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The Future of Cryptocurrencies
kierny writes "Today, Bitcoin, tomorrow, the dollar? Former Central Intelligence Agency CTO Gus Hunt says governments will learn from today's crypto currencies and use them to fashion future government-protected monetary systems. But along the way, expect first-movers such as Bitcoin to fall, in a repeat of the fate of AltaVista, Napster, and other early innovators. But the prospect of fashioning a better, more stable crypto currency system — and the likelihood that Bitcoin may one day burn — is good news for anyone who cares about crypto currencies, as well as the future and reliability of our monetary systems."
iCoins are the new thing. Apple is releasing them next week. You need an iPhone to use them. All iTunes transactions will require iCoins. You also can only buy them in $1000 USD increments.
What we've learned so far from Bitcoin:
Every time I see/hear someone mention "[X] has no value!" I feel like I have to remind them of the subjectivity of value. Robert Heinlein, I feel, provided the best interpretation:
"Value" has no meaning other than in relationship to living beings. The value of a thing is always relative to a particular person, is completely personal and different in quantity for each living human—"market value" is a fiction, merely a rough guess at the average of personal values, all of which must be quantitatively different or trade would be impossible. [...] This very personal relationship, "value", has two factors for a human being: first, what he can do with a thing, its use to him and second, what he must do to get it, its cost to him."i/>
-Lt. Col. Jean V. Dubois (Ret.), pp. 93-94 [Starship Troopers]
I take mild offense to the OP insinuating that Napster "fell". It didn't fall, it was torn down by the claws of the RIAA who didn't have the foresight to even recognize this would be the future of media distribution.
A year spent in artificial intelligence is enough to make one believe in God.
> anything traded is 'currency'..
No, something generally accepted in the market as an intermediary is a currency. Direct trade (some of my stack of lumber for a dinner) is called "barter". Barter has the difficulty called "a coincidence of wants". You need people who both want what the other person has to trade. A currency simplifies this difficulty, in that I can trade my lumber for currency, then later find someone making dinner, and trade my currency for that. I don't have to find someone who wants my lumber AND is making dinner.
For a currency to be useful as an intermediary, enough people have to accept it in trade. In theory, anything at all can become a currency, but in reality only a few items become the currency of a given community because of the network effect. Whatever is most used tends to get used even more. Which items gain early acceptance depends on their features: inherent usefulness, durability, portability, fungibility, divisibility, scarcity, and others. Fish are useful, but not very durable or portable. Cattle are also useful, and reasonably durable, and portable because they are self-mobile, and in fact cattle were used as an early currency. But they are not fungible (not all identical units), and not very divisible until you eat them, so other kinds of currency with better features replaced them. Sand meets many of the features of a currency, except scarcity - there's not much point in trading for your sand, when I can go get my own. Gold is better in that respect - it's not easy to go get your own, so if you want some, it's easier to trade for it.
Gold is useful (you can attract women with it), and has all the other features except divisibility for small amounts, and portability for large amounts, so for a long time it was the best currency.