Bitcoin Is a High-Tech Dinosaur Soon to Be Extinct(bloomberg.com)
bloomberg.com
Bitcoin Is a High-Tech Dinosaur Soon to Be Extinct
http://www.bloomberg.com/news/2013-12-31/bitcoin-is-a-high-tech-dinosaur-soon-to-be-extinct.html
57 comments
Hardly anyone gets Bitcoin, yet. But I am pretty sure that they will, eventually. It takes a long time, even for smart people, to really figure it out.
Agreed. I've seen very few Bitcoin skeptics who have demonstrated deep technical understanding of Bitcoin and it's potential beyond a simple currency. If they exist I'd love to hear about them.
Some might argue that the same could be said of Bitcoin cheerleaders and deep economic understanding of money...
And I've seen likewise from Bitcoin proponents. As far as I can tell, “Belief in Bitcoins” is the technolibertarian equivalent of “disbelief in evolution”.
I can see plenty of good arguments for non-physical currency. Bitcoin seems to combine the downsides of the Gold Standard and the Euro, though. Deflationary currency is a bad idea. Giving up control of one's currency is a bad idea.
I can see plenty of good arguments for non-physical currency. Bitcoin seems to combine the downsides of the Gold Standard and the Euro, though. Deflationary currency is a bad idea. Giving up control of one's currency is a bad idea.
Oh I agree most Bitcoin proponents don't have a good understanding. Don't listen to them either. But I can point to several who do understand it extremely well (e.x. Andreas Antonopoulos https://twitter.com/aantonop is one, Chris Dixon seems to be another)
I'm such a person. I've been active with BTC, I've mined and traded (both to a nice personal profit), but I think BTC is a loser. I invested in BTC the same way I invested in one-hit wonders like Zynga: very temporarily.
Perhaps we can ask each other some questions:
My first question: BTC is designed with very limited bandwidth for transactions (right now it can only do 7 transactions per second). Is there an actual solution in place to deal with this? All I ever see is hand-waving about how the limits could be raised or eliminated, though that appears that it would create a problem with block chain size and bandwidth.
Is there a proposal someplace that actually addresses BTC's current lack of capacity that doesn't just create a rather massive bandwidth and storage problem?
Perhaps we can ask each other some questions:
My first question: BTC is designed with very limited bandwidth for transactions (right now it can only do 7 transactions per second). Is there an actual solution in place to deal with this? All I ever see is hand-waving about how the limits could be raised or eliminated, though that appears that it would create a problem with block chain size and bandwidth.
Is there a proposal someplace that actually addresses BTC's current lack of capacity that doesn't just create a rather massive bandwidth and storage problem?
One possibility is to use off-chain transactions between networks of nodes that occasionally settle on the actual blockchain: https://bitcointalk.org/index.php?topic=152334.0;all
This also has the advantage of instant and micro transactions with minimal fees, while retaining most of the properties of Bitcoin itself (decentralized, trustless, irreversible)
This also has the advantage of instant and micro transactions with minimal fees, while retaining most of the properties of Bitcoin itself (decentralized, trustless, irreversible)
If I read the pertaining article correctly then the tps issue is solvable within the practical bounds of the internet, bitcoin development, home connections and bitcoin use cases. For proposals to solve this read: https://en.bitcoin.it/wiki/Scalability - I personally wouldn't consider this a show stopper. Are there specific reasons why you think it might?
If I'm understanding that correctly, every node would experience peak traffic of around 50mbps, and constant traffic of at least 10mpbs. It's not clear to me what happens when you have nodes that lag (and that would certainly be a common occurrence at those levels of traffic).
Beyond that, I found their choice of reference level of traffic oddly low given the stated ambitions of most serious BTC proponents.
Beyond that, I found their choice of reference level of traffic oddly low given the stated ambitions of most serious BTC proponents.
Bitcoin is targeted to those whom educated but not smart; Whom lacks a real opportunity in life.
Yes, but the point of view of the article is that from the perspective of national governments, it is similar. Hence they will try to kill it as they killed previous currencies that competed with the government monopoly-issued money.
I agree that bitcoin might be harder to kill due to those technological aspects, that does feel like it was not sufficiently addressed in the article.
I agree that bitcoin might be harder to kill due to those technological aspects, that does feel like it was not sufficiently addressed in the article.
I thought the sentence was clear. For example, if you strip away the mobile, network-connected, and technological aspects of a mobile phone away, you are left with nothing: there's no centuries-old parallel for such a communications device. With bitcoin, apparently there is.
Messages by carrier pigeon? Sounds pretty "mobile" to me.
I think the point is Bitcoin is revolutionary in many ways than just being a digital currency. It's also P2P, and these type of technologies seem very hard to shut down by governments, after reaching critical mass. There are probably a lot of things governments could do to slow it down, but I'm not sure they could kill it.
I think the point is Bitcoin is revolutionary in many ways than just being a digital currency. It's also P2P, and these type of technologies seem very hard to shut down by governments, after reaching critical mass. There are probably a lot of things governments could do to slow it down, but I'm not sure they could kill it.
But the problem is that, among all the things Bitcoin is trying to be, one of them is a currency. A pseudonymous decentralized p2p payment system is a reasonable idea, but since every transaction takes place in a currency with bad fundamentals as a currency, it's not a particularly good implementation of that idea.
I see the term critical mass being used a lot within the Bitcoin community. What's your opinion on what would constitute critical mass?
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Here's a tip I've picked up from the stock market. If everyone is talking doom and gloom, buy in. If everybody is talking about how bitcoin is the greatest thing ever and people are starting bitcoin investing clubs and "the price is going to keep skyrocketing!!!!1"...it's time to sell.
So, it's going to be slightly more regulated. Big deal. People say it has no value, but it does. A bitcoin, at this very moment, is worth ~732USD. That sounds like value to me. On top of the value people give it, it has value in that nobody owns the network, nobody can regulate transactions used with it, and anybody with access to a computer can trade it for goods or "real" currency.
I think people who don't like it a) are uninterested and sick of hearing about it b) lost all their money by buying on peaks (or just never bought in when it was $0.20 and are pissy about it) or c) don't have a clue what they're talking about.
At this point, it has to be treated like a volatile stock. Does it have value? As much value as someone is willing to buy it off of you for. Will the price go up or down? Impossible to tell. Is it going anywhere? Doubt it.
I predict that as more people adopt it and as it becomes more mainstream, the value will increase logarithmically and stabilize.
So, it's going to be slightly more regulated. Big deal. People say it has no value, but it does. A bitcoin, at this very moment, is worth ~732USD. That sounds like value to me. On top of the value people give it, it has value in that nobody owns the network, nobody can regulate transactions used with it, and anybody with access to a computer can trade it for goods or "real" currency.
I think people who don't like it a) are uninterested and sick of hearing about it b) lost all their money by buying on peaks (or just never bought in when it was $0.20 and are pissy about it) or c) don't have a clue what they're talking about.
At this point, it has to be treated like a volatile stock. Does it have value? As much value as someone is willing to buy it off of you for. Will the price go up or down? Impossible to tell. Is it going anywhere? Doubt it.
I predict that as more people adopt it and as it becomes more mainstream, the value will increase logarithmically and stabilize.
> If everyone is talking doom and gloom, buy in. If everybody is talking about how bitcoin is the greatest thing ever and people are starting bitcoin investing clubs and "the price is going to keep skyrocketing!!!!1"...it's time to sell.
Right now there are plenty of people in both camps. What do we do then? If we're just talking about predicting Bitcoin's price, I don't see that we have much reason to believe we can do better than chance.
Right now there are plenty of people in both camps. What do we do then? If we're just talking about predicting Bitcoin's price, I don't see that we have much reason to believe we can do better than chance.
That's probably why the multi-hundred-dollar fluctuations lately. There's also not really enough chart data (or volume) to facilitate technical trading.
You're right. If you have your money in bitcoin right now, you are taking a pretty big risk. However, I personally think that if the past year is any indication, there's not really a cap to the value it has at this point. It could add another few 0s to it's value by next year (subsequently taking other altcoins with it).
At the very worst I think it could drop down to ~100USD, but to go past there would be really difficult as it spent a lot of time building that base between 100-150. Still, that's about 80-90% loss if you were to buy today.
You'd be stupid to put in your life savings, but if you like high-risk, high-reward investments, it might be worth it to throw a few grand in.
You're right. If you have your money in bitcoin right now, you are taking a pretty big risk. However, I personally think that if the past year is any indication, there's not really a cap to the value it has at this point. It could add another few 0s to it's value by next year (subsequently taking other altcoins with it).
At the very worst I think it could drop down to ~100USD, but to go past there would be really difficult as it spent a lot of time building that base between 100-150. Still, that's about 80-90% loss if you were to buy today.
You'd be stupid to put in your life savings, but if you like high-risk, high-reward investments, it might be worth it to throw a few grand in.
Agreed that in the long term Bitcoin will either add a few 0's, in terms of say USD/BTC price (and equiv gov fiat), or, it will go towards 0. But I think the 0 scenario will only happen if a massive exploitable flaw is found, or, if a clearly better replacement/successor (most likely another digital/crypto-currency) to Bitcoin comes along, and everybody clearly and can easily switchover to it.
I'm not sure if Bitcoin is perfect. But I do think it's like the Internet was to a lot of older tech, but with respect to money. That says a lot about its potential and its niches. I know that as an engineer it's been frustrating for years, if not decades, being aware that money is essentially just a score, just bits of information, a number, and that moving money around is just like incrementing/decrementing two money fields in a database, but somehow the government banking and paper monetary systems seemed to make it so much more complex and slower and bureaucratic that in needed to be. (Also taxation has been made ridiculously over-complex, partly by malicious intent, I think, and partly and innocently by the momentum of the less tech available in an earlier age, the age before electronics, computers and the Internet.)
In short, Bitcoin is one particular way of letting money be as simple as a shared distributed scoreboard, as just bits in a database. It's not perfect. But it's much closer to what money fundamentally is at its heart.
I'm not sure if Bitcoin is perfect. But I do think it's like the Internet was to a lot of older tech, but with respect to money. That says a lot about its potential and its niches. I know that as an engineer it's been frustrating for years, if not decades, being aware that money is essentially just a score, just bits of information, a number, and that moving money around is just like incrementing/decrementing two money fields in a database, but somehow the government banking and paper monetary systems seemed to make it so much more complex and slower and bureaucratic that in needed to be. (Also taxation has been made ridiculously over-complex, partly by malicious intent, I think, and partly and innocently by the momentum of the less tech available in an earlier age, the age before electronics, computers and the Internet.)
In short, Bitcoin is one particular way of letting money be as simple as a shared distributed scoreboard, as just bits in a database. It's not perfect. But it's much closer to what money fundamentally is at its heart.
> But I think the 0 scenario will only happen if a massive exploitable flaw is found, or, if a clearly better replacement/successor (most likely another digital/crypto-currency) to Bitcoin comes along
What about something like this:
* A sufficiently large group of people decide for whatever reason to sell their Bitcoin.
* Prices drop.
* In response, tons of people start selling their Bitcoin.
* Positive feedback loop. Bitcoin loses almost all its value.
Since Bitcoin has no fundamental value, there's nothing to stop its price from plummeting. I think the above scenario is fairly probable.
What about something like this:
* A sufficiently large group of people decide for whatever reason to sell their Bitcoin.
* Prices drop.
* In response, tons of people start selling their Bitcoin.
* Positive feedback loop. Bitcoin loses almost all its value.
Since Bitcoin has no fundamental value, there's nothing to stop its price from plummeting. I think the above scenario is fairly probable.
This happens in the stock market all the time. Generally what happens is buyers start challenging the sellers once the price drops enough.
I'm not saying a crash is impossible, but it's going to take a lot more than a lot of people selling to bring the perceived value down to 0. I think something like an exploitable flaw is a much more likely reason.
I'm not saying a crash is impossible, but it's going to take a lot more than a lot of people selling to bring the perceived value down to 0. I think something like an exploitable flaw is a much more likely reason.
Right now, M1 money supply in the US is about $2.6 trillion (source: http://www.tradingeconomics.com/country-list/money-supply-m1). I couldn't find any data on world money supply, but extrapolating from US money supply, I'm guessing it's about $10-15 trillion.
The current market cap of Bitcoin is $10 billion (source: https://blockchain.info/charts/market-cap). In the absolute best case, Bitcoin will be adopted as the de facto currency of the entire world, in which case its market cap should rise to about $10 trillion—an increase by a factor of 1000.
That said, it's highly doubtful that Bitcoin will take over all world currencies in the near future. It may be reasonable to expect Bitcoin to grow, but it's almost certainly not going to increase its value by 100x in the next few years.
The current market cap of Bitcoin is $10 billion (source: https://blockchain.info/charts/market-cap). In the absolute best case, Bitcoin will be adopted as the de facto currency of the entire world, in which case its market cap should rise to about $10 trillion—an increase by a factor of 1000.
That said, it's highly doubtful that Bitcoin will take over all world currencies in the near future. It may be reasonable to expect Bitcoin to grow, but it's almost certainly not going to increase its value by 100x in the next few years.
"Be fearful when others are greedy, and be greedy when others are fearful."
-Warren Buffett
Everybody who wants to comment on this story should be aware that there is a mismatch between title and content.
The content - the interesting part that should be taken seriously - is about whether basing our economy on Bitcoin is a good idea or not. That is a serious economic question that has nothing to do whatsoever with the technology of Bitcoin.
The content concludes that Bitcoin is a bad idea economically and, unfortunately, the title then highlights the (possibly erroneous) conclusion that this means Bitcoin is necessarily doomed.
It is unfortunate that these different questions surrounding Bitcoin tend to be conflated. Let's try to avoid that here.
The content - the interesting part that should be taken seriously - is about whether basing our economy on Bitcoin is a good idea or not. That is a serious economic question that has nothing to do whatsoever with the technology of Bitcoin.
The content concludes that Bitcoin is a bad idea economically and, unfortunately, the title then highlights the (possibly erroneous) conclusion that this means Bitcoin is necessarily doomed.
It is unfortunate that these different questions surrounding Bitcoin tend to be conflated. Let's try to avoid that here.
I don't see where the issue of whether it is economically a good idea is brought up?
The article focuses on the history of money, specifically how governments have increasingly monopolized it. And the conclusion is summarized here:
> Anyone who thinks that Bitcoin will triumph has to believe that it will succeed where earlier generations of private currencies failed -- that Bitcoin will, improbably, manage to overthrow more than century’s worth of accumulated state power, jealously guarded and ruthlessly enforced.
In other words, the argument here is that governments will kill bitcoin (if it becomes big enough).
The basis for the argument is that, while bitcoin is new and unique and in no way similar to those old types of money that existed in the past, it is still money, and it is still being used by people within the reach of national governments. And the argument is that those national governments will keep their monopolies on currency by fighting bitcoin.
That leaves open the question of whether they will succeed. Certainly governments have not succeeded at killing another bit* thing, bittorrent.
However, the story is not quite a parallel, as bitcoin will be used in different ways, and likely require far more of a connection to "normal" monetary markets - people will want to exchange bitcoin for standard currency. Governments might be capable of fighting that very effectively, even though they have proven mostly powerless against bittorrent.
The article focuses on the history of money, specifically how governments have increasingly monopolized it. And the conclusion is summarized here:
> Anyone who thinks that Bitcoin will triumph has to believe that it will succeed where earlier generations of private currencies failed -- that Bitcoin will, improbably, manage to overthrow more than century’s worth of accumulated state power, jealously guarded and ruthlessly enforced.
In other words, the argument here is that governments will kill bitcoin (if it becomes big enough).
The basis for the argument is that, while bitcoin is new and unique and in no way similar to those old types of money that existed in the past, it is still money, and it is still being used by people within the reach of national governments. And the argument is that those national governments will keep their monopolies on currency by fighting bitcoin.
That leaves open the question of whether they will succeed. Certainly governments have not succeeded at killing another bit* thing, bittorrent.
However, the story is not quite a parallel, as bitcoin will be used in different ways, and likely require far more of a connection to "normal" monetary markets - people will want to exchange bitcoin for standard currency. Governments might be capable of fighting that very effectively, even though they have proven mostly powerless against bittorrent.
Not necessarily kill, but co-opt or take over entirely. Or even beat it into the ground competitively with a similar digital currency that they control and can promote more vigorously.
I think there's maybe a distinction to be drawn between transactions between individuals, which could be made in virtual doughnuts if both parties agreed, and a currency used in trade.
As far as I can see, btc is now two things - a protocol which could be used as technical implementation for any number of things, and also implementation of a currency which isn't backed by any concrete asset or entity (other than end users). For the currency, the main value and insurance against risk seems to be in the brand (i.e. what makes a bitcoin worth more than a foocoin).
But it's trivial for a government to kill commercial use of btc as an alternate currency within their jurisdiction. It's not legal tender and therefore can be banned for use in transactions by registered companies - that can be easily enforced by tax authorities and police. It's also quite justifiable on the basis of collecting taxes, protecting the economy generally, and protecting citizens from being caught with paper that isn't backed by law or national banks. Black markets are by definition illegal - the only question is to what extent they are tolerated and that is largely a question of their size and impact on the formal economy.
As far as I can see, btc is now two things - a protocol which could be used as technical implementation for any number of things, and also implementation of a currency which isn't backed by any concrete asset or entity (other than end users). For the currency, the main value and insurance against risk seems to be in the brand (i.e. what makes a bitcoin worth more than a foocoin).
But it's trivial for a government to kill commercial use of btc as an alternate currency within their jurisdiction. It's not legal tender and therefore can be banned for use in transactions by registered companies - that can be easily enforced by tax authorities and police. It's also quite justifiable on the basis of collecting taxes, protecting the economy generally, and protecting citizens from being caught with paper that isn't backed by law or national banks. Black markets are by definition illegal - the only question is to what extent they are tolerated and that is largely a question of their size and impact on the formal economy.
Did we read the same content? What I saw was some interesting history about the nationalisation of currency in the 19th century, and an unsupported assertion that states will once again succeed at defeating a private currency.
It doesn't actually talk much about why Bitcoin and other currencies like it were/are a "bad idea" for the economy. It mainly talks about how governments wanted to kill them, and how they succeed in the past (something that may prove much harder with Bitcoin, even if they do want to do that, which so far at least, most don't want to do).
Private currencies were local to small areas and national currencies were created to consolidate control and distribution to citizens -- making transactions easier between states, controlling inflation, etc. Why not look at bitcoin as the next step: a means to globalize currency and facilitate international economic growth.
Interesting point. Seems like a single currency would make transactions more efficient. That's why the EU did it, right? The problem becomes who controls it. You'll have some nations who want to inflate it. Others who won't. Eventually the system breaks down. That's where I see bitcoin as having an advantage. Everyone knows from the beginning the currency's inflation trajectory.
This sounds like a good idea but it isn't (for now). Look up "Currency Areas". There are several economic factors that are essential to make a single currency successful. One of the downsides of a global currency is that if someone is indebted to someone else, they can't print money until the debt is paid. Not only that, but it creates issues when labor forces aren't liquid geographically and trade isn't free between places. The value of the currency will start to benefit some economies at the expense of others, leading to inescapable stagnation (this is one of Greece's problems).
FWIW many economists were skeptical of the Euro zone because it failed to satisfy some of the criteria of a currency area. This resulted in problems for some of its members following the 2008 crisis.
FWIW many economists were skeptical of the Euro zone because it failed to satisfy some of the criteria of a currency area. This resulted in problems for some of its members following the 2008 crisis.
The author has managed to miss the point of bitcoins with impressive thoroughness. Crypto-currencies are both new and structured fundamentally differently, so don't tell me about 18th century shopkeepers.
* I've <5 USD in bitcoins, so not heavily biased.
* I've <5 USD in bitcoins, so not heavily biased.
The G4 (USD,EUR,JPY,GBP) may last for somewhat longer than the other fiat currencies, but that does not detract from the fact that currency crises in the smaller fiat currencies are very common (think Argentina).
People who live in a G4 country are apparently incapable of imagining that the situation elsewhere is seriously different than in their own country.
There are lots of Mickey Mouse fiat currencies around issued by the banana republics that keep debasing them until they collapse. Even the Russian ruble is a joke that became entirely worthless, three times, in the span of two decades.
Instead of dollarizing during a monetary crisis, as these smaller/weaker fiat currency areas used to do in the past, they may elect to bitcoinize.
If that happens, you could end up with an entire country using bitcoin. As soon as this happens, nobody will ever manage to eliminate bitcoin in that country.
History does not repeat itself. Collapsing currencies now face a prospect of hysteresis. Reintroducing fiat currency will not work if people have already moved over to bitcoin.
With smaller fiat currencies collapsing one by one -- as they always do -- bitcoin will keep growing stronger and stronger.
People who live in a G4 country are apparently incapable of imagining that the situation elsewhere is seriously different than in their own country.
There are lots of Mickey Mouse fiat currencies around issued by the banana republics that keep debasing them until they collapse. Even the Russian ruble is a joke that became entirely worthless, three times, in the span of two decades.
Instead of dollarizing during a monetary crisis, as these smaller/weaker fiat currency areas used to do in the past, they may elect to bitcoinize.
If that happens, you could end up with an entire country using bitcoin. As soon as this happens, nobody will ever manage to eliminate bitcoin in that country.
History does not repeat itself. Collapsing currencies now face a prospect of hysteresis. Reintroducing fiat currency will not work if people have already moved over to bitcoin.
With smaller fiat currencies collapsing one by one -- as they always do -- bitcoin will keep growing stronger and stronger.
> Reintroducing fiat currency will not work if people have already moved over to bitcoin.
Why not?
> With smaller fiat currencies collapsing one by one -- as they always do -- bitcoin will keep growing stronger and stronger.
Why would Bitcoin be immune from the factors that cause fiat currencies to collapse? If strong fiat currencies can suddenly lose value, it seems likely that Bitcoin could suffer the same fate. Do you have reason to believe that Bitcoin is different?
Why not?
> With smaller fiat currencies collapsing one by one -- as they always do -- bitcoin will keep growing stronger and stronger.
Why would Bitcoin be immune from the factors that cause fiat currencies to collapse? If strong fiat currencies can suddenly lose value, it seems likely that Bitcoin could suffer the same fate. Do you have reason to believe that Bitcoin is different?
> Why would Bitcoin be immune from the factors that cause fiat currencies to collapse?
I think the argument is that the more people whouse it the stronger the currency becomes. It has an extremely low barrier to entry because it can be used alongside other currency, and on top of this is decentralized (no "off" switch).
If fiat currencies are replaced by bitcoin, then yes it probably would become "stronger" (ie, more value in relation to other currencies). That's assuming a country who's currency/economy collapsed decides to use bitcoin as the national currency. I don't see why they would at this point, though.
I do think it's entirely susceptible to sudden value loss, at least for the next 5-10 years.
I think the argument is that the more people whouse it the stronger the currency becomes. It has an extremely low barrier to entry because it can be used alongside other currency, and on top of this is decentralized (no "off" switch).
If fiat currencies are replaced by bitcoin, then yes it probably would become "stronger" (ie, more value in relation to other currencies). That's assuming a country who's currency/economy collapsed decides to use bitcoin as the national currency. I don't see why they would at this point, though.
I do think it's entirely susceptible to sudden value loss, at least for the next 5-10 years.
The main failing of this and other articles - and bear in mind that I am not a bitcoin fanboi, own none, and question whether I should - is that many, many people fail to recognize that cryptography has in recent decades resulted in several sui generis inventions, that is, things in themselves, things entirely new that cannot be reasoned about with analogy to past things, for there are neither analogies nor homologies.
Witness the digital signature: When properly done, bound to the signer and the data being signed and entirely unique. A brand new thing that could never have been done before, not even slowly with other tech.
Thousands will criticize bitcoin, etc., for how they are like past things, few will grasp how the world is fundamentally different for their introduction.
How?
How the heck should I know? I'm not that visionary, nor that smart. None of us will really know for a few years yet, perhaps longer.
Witness the digital signature: When properly done, bound to the signer and the data being signed and entirely unique. A brand new thing that could never have been done before, not even slowly with other tech.
Thousands will criticize bitcoin, etc., for how they are like past things, few will grasp how the world is fundamentally different for their introduction.
How?
How the heck should I know? I'm not that visionary, nor that smart. None of us will really know for a few years yet, perhaps longer.
The article is advocating an incomplete picture. If we see this as a cyclical struggle between state-backed and private currencies, then what will actually happen is a competition between the two.
The state will prefer using force to squash bitcoin, because that's what it's good at, but we already have the recent history of digital media piracy to inform us of how difficult it can be; the only thing that has substantially slowed piracy has been to make the legal market increasingly cheap and convenient.
So regardless of who "wins," the existence of bitcoin acts to motivate a restructuring of top-level policies; employment of the traditional warmongering will drive it underground but not out of sight, since there isn't a "head" or "ringleader" to attack.
The state will prefer using force to squash bitcoin, because that's what it's good at, but we already have the recent history of digital media piracy to inform us of how difficult it can be; the only thing that has substantially slowed piracy has been to make the legal market increasingly cheap and convenient.
So regardless of who "wins," the existence of bitcoin acts to motivate a restructuring of top-level policies; employment of the traditional warmongering will drive it underground but not out of sight, since there isn't a "head" or "ringleader" to attack.
Governments will likely try to legislate Bitcoin out of the market, but I doubt they'll succeed. In a democracy, it's easy to make something that's used by a small number of people illegal, but if plenty of people are already using it, they'll vote you out of office.
If someone tries to make Bitcoin illegal in America, why wouldn't large Bitcoin holders try to distribute bitcoins as widely as possible in an attempt to win over the people and retain as much of the value of their Bitcoin holdings as possible?
Here's a short story that resulted from that thought experiment: http://niran.org/bitcoin-fiction/the-blockchain-letter.html
If someone tries to make Bitcoin illegal in America, why wouldn't large Bitcoin holders try to distribute bitcoins as widely as possible in an attempt to win over the people and retain as much of the value of their Bitcoin holdings as possible?
Here's a short story that resulted from that thought experiment: http://niran.org/bitcoin-fiction/the-blockchain-letter.html
This reads like religious fiction and makes me seriously question the rationality of the bitcoin community.
Most Bitcoin users don't believe this will happen, for what it's worth. The 'armageddon facedown with the government over Bitcoin' is just another doomsday fantasy popular with those who enjoy doomsday fantasies.
The rational types have already seen it taxed as capital gains in several countries. It's not even a question of if they will fight it anymore. They were never going to.
The rational types have already seen it taxed as capital gains in several countries. It's not even a question of if they will fight it anymore. They were never going to.
Communities don't have rationality. People do. If you're going to question my rationality, the least you can do is argue your case.
I don't see Bitcoin as an alternative currency. I see it more as a bank account held in a foreign currency. These exist today.
Only if that foreign currency is absolutely never inflated by that government, and allowed to thus increase in relative value to all the other fiat currencies.
And also that bank account does not flow through the existing US controlled international financial system.
And that bank account does not require an ID, residency address, or even your name to open.
Oh, and that bank never lends your money out. They keep a 100% reserve on all deposits.
I suppose this bank also has no bank fees, no wire transfer fees, no wire department transfer latencies, no bank holidays etc.
I should also point out that if you are a US citizen, it's nearly impossible to open a foreign bank account without either 1) foreign citizenship 2) connections 3) a very large minimum balance.
Then, you are correct, it's like a foreign bank account.
And also that bank account does not flow through the existing US controlled international financial system.
And that bank account does not require an ID, residency address, or even your name to open.
Oh, and that bank never lends your money out. They keep a 100% reserve on all deposits.
I suppose this bank also has no bank fees, no wire transfer fees, no wire department transfer latencies, no bank holidays etc.
I should also point out that if you are a US citizen, it's nearly impossible to open a foreign bank account without either 1) foreign citizenship 2) connections 3) a very large minimum balance.
Then, you are correct, it's like a foreign bank account.
I'm considering it only from a currency regulation standpoint, as per the article. But it's easy enough to make sure that you may deposit or withdraw money only from a local bank account, in the local currency, which you must have opened using valid non-anonymous credentials. Existing banks are highly regulated, as you point out.
BTW, EverBank offers foreign currency denominated money market accounts in the US.
BTW, EverBank offers foreign currency denominated money market accounts in the US.
And you are 100% correct that you can speculate in the forex style, however that misses the point if what bitcoin really is. It's like someone in the past saying "I don't view cars as an alternative transportation method. I see them more like a horse and buggy. These exist today."
I think the criticism to be read in that is that there really isn't that much economy in bitcoin, and it needs that to survive. The value of bitcoin currently is almost fully speculative, and all articles about it focus on the speculative aspect.
We need a "foreign country" (or something vaguely like it) to actually use bitcoin. Of course it has the problems of all other byzantine protocols : it's not fast, which would be an impediment, and it requires global connectivity. Also, I think the tracking is a mistake. It allows people to see the obvious problems with the distribution of bitcoin.
Imho, bitcoin is a large step forward, and it's close. Very close. But it's centralized dependencies mean it can't resist governments.
We need a "foreign country" (or something vaguely like it) to actually use bitcoin. Of course it has the problems of all other byzantine protocols : it's not fast, which would be an impediment, and it requires global connectivity. Also, I think the tracking is a mistake. It allows people to see the obvious problems with the distribution of bitcoin.
Imho, bitcoin is a large step forward, and it's close. Very close. But it's centralized dependencies mean it can't resist governments.
It has a lot more in common with gold than it does with currency. Its ultimate role may be to act as a basis for more usable cryptocurrencies.
This guy's argument just boils down to "they failed in the past, so these guys will fail now, any other outcome is preposterous." This is not an argument which can sand without consideration of factors of new technology, virtuality, and globalism, never mind any social and political factors which are different now from then.
Weak opinion article, with no actual coherent reasons to believe him. "It happened before, it must happen again" is not an argument.
BTW I am not entirely bullish on Bitcoin, but it's not because of this guy's (non-)argument.
Weak opinion article, with no actual coherent reasons to believe him. "It happened before, it must happen again" is not an argument.
BTW I am not entirely bullish on Bitcoin, but it's not because of this guy's (non-)argument.
It would be nice to know if all of the people hyping up and talking down Bitcoin own any Bitcoin.
I lurked for a long time, and recently bought in.
Perhaps the timing was bad, but I'm not a stranger to investing in the stock market (technical trading, mainly) and the patterns I see are favorable (although not definitive in any way).
I also just like the idea of bitcoin. I see people bash it all the time for not being a real currency, but the criteria they judge it on applies to all currency besides direct commodities (I'll trade you one cow for two goats).
The USD has as much real value as monopoly money. The gold which used to back it also has no real value. These currencies are a representation of value, but hold no value themselves.
I feel like bitcoin is slightly different. Although it represents value like other currencies (albeit with much volatility) it has the unique characteristic of being distributed and non-regulated (in the sense of visibility into transactions). I can send anybody with an internet connection (or hell, even a street address) bitcoin. I can store enormous amounts of it on in multiple places, encrypted, and effectively have a safe I can access anywhere that only I can open.
So it does have intrinsic value in that it does what other currencies do, but better.
Will it live or die? Live, I hope, because I've got a horse in the race now. I would argue though that if bitcoin were to fail, something very similar would take its place.
Perhaps the timing was bad, but I'm not a stranger to investing in the stock market (technical trading, mainly) and the patterns I see are favorable (although not definitive in any way).
I also just like the idea of bitcoin. I see people bash it all the time for not being a real currency, but the criteria they judge it on applies to all currency besides direct commodities (I'll trade you one cow for two goats).
The USD has as much real value as monopoly money. The gold which used to back it also has no real value. These currencies are a representation of value, but hold no value themselves.
I feel like bitcoin is slightly different. Although it represents value like other currencies (albeit with much volatility) it has the unique characteristic of being distributed and non-regulated (in the sense of visibility into transactions). I can send anybody with an internet connection (or hell, even a street address) bitcoin. I can store enormous amounts of it on in multiple places, encrypted, and effectively have a safe I can access anywhere that only I can open.
So it does have intrinsic value in that it does what other currencies do, but better.
Will it live or die? Live, I hope, because I've got a horse in the race now. I would argue though that if bitcoin were to fail, something very similar would take its place.
You know what really is a high-tech dinosaur soon to be extinct? Bloomberg terminals. Seriously why does anyone still use these?
I think that all evidence points to states having far far more power to respond to technologies than anyone here can imagine. Frankly, in light of all the public disclosures this year I can't help but wonder where all the bitcoin optimism comes from.
I am wondering what kinds of techniques governments could use to destroy the Bitcoin P2P network when they declare it illegal.
Most of the mining is now done in large data centres packed with ASIC miners. Ban it, seize the equipment and the government can immediately begin a 51% attack. Shut down the exchanges leaving only peer to peer exchanges, but now your local exchanger has the legal status of a drug dealer and all the sketchyness that comes with it.
No doubt there will be protocol changes to blacklist the government miners, a cat and mouse game will ensure. Bitcoin will survive, but it will be a tiny fraction of its previous size.
No doubt there will be protocol changes to blacklist the government miners, a cat and mouse game will ensure. Bitcoin will survive, but it will be a tiny fraction of its previous size.
In other words if you strip away everything that makes BitCoin different and unique from its predecessors, BitCoin looks the same as its predecessors.