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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...
Bitcoin is an experiment in getting people to agree on something (be it notarization, settlement or just exchange value) without the need for a central enforcer.
It's not a bug, it's a feature, i.e. you won't see Bitcoin bombing children to "reinforce" the position of its currency. No one should be surprised that this brings many limitations with it.
So no matter what the majority of Bitcoin community thinks, it's a collective experiment and will always depend on actions that are just for the sake of it succeeding. Network effect just won't cut it. Fortunately, there is a lot that makes sense in leaving behind central enforcers and decision makers.
Another problem I find in your analysis is, publicized thefts and the mechanics of Bitcoin are completely separate. There is plenty of way to go, but the currently lacking advancements in these areas are naturally complementary.
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.
Bitcoin is not mature enough to be used as a true replacement currency.
I don't think it will ever be used as a true replacement currency. At best, it will be an alternative currency, existing in parallel, and used for the some applications in which it works better. I've done some programming jobs for people in other continents, and got paid in bitcoin, and then used those bitcoin to order stuff from another continent. All in a matter of minutes, with very little overhead. I could have used wire transfers, but they take several days, and can be costly. I could have used paypal, and pay a substantial fee. So, bitcoin worked nicely for this application. However, I don't expect to be paying my rent in bitcoin at any time.
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?
There's a chance that the bank wouldn't be able to redeem the note, because of fractional reserve banking.
Besides other reasons for discounting notes at purchase time, like fake notes, or loss, or the bank being very far away.
Wonder what the public key field is for?
> First, a Bitcoin in of itself has no real-world value.
Neither does a UPS shipping label. It's the network of trucks and distribution centers that give the shipping token (the label) value. They are what enable moving a package from one place to another. That's a useful service, and hence people are willing to pay for the label.
Similarly, a bitcoin is merely an entry of 1.0000 units in a big distributed ledger (the block chain). It's the network of relay nodes and miners that give the bitcoin token value. They are what enable moving monetary value from one place to another. That's a useful service, and hence people are willing to pay for the tokens. Other parts of the ecosystem add more usefulness, and thus more value. Websites, wallet software, custom hardware, smartphone apps, exchanges, merchants who accept bitcoin, etc.
The transaction protocol also includes a scripting language, so you can make your money programmable. How useful is that? People have only touched the surface of what you can do with that capability.