Bitcoin's Nightmare Scenario Has Come To Pass

HughPickens.com writes: Ben Popper writes at The Verge that bitcoin's nightmare scenario has come to pass as the bitcoin network reached its capacity, causing transactions around the world to be massively delayed, and in some cases to fail completely. The average time to confirm a transaction has ballooned from 10 minutes to 43 minutes. Users are left confused and shops that once accepted Bitcoin are dropping out. For those who want the Bitcoin system to continue to grow and thrive, this is troubling. Merchants can't rely on digital transactions that can take minutes or hours to validate. A number of prominent voices in the Bitcoin community have been warning over the past year that the system needed to make fundamental changes to its core software code to avoid being overwhelmed by the continued growth of Bitcoin transactions. A schism has developed between the team in charge of the original codebase for Bitcoin, known as Core, and a rival faction pushing its own version of that open source code with a block size increase added in, known as Classic. "Many in the US Bitcoin community had hoped that hitting this crisis point — a network maxed out, transactions faltering — would result in closure, with miners quickly moving to adopt whichever chain proved more valuable to their economic interests," says Popper. "But so far the debate is dragging on without one side claiming a clear victory, leaving tens of thousands of consumer transactions stranded in limbo."

Comments

And Nothing Of Value Was Lost

[Anonymous Coward]

It's all a scam anyway.

Re:And Nothing Of Value Was Lost

[Anonymous Coward]

But muh buttcoins!!!

Re:And Nothing Of Value Was Lost

[Anonymous Coward]

Is it too much to hope that the bitcoin trouble means that the business model of the ransomware extortionists is now broken?

Re:And Nothing Of Value Was Lost

[Anonymous Coward]

At least when a real currency suffers a terminal crash, you can melt down the coins for scrap metal, in fact I understand it quite often happens that coins become worth more for their metal than their face value. Can't melt down them thar bits though.

Re:And Nothing Of Value Was Lost

[serviscope_minor]

This is a neither interesting nor insightful post. It's glib, ignorant and stupid.

People are happily exchanging bitcoins for goods and services and back again. In fact they're so happy with it that they exceed the capacity of the network.

If you sell some stuff for bitcoins, then buy some other stuff for bitcoins, then it is just inane to claim that you have been scammed.

Re:And Nothing Of Value Was Lost

[Dunbal]

This only works for old coins. Modern coins are so adulterated that the currency would have to crash very hard indeed for you to cover smeltering costs with the value of the nickel/copper/silver in them. Tin is very, very cheap.

Re:And Nothing Of Value Was Lost

[Anonymous Coward]

In that case, the Canadian Dollar is a scam.

Try spending one in 99% of the world's shops. Yet you've never seen any riots at shopping malls or Walmart.

Re:And Nothing Of Value Was Lost

[Anonymous Coward]

True, but when metal prices were high a few years ago, low denomination coins might have been in the zone. Even at todays prices, the 1946-2014 Nickel is worth 58.74% of its face value, and the 1982-2014 Cent is worth 47.75 of its face value in metal (source this site ). So if metal prices doubled, they'd be negative or close to it.

Re:And Nothing Of Value Was Lost

[Golddess]

US coins do not contain tin.

Re:And Nothing Of Value Was Lost

[Anonymous Coward]

https://www.google.com/search?q=walmart+riot&safe=off

Re:And Nothing Of Value Was Lost

[alvinrod]

That's expected to happen if you have a currency not tied to a precious metal (not saying it's a good idea, merely an observation) as you can create money without respect to the amount of any other resource. In these systems excess money is usually created (either by design in order to encourage inflation or due to reckless government action) which means that as time goes by its value naturally decreases with respect to the material of which the physical currency is made. A U.S. penny costs the government more than it's face value to mint because it has lost sufficient purchasing power that the metal it is composed of and the labor expended to min the coin has more value than the coin itself. Over a long enough period of time (about 150 years assuming annual inflation remains at around 3% on average), it will be useless to have anything less than whole dollars.

Also, this ignores the fact that in a real crisis, a gold coin isn't worth any more than a quarter for most people. You'd probably be more able to get someone to take it, but you can't eat it. Also, really old coins are worth far more than the gold or other metal it is made from simply because it is old and heavily supply constrained. Melting it down would destroy most of its value to other people who are interested in old coins. Even some of the older coins from the U.S. are worth more as collectibles than either their face value or the metal they contain. For example, a US half penny (we used to have one before the government decided it was useless to keep making because it had lost its value) can fetch thousands of dollars depending on year and condition.

Re:And Nothing Of Value Was Lost

[eyenot]

When people argue for gettin' yer gold coins ready for the crash (during discussions on politics, economics, whatever -- some people bring this up over what to get for breakfast) I like to liken a crisis as a life boat and ask them whether their heavy chest of gold coins is going to get them a spot on a the life boat.

Re: And Nothing Of Value Was Lost

[Type44Q]

Damn; well said.

Re:And Nothing Of Value Was Lost

[Khyber]

"This only works for old coins."

Not the penny. The amount of copper and zinc in a CURRENT penny is worth far more than its actual face value, which is why the US Mint is constantly thinking of retiring the penny.

Re:And Nothing Of Value Was Lost

[vtcodger]

"At least when a real currency suffers a terminal crash, you can melt down the coins for scrap metal,"

And you can use it to pay taxes ... at least you probably can as long as the government chooses to try to maintain the fiction that the currency is sound and is merely suffering a temporary setback caused by the actions of vile and disgusting currency speculators.

Re:And Nothing Of Value Was Lost

[Curunir_wolf]

People are happily exchanging bitcoins for goods and services and back again. In fact they're so happy with it that they exceed the capacity of the network.

Well they aren't going to be exchanging them for much longer, because the exchange mechanism is broken (sort of) by design.

If you sell some stuff for bitcoins, then buy some other stuff for bitcoins, then it is just inane to claim that you have been scammed.

It wasn't intended as a scam by the creator, but it became one because of the developers that took over, that didn't view bitcoins as a currency, but rather as a store of value. They don't care that it takes hours or days to close a transaction, because they are not really on board with the idea that bitcoins can be used like money. They only see it as an investment.

Mike Hearn lays out the issues much better than I can, in his open resignation letter. Everyone knew it was coming but the people in charge refused to do anything about it despite the warnings. I really think it's because they don't care about the use of bitcoin in commerce. They view it as nothing but mattress money or a digital investment. Only time will tell how much people lose as there will be less and less people interested in bitcoin at all.

Re:And Nothing Of Value Was Lost

[SpankiMonki]

You have no idea what you're talking about. The base metal melt value of the currently produced penny is $0.004775984212837.

Re:And Nothing Of Value Was Lost

[SpankiMonki]

Mod up pls.

Very very interesting read from Mike Hearn. Thanks for the link.

Re:And Nothing Of Value Was Lost

[Anonymous Coward]

And the base metal melt value of pre-1982 is $0.0146, which is more than face value. Good luck figuring out how many of those are in circulation.

Re: And Nothing Of Value Was Lost

[Anonymous Coward]

And the answer is yes. In the event of a currency collapse, things like diamond rings, gold, guns, and ammo can and do function as elements of trade.

Just because your Zimbabwe-bux are garbage doesn't mean that nobody wants a gold ring anymore, or that other currencies don't exist which also have exchange value for gold.

Dipshit.

Re:And Nothing Of Value Was Lost

[timholman]

Mike Hearn lays out the issues much better than I can, in his open resignation letter. Everyone knew it was coming but the people in charge refused to do anything about it despite the warnings. I really think it's because they don't care about the use of bitcoin in commerce. They view it as nothing but mattress money or a digital investment. Only time will tell how much people lose as there will be less and less people interested in bitcoin at all.

We're heading into the Bitcoin end game, where the goal will be for the miners to extract as much money as they can from BTC users via transaction fees until the whole thing collapses. The miners want the network to saturate, and they want people to pay ever-increasing fees to get their purchases on the blockchain. Once the mining reward halves later this year, the incentive to increase transaction fees will be that much greater.

Keeping the network saturated means keeping transaction volume high and the block size fixed, hence the dDOS attacks on nodes running Classic, the spamming of the network with tiny back-and-forth transactions, and the censoring of pro-Classic comments on discussion boards. It all fits with what Hearn has described.

I wouldn't be the least bit surprised to see BTC users paying 0.5% to 2% transaction fees a year from now. It is, after all, what the market will bear when compared to bank and credit card fees.

Re:And Nothing Of Value Was Lost

[Anonymous Coward]

Great! Except that GGP's claim was about the current penny, not pre-1982 ones. He even put "current" in all caps. In any case, thanks for stopping by to educate us about old pennies!

Re:And Nothing Of Value Was Lost

[serviscope_minor]

Well they aren't going to be exchanging them for much longer, because the exchange mechanism is broken (sort of) by design.

Yes, but that doesn't make it a scam.

Mike Hearn lays out the issues much better than I can, in his open resignation letter.

Interesting. It seems that the flaw is not inherent to bitcoin but based on several things:
1. Too high a concentration of mining capacity (2 people control over 50%)
2. Too heavily centralised community to the community manager can exhibit de-facto over bitcoin bu manipulating the community.

Re:And Nothing Of Value Was Lost

[vtcodger]

"Nice data you folks had there, If you want to see it again, you'll be making 7 cash transfers of $9998 each to the following account at the Bank of Kiev ... and soon. If the transfers have not cleared by 1400 GMT tomorrow, we will be forced to delete your information and use the space freed up to record tomorrow's episode of Days of Our Lives. Have a nice day"

Answer your question.?

Re: And Nothing Of Value Was Lost

[Anonymous Coward]

It costs more to MAKE a penny than its face value is worth. This takes into account wages/salaries, design costs, press maintenance (and/or cost) prorated, along with other factors.

Re:And Nothing Of Value Was Lost

[Anonymous Coward]

It's glib, ignorant and stupid.

yet another glibc bug! wtf!!

Re:And Nothing Of Value Was Lost

[aaarrrgggh]

Gold coins aren't for the Zombie Apocalypse... at least for rational people. Good financial planning is to have assets in different classes and forms. Keeping 1-5% of your liquid net worth in cash can quickly be a problem due to space constraints and challenges in concealing/securing it. A few dozen gold coins can be much easier to manage.

You also get the "Escape Artists" that want to bring more than $10,000 in cash into/out of a country, so they consider their $50 gold coin at face value rather than market value. Having lived in a place where being able to leave quickly with a small bag was important I can sympathize with that.

back on topic... Bitcoins are very easy to transport... even if they are more worthless than Gold in any kind of crisis.

Re:And Nothing Of Value Was Lost

[zlives]

why 9998? shouldn;t that be 4998

Re:And Nothing Of Value Was Lost

[Anonymous Coward]

You are thinking of older pennies, something pre-90's.

Re:And Nothing Of Value Was Lost

[goose-incarnated]

Well they aren't going to be exchanging them for much longer, because the exchange mechanism is broken (sort of) by design.

Yes, but that doesn't make it a scam.

That also doesn't lend it any legitimacy; IOW it doesn't make it "not a scam".

Re: And Nothing Of Value Was Lost

[Anonymous Coward]

Anything over 10,000$ the FBI gets notified.

Re: And Nothing Of Value Was Lost

[Anonymous Coward]

Err I mean IRS.

Re:And Nothing Of Value Was Lost

[avandesande]

Actually tin in fairly expensive, like 10$ a pound (much higher than copper). You are probably thinking of zinc.

Re:And Nothing Of Value Was Lost

[Anonymous Coward]

Also good luck separating the copper from the zinc out of those. Guys who actually deal in copper dont mess with pennies unless they believe that idea. The problem is you have to basically heat the penny and then do a chemical reaction to get the zinc out. So you spend MORE than 1 cent to get 1 cent of copper out.

https://www.usmint.gov/about_t...

If it hits 4-5 cents per penny you might see the copper guys pay attention to it. The zinc and tin was added to strengthen the penny so it did not wear out as quickly.

Also the vast majority of pennies out there are from after 1982. They basically got to the end of their life and were removed from circulation. You still find older ones out there. It is not too hard. But the central banks tend to scoop them up.

The 'it costs more than 1 cent to make' is true. But the materials is not where it is coming from. It is labor, shipping, overhead, and materials.

Re:And Nothing Of Value Was Lost

[istartedi]

A few years ago this was true; but the commodities bubble has burst. Current zinc pennies are worth about 60% of face. Old copper pennies are still worth about 150%.

Re: And Nothing Of Value Was Lost

[Anonymous Coward]

, things like diamond rings, gold, guns, and ammo

What an incongruous list. Two of those items are useful, and two are just pretty rocks. The fact that you fail to realize that means that you are the dipshit.

The only time gold is valuable is in an inflation crisis, when currency as a concept still has value, but not the particular one that your government issues. In a full on resource crisis where food and water become scarce, gold is worth less than shit. Because at least you can try to eat shit.

Re:And Nothing Of Value Was Lost

[kqs]

That's because Canadians are too damn polite to riot.

Re:And Nothing Of Value Was Lost

[Anonymous Coward]

Bitcoin requires more MINERALS!

Re:And Nothing Of Value Was Lost

[Anonymous Coward]

"far more" was the tip off. If pennies were worth "far more" than their value, then I'd buy up thousands of them and smelt them down to recoup the benefits.

Re:And Nothing Of Value Was Lost

[Anonymous Coward]

Seems like they could just try to get more pennies back, maybe offer $1.10 or whatever for 100 pennies. I've got tons of the things I don't spend because I would lose value.

Re:And Nothing Of Value Was Lost

[Anonymous Coward]

They actually closed that loophole a while ago. You would be in violation of Federal law..

Re:And Nothing Of Value Was Lost

[Anonymous Coward]

If pennies were worth "far more" than their value, then I'd buy up thousands of them and smelt them down to recoup the benefits.

"Smelting" is something you do to ore, not metal. Just sayin'.

Re:And Nothing Of Value Was Lost

[radarskiy]

"I wouldn't be the least bit surprised to see BTC users paying 0.5% to 2% transaction fees a year from now. It is, after all, what the market will bear when compared to bank and credit card fees."

The trouble is that we are surrounded by a lot of people who are as ignorant of microeconomics as they are about macroeconomics. They'll be outraged if you point out that supply curves slope upward. That's a really bad neighborhood for experimenting with currencies.

Re:And Nothing Of Value Was Lost

[farble1670]

They don't care that it takes hours or days to close a transaction, because they are not really on board with the idea that bitcoins can be used like money. They only see it as an investment.

That doesn't make sense.

Someone that's interested in bitcoin as an investment would care dearly about anything that would lessen the flow of chumps investing. If people get scared, or can't use their 'coin as currency, they are going to sell, causing the value to go down and deflating the holdings of the investors. Investors only win if the public is confident in bitcoin.

Re:And Nothing Of Value Was Lost

[Khyber]

http://www.infomine.com/invest... says otherwise, and they've got historical charts.

Just FYI, that 2.5g of metal costs $0.05 to manufacture. that's the actual Federal Reserve cost.

Try again when you've been alive long enough to watch this economy and know what it's doing, child.

Re:And Nothing Of Value Was Lost

[Khyber]

https://www.usmint.gov/about_t...

Try again when you know what you're talking about. You don't even have to go three pages in to see you're wrong.

Re: And Nothing Of Value Was Lost

[Anonymous Coward]

In the future, you might want to imply for farming for food, not for eating shit itself. Or, you're doing it wrong.

Re:And Nothing Of Value Was Lost

[istartedi]

I was comparing face value to melt value, not production cost to melt value.

Re:And Nothing Of Value Was Lost

[SpankiMonki]

http://www.infomine.com/invest... says otherwise, and they've got historical charts.

Your link doesn't say otherwise, it says the exact same thing. As of now, infomine.com shows a price for zinc of $0.83/lb. and cooinflation.com shows $0.8329/lb.

Just FYI, that 2.5g of metal costs $0.05 to manufacture.

Your original post had nothing to do with manufacturing costs, it was about the value of the coin's metal content. Here, let me refresh your memory:

"The amount of copper and zinc in a CURRENT penny is worth far more than its actual face value"

See? No mention about manufacturing costs. Now, had you said something along the lines of "It costs the mint more than a penny to make a penny", you would have been correct. But you didn't, so you aren't, and I'm not the only one here who has pointed this out to you.

that's the actual Federal Reserve cost.

Just FYI, US mints are part of the Treasury Department, not the Federal Reserve.

Try again when you've been alive long enough to watch this economy and know what it's doing, child.

What's with the patronizing attitude? Are you one of those types who really takes it hard when they're corrected in front of everyone? That's a sign of low self-esteem, you know. I hope my additional correction regarding the Fed doesn't ruin your day.

I'm over 50 and have an undergraduate degree in Economics. Be that as it may, I'll go ahead and get off your lawn anyway. Cheers!

Re:And Nothing Of Value Was Lost

[mlts]

There are levels of civilization. If civilization is destroyed to the point that preppers talk about, gold may not be the currency of choice, because there is no way to guarentee that a gold bar is genuine, or is gold-plated tungsten. Similar with silver. In a Mad Max scenario, the currency of choice will be something that is functional, and this likely will be ammo since it is relatively fungible, is useful, small and easily carried, and is universally valued. When people are on the edge of starvation, gold may be shiny, but it isn't going to help feed the family or keep the scavengers (both two legged and four legged) away.

After civilization stabilizes, and there is -some- form of government, if only to keep roads relatively safe and to dispatch people in grisly ways that counterfeit coins or fake metal, then gold can function as a means of exchange, just because there is a relatively low chance of it being worthless. However, until then, barter will be what people use to survive until there is some central authority.

Re:And Nothing Of Value Was Lost

[Areyoukiddingme]

We're heading into the Bitcoin end game, where the goal will be for the miners to extract as much money as they can from BTC users via transaction fees until the whole thing collapses. The miners want the network to saturate, and they want people to pay ever-increasing fees to get their purchases on the blockchain.

I think the problem is a lot more fundamental than that. Some people spent millions of dollars buying mining ASICs and installing them in Hong Kong skyscrapers. Seven people, to be precise. They get $11,000 worth of bitcoins for every block they complete. But those ASICs are badly designed, and only able to operate with 1MB block sizes. Three of the five core Bitcoin developers have been coopted, either with bribes or threats, to prevent the Bitcoin network from transitioning to a larger block size and turning that expensive investment into so much scrap. Those miners bought so many chips that they now dominate the worldwide hash rate, and they're damned if they're going to allow it to bankrupt them, resorting to direct pressure on Bitcoin developers plus DDoS of anyone who tries to run software that's capable of generating larger blocks.

The cryptocurrency that eschews government has been pwned by a criminal gang. Color me shocked and amazed.

Stick a fork in it, Bitcoin is done.

Re: And Nothing Of Value Was Lost

[pupsocket]

The biggest retail market for high-purity gold is people who've been there, people who have been through economic and political crises and forced to rebuild.

Re:And Nothing Of Value Was Lost

[Cro Magnon]

I've said that in a total collapse, lead will be more valuable than gold. Gold makes poor bullets.

Re:And Nothing Of Value Was Lost

[lawaetf1]

And lead makes poor currency. We have plenty of ways now to quickly validate the gold purity of an object.

Gold is the only real money

[mmiscool]

I don't need any of your fiat currency .

Re:Gold is the only real money

[Chrisq]

I don't need any of your fiat currency .

I wouldn't use cars as currency either !

Re:Gold is the only real money

[jareth-0205]

I don't need any of your fiat currency .

Gold is great until you need more of it, which you always do, because economies grow (all being well) and extra money is needed to support that. The other problem would be getting too much of it too quickly (ie building a mine) and ending up with a glut inflation. Fiat currencies are the only way to have a quantity of money that matches the size of the economy. I know we all want to believe that there's some quantity of precious metal somewhere that backs our cash, it's comforting, but real economies don't work well like that.

Re:Gold is the only real money

[Sax Russell 5449D29A]

I for one vote we go back to Kent economy.

Re:Gold is the only real money

[Anonymous Coward]

What's the differene between building a mine and the European Central Bank's current policy?

Fiat inflation - you heard it here first.

Re:Gold is the only real money

[Dr_Barnowl]

Conversely, fiat currencies don't necessarily represent the actual amount of wealth in the economy - hence the economic crash. A currency you can literally just make up out of confidence (or false confidence) isn't representative of real wealth.

You're right in that gold doesn't scale as a currency backing - because the amount of effort required to get it is not a fair representation of economic output any more (it used to be - you needed men and basic equipment so it was a reasonable proxy representation of how much economic surplus you had).

Cryptocoin could be regarded as a currency backing that actually scales with economic output - because there are no physical limits beyond manufacturing the ASICs and generating the energy (until you hit physical limits for those...).

Re:Gold is the only real money

[Errol backfiring]

You did not learn anything from the past crisis, did you? The main problem with our fiat currencies (the dollar / euro, etc) is that they are poofed into existence for dept with the obligation of paying usury. Off course, that usury was never created, so the dept spiral can only grow until the whole scam blows up in our faces. Gold has the problem that its quantity does not follow the population, but apart from distribution problems that is not necessarily a bad thing. We would just use less gold for the same goods when the population grows. The ever growing dept spiral however forces an economy to grow on top of the population growth, just to remain "stable". Off course, exponential growth can never be stable.

Mind you, fiat currencies could work, but not if they are created and managed as they are now.

Re:Gold is the only real money

[jareth-0205]

What's the differene between building a mine and the European Central Bank's current policy?

Fiat inflation - you heard it here first.

Control. The amount of mineable gold isn't particularly controllable, and the need to affect the amount of money in circulation is a constant effort. eg, when Quantitative Easing was introduced to increase the money supply and ease the recession, that is easy to do with fiat. Also, in the future that money will be removed from the system in the same way to prevent inflation.

Try doing that with bars of gold.

Re:Gold is the only real money

[jareth-0205]

Sure but the gold standard did not prevent economic crashes, eg in the 30s, and coming off the standard at that time helped. And there's a need to change the amount in circulation up and down to match what's going on in the economy.

As an aside, I rather think that using the vast quantities of energy to keep mining is a bad use of resources. At a time we're trying to be more efficient, creating a system that deliberately inefficient seems is dumb.

Re:Gold is the only real money

[Anonymous Coward]

That's sort of the point. QE marginally benefitted the lay, somewhat benefited those with investments, but the 1% have grown their assets to 40% with these tools.

Congrats.

Re:Gold is the only real money

[DigiShaman]

Gold is great until you need more of it, which you always do, because economies grow (all being well) and extra money is needed to support that.

I don't buy into the whole Peak Gold argument. There's plenty of gold in the oceans and whatnot, it's just too expensive to go after it. Once the value goes up, so will the resources be directed to find more of it. But let's assume the argument that we have reached Peak Gold. That's ok, so as it gets more expensive, we diversify into Platinum and other nobel metals. From there, move on down the the red headed stepchild - silver. And from there, we go to copper.

This isn't a problem.

Re:Gold is the only real money

[Anonymous Coward]

Adding more fiat money only dilutes the value of the existing money, stealing from whoever has it, and causes inflation. The "out of the thin air" part is the problem.
And more, it is private banks that do it for teh dollar, when it really should be the state if anyone.
Current scheme places the US state in extreme debt, giving the private banks power over the state they should never be allowed to have.

Re:Gold is the only real money

[Anonymous Coward]

So you know what you do when you have a fixed amount of a substance whether it is currency or a precious metal?

Your prices change, either they go up or they go down in response and people react accordingly. You don't need to add more paper/gold.

Re:Gold is the only real money

[Anonymous Coward]

Gold is great until you need more of it, which you always do

If you need more gold and there is no gold, what you end up correcting is the value of gold. That's the WHOLE POINT. You can't print it, so no one can screw your economy with reckless policy. You just have to make sure the guards you sit around it and the guy you hire to administer it are honest. As for gold mines - the only ones bitching about that are the people who don't have the gold mine. Anyway it's irrelevant nowadays - all the "easy" gold has already been mined. I dare you to find a gold mine nowadays that will provide more gold than your demand for it.

Re:Gold is the only real money

[Anonymous Coward]

I got some 10,000,000 Million Pengo notes if anyone's interested.....

Re:Gold is the only real money

[Dunbal]

Of course it didn't. But the guy who got hurt in the economic crash is the fool. The guy who kept his gold and didn't borrow too much did just fine right through the crash and beyond. Nowadays it seems we reward the fools for being foolish and punish the cautious.

Re:Gold is the only real money

[Sarten-X]

Who exactly do you think would be running the gold mine?

Do you really think that somehow, getting rid of fiat currency will also somehow invalidate the old rule of "it takes money to make money?"

Re:Gold is the only real money

[FooAtWFU]

Gold is crap as money. Good money needs to be a medium of exchange, store of value, and unit of account. It fails at all three of these. No one accepts gold as payment - we've moved on to other technologies. No one uses gold as a unit of account - considering its value can literally double (or fall in half) in the space of 1 calendar year, it'd make business wildly unpredictable. (Just imagine... that mortgage you got denominated in gold? One year later you owe twice the value of the house.) The only thing it sort of works for is being a store of value - it's deficient there, due to its volatility, but the volatility is different than other asset classes' volatility, so works as a hedge against a crisis. It's more insurance than it is money.

Re:Gold is the only real money

[Anonymous Coward]

I see someone doesn't understand the concept of supply and demand. When you need more gold, you just use a smaller amount as your trade token.

And you would have to be the greatest miner the world has ever known by far, perhaps with amazing technology from a hyperadvanced alien civilization to cause gold inflation on Earth, because all the gold ever mined is still in circulation. You would have to compete against 8000 years of mining. There was a bad inflation in Europe when the Spanish looted thousands of years worth of New World mining, but we are unlikely to find any new continents with technologically backwards people we can steal from in the near future. There is space mining, but once that starts up, no-one will care about the value of money because everyone in the world will be super rich.

Re:Gold is the only real money

[Anonymous Coward]

>He thinks the central banks are in control of their spending.

You're like a child. They will print money to promote their own interests until the value of the currency is destroyed. The dollar has already fallen by 98% since the Fed was established.

Saying "the money supply has to grow with the economy" is saying that any increases in productivity have to be confiscated and redistributed (largely to moneyed interests) because reasons. No, the people who earn their money by providing goods and services should get to keep the purchasing power, not the banks who get to loan out conjured money at interest.

Re:Gold is the only real money

[Anonymous Coward]

We would just use less gold for the same goods when the population grows.

Which is insane. Most non-essential spending would grind to a halt because it is always advantageous to wait until prices drop.

Re:Gold is the only real money

[RogerWilco]

Currently we mine 1-1.5% of the existing supply of gold annually.

That means that unless your economy grows less than that, or mining rates go up significantly, you are basically having deflation: Your gold becomes worth more over time.

Deflation is generally seen as a really bad thing, as it makes people prefer saving over spending. Money being saved is not part of the available supply, causing more deflation, causing more people to save their money, etc.
The people hardest hurt are those that can't save any money, as they need to spend all they earn on things like food.
Deflation is really good for people who have a lot of money, as they can save most of it, becoming richer over time, without doing anything.
If they let other people borrow the gold at an interest, their pile of gold also grows, on top of it getting more valuable.
The end result becomes a situation where those few people who have enough gold that they spend less than they earn by lending, will end up with all the gold very quickly.
This has happened many times in the past, when gold was the main type of currency. It usually ended by some King using their power to steal the money from whatever bankers had the big gold piles. (Kings always have wars to spend money on, so they usually spend more than they can earn and then some).

Re:Gold is the only real money

[MightyYar]

Like most things in life, currency policy is one of tradeoffs. You can have wild swings in value and deflation associated with hoarding, or you can have steady but stable inflation. The main downside to steady inflation is that hoarding cash becomes a money-losing endeavor. Of course, that's rather the point... Solution: buy something else instead of hoarding money. If you are comfortable with gold, hoard gold. If you like equities, get those. Or mix it up a little.

Another advantage of steady inflation is that salaries go down over time. Usually this is all but impossible, even though the laws of economics demand it for an efficient economy. The disadvantage is that, well, your real salary goes down over time. But in theory a rising tide lifts all boats. In practice there are winners and there are losers. This was the case during the gold standard as well.

Re:Gold is the only real money

[Anonymous Coward]

As soon as someone throws out "fiat money" you can be sure they don't have a fucking clue about basic economics. Dear god, is it so hard to know that money is intrinsically an abstract concept representing the value of other more tangible and other intangible goods and services. Gold doesn't have a magic property that makes it a better medium for exchange... in fact quite the opposite.

Re:Gold is the only real money

[JoeMerchant]

Off course, exponential growth can never be stable.

I think that people fail to realize: 1% interest, compounded, is still exponential growth. The exponentially growing economy has worked for the last few hundred years due to exponential growth of population, at first finding more and more gold and silver, but shortly after the globe was conquered switching to "paper money" that can grow with population.

Re:Gold is the only real money

[msauve]

" its value can literally double (or fall in half) in the space of 1 calendar year, it'd make business wildly unpredictable. (Just imagine... that mortgage you got denominated in gold? One year later you owe twice the value of the house.) "

You're unclear on the concept. You're apparently referencing getting a loan to purchase that house without saying as much. The value of the house doesn't change because you owe gold - you still owe the same amount of gold you agreed to. When you say the value of the house changes, what you really mean is that the exchange rate between fiat currency and gold has changed. If it takes more fiat currency to exchange for the gold you owe, then it's not the value of gold which has gone up, but that the fiat currency has been devalued, which means it is not a good store of value.

Your whole argument is based on gold not as money, but as an asset valued in fiat currency. The amount of gold is quite stable and not subject to artificial manipulation. It's the manipulation of fiat currencies which causes the exchange rate to change.

Re:Gold is the only real money

[Smidge204]

Paper money only has value because enough people think it does. People will be willing to give you things of tangible value (goods and services) in exchange for paper money and tin coin because they have confidence they can turn around and trade it for more goods and services from someone else at a later date.

Gold only has value because enough people think it does. Most people, however, will NOT be willing to accept gold in exchange for goods and services. In all but a handful of special cases you'll have to first convert that gold to an agreed upon currency first, possibly via some process that certifies the quantity and purity of the gold first.

Both paper money and gold are fiat currencies in this way: They have little or no intrinsic value, but instead serve as proxy of value. It's traded based on a level of trust that the per-unit-value will remain relatively stable (or increase) in the time it takes to turn around and trade it to someone else.

All of this is true for Cryptocurrencies as well. It has value because people want it, not because it's intrinsically valuable. If nobody wants it or is willing to accept it in trade, then it's worthless. You can't even burn it for warmth like paper money or make decorations and tableware out of it like you can with gold... it is absolutely devoid of intrinsic value.
=Smidge=

Re:Gold is the only real money

[Anonymous Coward]

The point is that if Gold is the medium of exchange, its value is not double or halving. The value
of fiat dollars is halving or doubling. Because the amount of Gold or its 'value' isnt changing. It's
the dollar's value that is changing, just like an FX rate.

If you bought your house with a mortgage denominated in Gold, then you'd have to accept that you
will be paying back the loan in a very basic way. By earning Gold from other Gold holders. Presumably
by offering your good or services in exchange for Gold. The value of your house in Gold may not change
very much. The value of dollar vs Gold may change hugely, but that means your house and your salary
or charge out rate will also change in dollar, though maybe not in Gold.

The bigger problem with Gold is that (as has been pointed out), it doesnt easily adjust to economic situations.
Only Fiat currencies can quickly and easily do that.

Re:Gold is the only real money

[mu51c10rd]

A Fiat would be worth the pennies in my couch cushions..

Re: Gold is the only real money

[Anonymous Coward]

Moreover the available fiat currency should be linked to numbers of living individuals, each allocated an equall sum at birth, to redistribute as they please. Upon death all the money issued to that individual at birth should cease to exist regardless of whoever owns them

Re:Gold is the only real money

[Stuarticus]

You're really good at spotting fools in hindsight, a real gift.

Re:Gold is the only real money

[Anonymous Coward]

And yet, history has seen many, many, many economies on a gold standard fuck their system up and go belly up. So history shows your assertion is incorrect.

Re:Gold is the only real money

[nitehawk214]

Don't worry. I'm sure goldfinger here doesn't actually have any gold outside of his "offshore gold depository" that you see advertised late night on basic cable channels. And I am sure he think that when the economy and society collapses they will be more than happy to ship his gold to him in some sort of well defended caravan.

Re:Gold is the only real money

[nitehawk214]

But the house itself could double or half in value overnight with disruptions in the price of gold, loan or not. This encourages people to walk away from their loans, which is exactly what happened in 2008. In that case it was because people went on a buying frenzy when prices were inflated, thinking that prices would continue to inflate.

The same would happen with gold, "Oh I better buy property now, gold went up in value a lot over the past few months... it might go up more!" Yeah, or it might not.

Either way the individuals are morons. Gold has been quite inconsistent over the years so it will only cause this to happen more.

Re:Gold is the only real money

[invid]

The currency of a given country is merely the measure of the people's confidence in that country's economy.

Re:Gold is the only real money

[aepervius]

why would I trust a crypto currency for which the one with the more computer power "wins", and the first adopter "wins", over the current fiat based currency ? That makes no sense to me as a user of currencies. The current system while having its default is far superior.

Re:Gold is the only real money

[Anonymous Coward]

The US is in a unique position with regards to fiat currency. IT WILL COLLAPSE, the only question is when and and what price.

Re:Gold is the only real money

[FooAtWFU]

Your whole argument is based on gold not as money, but as an asset valued in fiat currency.

No! It's not the fiat-currency-price of gold which doubles and halves, it's the real price, the only price that matters, the amount of goods and services which you need that you can purchase with it, which is the only real way to value an asset. (It's one of those terms of art in economics that actually means exactly what it says on the tin.)

And the amount of gold may be stable, but its value is not. You don't hold gold because of its intrinsic value. If no one else wants gold anymore you will not benefit from its intrinsic usefulness by turning it into pretty jewelry or using trace amounts in the manufacture of electronic components. You hold it because it has an effective value, because people demand it, and that demand is just as artificial as the demand for the "fiat" US Dollar, which is a bedrock of stability in comparison. For all the laser-focus on the supply side, gold-bugs have lost sight of the other half of economics, demand.

Oh, and fun fact: You can convert between fiat-currency price and real price using Math. The typical math involved is a little thing you may have heard called the "consumer price index" that measures inflation. In its worst year ever, US dollar inflation once hit 14.76%. Of course that kind of yearly change from gold is just business as usual.

Re:Gold is the only real money

[slashping]

Your prices change, either they go up or they go down in response and people react accordingly.

Accordingly means that falling prices should result in a negative interest rate, but you can always get a zero interest rate by keeping the money in a box. This means that in a deflationary environment, you can't borrow (enough) money to invest, and the economy slows down.

Re:Gold is the only real money

[Errol backfiring]

it is always advantageous to wait until prices drop

Only up to a point. You would not want to wait your entire life for clothes, food, housing, etc. Besides, I read that the world's population growth would end somewhere this century. And off course money can be managed. If you install a negative interest rate (a kind of hoarding tax) spending becomes more advantageous. This is not a new idea, and basically I think that most humans are, well, human and not bean counting "rational" specimens of homo economicus. Maybe the stock exchange would grind to a halt. That would actually be a good thing.

Re:Gold is the only real money

[myowntrueself]

Currently we mine 1-1.5% of the existing supply of gold annually.

That means that unless your economy grows less than that, or mining rates go up significantly, you are basically having deflation: Your gold becomes worth more over time.

Then the first asteroid ever prospected is found to have more gold and precious metals than have been mined from the Earth in all history.

Re:Gold is the only real money

[Dunbal]

You're really good at spotting fools in hindsight, a real gift.

You're really good at making frivolous remarks. OK it's the cautious people who get burned in market swings - every damned time. Yeah that makes sense. No hindsight is required, but certainly post facto inane remarks seem to be essential.

Re:Gold is the only real money

[Anonymous Coward]

Adding more fiat money only dilutes the value of the existing money, stealing from whoever has it, and causes inflation. The "out of the thin air" part is the problem.

So it only hurts those hoarding fiat money? Seems to me that at least in America, that's not a bad thing for most people. Most people don't have large cash reserves. They have large debts. They borrowed money at the old, higher value, and with QE they must pay it ack with money at the new, lower value.

Admittedly, there's a lag between inflation and wages (and runaway inflation has its own separate set of issues), but it does seem like some inflation should benefit borrowers (e.g. most Americans).

Re:Gold is the only real money

[msauve]

Your argument is based not on fundamentals, but on the pragmatic fact that most transactions occur with fiat currency. That doesn't change the basic fact that the value of fiat currency is subject to artificial manipulation (quantitative easing, anyone?). The argument for gold is based on an "all else being equal" situation, where gold would be the most widely accepted of exchange. In that case, gold has value for the same reasons that Bitcoin does - is naturally constrained (unlike, say, diamonds), easily verified, easily divisible, doesn't degrade, and is easily transferred. That makes it intrinsically valuable as a means of exchange. All of those things, except the constraint, are what makes fiat currency have value, so the argument is really whether the value of money should be subject to artificial manipulation. Hyperinflation has never occurred with a gold backed currency, it has with fiat currencies. So much for your claim that fiat currency holds it's real price better than gold.

If you wish to continue the discussion, drop the condescending attitude.

Re:Gold is the only real money

[Gr8Apes]

There's a saying: A fool and his money are soon parted.

The cautious survive the downswings, or do you not recall the stories of those losing everything when bubbles popped?

Re:Gold is the only real money

[Anonymous Coward]

Of course it didn't. But the guy who got hurt in the economic crash is the fool. The guy who kept his gold and didn't borrow too much did just fine right through the crash and beyond. Nowadays it seems we reward the fools for being foolish and punish the cautious.

By your definition, a "fool" in the 1930s would be anyone with a loan or mortgage. That's what the gold standard did - people spent less, thus money became more valuable (deflation). But the loans didn't change - if you borrowed $5,000 to buy farmland in 1925, the bank still expected $5,000 (+ interest) to be paid back, regardless of the true value of that $5,000.

Today, if we had the risk of deflation, a "fool" would be anyone who borrowed to get a higher education, or a reliable vehicle, or a home.

The opposite of a "fool" would be someone who didn't invest their money but instead put it under the mattress.

So think carefully about your definition of a fool.

Re:Gold is the only real money

[Anonymous Coward]

Ummm... inflation is bad, but DEflation is much much worse...

Re:Gold is the only real money

[Gr8Apes]

Besides, I read that the world's population growth would end somewhere this century.

Yep, time for the harvest

Re:Gold is the only real money

[Registered Coward v2]

The difficulties in extraction are the only reason gold holds its value as you point out. The total amount mined is estimated at 171000 tons. By contrast, there are 20 million tons in the ocean you just cant extract it economicslly. If that could be economically extrater gold would go the way of aluminum and cease to be a way to store value.

Re:Gold is the only real money

[msauve]

You're doing the same thing, conflating an exchange rate with value. As soon as you say "price of gold," you're no longer talking about value, only exchange rate. The value of a house doesn't change dramatically, it provides the same shelter, living space, amenities, etc. year after year. What changes is the value of fiat currency, so the exchange rate changes. Similarly with gold - the supply is naturally constrained (unlike diamonds), it is easily divisible, doesn't degrade, widely exchanged. What happened with real estate is that fiat currency became devalued over time (inflation), so the price of a house in fiat currency became high. Some people were overextending themselves by making risky bets that they would be able to pay off loans with future dollars which were further devalued (inflated). When a recession occurred the fiat money supply shrank, fiat currency became more valuable - and it took less to buy a home. Some people lost the bet, but the value of their house never really changed, only the value held by fiat currency.

That was good for people who exhibited responsible behavior and saved their money, bad for those who gambled on credit.

Re:Gold is the only real money

[westlake]

Cryptocoin could be regarded as a currency backing that actually scales with economic output - because there are no physical limits beyond manufacturing the ASICs and generating the energy

Meaning that what costs 10 bitcoins in the morning may cost 12 bitcoins at noon, 100 bitcoins tomorrow and a 1000 bitcoins next week.

Re:Gold is the only real money

[Stuarticus]

Plenty cautious people do get burned in market swings, you are just suffering from delusions of competence in your own decision making.

Re:Gold is the only real money

[ProzacPatient]

Furthermore I always think to myself whenever I see those Roslyn Capital commercials that if the doomsday fiat currency crash happens (think Depression-era tier or worse) like the spokesman says then who will be able to buy all that gold you been hording if everyone is broke? It's really a clever scam targeted at seniors IMO

Re:Gold is the only real money

[Anonymous Coward]

"One year later you owe twice the value of the house." - so if anything, gold is ostensibly more stable than Bitcoin, where in the span of 12 hours, rather than months, the value of your home can fluctuate between the cost of a pack of gum and the cost of a small nation. Good going, Bitcoin.

Re:Gold is the only real money

[eyenot]

Don't, don't, just don't.

The Parent is arguing that if everything in your life such as your contracting earnings for work, and your transactions of other sources of income, were also negotiated in Gold, then you'd be in the clear because even if the dollar-evaluation of Gold changes, you're still owed Gold for things like work-hours put in at work or projects completed for clients.

You're clearly arguing with a deluded lunatic.

For their unicorn economy to work, those bosses and those clients would also have to demand that a sufficient amount of their own income is also negotiated in gold, or else they, too, would have to suffer the exchange rate instability.

And that means those sources of income must also demand gold for their goods and services, etc.

Their plan only works if it's basically completely and instantly adopted by the entire population. And eventually you run into a problem: there's no way in hell that you can represent the daily exchange of goods, services, and everything else in let's say the United States of America with gold, while also representing the unexchanged value in all bank accounts in the USA with gold, while also representing the potential for economic growth also in gold.

You could argue that everything can be conducted electronically and that all the gold will actually be stored in Cheyenne Mountain or whatever. You could argue that the system will start with an evaluation of gold that allows the given amount of gold to represent all of the wealth in the united states.

No matter what you argue, you run into the fact that either new discovery is made and mined at a rate equal to or faster then the rate of economic growth, or you face continuous deflation. And that's deflation on a currency that is already so infinitesimalized by how small amount of it there is compared to the sum of gross domestic product plus capital plus banking principal plus wealth, etc. etc.

The evaluation of goods and services in gold would start off infinitesimalized and it would only decrease as time goes by. The people who argue for gold as a currency might as well just argue for any number, any integer whatsoever, to represent all the world's wealth and that everybody in the world simply exchanges increasingly infinitesimal amounts of that.

It's a harebrained scheme and it's not worth arguing with them over it because they never think they're wrong because by the time they're grasping at straws with this gold-based thing, they're already desperate and listening to crackhead late night radio shows looking for answers, or moved onto phase two where they're slowly draining their accounts and watching daytime television and getting sucked in by advertisements meant to fleece the aging population who are losing their faculties.

Re:Gold is the only real money

[Curunir_wolf]

What's the differene between building a mine and the European Central Bank's current policy? Fiat inflation - you heard it here first.

Control.

Central control by an unaccountable bureaucracy. That does not sound like a good thing to me.

The US was on the gold standard until around 1972. The only thing surprising is that the subsequent fiat system has exceeded the average lifespan of fiat currencies. Central authorities controlling currency will always try to extract more value out of it, even when it is backed by precious commodities. The difference is that when the greed of the controllers overwhelms the system and causes it to collapse, the people actually have some value they can extract. You don't have that option with fiat currencies.

Re:Gold is the only real money

[MightyYar]

I'm interested as to why you think it will collapse? My suspicion is that it will not collapse without a broader economic collapse - in which case the currency is the least of our problems. Anyway, currency collapse is not unique to fiat currencies. Inflation and deflation would swing +/- 40% in a very short time while we were on the gold standard.

Re:Gold is the only real money

[eyenot]

Everyone except the people who don't own or control the mining technology or the launch pads. They'll still continue to slave away just as people who don't own or control the banking world do today.

Re:Gold is the only real money

[Anonymous Coward]

Goldbugs are also really, really, really blind to history.

When you base your currency on precious metals, you now have an interest in controlling said precious metals. The US used to have strict laws about how much gold bullion you could own, move, sell, buy, trade etc. - For fear of anyone (Either private entities or hostile states) collecting enough to essentially manipulate currency.. Or blackmail the government with threat of causing a currency collapse.

Re:Gold is the only real money

[qbast]

Accordingly means that falling prices should result in a negative interest rate, but you can always get a zero interest rate by keeping the money in a box.

This is being worked on. Various governments are pushing steadily for cash-less economy. When this finally happens, 'keep it in the box' won't be an option anymore.

Re:Gold is the only real money

[Anonymous Coward]

Ok, so I think I've got this right. Correct me if I'm wrong.

You're proposing that we trade Fiats as currency. Do you have a car analogy for that?

Re:Gold is the only real money

[Bob the Super Hamste]

How about a more recent crash. Traditionally the view with housing was to put 20% down and have a monthly payment no more than 1/3 of your take home pay on a 30 year fixed mortgage. then there was the retard run in the 2000s where all the "experts" said that was wrong. My wife and I got a house doing things the old traditional way, a bunch of friends did the new way. They thought they were so smart until the shit hit the fan and they got foreclosed on, had to file for bankruptcy, or are stuck in a house they really can't afford. We took in the the shorts on equity but at the same time we didn't worry about losing the house, or bankruptcy, as our losses are what the would call paper losses since we bought a house to live in, not use as a bank. We did eventually refinance to a 15 year mortgage with a much lower rate (4.5% to 3.00%) and it cost us $18 more a month for the payment. Anyone who had half a brain should have known something was up, especially since my wife and I were approved for some silly loan amount where our monthly payment would have been $20 less than our pretax earnings. My response to the loan officer was "Are you fucking retarded? It would be physically impossible for us to make even one payment on this." I then told him what we could afford for a monthly payment and made the poor bastard work backwards to figure out what we could actually afford.

The people who got fucked hard in 1929 were just like the people who got fucked hard in '07-'08 the ones who were over extended and didn't listen to the traditional wisdom and instead decided that the rules didn't apply this time.

Re:Gold is the only real money

[Anonymous Coward]

i.e. prices lower

I'm sure the CEOs will be first in line to take a paycut.

Re:Gold is the only real money

[Bob the Super Hamste]

Weak I have a few Z$100,000,000,000,000 notes.

Re:Gold is the only real money

[slashping]

The funny thing is that the government doesn't even have to accept the cash anymore. As long as other people accept it, it's still useful on the black market.

Re:Gold is the only real money

[Lisandro]

Gold is valuable precisely because it is scarce. Yes, you might run into a gold ore but, overall, gold is less than 0.0011 ppm of the earth's crust - you can't easily "get too much of it quickly".

Re:Gold is the only real money

[Anonymous Coward]

So lets punish the people who have lived within their means because *some* people can't figure out how to do so. #feelthebern

Re:Gold is the only real money

[rickb928]

Don't you revalue the currency based on current value as a function of the metal backing it? So that when your local mine unions get a new contract and pay goes up, so does the cost of bread and motorcycles, and dollars are worth less?

Or do you have to accept that being successful and expanding your nation's wealth requires you to gather more of the metals backing your currency to keep pace with growth?

Oh no, that can't work, neither one. We have to let smart people figure these things out of thin air.

Re:Gold is the only real money

[Lisandro]

The difference is that you need to find an ore to mine in the first place.

Re:Gold is the only real money

[Anonymous Coward]

> No one accepts gold as payment

Bullshit. Plenty of people will take gold as payment. Honestly, probably more than half, and likely all of them if they were convinced you were actually giving them real gold beyond a shadow of a doubt.

Re:Gold is the only real money

[TheCastro1689]

Sure they do, you just revalue your currency.

Re:Gold is the only real money

[hey!]

I know people use "fiat currency" to imply that gold somehow has intrinsic value, but in a gold standard the value of gold is still set by arbitrary decree as well, and you can't stop the government from altering the dollar supply by saying it has to be linked to gold.

There's really no replacement for ongoing economically responsible management of the money supply. The fact that inevitably we'll do something short-sighted and stupid with the money supply doesn't change that. You can't adopt a convention (e.g. "One ounce of gold is worth $1200") that people can't amend in the future.

Re:Gold is the only real money

[Anonymous Coward]

The dollar has already fallen by 98% since the Fed was established.

Gold bug detected. Proceed with caution.

Re:Gold is the only real money

[hey!]

The Fiat standard: 1 Fiat 500 is worth 13.5 ounces of gold.

Re:Gold is the only real money

[goose-incarnated]

Adding more fiat money only dilutes the value of the existing money, stealing from whoever has it, and causes inflation.

You think that doesn't happen with the gold/silver/commodity supply? Why do think think BTC mining is rate-limited?

Re:Gold is the only real money

[avandesande]

Very few rich people have cash sitting around.

Re:Gold is the only real money

[Anonymous Coward]

The value of gold can change. Even if there was no such thing as the dollar.

You buy a house with a mortgage denominated in gold. You owe a set amount of gold. Meanwhile gold isn't being mined fast enough to keep up with the growth in the economy so you have deflation (more demand for gold causes the value of a unit of gold to increase (this is measured by what gold can buy not by an exchange rate with another currency)). Thus you get paid less in gold for the same amount of work and it becomes harder to pay off your house.

Re:Gold is the only real money

[Anonymous Coward]

At a time we're trying to be more efficient, creating a system that deliberately inefficient seems is dumb.

This is why I have always been adamantly against the current generation of digital currencies.

I like the basic idea of digital currencies, but it is outrageously unethical to waste massive amounts of energy "solving" useless computational problems. To me, the elimination of this generation of digital currencies is a moral ecological imperative.

If we cannot solve the technical problem of the massive energy waste in digital currencies, then they need to be abolished -- this is one of the rare cases in which I would support a strong legal crackdown. Capitalism is okay in some cases, but when it results in the wanton destruction of vital resources for profit, it needs to be stopped.

Re: Gold is the only real money

[Type44Q]

Q) What does "FIAT" stand for?

A) "Fix it again, Tony!"

Re:Gold is the only real money

[Anonymous Coward]

People seem to think that the Great Depression was the first economic downturn in the history of the United States. That's not the case. Starting from the American Revolution onwards, we had recessions or depressions every 3 years or so, with the economic contractions running from 10-30%. I don't know how people can possibly say that cautious people would have been fine, when jobs disappear and banks fail so often.

Since the Federal Reserve and the end of the gold standard, we have recessions every 6 years or so with the economic contractions typically less than 5%. That stability has been a huge benefit to everyone in this country. It does come at a price which is certainly paid disproportionately by the less wealthy. It would be nice if we could make that burden a bit more fair, but going back to the gold standard doesn't do that. It will hurt you more than it helps.

Re:Gold is the only real money

[firewrought]

I would like to say that any company (or government) with the engineering competency to mine such an asteroid would also have the economic competency to return it to earth at a controlled rate, so as to extract the max value of their investment. But I can't say that because competency in one domain doesn't imply competency in another domain. (For instance, being a successful jackass reality-TV start doesn't imply you can walk into the White House and avoid steering the country into the ground.)

Re:Gold is the only real money

[Anonymous Coward]

This is all true... but IMO, the biggest reason I'm not really enthused about Bitcoin is because we know it's not truly anonymous. As long as it relies on a blockchain like it does, it means there's some kind of trail that can be followed back to the source to figure out who initiated a transaction.

It might be very difficult to trace, but not impossible -- and that means there will be folks out there finding better and better methods to back-trace things for their own gain or purposes.

At least with tangible assets like cash, if a transaction happens without other witnesses to it, there's no way to prove it happened after the fact. That's the level of anonymity I think any digital alternative to cash needs to have.

Re:Gold is the only real money

[Anonymous Coward]

Bullshit indeed. While some people might accept gold as payment for goods/services rendered, businesses most certainly do not.

Re:Gold is the only real money

[JesseMcDonald]

Gold is great until you need more of it, which you always do, because economies grow (all being well) and extra money is needed to support that.

You do need the total supply of gold to become more valuable as the economy grows. What you do not need, however, is more gold. Absent deliberate interference, the law of supply and demand ensures that the value of the existing gold adjusts automatically to match the value of everything it can be used to purchase.

The only reason to need more currency would be if the supply were stretched so thin that the units required for common transactions became impractically small. However, in cases like that you can just substitute a more common material (like silver) for everyday use and reserve the gold for large transactions. However, gold's physical properties make it fairly easy to handle even in small quantities; for example, you can purchase 1/20 of a gram (about $4 worth) of gold wire embedded in a plastic card from Shire Silver, which is no harder to store or transact with than a typical $5 paper note.

Bitcoin, of course, does not suffer from this problem at all since it is just as easy to transfer 0.00000001 XBT (one satoshi) as it is to transfer 1 XBT—and if that ever did become an issue it would not be difficult to add a few extra decimal places to the protocol.

Re:Gold is the only real money

[Anonymous Coward]

Most of world history from 1600 to 1900+ flies in the face of your assessment

The economy continuously grew more than gold production, and it continuously grew while lowering prices. Lowering prices is not deflation. Deflation under gold standard would require gold to disappear, it would require less money.

The claim that savings causes deflation causes savings causes deflation is nonsense.

Fiat currency was created by governments so that they could inflate away national debt. Something they couldn't do with gold.

The USA banned private ownership of gold, then devalued the dollar against gold, effectively stealing 30%+ of its citizens own wealth over night. They did this because they didn't have gold to pay their foreign debts. After that they went fully fiat, so they can just print money to pay their debt and devalue the currency.

Re:Gold is the only real money

[Anonymous Coward]

Naturally, debtors want inflation, while savers want deflation. Central banks are supposed to seek a balance between the two, but with all governments and most voters deeply in debt, they tend to favor the debtors.

Thus the end result is always central bankers inflating the currency to worthlessness, wiping out any savers who were late in switching to a more durable store of value. Underlying all the above comments against gold is the unstated assumption that economies are democratic, when in fact they are ruthlessly darwinocratic.

Re:Gold is the only real money

[Sarten-X]

Adding more fiat money only dilutes the value of the existing money,

You're missing a key detail of modern economics: the debt economy. Think of money and debt as (loosely) matter and anti-matter. When they're together, they can cancel each other out, and one can be produced by producing an equal (except for an mentioned below) amount of the other. The federal reserve bank is able to do this, and that's where the "out of thin air" magic happens.

By producing money, which is then loaned to banks, the banks have enough money on hand to serve their customers' needs, including making more loans. That allows corporate customers to have enough money available to continue to do business, including paying out paychecks. That lets individuals continue to have money to spend, which goes back to keeping business moving. Ultimately, that's the goal of any economy: to keep goods and services moving from the people who produce them to the people who need them.

The other side of the economy is the debt. When the banks receive the loan from the Fed, they also get an equal amount of debt they are obligated to pay back. When borrowers get their loans, they also get debt. Debt, of course, doesn't get sent out with paychecks, so the borrowers have to pay the debt out of their profits, which limits how quickly they are willing to spend the money they have secured. That prevents runaway spending, and keeps the value of the money stable.

The Fed, then, can control inflation by controlling the interest rate, which affects the balance of money and debt. If they lower the interest rate, businesses (which make up the vast majority of economic transactions) are able to put more money into circulation, at the risk of increasing inflation. If they raise the interest rate, the debt increases, which will help prevent inflation, but has the risk of stopping the all-important circulation of goods and services. It's a careful balance, but it's pretty effective at stopping abrupt crashes or surges in the economy

Re:Gold is the only real money

[MagicMerlin]

> Sure but the gold standard did not prevent economic crashes, eg in the 30s, and coming off the standard at that time helped

The US did not come off the gold standard in the 30's FDR seized all privately held gold stores and no longer allowed redemptions. These actions greatly increased and lengthened the depression; a huge part of the banking crash was due to panic redemptions based on rumors that the gold seizures were going to happen (that later turned out to be true).

Don't get me wrong: the gold standard is impractical for all kinds of reasons. However, US government management of the great depression was a disaster.

Re:Gold is the only real money

[Anonymous Coward]

Extra money is not needed to support a larger economy. This is a common fallacy.

Re:Gold is the only real money

[Anonymous Coward]

News flash. Gold exists today. Rich people can have some and the poor people you described that live paycheck-to-paycheck cannot.

Whether or not gold is used as money is irrelevant to your argument.

Re:Gold is the only real money

[rahvin112]

Gold is great until you need more of it, which you always do, because economies grow (all being well) and extra money is needed to support that.

Or you have an accident or theft that loses a vast quantity of gold. When the USS Central America Ship sank in hurricane in 1857 it was carrying 15 tons (in today's dollars $50 Billion) of San Francisco gold rush gold in it's holds. This single event caused an economic crash and run on the banks in the US due to the gold standard.

When the sinking of a ship can cause a run on the banks you need to rethink what you are basing your economy on.

Re:Gold is the only real money

[Anonymous Coward]

This isn't so much a problem with gold as a problem with poor lending standards. A bank that lends money in such a way that people can profit in the way you describe will quickly go out of business.

The 2008 problem was partly caused by the artificial lending capacity of Fannie Mae and Freddie Mac backed by the tax payer.

Re:Gold is the only real money

[rahvin112]

Deflation is very very bad. Japan calls an entire decade the lost decade because they suffered through 10 years of deflation where the entire economy declined while their currency kept getting stronger. At the end the Japanese economy was so damaged that they may never recover.

Re:Gold is the only real money

[Anonymous Coward]

Were you born this stupid, or did it take practice? Did you do drugs that killed your brain cells?

Re: Gold is the only real money

[Anonymous Coward]

It is rare to see stupidity reach such depths.

Re:Gold is the only real money

[Anonymous Coward]

Do you have a gold plated dildo up your ass or something?

Re:Gold is the only real money

[farble1670]

When's the last time the US had deflation? Not since ~1940 says this,
https://en.wikipedia.org/wiki/...

Re:Gold is the only real money

[CaptainDork]

I see what you did there.

Re:Gold is the only real money

[Anonymous Coward]

Is it really possible to have a "truly anonymous and stable" digital currency scheme? Bitcoins works for the most part because it isn't "truly anonymous"; players can't normally game the system to create more cash faster than what is the consensus of the system as a whole; each coin is accounted by consensus. To be anonymous like you would like it means somehow, coins need to be created and spent without requiring the consensus of the whole system.

Re:Gold is the only real money

[Anonymous Coward]

The premise is fundamentally flawed since *total* economies never grow, only shrink. In physics, this is called thermodynamic laws.

Exponential growth is not the norm, has never been, and will abruptly and brutally end when you least expect it (just study historical price charts).

Re:Gold is the only real money

[jmcvetta]

In Vietnam everyone is a millionaire! (1,000,000VND = 44.86USD at today's exchange rate.)

Re:Gold is the only real money

[Anonymous Coward]

It would be helpful to see e some numbers on just how much energy is being wasted by bitcoin miners and transactions. Take those numbers and compare them to the energy wasted on murdering trees and digging metal for coins, along with other electronic transactions. It's all bad in my opinion. Wasted energy and resources.

Sounds like the free market at work

[Anonymous Coward]

Many may lose out in the short term but who cares about them! The resulting bitcoin will be stronger (until the next crisis).

Re:Sounds like the free market at work

[Anonymous Coward]

Yeah, like the regulated bureaucratic system we have today has worked out any better? Tell that to the shrinking middle class. Try blaming that on the free market.

"Merchants can't rely on digital transactions"

[Nutria]

This is why I don't rely on fan-currency.

Re:"Merchants can't rely on digital transactions"

[serviscope_minor]

This is why I don't rely on fan-currency.

As opposed to paper currencies which hold value precisely as long as people believe that they do (i.e. a fan currency).

Re:"Merchants can't rely on digital transactions"

[Nutria]

Just because fiat currency requires faith does not mean that we are fans of fiat currency or that it was created by fans of fiat currency.

Re:"Merchants can't rely on digital transactions"

[GuB-42]

At least paper money can be used as an actual fan.

Re:"Merchants can't rely on digital transactions"

[JoeMerchant]

This is why I don't rely on fan-currency.

So, the U.S. dollar is not fan-currency because it is backed by the full might of the U.S. military?

Re:"Merchants can't rely on digital transactions"

[slashping]

It's not about force, it's about trust. I'll take your dollars in exchange for work or goods because I trust that someone else will accept my dollars in the future.

Re:"Merchants can't rely on digital transactions"

[Nutria]

So, the U.S. dollar is not fan-currency because it is backed by the full might of the U.S. military?

A fan, or fanatic, sometimes also called aficionado or supporter, is a person who is enthusiastically devoted to something or somebody, such as a band, a sports team, a genre, a book, a movie or an entertainer.

How in the hell do you equate backed by the full might of the U.S. military to fandom?

Re:"Merchants can't rely on digital transactions"

[JoeMerchant]

So, the U.S. dollar is not fan-currency because it is backed by the full might of the U.S. military?

A fan, or fanatic, sometimes also called aficionado or supporter, is a person who is enthusiastically devoted to something or somebody, such as a band, a sports team, a genre, a book, a movie or an entertainer.

How in the hell do you equate backed by the full might of the U.S. military to fandom?

You missed a negation. Bitcoin is a fan based currency, OP expressed a distaste for fan based currency... I was asking why the U.S. dollar is not fan based, is it because of faith and trust in the government? That would sound more like fandom to me.

Re:"Merchants can't rely on digital transactions"

[JoeMerchant]

It's not about force, it's about trust. I'll take your dollars in exchange for work or goods because I trust that someone else will accept my dollars in the future.

Do you ever look deeper and ask why you have that trust?

Re:"Merchants can't rely on digital transactions"

[slashping]

Sure. I have trust because everybody else has it, and it makes no sense for me to be first to abandon my trust. I can imagine that the trust would rapidly disappear if China stopped purchasing US bonds and assets. If that were to happen, there's not much the US military could do to restore trust.

Re:"Merchants can't rely on digital transactions"

[Nutria]

OP expressed a distaste for fan based currency...

I am OP.

I was asking why the U.S. dollar is not fan based, is it because of faith and trust in the government?

You're making a syllogistic fallacy. Just as Socrates is a mortal, but not all mortals are Socrates, everyone who is enthusiastically devoted to something also has faith and trust in it, but not everyone who has faith and trust is also enthusiastically devoted to it.

Re:"Merchants can't rely on digital transactions"

[slashping]

People also have trust in Swiss franks, perhaps even more than in the US dollar, and they have only a very small military.

Re:"Merchants can't rely on digital transactions"

[eyenot]

Actually it kind of does.

Re:"Merchants can't rely on digital transactions"

[Anonymous Coward]

...backed by the full might of the U.S. military?

i think we usually call them fanboys...

Re:"Merchants can't rely on digital transactions"

[Nutria]

Maybe the people who took us off the precious metal standard were enthusiastically devoted to fiat currency. Or maybe , and I think much more likely they saw it as the only practical alternative.

Re:"Merchants can't rely on digital transactions"

[eyenot]

It sounds like you're eroding your position to stay "right". I'll just take that emboldened "maybe" and let the rest fall into the void. Thank you for p(l)aying.

Re:"Merchants can't rely on digital transactions"

[serviscope_minor]

At least paper money can be used as an actual fan.

The cooling equipment in your mining rig might be more effective though.

Re:"Merchants can't rely on digital transactions"

[JoeMerchant]

Good point. The Swiss have many redeeming qualities.

Re:"Merchants can't rely on digital transactions"

[Anonymous Coward]

I have more faith in their cheese than in their hotdogs.

Re:"Merchants can't rely on digital transactions"

[Actually, I do RTFA]

I was asking why the U.S. dollar is not fan based, i

To pay US income and property taxes (and sales, etc.), you need US dollars. To invest in US bonds, you need US dollars. Both of those are by law. So there's always some demand for them.

You never need Bitcoin.

Because of the legal need for US dollars, practical needs arose. See buying stocks on the NYSE or NASDAQ.

Re:"Merchants can't rely on digital transactions"

[Anonymous Coward]

I'd imagine they call them some kind of wurst...

Re:"Merchants can't rely on digital transactions"

[Anonymous Coward]

Except the problem being pointed out is why the currency has value, the problem being pointed out is its long term utility.

Fiat currency has a far longer, and more successful, track record than something whose sole useful value is a group of libertarian nerds saying it's useful.

Re:"Merchants can't rely on digital transactions"

[Zontar The Mindless]

So you equate sticking your fingers in your ears and saying, "Lalalalala..." with winning a debate? Thanks for letting us know.

Re:"Merchants can't rely on digital transactions"

[Zontar The Mindless]

I'm sure it has nothing whatsoever to do with the notice that This bill is legal tender for all debts public and private printed on each note, which—coming from a national government—can be presumed to carry the force of law in that nation.

Re:"Merchants can't rely on digital transactions"

[JoeMerchant]

Yes, though some nations - even otherwise respectable ones - do seem to devalue their currency rather spectacularly at times.

Re:"Merchants can't rely on digital transactions"

[eyenot]

If politely calling you out on your cop-out erosion of your own argument rather than outright calling you a troll is:

sticking your fingers in your ears and saying, "Lalalalala..."

... then you might be a troll. And yes, everyone who's not a troll always, always, always wins a debate against a troll because a troll's not even trying to debate. Back to the original illustration: you gave up. You eroded your own argument instead of ceding the point. Next troll.

We do not care about Bitcoin

[Anonymous Coward]

We do not care about Bitcoin. If we ever have another Bitcoin story it will be too soon.

Re:We do not care about Bitcoin

[Anonymous Coward]

Agreed, but sadly this is an example of survivorship bias. Everyone who cares about Bitcoin are sipping a Pina Colada on a tropical island.

Re:We do not care about Bitcoin

[Anonymous Coward]

Yes, but we welcome the opportunity to tell all the BTC-nutters, "TOLD YA SO!"

Get Trump on it

[Anonymous Coward]

This is what happens when there's no one person in overall charge to give a meaningful direction. The Donald will make bitcoin great again.

"Classic"?

[H_Fisher]

I don't know if there's more backstory, but perhaps users have been slow to adopt because "Classic" sounds like what you'd call an older and (in the usual context) more limited option?

If I'm developing a new technology with potentially millions of $USD riding on its availability and adoption, I'm not going to call it "Classic." "NextGen," or "Enhanced," or even "CC" for Corrected Chain? This sounds less like the free market and more like terrible marketing.

Re:"Classic"?

[Anonymous Coward]

The rationale behind "Classic" is that bitcoin would continue to actually operate the same way it always has, unconstrained by a block size limit.

Re:"Classic"?

[Anonymous Coward]

I don't know if there's more backstory, but perhaps users have been slow to adopt because "Classic" sounds like what you'd call an older and (in the usual context) more limited option?

If I'm developing a new technology with potentially millions of $USD riding on its availability and adoption, I'm not going to call it "Classic." "NextGen," or "Enhanced," or even "CC" for Corrected Chain? This sounds less like the free market and more like terrible marketing.

Maybe you are too young to have witnessed Coca-Cola "Classic" replacing "New" Coca-Cola?

Re:"Classic"?

[amicusNYCL]

The rationale behind "Classic" is that bitcoin would continue to actually operate the same way it always has, unconstrained by a block size limit.

It doesn't sound like Bitcoin is currently operating in a way that is unconstrained by a block size limit. In fact, it actually sounds like that limit has always been there, but was never reached until now.

Still, I'm about 80% down the page here on Slashdot and still don't see anyone trying to talk about the practical effects of what this means for Bitcoin users. So far the conversation is all about whether or not gold is a better currency, or people talking about fiat currency (I think the major reason that people talk about fiat currency is so that they can use the phrase "fiat currency"), but true to Slashdot form there's little discussion about the actual article. Just like the article about how the CIA flew a plane from Virginia to the EU, which passed over Scotland, in order to possibly bring Snowden home if he was captured and everyone in the comments is talking about whether or not Scotland is a country.

How about a discussion about what this actually means? Will transactions actually just fail, where it would be like they were never initiated to begin with? The sender still has all their money and the recipient never got anything? Would the transaction be randomly approved at some later point when a miner decides to process it or does it just expire? Is this a self-correcting problem, in the sense that the network is at capacity, so a certain number of people will stop using it which will then lower demand and bring transaction times back to normal? Does anyone care about things like this or is everyone here to just argue about whether or not you should mortgage your house using gold while pointing out that they don't use Bitcoins anyway?

DOUBLOONS

[theprophetof sarcasm]

Wouldn't it be easier to dig up a sunken ship with Golden Doubloons and use this as the accepted currency. Frankly I'd rather be a pirate that sails the seas, than one that pirates movies and music.

Re:DOUBLOONS

[mmiscool]

Arggg. So you want an eye patch and hat and mortal combat every day?

Re:DOUBLOONS

[Anonymous Coward]

Well, the hat and patch are definitely stylish, as long as I don't have to lose an eye for it. (what good is VR gaming if I have one eye?)

As for the mortal kombat, I was more into street fighter.

Re:DOUBLOONS

[Anonymous Coward]

So cancel your internet connection and move to Somalia.

Re:DOUBLOONS

[Pfhorrest]

You can just be a movies-and-music pirate and still play Mortal Kombat every day.

Re:DOUBLOONS

[phantomfive]

Frankly I'd rather be a pirate that sails the seas, than one that pirates movies and music.

The scurvy is really what kills you there.

Re:DOUBLOONS

[theprophetof sarcasm]

The scurvy is really what kills you there.

Well depending on who I am sailing with, there sound be plenty of "fruit" to rectify that issue.

Block chain applications

[VikingNation]

There are a number of efforts to leverage the block chain for other applications. It would be interesting to see if these suffer the same issue.

Re:Block chain applications

[Richard_at_work]

Its doubtful - the main issue here is the core BitCoin team who are blocking changes.

This is a fantastic post on the topic, from an authoritative source: The resolution of the Bitcoin experiment.

Re:Block chain applications

[VikingNation]

Thanks for that link. I have not been following the news about the issues with Bitcoin Core. It sounds like there are major issues ahead and the entire experiment could come crashing down.

\o/

[Anonymous Coward]

...1849.

And now I *KNOW* bitcoin is open source

[NotDrWho]

With that much internal bickering sabotaging the whole project, it MUST be OSS.

Re:And now I *KNOW* bitcoin is open source

[Anonymous Coward]

And who would have guessed that crypto-anarchists would be bad at organizing?

Threat of violence is the only real money

[Anonymous Coward]

My guns and ammo say that your gold is now my gold.

Re:Threat of violence is the only real money

[Dunbal]

Sure, but first look behind you...

Re:Threat of violence is the only real money

[invid]

There are two kinds of people in the world, those with loaded guns and those who dig.

Re:Threat of violence is the only real money

[110010001000]

Yet the people with loaded guns are usually the dregs of the Earth.

Re:Threat of violence is the only real money

[invid]

The only rights that any human being has comes from the State that they are a citizen of; not from God nor Nature nor the United Nations. And ultimately, the ability of a State to enforce the rights of its citizens comes from those members of the State willing to wield the force of arms.

Re: Threat of violence is the only real money

[Anonymous Coward]

Black people?

Re:Threat of violence is the only real money

[qbast]

And yet, they invariably submit to those members of State that have money or political power (which is pretty much interchangeable).

Re:Threat of violence is the only real money

[perpenso]

And yet, they invariably submit to those members of State that have money or political power (which is pretty much interchangeable).

You left out the part where people with weapons overthrow the old State and create a new State more to their liking. Ask the King of France, Russian Czar, etc how well money and political power worked for them. Face it, the monied and the politicians can only get away with what the people tolerate, some people tolerate more than others.

Re:Threat of violence is the only real money

[firewrought]

Government can recognize and protect rights, but they cannot grant them... these rights derive directly from human nature. You have a biological need for air, water, and food: denying these needs means that your body will die. You similarly have needs for privacy, autonomy, self-expression, and so forth: if those needs are denied, you will not live free and let others live free. If, as as society, those needs are denied, then the society will not live free; it will struggle to proper economically; it will be beset by violence and squander it's destiny.

Re:Threat of violence is the only real money

[invid]

Government can recognize and protect rights, but they cannot grant them... these rights derive directly from human nature. You have a biological need for air, water, and food: denying these needs means that your body will die. You similarly have needs for privacy, autonomy, self-expression, and so forth: if those needs are denied, you will not live free and let others live free. If, as as society, those needs are denied, then the society will not live free; it will struggle to proper economically; it will be beset by violence and squander it's destiny.

A cow's biological needs are not rights because the State likes to eat cows. The State doesn't want to grant cows rights so they have none. Nature grants no rights to cows.

Crypto Trojans?

[4im]

As an AC over on SoylentNews already asked - is there a significant amount of Bitcoin transactions due to ransom payments for crypto-locked data?

I seriously wonder, as there's apparently been quite a surge of corresponding infections lately, and it also seems that quite some victims actually pay up.

Re:Crypto Trojans?

[Anonymous Coward]

That's one of the biggest items, along with other black market payments. Legal purchases, donations, etc, appear to make up only a tiny fraction. Paying $200 to get your files back is your only option if you didn't keep backups, and they make it really easy and streamlined these days. There was even an article a while back about how they actually have customer service departments that are very helpful.

It's sort of like how bittorrent has plenty of legitimate uses we can point to, but at the end of the day 90% of it is pirating.

Re:Crypto Trojans?

[Anonymous Coward]

Ding ding ding ding.

Re:Crypto Trojans?

[Anonymous Coward]

Bullshit, you have no idea what most transactions are actually paying for. Show me your source.

Re:Crypto Trojans?

[amicusNYCL]

Legal purchases, donations, etc, appear to make up only a tiny fraction.

How do they appear to be so small? Which reference are you using which shows the purpose of each transaction?

Re:Crypto Trojans?

[Anonymous Coward]

If you could prove him wrong, you'd be doing it. Show us *your* source or GTFO.

Re:Crypto Trojans?

[Anonymous Coward]

lol

https://en.wikipedia.org/wiki/Philosophic_burden_of_proof#Holder_of_the_burden

You sound like one of those "prove there is no god" people

Urban Legend

[Anonymous Coward]

Didn't someone inject all the episodes of Friends into the block chain? I can't find out if this is just an urban legend or not.

Huh

[Anonymous Coward]

I don't get it. The network has come to a halt because the old code base has maxxed out the number of transactions. The new fork is working.

They are waiting to see which one wins?

Not the best strategy.

Yawn

[Orgasmatron]

Pay higher fees if you are in a hurry.

The demand for most goods tends towards infinity as the cost drops. Bitcoin transactions have been fantastically cheap, which everyone sensible knew couldn't possibly last.

So, do we make bigger blocks, or increase fees? Miners should get more fees from either option. Users would prefer bigger blocks, since it keeps their costs artificially low.

But the real problem is the relay node shortage. Running a node is no longer trivial, and there is no mechanism to recover costs. The blockchain is around 80 GB now (including the index), and growing by ~100 MB per day. Larger blocks will only make that worse, and will almost certainly knock yet more nodes offline.

Someone made a distro that ran bitcoin entirely out of tmpfs. I once had a bunch of super-fast nodes using it. When the blockchain finally exceeded my ability to add more RAM to those boxes, the average time for a new node on the network to sync up increased by a factor of 3 or so.

That's just my personal example. Hundreds of other nodes have dropped off for their own reasons.

Re:Yawn

[swb]

It almost sounds like Bitcoin is starting to suffer from the same capacity problems that hit USENET. I remember a point where running a server just became such a major resource hog that lots of places just quit or could only carry a subset of the hierarchy.

What's odd is that 80 GB doesn't seem like a staggering amount of data, especially in an era of superfast SSD storage (like NVMe) where the memory/disk penalty is a lot smaller. It doesn't even seem like a lot of RAM, either, unless you think in terms of consumer-level mainboards that have limits of 32 or 64 GB.

Re:Yawn

[slashping]

Bitcoin transactions have been fantastically cheap, which everyone sensible knew couldn't possibly last.

Actually not. They've been quite expensive, especially for small amounts.

Re:Yawn

[OverlordQ]

> The blockchain is around 80 GB now (including the index), and growing by ~100 MB per day. Larger blocks will only make that worse, and will almost certainly knock yet more nodes offline.

0.12.0 has pruning that drops the disk requirements back down to less than 10 gigs.

Re:Yawn

[Anonymous Coward]

Actually not not. They've been syphilitic monkeys, especially for pigeons.

Re:Yawn

[slashping]

I don't know why this gets downmodded, but according to the bitcoin wiki:

Note that a typical transaction is 500 bytes, so the typical transaction fee for low-priority transactions is 0.1 mBTC (0.0001 BTC), regardless of the number of bitcoins sent.

At current prices, 0.1 mBTC equals about $0.04 for a simple transaction. If your transaction is $1, that means you pay 4% in transaction fees, which is not "fantastically cheap". I can do an electronic bank transfer in the Euro zone for free.

Re:Yawn

[slashping]

I don't know why this gets downmodded, but according to the bitcoin wiki: Note that a typical transaction is 500 bytes, so the typical transaction fee for low-priority transactions is 0.1 mBTC (0.0001 BTC), regardless of the number of bitcoins sent. At current prices, 0.1 mBTC equals about $0.04 for a simple transaction. If your transaction is $1, that means you pay 4% in transaction fees, which is not "fantastically cheap". I can do an electronic bank transfer in the Euro zone for free.

Re:Yawn

[Anonymous Coward]

More succinctly, it's nothing short of hilarious that the self-appointed captains of industry behind Bitcoin are now facing the potential for an increase in transaction costs, when part of their whole spiel was that Bitcoin doesn't require transfer fees. Looks like those evil banks handling millions or billions of transactions a day might actually know more than people with an inflatabe anime waifu living in parent-subsidized housing.

Re:Yawn

[Anonymous Coward]

No transaction fees! Be your own bank!

What a crock of shit.

Re:Yawn

[Yunzil]

The demand for most goods tends towards infinity as the cost drops.

Yeah, like if jeans were cheaper, I would buy a million pairs of jeans. Same with cars, appliances, food....

Re:Yawn

[Orgasmatron]

They were indeed dirt cheap consumer motherboards. Carefully selected to support relatively large memory (for the category, at the time).

For what I was doing, it wasn't about the size, it was about the seeks. Bootstrapping a new node is murder on a spinning disk. It is, or at least was, incredibly unfriendly to cache schemes because you keep skipping backwards by 1000 blocks to get to the root.

Also, SSD is fast, but it isn't as fast as you are thinking, particularly when every single read is a cache miss. Hell, even DDR3 isn't so fast when everything misses, but it is still WAY faster than even SSDs.

You can test it yourself, if you've got the RAM. Grab a copy of the source from the 0.6 or 0.7 era (newer versions are somewhat better, but this is what we had at the time) and sync it up on disk, then isolate it and bootstrap a second node. Then copy it to RAM, wipe the second node, and run it again. The second one will probably save you a day or two. Seems absurd, since the limiting factor appears to be the CPU validating the blocks, but there it is.

Now imagine that box sitting on the public network, usually feeding two or three nodes at a time. Bootstrapping a new node was so bad that lots of people took active measures to prevent it. At one point, there was a cron script floating around that would poll the peer table of the local node and use iptables to kick peers that were too far behind.

That reminds me, I should probably see if that distro is still active, maybe kick a donation at the maintainer.

Re:Yawn

[Orgasmatron]

Not everyone can prune. You especially can't prune if you are aiming to seed new nodes. Jeff's torrents, assuming he is still doing them, can help with that, but there are trust issues there too.

Re:Yawn

[OverlordQ]

The torrents are no faster than the current bootstrapping method which pulls in headers first.

Re:Yawn

[Fwipp]

It's human nature to desire infinite homes.

Re:Yawn

[Orgasmatron]

And yet, despite your attempt at snark, demand for each and every one of the 4 things you listed has exploded as costs dropped.

Re:Yawn

[Anonymous Coward]

It also crashes a lot. At least for me.

Re:Yawn

[Anonymous Coward]

I think that is a bit misleading. Your almost certainly paying fees somewhere along the line. A mere $5 / month bank fee translates into 125 'free' bitcoin transactions under that logic. Whether it is through taxes, bank fees, advertising they throw at you, interest, or whatever.

86358692

[PohankaPošlapaná]

Chat

re: Bitcoin

[Anonymous Coward]

It was a stupid idea anyway. Never liked it. Never will. Hope it dies a painful death and all those that use it get f*&ked.

Checks take a while to clear too

[goombah99]

We lived for centuries writing checks and they don't clear instantly either. Why is it essential that Bitcoin clear instantly?
THe desgin of bitcoin anticipated this. Initially the profit for adding transactions to the block chain with bitcoin mining. But it was always expected that as the return on mining slowed that it would become fee based. The problem is the fees offered are not reaching the required levels for more miners to enter.

Re:Checks take a while to clear too

[Richard_at_work]

I have no idea how "checks" (from here on in this post refers to them as "cheques") were handled in US shops, but here in the UK you could not actually buy goods in a physical shop with a cheque unless it was also presented with a valid cheque guarantee card issued by your bank - the cheque could then be presented up to the value of the cheque guarantee card.

The only time you would present a cheque without a guarantee card is when buying remotely, and then the shipper would wait until your cheque cleared before shipping your goods.

Unless BitCoin comes up with a valid equivalent of a cheque guarantee card, physical shops and online shops which give you immediate access to digital goods cannot use BC as a payment method, because there is no guarantee they won't be defrauded by you walking out of the shop and immediately cancelling the transaction.

Re:Checks take a while to clear too

[bws111]

I don't recall ever having a check accepted where I didn't have to show ID. Furthermore, unless it was forgery, the check itself identifies who wrote it, and who is responsble for the debt. None of that is true with bitcoin. In fact, that seems to be the main selling point of bitcoin.

Re: Checks take a while to clear too

[bill_mcgonigle]

Credit cards take a while to clear too - - chargebacks can be up to 6 months later. There's absolutely no guarantee that you will actually have the money until that six month period is past. Bitcoin actually improves the situation tremendously. The odds of a bitcoin double-spend are significantly lower than the odds of a credit card chargeback. Especially within wallet systems - say Mycelium to Mycelium - nobody in the peer-to-peer economy is worried at all about getting their money. It's something the established bankers make up to create fear.

Re: Checks take a while to clear too

[Asgard]

As I understand it, chargebacks can happen if the transaction is disputed, but the vendor is not exposed to whether the customer can actually *pay*. The credit card company pays the vendor regardless of whether the customer pays their credit card bill.

Re:Checks take a while to clear too

[H_Fisher]

For most of my lifetime, if a U.S. retailer accepted checks, one of two things happened: You wrote your check and went on your way with your goods, and either the check cleared within a few days, or the check did not clear. If your check didn't clear due to insufficient funds, the merchant could go after you for the amount of the check plus a "returned check" service fee. If you wrote a "worthless check" intentionally, you could be charged with a crime.

Major retailers had their own solutions. I remember Gold Circle (predecessor of the Target store chain) having a check approval counter where you had to get your checks OKed — presumably to make sure you weren't a habitual writer of bad checks. At smaller businesses, it wasn't uncommon to see photocopies of people's bad checks pinned to the wall behind the cash register, or a sign boldly telling staff (and customers) not to accept checks from the below-named people. (There was an episode of "Seinfeld" that involved this, IIRC.)

After 9/11, using the delays caused by the attack as a stated reason, the government and banking system changed it so that now, at most major retailers, writing a check is handled as an electronic debit of your bank account. Many retailers don't even keep the paper check — they print transaction information on it and hand it right back. This caused a little consternation among people who used to "float" a check, writing it a day or two before the money actually made it to the bank and betting the check would arrive after their pay did.

And that's your history lesson. Hope it was worth the read. :-)

Re: Checks take a while to clear too

[goombah99]

No the vendor loses if there is a chargeback

Re: Checks take a while to clear too

[Anonymous Coward]

Ethereum is faster than Bitcoin and is the number two cryptocurreny in the world right now. It also has smart contracts so your mining is doing useful work, not just hammering out 1+1 all day.

Re: Checks take a while to clear too

[omnichad]

That's not what they're saying. The point is that insufficient funds won't reverse a credit card transaction, whereas this could happen with a check or Bitcoin.

Re:Checks take a while to clear too

[Anonymous Coward]

Retailers have used check guarantee services (sch as TeleCheck) for decades which makes sure the ID and account are known to be good. If the check turns out to be bogus, the retailer will still be paid. It takes 10-30 seconds to verify a check via a standalone terminal via dial-up and it can be almost instant via PoS terminals with built in scanning.

We don't live in the world where checks take days (or weeks) to clear. Paper checks are digitally scanned and an electronic transaction is initiated via ACH. It takes one business day after being deposited at a participating financial institution. The paper is no longer transported, the original is destroyed. Some large retailers actually initiate a direct withdraw from the checking account via ACH, with the paper check used as authorization, and it is done in seconds.

Re:Checks take a while to clear too

[Anonymous Coward]

We haven't been writing checks for 2 decades already, because nobody trusted them. If you say bitcoin is an alternative to the untrustworthy checks then it will go nowhere.

Re:Checks take a while to clear too

[Chuckstar]

Pedantic comment: Gold Circle was not a predecessor of the Target chain. Target was founded before Gold Circle. The only relationship between the two is that Target took over some locations from Gold Circle when they were liquidated. But that was merely a real estate transaction, where Target bought the leases from the liquidating entity.

Damn

[dcw3]

You know, I went through the Burger King drive thru, and they wouldn't take my bitcoin. So, I drove over to Micky-D, and you know they were like, "WTF is a bitcoin?!?" So, I figured I'd go exchange them at the bank, and the tellers at both Skank of America and ShittyBank just stared at me.

Seriously, the level of concern for bitcoin is probably lower than that of folks trying to figure out which dog food to purchase. Please stop posting this crap.

I for one

[thegarbz]

Am glad that Bitcoin is distributed and not beholden to some central group that can dictate monetary policy.

Oh wait...

Good work guys, you not only broke bitcoin, but you broke the very premise that bitcoin was founded on.

Higher fees are your solution?

[Sycraft-fu]

Well if Bitcoin is going to get expensive to use... then why would merchants (or customers) have any reason to like it over credit cards? Credit cards settle in seconds, and the network has scaled to massive size and can continue to scale no problem. The alleged advantages of Bitcoin that people liked to bandy about were that it was supposed to be really fast and not cost a bunch like credit cards do. If you can't deliver that (and it can't, it cannot scale to the levels it would need to) then there's little point.

Also "just pay more" is a self defeating thing if people keep following that. So faster transactions are needed, so people pay more for it, as more people pay to get fast, that becomes the new slow so you have to pay MORE and so on. It hasn't solved any kind of scaling issues. You can't argue that it'll reach and equilibrium because as I noted, there's already a system that does it very fast, and doesn't cost too much (2-3% is normally what payment processors charge).

Re:Higher fees are your solution?

[slashping]

This reminds of the day I went into the university book store to get a required book for a class. Apparently, they didn't print enough and it was sold out. The clerk told me "you should have come earlier", apparently not realizing that somebody else wouldn't have a book then.

Re:Higher fees are your solution?

[Raenex]

The alleged advantages of Bitcoin that people liked to bandy about were that it was supposed to be really fast and not cost a bunch like credit cards do.

Huh? The canonical selling point was that you could use it to by illegal drugs. And remember when the major payment providers shut down donations to Wikileaks, without any legal orders but at the behest of the US government? The main advantage of bitcoin is that it's a currency without Big Brother, not cheaper and faster.

As to why a legitimate merchant would take bitcoins, it was a fad.

Because we have a system that does

[Sycraft-fu]

Never mind all the other issues, of which there are many, but BTC has to compete with the credit card networks. They work effectively instantly. People are not interested in stepping backwards.

That's it

[CanadianMacFan]

I'm gong back to tulips!

Why any currency has value

[sjbe]

As opposed to paper currencies which hold value precisely as long as people believe that they do (i.e. a fan currency).

ALL currencies only have value because people believe they have value. People who back the gold standard or similar schemes merely suffer from the delusion that gold is any different in this respect. People who support bitcoin are under the (I believe mistaken) belief that a digital mimic of the gold standard via cryptography somehow solves the problems that forced everyone away from the gold standard. But no matter what currency you use the only reason any of it has value is because people believe it has value.

Verge's Nightmare Scenario Has Come To Pass

[Anonymous Coward]

Here we go again.

It wouldn't be the first time Bitcoin was declared "dead", so I'll just leave this here:

https://medium.com/@tradertimm/the-verge-s-nightmare-scenario-has-come-to-pass-10554c533e47

Yellow e-journalism is all about clicks, and not so much about facts, as Ben Popper knows...

Pragmatism

[sjbe]

I was asking why the U.S. dollar is not fan based, is it because of faith and trust in the government? That would sound more like fandom to me.

Nobody really needs to be a fan of the US government to realize that a currency backed by the taxing authority of the country with the biggest economy and biggest military which is accepted in trade around the globe and a long record of stability is probably of practical value. Bitcoin on the other hand is thinly traded, volatile, digital only, and relies on technology of uncertain robustness. Those things matter a lot.

The majority of pragmatists using bitcoin seem to be people engaged in activities that are not exactly legal. I'm not judging but the evidence is clear that the most enthusiastic users of bitcoin appear to be people engaged in drug trafficking or other activities where money laundering and identity hiding are of practical value. Many of the rest of the users of bitcoin seem to be people who are ideologically inclined to dislike government and/or fiat currencies or who are of the opinion that some version of the gold standard should come back. These people like the idea of bitcoin and tend to be the loudest proponents of it, a bit like fan-fiction writers. Hence the (perhaps unfair) moniker.

Re:Pragmatism

[Anonymous Coward]

Feel free to show us your evidence.

Bullshit

[sexconker]

This problem is self-correcting.

If there's a drop in the computational power of the network such that blocks are mined less frequently, then the difficulty drops and blocks are mined more frequently.

If people are complaining (again) about not being able to fit a ton of tiny transactions into a block without paying a fee to ensure prompt delivery, then I'll say (again):

1: Pay a transaction fee
2: Stop shitting around a bunch of tiny transactions
3: Help out and be a miner yourself
4: This is all by design - the end game scenario for BTC is that mining rewards end and all incentive is from transaction fees

If this continues and people don't recognize 1-4 above, idiots will stop using Bitcoin for a bunch of tiny transactions and the problem will correct itself. You don't need to pay .000000001 BTC every time you visit a page on a BTC funded site. You need to pay 000001 BTC to get a credit of 1000 page visits. Bitcoin isn't for massive amounts of microtransactions any more than a traditional bank is. If you want it to do that, then pay the fee (which could be a significant percentage of your microtransaction).

Re:Bullshit

[Anonymous Coward]

This problem is self-correcting.

Yes, bitcoin is self-correcting! Any problems will magically disappear by the incentives built into the system! Yay!

If people are complaining (again) about not being able to fit a ton of tiny transactions into a block without paying a fee to ensure prompt delivery...

That's not what people are complaining about. You clearly have no understanding of the forces at work here.

...idiots will stop using Bitcoin for a bunch of tiny transactions and the problem will correct itself.

Ugh. More evidence of your ignorance. Looks like you didn't bother to read TFS, much less TFA. Try reading this.

Moo says the ignorant cow. MOOOOOOOO!

Re:Bullshit

[Holi]

Quite the claim, any evidence to support it?

Re:Bullshit

[Chuckstar]

Why is this insightful? Getting rid of small transactions only gets you so far. The hard limit of transactions in somewhere around three per second (or at least that order of magnitude). Getting rid of micro-transactions only buys a small amount of time, until transaction volume grows to where even macro-transactions are occurring at more than 3 per second, or at least trying to occur at more than 3 per second.

Think about it this way. This is a global currency that can't do more than 95 million transactions in a year. The Fed estimates that U.S. non-cash transactions totaled 122 billion in 2012. That's 10,000 as many transactions as the current Bitcoin hard limit, and that's just the U.S. And your argument is to lump everything into bigger transactions. OK... let's see how that might work. Most people lump cash transactions together into larger ATM withdrawals. How many ATM withdrawals were there in the U.S. in 2012? Approximately 6 billion.

Now, exactly how is a currency with a hard limit of 95 million transactions a year supposed to be useful in a global economy in which billions of people participate, executing trillions of transactions per year? There are something like 2.5 billion smartphones in use in the world right now. Pretty much every one of those people (1) has enough money for a smartphone (at least a cheap one on a cheap data plan) so has enough money to participate in at least a small way in the Bitcoin economy and (2) has a device capable of engaging in Bitcoin transactions. Each smartphone owner in the world, therefore, could engage in a Bitcoin transaction once every 25 years without overwhelming the system. That's how the problem would self correct, then. Everyone would get to make a Bitcoin transaction only once in every 25 years.

Yay for self-correction.

Re:Bullshit

[sexconker]

It's insightful because it's true and it shows a fundamental understanding of what Bitcoin is and why it's designed the way it is.
Bitcoin isn't meant to handle every transaction under the sun.
Further, it CAN scale, quite easily, if people want it to. All you do is fork it and increase the transaction size.

The doom and gloom bullshit is being parroted by retards with a monied interest in Bitcoin transactions - these people stand to lose money if they have to pay fees, so they're saying they NEED larger blocks NOW!!!
Everyone else, including the core developers of the client that every user considers to be the "official" client, say "Nah, that's dumb, transaction fees are good and by design."

If and when the issue is such that the majority of people WANT to use Bitcoin for 40 small transactions a day, then it'll fork (and people will keep their balances).
People accepting Bitcoin will have to choose whether to stay with the existing branch or go with the fork.

It's been done before, it'll be done again. but not unless and until there's a good reason and a large demand for doing so.

Re:Bullshit

[Anonymous Coward]

Further, it CAN scale, quite easily, if people want it to. All you do is fork it and increase the transaction size.

...Which is exactly what has happened, yet here we are.

The doom and gloom bullshit is being parroted by retards with a monied interest in Bitcoin transactions - these people stand to lose money if they have to pay fees

Mike Hearn is hardly a retard, and he wouldn't make or lose any money if the block size changes, or if bitcoin users pay fees or not.

Everyone else, including the core developers of the client that every user considers to be the "official" client, say "Nah, that's dumb, transaction fees are good and by design."

You don't know what you're talking about. It's the miners who are saying this, not "everyone else". The core developers (Bitcoin Core) have forked the software to support larger blocks. Additionally, it's the miners who control which fork will dominate, and right now they're running Bitcoin Classic because that is where their $ interests lie.

If and when the issue is such that the majority of people WANT to use Bitcoin for 40 small transactions a day, then it'll fork (and people will keep their balances).

It HAS forked, and the decision to fork had nothing to do with users wanting to do 40 small transactions a day.

People accepting Bitcoin will have to choose whether to stay with the existing branch or go with the fork.

The majority of MINERS decide which fork is adopted, not merchants accepting bitcoin, not consumers spending bitcoin. BTW, mining has become so centralized that a couple of guys in China control more than 50% of the network's hashing power. That fact alone indicated the system is broken.

But by all means, keep prattling on like you know what you're talking about.

Re:Bullshit

[Anonymous Coward]

The core developers (Bitcoin Core) have forked the software to support larger blocks.

Wrong. Other competing forks have increased the block size, but not Bitcoin Core.

Please contribute information!

[Anonymous Coward]

Since all of you are experts in bitcoin because you read Mike Hearn's article, I suggest you make EASY MONEY and short bitcoin over the rest of the year.

In reality, the "nightmare" scenario will either generate enough political will to raise the block size, or encourage using the upgrades to micropayment channels that are already scheduled for later this year. This is why the main dev team is refusing a block size increase - they're extremely confident that "Lightning Network" micropayment channels will be good enough to serve the entire network.

The whole subject is technically, politically, and economically complex. If you have an opinion worth sharing here, then you deserve to be rewarded for your contribution!

Trumpcoin

[goombah99]

Trump coin will posses intrinsic value regardless of the face value precisely because it had the face of Donald trump on it. It will be a really great currency made from the best bits hand selected by trump himself. There will be no cheap imported bits in Trumpcoin. And Trumpcoin will only work when you are sending money into the USA.
Even if the USA goes down the toilet the trump brand will make these increase in value. Available only at the SHarper Image.

Re:Trumpcoin

[CaptainDork]

Trump has small hands.

Re:Trumpcoin

[WolfWithoutAClause]

You learnt all this at Trump University didn't you.

Re:Trumpcoin

[Cro Magnon]

And presumably other things too.

Bullshit

[Anonymous Coward]

Bullshit.

What happened was a spam attack on the network with very TX fees intended to not confirm.

People who paid normal fees (a US penny typically) had no problem.

I wish journalists would get their heads out of their fucking asses and actually fucking do a little research before they write sensationalist clickbait shit.

"Classic" as in Satoshi's original design ...

[perpenso]

Its "Classic" as in Satoshi's original design where increasing the block size was expected. Its the current core developers that are deviating from that original. The audience for this debate are the miners who are somewhat technically informed and understand the context. Users are irrelevant to the discussion, only miners control what incarnation of the software gets used.

Re: "Classic" as in Satoshi's original design ...

[Anonymous Coward]

Do you have any source for the original design increasing the block size? My understanding is that the opposite is true. Fees are built into the system which will take over as mining rewards decrease. Fees are now just starting down the path of taking over, as per the original design.

Re: "Classic" as in Satoshi's original design ...

[perpenso]

Do you have any source for the original design increasing the block size?

Googling shows:

"It can be phased in, like:

if (blocknumber > 115000)
maxblocksize = largerlimit

It can start being in versions way ahead, so by the time it reaches that block number and goes into effect, the older versions that don't have it are already obsolete.

When we're near the cutoff block number, I can put an alert to old versions to make sure they know they have to upgrade."

https://bitcointalk.org/index....

My understanding is that the opposite is true. Fees are built into the system which will take over as mining rewards decrease. Fees are now just starting down the path of taking over, as per the original design.

No. The upcoming block halving has not occurred yet (well that was redundant). The fees being currently discussed are for a different purpose, to turn people away from using Bitcoin. To get below the limit by getting people to use Bitcoin less. Turning people away does not sound like the original plan. It sounds like a desperate kludge. Largely relying on fees is something for when Bitcoin is well established, not during its early adoption phase.

What?

[Anonymous Coward]

From the page you linked:

Total Face Value: $1
Coin Type: 1909-1982 Lincoln Copper Cent
Copper Price: $2.2646 / pound
Zinc Price: $0.8329 / pound

Answer:

Total melt value is $1.50.

Statistics:

  There are 0.6514 pounds of copper and 0.0343 pounds of zinc in $1 face value of copper cent(s).

  A roll of copper cent(s) has 50 coins and is valued at $0.75 when copper is at $2.2646 / lb and zinc at $0.8329 / lb (exact value is $0.75180680886239).

Re:What?

[Anonymous Coward]

Coin Type: 1909-1982 Lincoln Copper Cent

Reading FAIL.

The original poster's claim was regarding the *current* penny, which is 97% zinc, not pennies from more than 30 years ago. Since OP wrote CURRENT in all caps, I can see how you might have missed that.

Re:What?

[Anonymous Coward]

Our friend "Khyber" is, well... They're just a bit special. Being correct is not something that seems to matter to them as much as does being vocal. For some odd reason, they've opted to insist that I'm their 'foe.' I am not actually sure what their motives are as all that does is draw them to my attention and give me more chances to laugh at their varied, and plentiful, mistakes.

There's nothing wrong with being incorrect. It's only problematic when you insist on it, present oneself as an authoritative source, and fail to accept correction. I'm not a head-smith so I don't really know what prompts that type of person but I suspect it's ego-related. It's probably hard for him, being less intelligent than he believes. I am not sure what it is like to go through life in that condition, it cannot be comfortable. What makes me curious is how one can keep themselves in that condition. I seriously don't get that.

How can someone be so often incorrect and keep losing face by insisting, emphasizing, and drawing attention to it? How hard is it to pose it as a question instead of stating it as a fact? How hard is it for one to clarify that they're uncertain? How difficult is it to actually spend a couple of minutes searching for an answer? The best part is, we've got the internet available. Huge amounts of resources have put vast amounts of data online. Why ignore that, state something authoritatively, and insist that one is correct in a way that brings even more attention?

I do not understand that... I'd be embarrassed and would want to change my ways. I'd be sorry for having passed along incorrect information and presented it as factual, not subject to debate, and for insinuating that I was an authority on the subject. I'd be ashamed for having fooled myself into thinking that I was more capable than I was, that I'd convinced myself that I had domain knowledge that I did not have, and for failing to correct this type of behavior in myself. It's not like this is the first time this has happened, it happens with nearly every post they make.

It's like someone having only changed the spark plugs in their car and then trying to present themselves as a mechanical engineer, professional driver, or automotive technician. Worse, it's sometimes (perhaps more often) a case of them having never actually changed their plugs, watched anyone change the plugs, know where to find the plugs, or knows what the plugs do. It baffles me when people continually present themselves as authority figures when they are not actually capable of having a valuable opinion on the subject. It's like me trying to tell someone how to do surgery and trying to fool others into believing that I'm actually a surgery - even though I've no domain knowledge - and, to top it off, doing so while acting pompous and presenting myself as an authority figure. I'd actually be embarrassed by that.

Ah well... It's obvious who I am and I'm experimenting with a neat server and a mobile browser. I'm going to not bother to login and will post this as an AC. I'm checking a grammar tool, hosted on my own hardware, and seeing how well it works with alternative inputs. To bring this full circle, that's because I want to improve myself and, more importantly, I'd still neither present myself as an expert on this server-running subject nor make authoritative statements based on limited experience and knowledge. I truly haven't a clue what prompts people to do that sort of thing.

Truly, I've no idea why people do that. They're not alone. They're not unique. Maybe they think they're smarter than they are but are somehow too stupid to admit it? Maybe they think they can fool people? Maybe it's ego or mental illness? Either way, it's laughable and, the best part, is that they choose to bring attention to themselves. I wonder if it's some sort of self-esteem problem, lack of positive attention, or just plain stupidity and arrogance? I don't really know.

Re:What?

[Anonymous Coward]

and that's not what you said, is it? this is what you said -

"Not the penny. The amount of copper and zinc in a CURRENT penny is worth far more than its actual face value, which is why the US Mint is constantly thinking of retiring the penny."

and now you're trying to talking about its production cost

AC is on to something - you must like being wrong.

you said the copper and zinc is worth more than the penny, that is wrong now and it will be wrong tomorrow.

do you think we're too stupid to see what you said and how you're now talking about the energy used to produce it instead of the original subject? is your whole family this stupid or is it just you with a monopoly on handicaps?

Problem not inherent to block chain tech ...

[perpenso]

There are a number of efforts to leverage the block chain for other applications. It would be interesting to see if these suffer the same issue.

The problem is only specific to this one particular implementation of the block chain concept. Its a bitcoin specific problem. In theory one easy to fix, but possibly complicated by old mining hardware that would need to be replaced. Not sure about the later, maybe current mining hardware is OK with the fix? Its not like this fix was unexpected, it was expected in the original design and discussion of bitcoin.

Re:Problem not inherent to block chain tech ...

[VikingNation]

I have heard of mining gear that is used to accelerate hashing functions. Is the software that runs the protocol 'baked' into these machines?

Re:Problem not inherent to block chain tech ...

[perpenso]

Mining is dominated by ASIC hardware. Application Specific Integrated Circuits.

The ASIC does the computationally hard "work", the hash or scrypt calculations. Regular software handles getting data into and out of the ASIC, submitting the results per some defined protocol. This regular software is not very demanding. A Raspberry Pi can handle the software that run dozens of ASIC mining devices.

Also keep in mind that it is not just that ASIC devices are faster. They also use less electricity. A very small fraction of the power needed by a GPU. Which makes ASIC more profitable.

Housing Markets

[Tenebrousedge]

This is all true. However, you seem to be exonerating the bank in only discussing the personal responsibility side of things. The loan officer absolutely knew that you would not be able to make payments. Why did he offer you that loan? Offering people loans they can't afford to pay interest on is a terrible way to do business.

Except if you can package the bad loans into a mortgage-backed security, have it rated AAA, sell it for a hefty profit, and leave some other sucker holding the bag. Or were you unaware that the banks made billions of dollars giving out these bad loans?

You're saying people should know better than the loan officer what kind of loan they need. Maybe that's even true, in an ideal world. In an ideal world, investment and consumer banking would have nothing to do with each other, removing incentives for banks to offer bad loans to their customers. In this world, stupid people still want houses to live in, most people don't know enough about loans to be able to contradict a loan officer or even to read the fine print, and banks don't always need to maximize loan repayments to maximize profits.

The people who got fucked hard in '08 were the entire world, and especially US citizens, who saw $10 trillion dollars worth of wealth disappear due to a massive amount of fraudulent securities. But go ahead and blame it on the victims.

Re:Housing Markets

[Bob the Super Hamste]

You're saying people should know better than the loan officer what kind of loan they need

It wasn't like the loan I qualified for was a little different from what we could actually afford, it was massively different as in for 5x the amount. Also the fact that it consumed more than our take home pay as it likely did for most people show that basic thinking and budgeting skills were lacking. From what I understand those loans were common and there still was the traditional advice that people should have followed.

who saw $10 trillion dollars worth of wealth disappear due to a massive amount of fraudulent securities

It wasn't real wealth and besides there were a lot of red flags that were there for everyone to see. Handing out piss poor loans to everyone who could write their name on the line, the fact that these were pretty new things, that some large banks were betting against these securities that they created.

The people who got fucked hard in '08 were the entire world

Not entirely I know plenty of people who came out smelling like roses, that year I only lost a 4% of my investments but over the next 3 years well over doubled it by following the simple advice of maintaining a balanced (if aggressive as I am still young enough to ride out fall) portfolio, and continuing to invest money. If you are one who can't handle even the most basic investing then most banks offer these wonderful things called Certificates of Deposit, or there are always US government bonds, neither of which offer a great return but are safe.

and especially US citizens

I will concede this but probably not the way you would like. It was a shame that US tax payers who were responsible had to prop up those who weren't. This includes banks and lenders that the invisible hand of the market was trying to bitch slap out of existence but instead the US government propped up. The various housing rescue programs to restructure and reduce payments for those who got too large of a loan or who likely should have never gotten a loan to begin with. The people who were stuck holding the bag were people like myself who wanted to refinance but because we were responsible and had made every payment on time but who's loans were underwater didn't get any special treatment and so were stuck at our old higher rates. It took years before my wife and I could go down to a 15 year mortgage at a lower rate yet the irresponsible were having the poor behavior rewarded. Yes it sucks that the government hasn't jailed various bankers as there are plenty. It sucks that the government allowed retail banks to play in the world of high finance, but that is just par for the course of the US government fucking its citizens.

But go ahead and blame it on the victims.

I was blaming the stupid. My kids do stupid shit too even when told that it is a bad idea and why it is a bad idea. When my oldest was little he liked to step on his toys and I would tell him that he will either break them or hurt himself. One day he was about to step barefoot onto a little metal play noodle grabber and I told him to not step on his toys as he will get hurt. So what does he do, decides to show me and instead of just stepping on it he stomped on it. The point is sometimes it is the victim's own fault.

Re:Housing Markets

[Tenebrousedge]

The point is sometimes it is the victim's own fault.

The banks were the ones with criminal designs and motives. The people taking bad loans were merely stupid. The American people collectively and severally were ripped off both by the banking industry and the federal government, and you're complaining about how you got screwed because of your neighbors: what misguided myopia.

Your argument is as specious as the rapist suggesting that his victim's skirt was too short. The intelligence level of the victims of a crime is as irrelevant as their skin color. No one forced the banks to start offering NINJA loans to anyone who could fog a mirror. I understand you have this ego-supporting narrative about your own financial acumen in relation to this crash, but you are doing an injustice to your peers. If we were to reduce this to strictly legal terms, you're suggesting that the victims had some responsibility to ensure that their loans were a sound investment for the bank. Even if that were true (and it is not), the banks had a far greater responsibility to not make idiotic investments. The loan officers knowingly failed any due diligence required of their positions. Not only is assigning culpability to the victim of fraud legally indefensible, but it also contradicts your earlier statements: if you're going to deride people for making poor investments, does that not apply in greater force to banking establishments?

I'm sure you're a shrewd investor and clearly people who don't listen to you are bad people and deserve to have bad things happen to them. Your misanthropy aside, blaming people for being victims of fraud is still morally and legally indefensible.

Re: (Desperate pleas to disregard) information!

[eyenot]

This is exactly the same tack that "quick switch to gold!" enthusiasts take when you soundly beat them with their own arguments: they "dare" you to "short gold" if you "know so much" and are "so confident".

I might have read somewhere that this is typical behaviour for traumatized victims of abuse.

Who would of thought

[poet]

That a bunch of geeks who know very little about how to operate economy would fail at trying to create one.

Re:Who would of thought

[JustAnotherOldGuy]

That a bunch of geeks who know very little about how to operate economy would fail at trying to create one.

^^^^ This is probably the most insightful comment on this entire subject.

Put another way, "Good intentions, bad results." Like when I asked my plumber to help with my heart transplant.

Re: (Desperate pleas to disregard) information!

[Anonymous Coward]

You'll notice they try the exact same trick when you're the one bullshitting them. I'm not a goldbug myself, but I can respect when they put their money where their mouths are instead of just posturing for internet points. Who's deciding that you've beat them with their own arguments, you or the market?

What exactly are traumatized victims of abuse daring you to bet on?

This isn't surprised

[Anonymous Coward]

Basically Bitcoin was created because someone had the childish mindset of "I'm going to create my own currency! With hookers and blow!" Might as well have used Monopoly money.