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Bitcoin was struck the fatal blow when the bubble popped and Mt. Gox died. Everything since has been nostalgia for its past dreams. The main problem is that it

Bitcoin was struck the fatal blow when the bubble popped and Mt. Gox died. Everything since has been nostalgia for its past dreams. The main problem is that it was built on crank economic assumptions. It is literally an implementation of Federal Reserve/gold bug conspiracist economic theories and weird Bircher ideas of where inflation comes from - that's actually its point. The white paper alludes to this, the Bitcoin 0.1 release notes are clear about it: > The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible. Bitcoin failed at every one of the aspirations here. The price is ridiculously volatile and has had multiple bubbles (this should be impossible with a fixed supply if Bitcoin economic theories were true); the unregulated exchanges (with no central bank backing) front-run their customers, paint the tape to manipulate the price, and are hacked or just steal their users' funds; and transaction fees and the unreliability of transactions make micropayments completely unfeasible. Because all of this is based in crank ideas that don't work in practice. Ethereum is hipper, but has similar problems with ever working properly. (Remember the Skype chat where the devs admitted sorting out its problems would take several years?) Its basic problem is that smart contracts require humans to program perfectly, and even the best and brightest of Ethereum coders came up with The DAO, a $150 million clustercuddle. If you follow the "Venezuelans are turning to Bitcoin" link, you'll see the actual number is ... 370 BTC traded a week. This may not rock the central banksters to their foundations. Almost all Bitcoin use is speculation on Chinese exchanges; day trader gambling, basically. I need to find the figures, but it's something like 95-97%. Next is the drug trade, next is ransomware. Western Bitcoin advocates are a sideshow, except the actual core developers. (I am literally writing a book on this, God help me. I have read more and worse PDF white papers than any human should have to suffer. Currently 30k words and six weeks into writing a 15k short I was supposed to take 2 days on. http://davidgerard.co.uk/blockchain/ http://davidgerard.co.uk/blockchain/ )

noobermin 10y ago
>The price is ridiculously volatile and has had multiple bubbles I have an armchair's knowledge of economics and economic history, but wasn't this precisely the case before the Fed switched off Gold?
- davidgerard 10y ago
  That would be entirely correct! It turns out that even though rich first-world countries used the gold standard for a long time, they suffered manic booms and devastating busts, over and over; countries recovered from the Great Depression precisely as early as they got off the Gold Standard and went to central bank money supply management, because it actually works better. It's a common mode of pseudoscience to fervently adopt a discarded idea, and economics is no exception. Gold bugs and Federal Reserve conspiracists (and the acceptable face of this, Austrian Economics) is precisely this variety of bad idea. I too am an amateur enthusiast, but boy I had to sharpen up arguing with bitcoiners ...
petertodd 10y ago
> The main problem is that it was built on crank economic assumptions. It is literally an implementation of Federal Reserve/gold bug conspiracist economic theories and weird Bircher ideas of where inflation comes from - that's actually its point. Speaking as one of those western developers - and as someone with a standard economics education - what makes you think those economic assumptions hurt Bitcoin itself? Sure deflation is a terrible thing for economies, but that has no bearing on the success and value of the currency itself. What matters for a currency that people aren't forced to use is that it maintains its value, which is exactly what the eventual deflation in Bitcoin does. Equally, _currently_ Bitcoin's monetary supply is highly inflationary, about 8%/year right now iirc, and will remain high for years to come. Let's not let our economic education prejudice us; Bitcoin is a good example of how good monetary policy is often similar to taxes in general in terms of the conflict between what's good for individuals and what's good for society as a whole.
- davidgerard 10y ago
  They do seem to supply the inherently contradictory element seen at the heart of a lot of viral ideologies. Bitcoin ideology propagated through two things: * if you want to get rich for free, take on this weird ideology that goes with it. * don't worry if you don't understand the ideology yet, just keep doing the things and you'll get rich for free! Since the ideology doesn't actually make coherent sense - and is literally straight out of John Birch Society and Eustace Mullins - this means the second condition is reinforced. (Not making coherent sense is why you will observe advocates claiming that everything and its opposite is actually good for Bitcoin.) So being made of fractally wrong ideas that don't work did indeed help it along a whole lot during the bubble! That and the insatiable urge to gamble of Chinese day traders. And the drug market. It was less convincing when it turned out it wasn't going to go up forever, but was a completely standard asset bubble.

noobermin 10y ago

>The price is ridiculously volatile and has had multiple bubbles I have an armchair's knowledge of economics and economic history, but wasn't this precisely the case before the Fed switched off Gold?

davidgerard 10y ago
That would be entirely correct! It turns out that even though rich first-world countries used the gold standard for a long time, they suffered manic booms and devastating busts, over and over; countries recovered from the Great Depression precisely as early as they got off the Gold Standard and went to central bank money supply management, because it actually works better. It's a common mode of pseudoscience to fervently adopt a discarded idea, and economics is no exception. Gold bugs and Federal Reserve conspiracists (and the acceptable face of this, Austrian Economics) is precisely this variety of bad idea. I too am an amateur enthusiast, but boy I had to sharpen up arguing with bitcoiners ...

petertodd 10y ago

> The main problem is that it was built on crank economic assumptions. It is literally an implementation of Federal Reserve/gold bug conspiracist economic theories and weird Bircher ideas of where inflation comes from - that's actually its point. Speaking as one of those western developers - and as someone with a standard economics education - what makes you think those economic assumptions hurt Bitcoin itself? Sure deflation is a terrible thing for economies, but that has no bearing on the success and value of the currency itself. What matters for a currency that people aren't forced to use is that it maintains its value, which is exactly what the eventual deflation in Bitcoin does. Equally, _currently_ Bitcoin's monetary supply is highly inflationary, about 8%/year right now iirc, and will remain high for years to come. Let's not let our economic education prejudice us; Bitcoin is a good example of how good monetary policy is often similar to taxes in general in terms of the conflict between what's good for individuals and what's good for society as a whole.

davidgerard 10y ago
They do seem to supply the inherently contradictory element seen at the heart of a lot of viral ideologies. Bitcoin ideology propagated through two things: * if you want to get rich for free, take on this weird ideology that goes with it. * don't worry if you don't understand the ideology yet, just keep doing the things and you'll get rich for free! Since the ideology doesn't actually make coherent sense - and is literally straight out of John Birch Society and Eustace Mullins - this means the second condition is reinforced. (Not making coherent sense is why you will observe advocates claiming that everything and its opposite is actually good for Bitcoin.) So being made of fractally wrong ideas that don't work did indeed help it along a whole lot during the bubble! That and the insatiable urge to gamble of Chinese day traders. And the drug market. It was less convincing when it turned out it wasn't going to go up forever, but was a completely standard asset bubble.