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MIT May Help Lead Bitcoin Standards Effort
gthuang88 writes: With everyone from PayPal merchants to Rand Paul starting to accept Bitcoins as payment, the race is on to develop technical standards for the virtual currency. Now MIT Media Lab director Joi Ito is getting ready to unveil a plan for MIT to become an independent, neutral home for standards development. Ito is enlisting cryptographer Ron Rivest and economist Simon Johnson to help with the effort, which could provide an academic alternative to the Bitcoin Foundation for conversations about the currency's future. Ito says, "I’m not pushing it, but I’m offering MIT as a neutral academic home for some of the conversations and the technical coordination. Which I think will give a lot more stability to Bitcoin, which right now is a little bit fragile."
I see Bitcoin having a twofold problem. First, a Bitcoin in of itself has no real-world value. Certainly it costs money and/or resources to create, but once created it has no worth of its own, its only worth is that of exchange. Second, it doesn't have any strong central backer with an authority to reinforce it like national currencies do.
All other currencies have at least one of these characteristics satisfied. Fiat currency is supported by a government. Not-government-supported currency like gold has value besides its means as an exchange rate. Bitcoin has neither. Right now it has some vigorous supporters, but those are truly very, very few in number, and my guess is that large entities that have chosen to accept Bitcoin do so for the purposes of engaging that community, and are well aware that there's risk that Bitcoin could come completely crashing down and the fees they've collected in Bitcoin could be completely worthless at any time.
Bitcoin is a nice experiment, but given all of the highly publicized thefts with the only prosecution seeming to be for government officials that got caught using their offices to get access to do the stealing, I don't think that Bitcoin as it is now will be the future. It might help direct us to where to go, but it is not the end result.
Do not look into laser with remaining eye.
Fiat money also has no real value. Just like bitcoin it is based on trust, not on authority or enforcement.
Not-government-supported currency like gold has value besides its means as an exchange rate
Gold doesn't have much real value either.
Fiat currency is supported by a government
Didn't work well for Zimbabwe, or Weimar republic. Ultimately, fiat currency is simply based on trust that it will be accepted by others tomorrow like you accept it today. The government can help to provide stability, but the trust comes from the bottom, and can't be enforced when it's failing.
I disagree. Bitcoin has major value in sending money worldwide without fees. Also, it can be used with only a cellphone and an account. Bitcoin could revolutionize 3rd world involvement in the world economy without the blockades that banks have traditionally put in their way.
Right now, Bitcoin is the only way to send money to Wikileaks or mega.co.nz. If you believe in free speech without the government bankrupting foreigners even before a trial just because the banking industry or the MAFIAA doesn't like them, then you should be pro-bitcoin.
Peter predicted that you would "deliberately forget" creation 2000 years ago...
The industrial use of gold is fairly small on the total gold market. Most of the value comes from people's desire to possess it, and people like to possess it because it's valuable.
If it was just for the industrial use, the price of gold would be a lot lower.
Dollars have the value of being able to pay off your US Govt (and state) tax/tarriff/whatever obligations. Even if you barter bits of string in exchange for a chicken the chicken seller will need to convert some of that string into dollars to pay off their tax bill. Even if everyone switched to using something else day to day they would have to convert a whopping $3 trillion a year to pay off their government debts. So as long at there exists economic activity in the US which requires taxes the dollar will have some sort of value.
Then of course there are myriad other benefits to the dollar such as taxes are a heck of a lot easier to calculate for a transaction executed with dollars, the US court system basing judgements and awards in dollars, everyone in the US (and most trading partners in the world) having/accepting them which leads ease of use, etc.
Could the dollar go away or become worthless tomorrow or in a year? Perhaps, but any event of sufficient magnitude to completely wreck the value of the dollar in a short time would pretty much nuke (perhaps literally) the world economy. But I'd put better odds on someone breaking SHA-256 or figuring out a catalyst allowing extraction of gold from seawater. Also
Fiat money also has no real value. Just like bitcoin it is based on trust, not on authority or enforcement.
It has value in its jurisdiction. Try refusing to accept settlement of a debt in your local currency and see what happens.
Fiat currency is supported by a government
Didn't work well for Zimbabwe, or Weimar republic.
Neither did elections. Doesn't mean that they are a bad idea.
Ultimately, fiat currency is simply based on trust
Nope. Bitcoin supporters frequently make the mistake that all something needs to be a currency is trust. This is not true. It needs a sovereign government backed by men with guns who will force you to pay your bills only in that currency or face punishment. That is what ultimately makes a currency. Not trust. Since the invention of coinage there has never ever, not even once, been a currency based on trust.
I'm a minority race. Save your vitriol for white people.
Since the invention of coinage there has never ever, not even once, been a currency based on trust.
This is absolutely not the case.
As little as 200 years ago, there were many competing currencies, typically backed in gold. There was even merchant's associations and regular publications on how much you should discount certain bank's currency because the redeeming bank was far away, or not as trustworthy. Wikipedia has a whole catalog of these notes.
Wonder what the public key field is for?