, a private corporation, gets to print their own paper money, that they promptly loan out. So one thing costs the Fed money, the other makes them untold trillions. Which one do you think they are trying to limit? More...

Re:Production cost

[alexander_686]

By issuing money the Federal government is issuing debt at 0%. It is called seigniorage. You can look it up in wiki. For most major economies it works out the be less then a rounding error, so no big deal. Here is a article.

http://www.npr.org/blogs/money...

No, the real concern is that when it takes 2 pennies to mint 1 pennies mining companies will order lots of pennies and melt them down for the copper (or zinc nowadays).

Re:Production cost

[NapalmV]

The reason that 1 penny got to cost 2 pennies to mint is inflation, mr. smarty anonymous. Keep doing it and soon 1 dollar will cost 2 dollars to mint and so on. In the long run you would declare all and any money as being nothing but useless and just a rounding error.

Re:Production cost

[NapalmV]

Production cost = material cost (metal) + manufacturing costs (power, tools, wages etc). As long as material cost 1 penny nobody will melt it. OTOH you can also make such melting a criminal offense, as to raise the costs of doing it with some 25 years in jail.

Re:Production cost

[cheesybagel]

You can change the materials used to mint the coins or use smaller coins. Or bigger denominations. That's what happens.

Re:Production cost

[bondsbw]

Because taxes. If it costs $20 million to mint $10 million of coins, then tax revenue is in the negative $10 million and the government has to tax more to make up for it.

The replacement would likely be to round all transaction totals the nearest nickel. If the penny is changed hands millions of times, then replacing it with the nickel will result in similar usage. It's not like people just suddenly stop paying for things.

The penny typically doesn't change hands that often anyway.[citation needed]

Re:Production cost

[QuasiSteve]

Thus the minting cost per transaction for that penny is actually very small. What you're really paying is the cost of the convenience of having pennies available for transactions, and judged per transaction it ain't looking that bad.

Good, good, thinking beyond just the material value vs face value issue - very good.

Now calculate the costs involved with issuing them, recycling them, transporting them, handling them, the cost per transaction in using them because cashiers have to dig them out of the drawers, the value of time wasted by people waiting in line as somebody in front of them who has received those pennies and goshdarnit will spend four them again to make exact change for that $9.99 item (convenience, you say...), cleanup from pennies wasting away into the environment, and material loss that could otherwise have been used for more appropriate purposes.
And then of course counter that with the reduced happiness in some people's lives as they can no longer fill entire jars with pennies and reduced income from places that run 'wishing wells' which tend to be another dumping ground for pennies.

Maybe then we can actually start looking at the cost of a penny in an all-encompassing manner. Or we can just accept that the penny in general is a dumb idea at this - time no matter how much any associated costs are stretched out over the lifetime of a single penny.

Re:Production cost

[jythie]

I think it is less about production cost, and more people melting down pennies when the metal is worth more then the coin.

Re:Production cost

[NapalmV]

You may also want to look at your electronic bank account in the same manner. It's a database record somewhere that needs continuous power, regular maintenance/backups and equipment replacements etc. My wild guess is that in the long run storing 1 penny coin in a jar is less expensive than a 1 penny balance bank account. Of course if your balance is much bigger than just 1 penny then things start to change, but nothing stops you to fill the jar with $100 bills either. Keeping the penny too.

Re:Production cost

[pla]

I don't get it why they keep saying that "if 1 penny costs 2 pennies to mint then we shouldn't make them anymore".

In the case of pennies and nickels, this has nothing to do with the actual cost to make them so much as their inherent value in metal content.

Yes, melting down pennies to sell for scrap breaks the law. Now look at a random handful of pennies and see how many you can find that predate 1982 (when they went from pure copper to mostly zinc). If you don't think we have people scrapping them for copper, I have a bridge to sell you.

The same thing happened in 1964 when our dimes-and-up stopped containing any silver (nickels always used copper/nickel, except during WWII) . Although you'll occasionally (rarely!) get lucky and find one mixed in with your change, pre-1964 change has effectively ceased to exist in circulation.


That said, as far as I can tell the whole "costs more to make" arguments counts as just a rationalization. People hate pennies, and just want them gone. This has nothing to do with value or cost or the phase of the moon - Even in my youth, a few decades ago, a penny would only buy you a single piece of the crappiest candy. Today, even that crappy candy costs a quarter. So why the hell do we keep creating a coin that only has use in the aggregate? Ditch the worthless lump of zinc and stick with coins that have actual buying power.

People do two things with pennies - Kids thrown them in jars in the closet, and old ladies tie up the checkout line trying to make exact change. Factoid of the day: If you saw a parking lot covered in "free" pennies (say one per square foot), you would need to pick one up every five seconds just to make minimum wage. By comparison, doing crappy agricultural piecework like strawberry harvesting, if you could work at that same rate, you'd make 21x as much for the same type of effort.

Re: Production cost

[tom229]

You'd be right except the government doesn't print money, the Federal Reserve does. The government prints T-Bills and the private for profit Federal Reserve isn't going to buy those at a loss.

Re:Production cost

[QuasiSteve]

nothing stops you to fill the jar with $100 bills either

A Benjamin jar.. I like that! But only if the U.S. adopts polymer notes.

And yes, it tends to change rather slightly when it's no longer about a single penny :)

Re:Production cost

[noh8rz10]

t's not like people just suddenly stop paying for things.

I would stop paying for things. Considering I pay for everything in pennies currently, and don't use CCs etc, my system works for me and I'm not going to change it.

Re:Production cost

[KingOfBLASH]

How about there comes a point where it makes no sense to continue subdividing money? In parts of europe registers round to the nearest 0.05 EUR so pennies are not seen anymore. Sometimes it's in your favor and sometimes it's not -- but on average you are flat (since rounding is basically random).

Really it only makes sense to mint / print money that actually makes a difference in transactions.

And if you don't like my argument, pray tell why the Hay Penny doesn't exist anymore? Maybe we should bring it back as well, since we shouldn't discontinue units of currency too small to matter?

Re:Production cost

[Bryan Ischo]

Not sure whether this supports your argument or refutes it; mostly I think it's just anecdotal evidence that doesn't really say anything either way.

However, just for fun, I grabbed every penny I could easily find in the house and counted those older than 1982.

Result:
Pre-1982: 17
Post-1981: 110
Undentifiable: 1 (had been flattened by one of those flatten-a-penny amusement machines with a Sydney Opera House scene)

It didn't take long before I learned to identify the pre-1982 pennies pretty much on sight (although I double-checked the date on all pennies, I didn't rely on visual inspection of the appearance). The copper ones were all uniformly brown, in a way that was distinctive even from the few post-1981 pennies that were browned (most post-1981 were still shiny to varying degrees).

Re:Production cost

[Bryan Ischo]

When I lived in New Zealand I found their approach most sensible. Cash payments are always rounded to the nearest 10 cents.

Of course, they don't have dollar bills, only dollar coins (and two dollar coins), which is ridiculously annoying - you end up with a pocketful of heavy, clunky coins when bills would have been easier to deal with.

Re:Production cost

[Jane Q. Public]

" The Fed *pays* for the minting of coins, whereas the Fed, a private corporation, gets to print their own paper money, that they promptly loan out."

The Fed doesn't mint coins. The U.S. government does. Look it up.

Re:Production cost

[justthinkit]

The Fed pays for coins in that (1) they don't get free money handed to them and (2) they can't accrue interest on coins in circulation.

My point, that I recalled from memory slightly incorrectly, apparently, is that coinage is a tiny, incidental business. That all involved want to limit.

Paper money, on the other hand, is what national debt dreams are made of.

Re:Production cost

[Jane Q. Public]

"The Fed pays for coins in that (1) they don't get free money handed to them and (2) they can't accrue interest on coins in circulation. "

Well, that's kind of like saying that Wal-Mart "pays" for Kroger. It's not really true. They're simply unrelated.

"My point, that I recalled from memory slightly incorrectly, apparently, is that coinage is a tiny, incidental business. That all involved want to limit. Paper money, on the other hand, is what national debt dreams are made of."

We definitely agree on this. But I would throw in that certain interests want to limit coinage because it interferes with their inflationary goals. It may be a relatively "incidental business" but it throws a wrench into the works of fiat money.

Or it would, anyway, if the coins were real money in themselves (gold, silver, etc.) like they used to be.

Re:Production cost

[khallow]

Incidentally, there are some copper 1982 pennies out there. They actually did the switch to copper plated zinc in the middle of the year. You can visually tell the two apart because the copper pennies have larger dates than than the copper plated zinc.

Re:Production cost

[Anonymous Coward]

What you're really paying is the cost of the convenience of having pennies available for transactions, and judged per transaction it ain't looking that bad.

What convenience? Having pennies is inconvenient. It's lots of extra work keeping track of something that's worth less than the time it takes to pick one up off the ground! That's a horrible trade off. Sadly, those who profit from selling those metals to the government are blocking efforts to get rid of this waste.

Re:Production cost

[KingOfBLASH]

Living in europe (with 2 EUR coins) I find that the coins are not much different then normal change once you get used to them. The key is you just have to get used to looking in your pocket for change instead of discarding them the second you get them...

Re:Production cost

[Vitriol Angst]

Fiat Money may not be perfect - but it's better than Gold and Silver coins. You don't want resources wasted digging holes in the ground trying to scratch up more useless Gold to be turned into a vehicle for exchange. Money is best if it represents a good or service -- not if it has intrinsic value.

The only problem with fiat currency is third parties making counterfeits and the money producers printing excessive amounts. The first is technology while the latter is policy. We the people if we are in control have an impact on that last part.

Regardless of the form of currency, if a government is corrupt of falls into expediency -- then it doesn't matter what type of currency they have.

Re:Production cost

[martas]

reduced income from places that run 'wishing wells' which tend to be another dumping ground for pennies

Eh, I highly doubt there would be a significant decrease in charitable giving if the penny was murdered (as it no doubt should be). In fact, I wouldn't be surprised if there was an increase -- psychologically, people might be more willing to give up nickels, dimes, and quarters if the penny no longer the smallest denomination.

Re:Production cost

[fa2k]

If the shops don't want people to hold up the queue looking for 9.99, they should set the price to 10.00

Re:Production cost

[tlhIngan]

And then of course counter that with the reduced happiness in some people's lives as they can no longer fill entire jars with pennies and reduced income from places that run 'wishing wells' which tend to be another dumping ground for pennies.

Maybe then we can actually start looking at the cost of a penny in an all-encompassing manner. Or we can just accept that the penny in general is a dumb idea at this - time no matter how much any associated costs are stretched out over the lifetime of a single penny.

The big problem with getting rid of the penny happens to be with the poorest of the poor - they deal almost exclusively in cash, and having to deal with rounding means they often spend more cents than they have.

When you're dealing with saving every penny, having things cost 2 cents more can hurt (usually 1, 2 gets rounded down to 0, while 3, 4 gets rounded to 5, and likewise 6, 7 rounds to 5, 8 and 9 round up to 0.

And having experienced it, I've found stores that cheat, and round UP always (and no, they refuse to do business if you're short a nickel to cover the extra penny of cost). And I've also found that rounding down (benefiting you) happens rarely to never, but roudning up happens almost always.

Re:Production cost

[Anonymous Coward]

Don't forget that Zinc in pennies is now worth > $0.01

Re:Production cost

[Jane Q. Public]

"Fiat Money may not be perfect - but it's better than Gold and Silver coins."

Wanna bet? Oh, I suppose you might say it's "better" if you have an inflation fetish. But why would you?

This is what it has done to prices -- and as a consequence undermined savings -- over the last 100 years.

"The only problem with fiat currency is third parties making counterfeits and the money producers printing excessive amounts."

Wow. No, there are LOTS of problems with fiat currency.

"We the people if we are in control have an impact on that last part."

Sure, but we haven't been "in control" since 1913. Loot at that chart again. Monetary policy is under the control of the Fed. And the Fed -- although the chair is appointed by the President -- is a collection of private banks. And much of their assets are owned by foreign interests. They don't give the slightest shit what you have to say. They don't even really care much what the President has to say.

"Regardless of the form of currency, if a government is corrupt of falls into expediency -- then it doesn't matter what type of currency they have."

Not true, because when we had a gold standard (and no Fed), We The People were in fact in control of the money supply... just as it should always have been. THEN, the government+Fed could not inflate the money. Look at that chart again... the only times of inflation were when the government borrowed money for wars, and it went right back again afterward. Until the Fed was created.

The whole reason we HAVE fiat money, in the first place, was that the government spent more money than it actually had in gold. It could not meet its debts so it created the floating dollar. (First partially in 1934, the completely in 1971. See that chart one more time. It's full of valuable information.) They created the fiat dollar so they could inflate it at will.

But government inflates money, THEY and the BANKS get to spend it at full value. But by the time the inflation actually hits the economy (it's not instant, it usually takes 2-3 years), your savings have lost their value.

That's why government likes inflation. But it actually hurts the economy. Just one way it does that, is that your savings evaporate at a rate equal to the inflation rate. So if you get 5% from your bank account (haha... does anybody today?), but inlation is 6%, you're losing 1% of your money annually.

Right now, today, most "savings" accounts, after adjusting for inflation, are losing money.

Paste this to cut the BETA

[Anonymous Coward]

Please post this to new articles if it hasn't been posted yet. (Copy-paste the html from here so links don't get mangled!)

On February 5, 2014, Slashdot announced through a javascript popup that they are starting to "move in to" the new Slashdot Beta design. Slashdot Beta is a trend-following attempt to give Slashdot a fresh look, an approach that has led to less space for text and an abandonment of the traditional Slashdot look. Much worse than that, Slashdot Beta fundamentally breaks the classic Slashdot discussion and moderation system.

If you haven't seen Slashdot Beta already, open this in a new tab. After seeing that, click here to return to classic Slashdot.

We should boycott stories and only discuss the abomination that is Slashdot Beta until Dice abandons the project.
We should boycott slashdot entirely during the week of Feb 10 to Feb 17 as part of the wider slashcott

Moderators - only spend mod points on comments that discuss Beta
Commentors - only discuss Beta
http://slashdot.org/recent - Vote up the Fuck Beta stories

Keep this up for a few days and we may finally get the PHBs attention.

-----=====##### LINKS #####=====-----

Discussion of Beta: http://slashdot.org/firehose.pl?op=view&id=56395415
Discussion of where to go if Beta goes live: http://slashdot.org/firehose.pl?op=view&type=submission&id=3321441
Alternative Slashdot: http://altslashdot.org (thanks Okian Warrior (537106))

Not necessary

[haggus71]

There's already a currency available world-wide, used instead of local currencies of dictatorships. It's also the preferred currency of such nations as Saudi Arabia and other Arab states...as well as Iran. It's called the US dollar.

There are about as many dollars in circulation outside the us as there are here. It's why more nations invest in the US than in any other nation, with treasury bonds. The Euro stinks, and they can't trust the Chinese to not futz with their system.

Now, if we keep going with this default business...

Re:Not necessary

[NapalmV]

You mean this business?
http://www.forbes.com/sites/charleskadlec/2012/02/06/the-federal-reserves-explicit-goal-devalue-the-dollar-33/

Re:Not necessary

[Anonymous Coward]

And it's not as if the Euro stinks because it brings it too much inflation either... It stinks because the laser-focus on inflation control has made production in the eurozone a disaster. If A stable Euro hurts Spain and Greece, Imagine what Bitcoin would do to their economy. Who'd be insane enough to set up a loan denominated in Bitcoin anyway? The volatility would make it a tremendous risk.

Re:Not necessary

[fsterman]

RTFA, dollars are not impervious to counterfeiting and there is no way for locals to check the authenticity. With physical Bitcoins, you can get both.

Re:Not necessary

[Anonymous Coward]

It's absolutely naive to believe that physical Bitcoins could be impervious to counterfeiting. They've made it difficult, but nowhere near impervious. Especially the part where you can convert the physical Bitcoin to digital, completely negating the effectiveness of the hologram if someone steals your coin.

Re:Practicality of Beta

[Transparent Ghost]

They're trying to replace the 3 million slashdotters with 30 million youtubers.

Did Taco just throw us all under a bus?

[ObsessiveMathsFreak]

The Washington Post interviewed Taco about the Beta. Apparently he's not very sympathetic.

I posted some more thoughts on this on reddit(I feel funny), but basically I'm getting the impression that neither Taco, the Slashdot editors, or especially Dice every care very much for the Slashdot commenters. It would explain quite a few things over the years I guess. I honestly feel like the (original) Internet is being put back in a box these days. Get off my lawn, etc, etc.

P.S.
Is Slashdot deleting posts about the Beta? Didn't this site used to not delete posts?

Re:Did Taco just throw us all under a bus?

[DiamondGeezer]

Because destroying Slashdot to protest the beta makes so much sense.

Re:Did Taco just throw us all under a bus?

[jbernardo]

Is Slashdot deleting posts about the Beta? Didn't this site used to not delete posts?

Well, all firehose entries related to the beta are marked as spam, all comments are quickly modded -1, so why not do the next step and delete posts?

After all, even the useful idiots that complain about the protest might some day understand what is at stake, so it is even better if they are "protected" from subversive ideas.

Re:Did Taco just throw us all under a bus?

[ObsessiveMathsFreak]

You seem to have me confused with other posters. I was trying to get across some of the wider aspects of the redesign controversy/debacle/corporate-zeitgeist.

Re:Did Taco just throw us all under a bus?

[Anonymous Coward]

Yeah, posts are being deleted. PLEASE someone make a new slashdot. and maybe more than a dozen front page stories per day. like really, every day, there are EXACTLY 12 impotant stories?

Re:Did Taco just throw us all under a bus?

[Anonymous Coward]

"When I originally added (totally optional!) user accounts in 1998, the community freaked out that I was asking them to even consider logging in!"

Maybe because they've foreseen the further development. Yes, posting without being logged in is still possible. But only with severe restrictions. Unless you've got a big enough IP address pool to choose from, that is.

Re:Did Taco just throw us all under a bus?

[maxwell demon]

Yeah, posts are being deleted.

Now if that's true, that's a deviation from classic Slashdot that's a few orders of magnitude more worrying than the beta redesign.

Re:Did Taco just throw us all under a bus?

[Anonymous Coward]

Well, all firehose entries related to the beta are marked as spam, all comments are quickly modded -1

Because they are spam. Stop pretending otherwise.

They've provided you with ways to state your opinions on the beta that don't involve spamming unrelated stories. Do that instead of getting in the way of everyone else like a dick. This goes for every one of the spammers, not you in particular.

Re:Did Taco just throw us all under a bus?

[jythie]

Not really. You are just another poster butthurt enough that you would rather destroy slashdot then let it change. If YOU can't have the toy, no one can.

Re:Did Taco just throw us all under a bus?

[KingOfBLASH]

You're posting articles about beta in an unrelated thread which makes you just as much of a troll.

What's worse is Taco's comments aren't really that bad, but in typical slashdot reactionary fashion you probably didn't even read the article.

classic slashdot

[Anonymous Coward]

This might be off topic, but I am getting a message saying that classic slashdot is going to be going away and the beta put in place... Am I the only one disturbed by this?

Re:Practicality of Beta

[Anonymous Coward]

Might as well call it Slashdot+

-1 posts on beta

[Anonymous Coward]

Posts with a "-1" have only their title bar show up on beta so you can't read them and it appears as if they were deleted - compare the posts with the regular site and see. As beta stands now, folks who were commented down to -1 will not be seen and therefore, will not get redeemed if they were mod'ed down unfairly.

beta is a boon to troll mods.

Bitcoin or businesses?

[aslashdotaccount]

Is the problem really Bitcoin or the businesses that could be using it as a currency? No matter how much Bitcoin fluctuates, the reality is that it will never suffer from hyperinflation because the currency space is limited to 21 million bit coins. The only problem is the speculative overvaluation that the currency seems to suffer from. However, the ratio of demand to valuation varies across a very narrow margin.

So, the problem in with electronic currencies is not the currency itself but how the businesses price their products and services. With electronic currencies looming so large in the horizon, businesses need to develop a pricing mechanism that is more dynamic, which reacts more rapidly to the currency fluctuations. Perhaps valuations can be done based on live data feeds from Bitcoin exchanges. In such a case the products and services of businesses could be directly targeted by speculators to make a quick buck, which may be avoided by quoting those prices for the respective e-currency only...

Re:Bitcoin or businesses?

[maxwell demon]

I don't think at the current point you could even define inflation rates for bitcoin. There's up to now no genuine bitcoin market of measurable size. Bitcoins are typically used as transaction medium, where the price is based on another currency, and as investment, where bitcoins are treated as asset instead of currency. Since inflation is defined as price growth (the price of goods sold in the currency, not the price of the currency in other currencies), and AFAICT virtually no goods are genuinely priced in bitcoins (what's the current price of butter in bitcoins, for example? Note that getting the price in dollars, and converting the value according to current exchange rates doesn't count), an inflation rate cannot be meaningfully defined.

Dictatorships with hyper-inflation

[TheloniousToady]

Imagine a digital currency in the form of news articles posted on a website. This currency can be minted out at will by the benevolent dictator who runs the site. As in all healthy economies, currency has been supplied at a rate that matches demand in order to keep the economy stable. On the weekends, for example, demand typically has gone down. Thus, the weekend currency supply typically has been reduced to match.

Imagine, though, that the dictator enacts a new policy that makes The People mad. Grumbling and other political unrest ensue. Noticing this, the dictator tells himself, "The People are revolting." So, he dictator issues a soothing message. That works to some extent but ultimately isn't completely effective, primarily because he doesn't explicitly reverse the unwelcome policy; worse, if one reads his statement carefully, it actually states that the unwelcome policy will remain. Still, the dictator finds The People revolting.

So, in order to distract The People and make them feel richer, the benevolent dictator who runs the site suddenly begins minting out lots of new currency on the weekend. Notably, weekend demand has not increased but has actually decreased due to disruption of the economy caused by the new policy. Yet supply goes through the roof.

As in all such cases where supply of a currency greatly outpaces demand, hyperinflation results. The currency is inevitably devalued. Of course, The People notice this. Rather than feeling richer, hyperinflation makes them feel even poorer, and, ironically, actually contributes to the economic disruption that the benevolent dictator was hoping to ameliorate. The People begin to question the benevolence of their beloved dictator even further.

The dictator soon recognizes the hyperinflation he has created, and realizes that minting out currency is the cause of it. (As Milton Friedman said, "Inflation is always and everywhere a monetary phenomenon.") Yet he keeps minting out currency. Worse, he stubbornly sticks to the bad policy that caused his whole little economy to spiral out of control.

After all, what's the use of being a dictator if you aren't always right?

Re:Dictatorships with hyper-inflation

[TheloniousToady]

For those of you who enjoyed this, here's an image of an old gag that inspired part of it

Re:Practicality of Beta

[Anonymous Coward]

3 million? Doubtful.

There are 3 million accounts but I would be quite surprised if more than 100k post more than even once a year. I personally have over a dozen accounts here that I've abandoned over the years.

Currency exchange

[monkaru]

I may be going against the flow here; but I have the distinct impression that allowing a crypto currency to be exchanged for a fiat currency is one layer of abstraction too far. Thus, I think the Russian central bank got it right by banning the stuff and that the bitcoin bubble is going to burst within the year. If Mt.Gox collapses it might not last the week.

Re:Currency exchange

[aaarrrgggh]

The US decided it is a commodity rather than a currency. That simplifies things pretty much and more accurately reflects what it is. Maybe a derivative of a commodity is more reasonable, but that is more of a detail.

Personally, I have a few gold coins, because the portability is nice. I'm not really worried about the inherent value of the coins when gold eventually comes back down to reality pricing, because it is still an easy way to be able to move money around. Much of the downside of bitcoins also relate pretty well to gold, only the redemption network is much more limited.

If/when Mt Gox crashes, Bitcoins will go back down to a more stable pricing. Eventually, expect the entrenched financial firms to get into the race, which will ultimately be the downfall. Bitcoin ETF... coming to a stock exchange near you...

Bullshit...

[Junta]

Even if you think bitcoin is a reasonable path (I personally don't), this concept is pretty bonkers.

It goes on and on about how the there is no number that can be easily faked. Fiat currency counterfeiters with plain old serial numbers can copy a valid serial number and someone bothering to lookup the serial number could be fooled, not so with Bitcoin. Point taken, but the thing is before that has any value, the recipient of the currency must actually verify that data. There is no point in conveying that info in an expensive physical coin, because such infrastructure could just as easily be fed the data by electronic means or even a printed slip of paper. The physical coin aspect of it becomes the tail wagging the dog, an overpriced way of conveying the counterfeit resistant data. If the data is not actually envisioned to be verified at time of transaction, then it's as useless as the serial number on a dollar.

The only thing holding Bitcoin from exploding in many markets is a lack of a physical incarnation.

Incredibly wishful thinking there. Bitcoin has a lot more problems than lack of a physical incarnation. Being outlawed by major governments, at the mercy of speculators without any regulation, and downright vulnerable to an attack by a critical mass of mining resources working together.

rural farmers in 3rd world countries are not going to get a smartphone and a $100/month data plan just so they can accept Bitcoin.

Exactly! But just a few sentences above it says:

anyone with an NFC equipped cellphone can check if a coin is counterfeit.

You've come round full circle to the problem in the first place: You need functioning internet infrastructure (and a long time) to validate a transaction in the secure way. Without that, you could counterfeit any 'bitcoin' based currency just as easily as any other currency.

A viable alternative currency for micro-nations and dictatorships with hyper-inflation."

Another foolish statement. Again, people are incorrectly assuming there is a technological solution to a socioeconomic problem. The failure of such currencies are a symptom, not a root cause. If it were as simple as all that, the citizens could just as easily move around some stable foreign currency. You can't do a safe, 'sneaky' end run around the force that governs a citizenry. So long as they are empowered to prosecute, shut down internet infrastructure, or just send soldiers into the street, no currency trick is going to work in the face of the fundamental problem.

Re:Bullshit...

[Ambvai]

It's a bit of a fluff article, but there are certainly enough relevant examples of cell phone usage being an active element in improving the lives of 'rural farmers in 3rd world countries': http://www.cnn.com/2012/09/13/...

(Also, came across this article, which is a bit more recent and covers specific products: http://www.ventures-africa.com...)

Re:Bullshit...

[Junta]

The point being that if you have a cell phone, you have the means of verifying things without need for a physical currency. If you don't have a means of verifying that currency, a 'bitcoin' currency is no more counterfeit resistant than any other currency.

He makes the case for the currency over purely electronic by saying that 3rd world countries won't tolerate cell phones as it's too expensive. At the same time, he wants to trivialize that requirement when it comes to supporting his point of adding value to such a currency since 'anyone with an NFC equipped cellphone' can verify the currency. He comes right back to the same requirement that non-physical bitcoin has, with dramatic differences of opinion of how onerous it is depending on whether he's talking about non-physical or physical medium of exchange.

So for the article, either such infrastructure is out of reach of those markets and thus the physical currency is not inherently more counterfeit proof than anything else, or it is in reach at which point the physicality of the currency is utterly pointless.

Re:Bullshit...

[fsterman]

Point taken, but the thing is before that has any value, the recipient of the currency must actually verify that data. There is no point in conveying that info in an expensive physical coin, because such infrastructure could just as easily be fed the data by electronic means or even a printed slip of paper. The physical coin aspect of it becomes the tail wagging the dog, an overpriced way of conveying the counterfeit resistant data. If the data is not actually envisioned to be verified at time of transaction, then it's as useless as the serial number on a dollar.

If you can start with a trusted reader (A.K.A. a trusted base, the premise with *all* cryptography) then you can sign all of that data. Even if you are able to crack the verification code and feed an offline reader faulty data you would have to control what coins that person comes in contact with. Read up on how UXTO extension works to verify transactions authenticity without having the full block chain.

The only thing holding Bitcoin from exploding in many markets is a lack of a physical incarnation.

Incredibly wishful thinking there. Bitcoin has a lot more problems than lack of a physical incarnation. Being outlawed by major governments, at the mercy of speculators without any regulation, and downright vulnerable to an attack by a critical mass of mining resources working together.

That is in reference to markets with hyperinflation. The whole point is that the local government is trying to force people to use a useless currency. Compared to falling back on physical dollars, physical Bitcoins can be seamlessly transferred to a digital account and used online. It's about extending the utility of the digital version to a physical version, just as we can do with dollars and PayPal, just without the banks and regulatory policies which blockade people from third-world countries.

rural farmers in 3rd world countries are not going to get a smartphone and a $100/month data plan just so they can accept Bitcoin.

Exactly! But just a few sentences above it says:

anyone with an NFC equipped cellphone can check if a coin is counterfeit.

You've come round full circle to the problem in the first place: You need functioning internet infrastructure (and a long time) to validate a transaction in the secure way. Without that, you could counterfeit any 'bitcoin' based currency just as easily as any other currency.

They have made cheap, $10 devices which can verify PUF's.

A viable alternative currency for micro-nations and dictatorships with hyper-inflation."

Another foolish statement. Again, people are incorrectly assuming there is a technological solution to a socioeconomic problem. The failure of such currencies are a symptom, not a root cause. If it were as simple as all that, the citizens could just as easily move around some stable foreign currency. You can't do a safe, 'sneaky' end run around the force that governs a citizenry. So long as they are empowered to prosecute, shut down internet infrastructure, or just send soldiers into the street, no currency trick is going to work in the face of the fundamental problem.

No, this is not a solution to the problem as a whole. However, in your words, it makes end-run arounds the forces that govern the local citizenry a hell of a lot easier and safer. This helps to weaken the power of a central government to force the citizens to use a currency which they have manipulated and thus weakens the power of such a government to manipulate their currencies to begin with.

Re:Bullshit...

[Orestesx]

Please explain to me how it is at all counterfeit resistant. The thing that makes the US dollar counterfeit resistant is not so much the technological countermeasures but the fact that the full weight of US law enforcement will rain a shitstorm down on you if you try to replicate it. Without a government behind the physical bitcoins, there is nothing from stopping a well-funded entity from creating coins physically identical to the real thing.

Re:Bullshit...

[fsterman]

He makes the case for the currency over purely electronic by saying that 3rd world countries won't tolerate cell phones as it's too expensive. At the same time, he wants to trivialize that requirement when it comes to supporting his point of adding value to such a currency since 'anyone with an NFC equipped cellphone' can verify the currency.

If someone already has a cellphone with an NFC reader then it's basically a "free" PUF verifier. Even if you want scanner to verify those payments a PUF physical scanner would be cheaper and more secure than a credit card machine. But the real distinction comes when you are in markets which don't have access to credit card payment systems at all, in which case verifying the currency is still better than judging a bill by the number of creases it has.

Re:Bullshit...

[Junta]

If you have a cellphone with an NFC reader, then you don't *need* a physical 'bitcoin' to do bitcoin. If you call out having a cell phone to verify bitcoin transaction as too onerous, and therefore you need physical currency, then *you don't get to claim to have a free verification facility*. It's either cellphones are a trivial requirement and therefore you wouldn't need the physical currency, or cellphones are too big a burden and you can't verify the benefit of a bitcoin backed physical currency. You can't change your opinion on the availability of cell phones in the middle of explaining your stance just because a consistent opinion would unravel that stance.

That is the perspective even after hypothetically accepting the premise that bitcoin is the optimal underlying scheme. As someone who additionally rejects that premise, I'll say that while the current state of the credit card processing is pathetic, the answer is not going to bitcoin. Bitcoin brings a whole lot of bad with the good (at least the controlling interest to watch for corruption/abuse in Fiat currencies is a knowable thing, unlike Bitcoin where an abusive interest is possible, but can be more easily be hidden). In this specific case, if we accept the same infrastructure required for bitcoin to be viable (ubiquitous secure network-capable compute devices), then that same infrastructure could be applied to improve the security of credit card payment systems (abolish passing around a wide-open account number in favor of a more discretionary system where each transaction only provides a vendor what the vendor needs to authorize that one transaction for one specific amount).

Re:Production cost - virtual strawman

[rubycodez]

Most U.S. dollars are digital currency, less than 3 percent of the whole of U.S. money is physical.

An easier solution: Don't make coins

[Confused]

The article assumes for some strange reason, that those countries use coins. Well hello to the reality, many countries have paper money only and no coins, or after inflation the coins are so worthless, that they're good as collectors items only. Problem solved and other half-baked college theses can be safe stored in the depths of some library to be forgotten for the next millennia.

Re:An easier solution: Don't make coins

[fsterman]

The article assumes for some strange reason, that those countries use coins. Well hello to the reality, many countries have paper money only and no coins, or after inflation the coins are so worthless, that they're good as collectors items only.

Wtf are you talking about? The distinction is between physical and digital versions of a currency, not between paper vs. metal incarnations of the physical currency. And, huh, if you have hyper-inflation they are worthless.

Meh

[mr100percent]

I don't see an incentive for them to use Bitcoin over US dollars or some other established currency.

Re:Meh

[Anonymous Coward]

A US dollar is many MANY times easier to counterfeit than a Bitcoin.

Forget the BETA!

[Anonymous Coward]

Tired of people saying, "Fuck BETA!" I'm here to say, "Fuck Tim Landers!"

As long as PUF is made of gold

[Anonymous Coward]

So long as the PUF's are made of gold, silver or some other useful resource, I don't care what kind of imaginary fiat value is attached to it - whether it be a government or a distributed group of despots. Should up and gimme me pot'fgold'n'rainbow.

Questionable legality in the U.S.

[DaveV1.0]

They may be illegal to make and/or use in the U.S., thanks to 18 U.S. Code 486 - Uttering coins of gold, silver or other metal

Whoever, except as authorized by law, makes or utters or passes, or attempts to utter or pass, any coins of gold or silver or other metal, or alloys of metals, intended for use as current money, whether in the resemblance of coins of the United States or of foreign countries, or of original design, shall be fined under this title or imprisoned not more than five years, or both.

nooo

[Anonymous Coward]

Normal computer are worthless for generating bitcoins nowadays.

The only machine that has a chance is a custom built ASIC.