The source code has nothing to do with Bitcoin being a scam. The fact that Bitcoin was designed to generate tremendous returns for its developers and early adopters, and siphon other currencies away from late adopters, is what makes Bitcoin a scam. You are talking about a currency that is inherently deflationary, and which will only see inflation at the very end of its life when the last adopters find themselves holding worthless tokens. The value of Bitcoin is based on speculation about how many more people will buy into the system.
Actually, you do have a right to print private currency in the United States, as long as you guarantee that it can be redeemed for USD and as long as you report and pay the appropriate taxes on transactions made in that currency. You can't legally use your private currency to settle a debt or to pay your taxes, but you can pay workers with it and use it to purchase goods and services. See, for example, this:
Now, Bitcoin is different, in that there is no guarantee of being able to redeem it for anything at all. This muddies the legal situation surrounding Bitcoin.
Fiat currencies are backed by faith in a government. That is to say, faith that the government will continue to provide essential services, or more pessimistically faith that the government will arrest people who do not pay their taxes. Fiat currency derives its value from its utility as a means of paying taxes and government fees, and legally settling debts.
Bitcoins are quite similar to most forms of fiat money.
Except that Bitcoin cannot be used to pay taxes or any government fees or tariffs. Nor can Bitcoin be used to legally settle debts in some places (like the United States). In fact, Bitcoin is about as similar to fiat currency as a Chuck-e-Cheese token would be. Most fiat currencies are designed to defend against deflation, whereas Bitcoin is designed to encourage it. Most fiat currencies are useful for money lending; only a fool would lend or borrow Bitcoin.
Bitcoin was a superficially nice idea, but spend more than 5 minutes thinking about its implications and fundamental architecture and one is forced to conclude that it was either designed by people with a high-school level understanding of economics or it is a scam designed to yield big profits for the developers and early adopters, while screwing over late adopters.
Hm, following news of high volatility, major security problems, and the fact that one compromised account panicked an entire exchange, can anyone claim they are surprised by this?
while bitcoins might be designed to see an extreme rate of deflation, i see absolutely no difference in a capitalist market that raises the prices of goods but doesn't raise the laborer's wage to keep up
Probably because you never saw the definitions of inflation and deflation.
i see absolutely no difference in a capitalist market where a central bank dictates the interest rate of debt
That is because you are not paying attention. Nobody would issue a Bitcoin loan, because they would have little recourse if a person defaulted on their debt, and only a complete idiot would take out a Bitcoin loan, because the built-in deflation would make repaying that loan very difficult. You think that it is problem that banks can manipulate markets with loans? Try a world without loans, and see how much harder it becomes for the lower class to open a business when they can't find any capital.
except that in the bitcoin world, nobody has the power to adjust the value of the bitcoin via interest rate.
In the Bitcoin world, the developers and early adopters sold their currency at a huge profit, leaving the late adopters praying for more deflation and even more late adopters so that they don't lose everything they put into Bitcoin.
What's inherently deflationary about it ? Are you arguing new bitcoins aren't generated fast enough ?
Essentially, yes: Bitcoins are not generated fast enough to prevent deflation; worse, Bitcoin is designed so that the rate of new currency generation is slowed down over time, regardless of whether or not the Bitcoin economy grows. Bitcoin has already seen substantial deflation over the past year.
Fiat currency does not have to be issued by a government. Wikipedia:
You must have missed these parts of that very article:
Fiat money is money that has value only because of government regulation or law.
A feature of all fiat money is its acceptability to the government for payment of taxes and charges.
fiat money is based solely on faith in the government issuing the money.
No, the "haters" are people who understand that currencies which cannot be used to legally settle debts and whose design inevitably leads to a deflationary trend should be avoided. Bitcoin is not even a fiat currency, since it was not created by a government (see: definition of fiat currency).
It's OK though, you can continue to assume that we live in a world where everyone either supports Bitcoin or thinks we should run back to the gold standard.
What makes it a scam has nothing to do with the source code; it has to do with the fundamental architecture of Bitcoin. Bitcoin was designed to see an extreme rate of deflation early on, and gradually slow down as more people used the system. In other words, Bitcoin's developers and early adopters make enormous profits, and late adopters wind up losing.
"Illicit access to one account?" Your market teeters on the access to one account?!
Exactly what I was thinking when I saw this -- how can a single account be used to crash an entire market like that? Wasn't the claim that Bitcoin would have a stable value and that no single entity could play games with the exchange rate?
It is like people with sense said from the beginning: Bitcoin is going to fail in the long run.
it's receiving too much attention and increasing in value too quickly for its own good.
Anyone with an iota of common sense could see that.
I really like the idea of the system and I want to see this system or one like it succeed
What we need is a digital cash system that is run by banks -- yes, I know, we all like to hate on banks, but the truth is that banking is an important part of the economy and the majority of digital cash protocols call for a bank to issue the digital currency.
Every decade we have more not less personal freedoms,
Funny, a century ago you were allowed to grow plants for personal use without having a paramilitary force invade your home, seize your property, and imprison you. These days, the list of plants and chemicals you are not allowed to be in possession of grows year after year, and we no longer bother with democratic processes when determining what is on that list: the Attorney General has the power to declare a drug to be illegal without having to first seek congressional approval. You can be arrested for possession of a drug whose legality was never voted on by your representatives.
Yes, some strides have been made -- it is certainly easier for men to be gay now than it was 50 years ago, and likewise with black people and communists. In that same period of time, despite those improvements, the United States' prison population has grown by orders of magnitude, to the point where we have a larger prison population than any country in the entire world, and have the third largest of any country that ever existed (we still haven't imprisoned more people than Nazi Germany or the USSR). It is not that surprising, though, considering that many American prisons are operated for-profit, and that police forces are actually allowed to use seized assets in drug cases to pay their own salaries (thus giving rise to our self-funded police units, who have been known to get appraisals on property before making an arrest).
Take a look around. This is not 1 step back and 1.1 steps forward, it is 2 steps back and an occasional step forward. You know something is wrong when law enforcement agencies are carrying around military rifles to arrest people for non-violent crimes.
When you work "under the table," how would the government know what your income is? Oh, right, because a business with 500 employees can't hide the fact that it is paying those employees, and the government is going to want to know why their taxable income is not being reported.
Really though, the situation you describe would not even be possible in a lot of places, since an employee who does not get paid their Bitcoin salary will have no legal recourse. A few foolish people would get cheated, have the courts tell them that there is nothing they can do about it, and suddenly people would be demanding salaries paid in their nation's currency.
You mean that food does not have an inherent value? Or shelter? Or medicine?
Value is a result of supply and demand. If there is a limited supply of something that people want, then it has value. The more people demand it, or the more the supply is limited, the more value it has. People don't just "assign" value to something by some magical process.
We all know where the supply of Bitcoins comes from. Where does the demand come from? Oh, right -- speculation about your ability to exchange Bitcoins for other currencies. Compare this with the demand for those other currencies, which is the result of the need to pay taxes, the ability to have a court settle a dispute over a debt, and so forth. Nothing magical about it; the demand for currency is a result of the legal framework that surrounds it, and the supply comes from governments and banking systems.
When I can take you to court for defaulting on a Bitcoin loan, or when I can pay my taxes in Bitcoins, there will be no question about whether or not Bitcoins have any actual value. Until then, Bitcoin should be considered a speculative bubble if you happen to be optimistic or a scam if you are not an optimist.
Value does not appear magically, or because a bunch of people wake up one day and ascribe value to something. Value exists because of supply and demand -- something which is limited and which people want. The demand for currency is not that it is a "medium of exchange" -- that is nice, but nobody is going to accept pieces of paper with numbers printed on them just because they are a convenient medium of exchange. The demand for currency is a result of its useful in settling debts -- debts owed to the government (e.g. taxes), private debts (which you can have the courts settle, and which the courts will only deal with in terms of the government's currency), and so forth. The supply of currency comes from governments and banks, and it is finite -- hence, we have a situation where currency has value.
As for Bitcoin, supply is simple -- supply is limited by design, and comes from the participants in the system. Demand, on the other hand, is shakier. Demand for Bitcoin stems solely from demand for other currencies; Bitcoins are only in demand as long as people are willing to operate a Bitcoin exchange, and as long as people are willing to buy Bitcoins (i.e. because they believe they can turn a profit by selling the Bitcoins for something else). This is not a system that has much long-term viability; if the Bitcoin userbase does not keep growing, the value of Bitcoin will start to fall, as the holders of Bitcoins attempt to exchange them for other currencies.
Or in other words, Bitcoin is a fancy pyramid scheme. For Bitcoin to have value, people need to keep entering the system and keep propping up the speculative bubble that surrounds Bitcoin. At the end of the day, when there are no more Bitcoins to be mined and nobody is trying to enter the system, the only thing left will be for the current participants to dump their Bitcoins. The early adopters will win (and have probably already won); the late adopters will be stuck with a bunch of worthless Bitcoins.
What do governments have to lose from Bitcoin? At the end of the day, no nation's currency is in jeopardy from Bitcoin, because:
People still need to pay taxes, at the very least on their property, and they cannot use Bitcoin to settle their tax obligations. People who do not pay their taxes will lose their property, and possibly be put in prison.
Courts do not have to recognize debts paid in Bitcoins, nor do courts have to recognize a failure to repay a Bitcoin loan. Thus, nobody will make Bitcoin loans (since it would be too difficult to seize the collateral from people who default on the loan) and only a fool would try to repay a loan in Bitcoins, since the courts might still insist that the loan be repaid in another currency. Loans are an important part of the economy, and are necessary for a lot of businesses to operate; if Bitcoin cannot support a system of loans, then Bitcoin will never replace other currencies.
As it turns out, in some countries (like the United States), barter is taxable, and thus a Bitcoin transaction would be taxable. Failing to report a large Bitcoin transaction would be a serious crime, and it would be fairly difficult to hide it. If Bitcoin becomes the currency of people who are committing crimes, the government will start tracking down Bitcoin users; since people will still need their nation's currency eventually, governments will only have to watch the Bitcoin exchanges and see who is trying to selling Bitcoins for other currencies.
Really, Bitcoin is a superficially interesting experiment that is doomed to fail in the long run. Digital cash should be issued by banks, and backed by actual currency -- you can still enable anonymous and offline payments, and you have the added benefit of being able to track down people who try to cheat the system (e.g. there are digital cash systems in which people who try to double spend wind up revealing their identity in the process). Unfortunately, the current US political climate is not very friendly toward anonymous payments, and so it is unlikely that we will see banks issuing digital cash, but it is nice to dream.
So a trojan goes around trying to find some data? Big deal. Call me when the data has some actual value, and is not just part of a giant speculative bubble (or perhaps pyramid scheme).
Theoretically this should be part of basic high school education, but considering that we only barely expect our high school graduates to be literate (at least in America), I doubt we will see such a situation any time soon.
Hm...a "garden" surrounded by a fence, patrolled by a team of guards, and in which a select few people are allowed to come in for "visits." I think I have heard of real-life examples of such a set up, although people don't usually live in such facilities voluntarily.
Slashdot Mirror
The source code has nothing to do with Bitcoin being a scam. The fact that Bitcoin was designed to generate tremendous returns for its developers and early adopters, and siphon other currencies away from late adopters, is what makes Bitcoin a scam. You are talking about a currency that is inherently deflationary, and which will only see inflation at the very end of its life when the last adopters find themselves holding worthless tokens. The value of Bitcoin is based on speculation about how many more people will buy into the system.
Actually, you do have a right to print private currency in the United States, as long as you guarantee that it can be redeemed for USD and as long as you report and pay the appropriate taxes on transactions made in that currency. You can't legally use your private currency to settle a debt or to pay your taxes, but you can pay workers with it and use it to purchase goods and services. See, for example, this:
http://www.berkshares.org/
Now, Bitcoin is different, in that there is no guarantee of being able to redeem it for anything at all. This muddies the legal situation surrounding Bitcoin.
Fiat currencies are backed by faith in a government. That is to say, faith that the government will continue to provide essential services, or more pessimistically faith that the government will arrest people who do not pay their taxes. Fiat currency derives its value from its utility as a means of paying taxes and government fees, and legally settling debts.
Bitcoins are quite similar to most forms of fiat money.
Except that Bitcoin cannot be used to pay taxes or any government fees or tariffs. Nor can Bitcoin be used to legally settle debts in some places (like the United States). In fact, Bitcoin is about as similar to fiat currency as a Chuck-e-Cheese token would be. Most fiat currencies are designed to defend against deflation, whereas Bitcoin is designed to encourage it. Most fiat currencies are useful for money lending; only a fool would lend or borrow Bitcoin.
Bitcoin was a superficially nice idea, but spend more than 5 minutes thinking about its implications and fundamental architecture and one is forced to conclude that it was either designed by people with a high-school level understanding of economics or it is a scam designed to yield big profits for the developers and early adopters, while screwing over late adopters.
How is a scam like Bitcoin in any way related to "defending freedom?"
Hm, following news of high volatility, major security problems, and the fact that one compromised account panicked an entire exchange, can anyone claim they are surprised by this?
go do something with your hands
But...but...I need my computer to get all the por...
am i wrong?
Yes you are wrong:
while bitcoins might be designed to see an extreme rate of deflation, i see absolutely no difference in a capitalist market that raises the prices of goods but doesn't raise the laborer's wage to keep up
Probably because you never saw the definitions of inflation and deflation.
i see absolutely no difference in a capitalist market where a central bank dictates the interest rate of debt
That is because you are not paying attention. Nobody would issue a Bitcoin loan, because they would have little recourse if a person defaulted on their debt, and only a complete idiot would take out a Bitcoin loan, because the built-in deflation would make repaying that loan very difficult. You think that it is problem that banks can manipulate markets with loans? Try a world without loans, and see how much harder it becomes for the lower class to open a business when they can't find any capital.
except that in the bitcoin world, nobody has the power to adjust the value of the bitcoin via interest rate.
In the Bitcoin world, the developers and early adopters sold their currency at a huge profit, leaving the late adopters praying for more deflation and even more late adopters so that they don't lose everything they put into Bitcoin.
What's inherently deflationary about it ? Are you arguing new bitcoins aren't generated fast enough ?
Essentially, yes: Bitcoins are not generated fast enough to prevent deflation; worse, Bitcoin is designed so that the rate of new currency generation is slowed down over time, regardless of whether or not the Bitcoin economy grows. Bitcoin has already seen substantial deflation over the past year.
Fiat currency does not have to be issued by a government. Wikipedia :
You must have missed these parts of that very article:
No, the "haters" are people who understand that currencies which cannot be used to legally settle debts and whose design inevitably leads to a deflationary trend should be avoided. Bitcoin is not even a fiat currency, since it was not created by a government (see: definition of fiat currency).
It's OK though, you can continue to assume that we live in a world where everyone either supports Bitcoin or thinks we should run back to the gold standard.
What makes it a scam has nothing to do with the source code; it has to do with the fundamental architecture of Bitcoin. Bitcoin was designed to see an extreme rate of deflation early on, and gradually slow down as more people used the system. In other words, Bitcoin's developers and early adopters make enormous profits, and late adopters wind up losing.
Your bitcoins were never and will never be safe, because the entire system is a scam.
Books have been around for almost EIGHT centuries
Not that I disagree with the sentiment, but books have been around for longer than that, at least if you count the codex:
http://en.wikipedia.org/wiki/Codex
Real currencies can be used to pay taxes and legally settle debts.
"Illicit access to one account?" Your market teeters on the access to one account?!
Exactly what I was thinking when I saw this -- how can a single account be used to crash an entire market like that? Wasn't the claim that Bitcoin would have a stable value and that no single entity could play games with the exchange rate?
It is like people with sense said from the beginning: Bitcoin is going to fail in the long run.
it's receiving too much attention and increasing in value too quickly for its own good.
Anyone with an iota of common sense could see that.
I really like the idea of the system and I want to see this system or one like it succeed
What we need is a digital cash system that is run by banks -- yes, I know, we all like to hate on banks, but the truth is that banking is an important part of the economy and the majority of digital cash protocols call for a bank to issue the digital currency.
Every decade we have more not less personal freedoms,
Funny, a century ago you were allowed to grow plants for personal use without having a paramilitary force invade your home, seize your property, and imprison you. These days, the list of plants and chemicals you are not allowed to be in possession of grows year after year, and we no longer bother with democratic processes when determining what is on that list: the Attorney General has the power to declare a drug to be illegal without having to first seek congressional approval. You can be arrested for possession of a drug whose legality was never voted on by your representatives.
Yes, some strides have been made -- it is certainly easier for men to be gay now than it was 50 years ago, and likewise with black people and communists. In that same period of time, despite those improvements, the United States' prison population has grown by orders of magnitude, to the point where we have a larger prison population than any country in the entire world, and have the third largest of any country that ever existed (we still haven't imprisoned more people than Nazi Germany or the USSR). It is not that surprising, though, considering that many American prisons are operated for-profit, and that police forces are actually allowed to use seized assets in drug cases to pay their own salaries (thus giving rise to our self-funded police units, who have been known to get appraisals on property before making an arrest).
Take a look around. This is not 1 step back and 1.1 steps forward, it is 2 steps back and an occasional step forward. You know something is wrong when law enforcement agencies are carrying around military rifles to arrest people for non-violent crimes.
When you work "under the table," how would the government know what your income is? Oh, right, because a business with 500 employees can't hide the fact that it is paying those employees, and the government is going to want to know why their taxable income is not being reported.
Really though, the situation you describe would not even be possible in a lot of places, since an employee who does not get paid their Bitcoin salary will have no legal recourse. A few foolish people would get cheated, have the courts tell them that there is nothing they can do about it, and suddenly people would be demanding salaries paid in their nation's currency.
nothing has inherent value
You mean that food does not have an inherent value? Or shelter? Or medicine?
Value is a result of supply and demand. If there is a limited supply of something that people want, then it has value. The more people demand it, or the more the supply is limited, the more value it has. People don't just "assign" value to something by some magical process.
We all know where the supply of Bitcoins comes from. Where does the demand come from? Oh, right -- speculation about your ability to exchange Bitcoins for other currencies. Compare this with the demand for those other currencies, which is the result of the need to pay taxes, the ability to have a court settle a dispute over a debt, and so forth. Nothing magical about it; the demand for currency is a result of the legal framework that surrounds it, and the supply comes from governments and banking systems.
When I can take you to court for defaulting on a Bitcoin loan, or when I can pay my taxes in Bitcoins, there will be no question about whether or not Bitcoins have any actual value. Until then, Bitcoin should be considered a speculative bubble if you happen to be optimistic or a scam if you are not an optimist.
Value does not appear magically, or because a bunch of people wake up one day and ascribe value to something. Value exists because of supply and demand -- something which is limited and which people want. The demand for currency is not that it is a "medium of exchange" -- that is nice, but nobody is going to accept pieces of paper with numbers printed on them just because they are a convenient medium of exchange. The demand for currency is a result of its useful in settling debts -- debts owed to the government (e.g. taxes), private debts (which you can have the courts settle, and which the courts will only deal with in terms of the government's currency), and so forth. The supply of currency comes from governments and banks, and it is finite -- hence, we have a situation where currency has value.
As for Bitcoin, supply is simple -- supply is limited by design, and comes from the participants in the system. Demand, on the other hand, is shakier. Demand for Bitcoin stems solely from demand for other currencies; Bitcoins are only in demand as long as people are willing to operate a Bitcoin exchange, and as long as people are willing to buy Bitcoins (i.e. because they believe they can turn a profit by selling the Bitcoins for something else). This is not a system that has much long-term viability; if the Bitcoin userbase does not keep growing, the value of Bitcoin will start to fall, as the holders of Bitcoins attempt to exchange them for other currencies.
Or in other words, Bitcoin is a fancy pyramid scheme. For Bitcoin to have value, people need to keep entering the system and keep propping up the speculative bubble that surrounds Bitcoin. At the end of the day, when there are no more Bitcoins to be mined and nobody is trying to enter the system, the only thing left will be for the current participants to dump their Bitcoins. The early adopters will win (and have probably already won); the late adopters will be stuck with a bunch of worthless Bitcoins.
Governments have far more to lose from bitcoin
What do governments have to lose from Bitcoin? At the end of the day, no nation's currency is in jeopardy from Bitcoin, because:
Really, Bitcoin is a superficially interesting experiment that is doomed to fail in the long run. Digital cash should be issued by banks, and backed by actual currency -- you can still enable anonymous and offline payments, and you have the added benefit of being able to track down people who try to cheat the system (e.g. there are digital cash systems in which people who try to double spend wind up revealing their identity in the process). Unfortunately, the current US political climate is not very friendly toward anonymous payments, and so it is unlikely that we will see banks issuing digital cash, but it is nice to dream.
So a trojan goes around trying to find some data? Big deal. Call me when the data has some actual value, and is not just part of a giant speculative bubble (or perhaps pyramid scheme).
Theoretically this should be part of basic high school education, but considering that we only barely expect our high school graduates to be literate (at least in America), I doubt we will see such a situation any time soon.
Hm...a "garden" surrounded by a fence, patrolled by a team of guards, and in which a select few people are allowed to come in for "visits." I think I have heard of real-life examples of such a set up, although people don't usually live in such facilities voluntarily.
No, less freedom to develop your own applications, which read your own data in ways that are useful to you.