Ask HN: What's your perspective on BitCoin?
6 comments
I wrote this some time ago:
"It is obvious that electronic money will replace paper bills in the future. Not because they are better or worse than paper but simply because the methods of payment simply killed the need for paper bills. Instead of storing tons of paper and gold in their safes, banks will store the electronic money in their databases. The public will never touch that electronic money, they will be just a number in a bank statement. You won't have to install any bitcoin client. The only thing you will ever need is a authentication tool. It could be a card, it could be your cell phone, it will certainly be some sort of portable token."
Yet, I'm still not sure how eletronic money can really be democratic, not everyone has access to basic infrastructure.
http://eduardo.intermeta.com.br/posts/2013/1/18/bitcoins-and...
"It is obvious that electronic money will replace paper bills in the future. Not because they are better or worse than paper but simply because the methods of payment simply killed the need for paper bills. Instead of storing tons of paper and gold in their safes, banks will store the electronic money in their databases. The public will never touch that electronic money, they will be just a number in a bank statement. You won't have to install any bitcoin client. The only thing you will ever need is a authentication tool. It could be a card, it could be your cell phone, it will certainly be some sort of portable token."
Yet, I'm still not sure how eletronic money can really be democratic, not everyone has access to basic infrastructure.
http://eduardo.intermeta.com.br/posts/2013/1/18/bitcoins-and...
I have a natural aversion to it because it seems lawless and ungovernable. For many this is a good thing (buying drugs, freedom from tax, etc etc) but I'm very much so a "by the books" kind of guy so none of that has any value to me. I guess I COULD convert my money to a currency with no stability or permanence, but there's really no benefit.
Why would I want to spend something that is bound to increase in value? We spend cash because we're inflating it every year and it's a bad decision to hoard it. With no inflation (at least eventually) it makes no sense. I think Bitcoin will have some utility as an investment or to convert currencies but beyond that nothing.
Correction. We spend cash because we need or want things. If the utility I get from the thing I'm want to buy give me greater satisfaction today than the value I gain in the future from inflation, then I will still spend the money. It's all about marginal utility.
If bitcoins are deflating rapidly, those bitcoins have greater marginal utility if you hold on to them. However if they are deflating very slowly (not inertially) then people will spend them to get something that provides greater marginal utility now.
Humans are capable of putting a price on time (determine the marginal utility of time). Inflation is not the only economic circumstance that works for trade to occur. Economics is very relative and reflexive. The only entity that truly loses in a deflationary environment is the government, because they can't steal from its constituents by printing money and devaluing the money its constituents are holding.
More important than deflation or inflation is relative temporal constituency in the value of money. So long as money stays are relatively the same value for long stretches of time, i.e. it isn't volatile, then humans are afforded circumstances in which they can make rational judgements of value and utility.
If bitcoins are deflating rapidly, those bitcoins have greater marginal utility if you hold on to them. However if they are deflating very slowly (not inertially) then people will spend them to get something that provides greater marginal utility now.
Humans are capable of putting a price on time (determine the marginal utility of time). Inflation is not the only economic circumstance that works for trade to occur. Economics is very relative and reflexive. The only entity that truly loses in a deflationary environment is the government, because they can't steal from its constituents by printing money and devaluing the money its constituents are holding.
More important than deflation or inflation is relative temporal constituency in the value of money. So long as money stays are relatively the same value for long stretches of time, i.e. it isn't volatile, then humans are afforded circumstances in which they can make rational judgements of value and utility.
To this I add: If all of your assets and income were denominated in bitcoins, you'd still spend some of them. You probably need food, shelter, clothing, and transportation right now, or at least pretty soon, and so you would give up some of your bitcoins to get those things.
Check out this question on Quora. Excellent answers:
https://www.quora.com/Bitcoin/Is-the-cryptocurrency-Bitcoin-...
It's got a specific application where BTC is appropriate. I don't think the main attraction of BTC is as an investment or alternative to real currency.
I too am curious - are there speculators, cuz the price keeps a rising!
bitcoin.org | mtgox.com