And you can use your own. You just by law have to accept dollars as the ultimate form of resolution. That's it. But for day to day actions you can use another currency.
Keynes has a classic statement in general theory, which is like "the good, fast, cheap; pick any 2" meme about programming.
a) adjustability (the ability of the government to manipulate interest rates for the common good) b) stability (the currency trades at a stable level relative to other currencies) c) convertibility (you can move easily between this currency and other currencies)
Pick any 2.
Our system is designed for (a) and (c). Bretton Woods was (a) and (b) Gold standard (or bimetalism which is what the US actually had for most of its history) is (b) and (c)
In a (b) and (c) system the government's involvement is helpful. The real problem for the "keep-the-government-out-of-my-money crowd" is they hate adjustability.
In any case, it's not clear that you need to factor in virtual currencies when relying on bitcoin, since those instruments would no longer be useful.
Why? You certainly agree you could have bonds in bitcoin? If I can have short term bonds that means I can have money market instruments. I can price stocks. I can have derivatives on those stocks and bonds.
That's not true. A mildly deflating economy isn't a bad thing. Its like a built in lowest possible interest rate. As long as the utility of investment exceeds the interest rate you are fine.
For example assume currency X has a deflation rate of 2% per annum. Assume the interest rate is currently 3% nominal. Then the real interest rate is 5%. If the economy can support that (i.e. rapid growth) fine. If not the nominal interest rates comes down.
The catch is as the nominal interest rate starts to hit around 1% it stops coming down and you end up with a minimum real interest rate of 3% which might still be too high.
The big mistake you are making is your definition of "owning" and "transferring"
To transfer money is to tell lots of nodes you transfered money. The money hasn't moved until lots of nodes know about it. The system is designed to avoid dual payments.
3) the description has this trail of signed hashes being appended. Does this grow forever and can it be inverted to follow the money?
Yes. You can trace transactions all the way back to semi anonymous accounts.
For #5. The production rate, etc... was established when the system was first designed. Every node knows the rules. There is no way to change them. And there is no longer a central signing authority, the authority is fully distributed.
Does anyone honestly think the promise of protection from inflation will cause people to ask for their paycheck in BitCoins?
Similar arguments were made about the transfer from useful commodities to stable commodities, stable commodities to coin money, coin money to paper money, government paper to bank paper (i.e. checks), backed currencies to fiat currencies.
Yeah I can see it. If there is genuine hostility to governments I can see a popular movement towards a currency that governments can't control.
There are perhaps 55 trillion "dollars" out there in the world
I agree with the trust of your post. But if you are counting virtual currencies, you are off by over an order of magnitude. Synthetic treasuries (which generally cancel each other out) are probably around 5x that amount that amount by themselves.
We have a fiat currency, a government with the arbitrary power to tax and a government with the unlimited power to spend. Its all the government's money. Government isn't playing the game, they are the referee.
The purpose of inflation is not support spending it is to deal with certain macro economic variables which result in sub optimal resource utilization. Private individuals deal with micro economic factors, governments should deal with the macro factors like aggregate demand.
A great deal of that wealth is in form of: land, precious materials, permits, physical assets (like buildings).... The wealthy would still be able to trade those things for bitcoin and be wealthy. Less control for sure.
Well criminals and people engaging in transactions they don't want tracked is potentially a gigantic market: gambling, tax free transactions, drugs, escorts, buying software or services abroad... that's tens of billions in the US alone. That's millions of highly motivated users. Once it or another de-central currency gets established its a real problem for the government.
This was why early in the war on terror the government didn't keep cracking down on online poker. The Poker community was setting up black market banks with billions of dollars flowing through them, which could easily hide terrorist financing. So the government let them go semi-legit for a while because they had more serious things to worry about than someone blowing a few hundred in a poker game.
It doesn't have the sole authority to coin money it has the authority to coin money. For many years private banks and states had their own currencies. The purpose of that clause was to grant the existence of a national currency.
Liberty coins is still fighting it. But bitcoin is designed not to be able to be shut down. From a data perspective it looks like a peer to peer distributed database with open source software for clients.
Slashdot Mirror
I think it does save the from, there is that hold hash of chains of transactions. Not only does it save the "from" and "to" but its public.
Well the electronic equivalent would be an EFT or a check. Yes its worse than cash however for monitored transfers.
You spend it by transferring it to another account. You can do that infinitely often.
There is no company to give the order too. Its peer to peer to avoid a central point of attack.
OK well first off I was correcting you.
And you can use your own. You just by law have to accept dollars as the ultimate form of resolution. That's it. But for day to day actions you can use another currency.
Keynes has a classic statement in general theory, which is like "the good, fast, cheap; pick any 2" meme about programming.
a) adjustability (the ability of the government to manipulate interest rates for the common good)
b) stability (the currency trades at a stable level relative to other currencies)
c) convertibility (you can move easily between this currency and other currencies)
Pick any 2.
Our system is designed for (a) and (c).
Bretton Woods was (a) and (b)
Gold standard (or bimetalism which is what the US actually had for most of its history) is (b) and (c)
In a (b) and (c) system the government's involvement is helpful. The real problem for the "keep-the-government-out-of-my-money crowd" is they hate adjustability.
Why? You certainly agree you could have bonds in bitcoin? If I can have short term bonds that means I can have money market instruments. I can price stocks. I can have derivatives on those stocks and bonds.
No, you are right. That's a big if though.
You can buy things right now. Including about 20 mainstream government western currencies including US$
That's not true. A mildly deflating economy isn't a bad thing. Its like a built in lowest possible interest rate. As long as the utility of investment exceeds the interest rate you are fine.
For example assume currency X has a deflation rate of 2% per annum. Assume the interest rate is currently 3% nominal. Then the real interest rate is 5%. If the economy can support that (i.e. rapid growth) fine. If not the nominal interest rates comes down.
The catch is as the nominal interest rate starts to hit around 1% it stops coming down and you end up with a minimum real interest rate of 3% which might still be too high.
How does a peer to peer system crash? And all currency is valuable only by common consent.
Gold does have industrial uses but the value would be around $40 an ounce or less if it were priced as a useful waste product of copper mining.
The big mistake you are making is your definition of "owning" and "transferring"
To transfer money is to tell lots of nodes you transfered money. The money hasn't moved until lots of nodes know about it. The system is designed to avoid dual payments.
Yes. You can trace transactions all the way back to semi anonymous accounts.
For #5. The production rate, etc... was established when the system was first designed. Every node knows the rules. There is no way to change them. And there is no longer a central signing authority, the authority is fully distributed.
I don't understand #6.
The issue of the suitcase of 20s is that it works fine for in person. It doesn't work so well for people who:
a) Have to do it as a large percentage of their income.
b) Have to do it for large amounts
c) Have to do it electronically.
Does anyone honestly think the promise of protection from inflation will cause people to ask for their paycheck in BitCoins?
Similar arguments were made about the transfer from useful commodities to stable commodities, stable commodities to coin money, coin money to paper money, government paper to bank paper (i.e. checks), backed currencies to fiat currencies.
Yeah I can see it. If there is genuine hostility to governments I can see a popular movement towards a currency that governments can't control.
Its peer to peer you can't change the rules ever. You can create a new currency with new rules.
I agree with the trust of your post. But if you are counting virtual currencies, you are off by over an order of magnitude. Synthetic treasuries (which generally cancel each other out) are probably around 5x that amount that amount by themselves.
That's a good description. A smart ass counterfeiting. Mod up if any mods are reading.
We have a fiat currency, a government with the arbitrary power to tax and a government with the unlimited power to spend. Its all the government's money. Government isn't playing the game, they are the referee.
The purpose of inflation is not support spending it is to deal with certain macro economic variables which result in sub optimal resource utilization. Private individuals deal with micro economic factors, governments should deal with the macro factors like aggregate demand.
The interfaces can be arbitrarily simplified. Throw on another layer and it could be a very simple application.
Really all that has to happen is:
A gives user B some money and broadcasts this transaction to lots of others
B sees from trusted sources that A sent the money
B gives A stuff.
A great deal of that wealth is in form of: land, precious materials, permits, physical assets (like buildings).... The wealthy would still be able to trade those things for bitcoin and be wealthy. Less control for sure.
There is a market to and from the USD and about 20 other currencies.
Well criminals and people engaging in transactions they don't want tracked is potentially a gigantic market: gambling, tax free transactions, drugs, escorts, buying software or services abroad... that's tens of billions in the US alone. That's millions of highly motivated users. Once it or another de-central currency gets established its a real problem for the government.
This was why early in the war on terror the government didn't keep cracking down on online poker. The Poker community was setting up black market banks with billions of dollars flowing through them, which could easily hide terrorist financing. So the government let them go semi-legit for a while because they had more serious things to worry about than someone blowing a few hundred in a poker game.
That prohibits states from demanding payment in another currency. For example they can't demand payment in tabacco or in their own state currencies.
How is that clear that they are the "only one allowed"?
It doesn't have the sole authority to coin money it has the authority to coin money. For many years private banks and states had their own currencies. The purpose of that clause was to grant the existence of a national currency.
Liberty coins is still fighting it. But bitcoin is designed not to be able to be shut down. From a data perspective it looks like a peer to peer distributed database with open source software for clients.