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I think you have a valid point, but, ultimately aren't all or most trades digital today? Are countries exchanging actual loads of gold and/or cash around? If t

I think you have a valid point, but, ultimately aren't all or most trades digital today? Are countries exchanging actual loads of gold and/or cash around? If the answer is no, then isn't it all just data on a hard-drive? In that case damaging internet links will have the same effect all around, though information can probably still go in/out in different ways with some effort. Is there some aspect of crypto currency that makes it different (honest question)?

simias 9y ago
The difference IMO is that gold has intrinsic value by virtue of being rare and shiny. I guess the idea is that even if civilization collapses and we return to the stone age gold will still be valuable. Since the use of gold as currency can be traced back at least to 600BCE[1] there's a good reason to believe that. Bitcoins however doesn't really have a intrinsic "rest" value. Anybody can (and many do) spawn a new blockchain out of thin air. Ironically Bitcoin is entirely about trust at the core. The trust that the other participants in the bitcoin economy won't lose faith in the currency and dump it. That trust is the only thing that gives the coin value. [1] http://rg.ancients.info/lion/article.html http://rg.ancients.info/lion/article.html
- lostmsu 9y ago
  If you can carry gold to another country, nothing will stop you from bringing a USB flash with new, longer Bitcoin blockchain, which includes your transaction to send BTC to the receiver.
  - prostoalex 9y ago
    That's after you convince the rest of the operating nodes in that country that the blockchain version on your USB is indeed the greatest, and everyone should just migrate to that.
- acdha 9y ago
  Similarly, national currencies have a value because governments collect taxes and pay for things using those currencies so there's a considerable inertial force encouraging their usage. That doesn't mean that failure is impossible but it smooths out a lot of minor fluctuations whereas, as you pointed out, if a Bitcoin competitor took off tomorrow there's no pressure not to adopt it instead other than the sunk costs which a small percentage of the general population has.
  - ericb 9y ago
    I don't think it is that simple. Bitcoin has 3 main advantages that can't be easily taken away from it that make things harder for competitors: 1 - Distribution (Metcalfe's law): Metcalfe's law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2). https://en.wikipedia.org/wiki/Metcalfe%27s_law https://en.wikipedia.org/wiki/Metcalfe%27s_law 2- Schelling Point Bitcoin is the natural Schelling point for those drawn to the advantages of cryptographic money. https://en.wikipedia.org/wiki/Focal_point_(game_theory) https://en.wikipedia.org/wiki/Focal_point_(game_theory) 3 - Most battle-tested codebase. No cryptocurrency has been successfully operating for as long.
    - acdha 9y ago
      That's arguing that the past will be like the future when things are still really early. Statistically almost nobody owns or uses Bitcoin, especially when you subtract the Bitcoin proponents who do most of their transactions using something like a credit card which actually uses local currency via Visa or where Bitcoin is converted into real currency immediately by the recipient, and who thus would have very little switching converting to something else. Ask how long either #1 or 2 would hold true if, say, a couple of large banks, Visa/Mastercard, Apple and/or Google, etc. launched a currency accessible to their existing customer bases. I'd give that a couple of days before Bitcoin would be a rounding error in the daily transaction volume. The big long-term reason I expect that to happen is the deflation model baked into Bitcoin: every player which didn't acquire a substantial holding years ago has a huge incentive to find an alternative which doesn't mean they're putting effort into making someone else rich. Right now there's very little mainstream demand for Bitcoin but if that change it's hard to believe the finance people wouldn't be obsessed with ways to capture that revenue going to a third-party.
sametmax 9y ago
Banks datacenters holding money are off the grid, and they have material goods for backing part of it. It doesn't mean they would not be affected by internet going down. They would be hit hard. But they would not disapear.
amluto 9y ago
Conventional digital currencyish things (e.g. credit cards) have at least some tolerance to network partitions. Current blockchains fail rather catastrophically if partitions occur.

simias 9y ago

The difference IMO is that gold has intrinsic value by virtue of being rare and shiny. I guess the idea is that even if civilization collapses and we return to the stone age gold will still be valuable. Since the use of gold as currency can be traced back at least to 600BCE[1] there's a good reason to believe that. Bitcoins however doesn't really have a intrinsic "rest" value. Anybody can (and many do) spawn a new blockchain out of thin air. Ironically Bitcoin is entirely about trust at the core. The trust that the other participants in the bitcoin economy won't lose faith in the currency and dump it. That trust is the only thing that gives the coin value. [1] http://rg.ancients.info/lion/article.html http://rg.ancients.info/lion/article.html

lostmsu 9y ago
If you can carry gold to another country, nothing will stop you from bringing a USB flash with new, longer Bitcoin blockchain, which includes your transaction to send BTC to the receiver.
- prostoalex 9y ago
  That's after you convince the rest of the operating nodes in that country that the blockchain version on your USB is indeed the greatest, and everyone should just migrate to that.
acdha 9y ago
Similarly, national currencies have a value because governments collect taxes and pay for things using those currencies so there's a considerable inertial force encouraging their usage. That doesn't mean that failure is impossible but it smooths out a lot of minor fluctuations whereas, as you pointed out, if a Bitcoin competitor took off tomorrow there's no pressure not to adopt it instead other than the sunk costs which a small percentage of the general population has.
- ericb 9y ago
  I don't think it is that simple. Bitcoin has 3 main advantages that can't be easily taken away from it that make things harder for competitors: 1 - Distribution (Metcalfe's law): Metcalfe's law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2). https://en.wikipedia.org/wiki/Metcalfe%27s_law https://en.wikipedia.org/wiki/Metcalfe%27s_law 2- Schelling Point Bitcoin is the natural Schelling point for those drawn to the advantages of cryptographic money. https://en.wikipedia.org/wiki/Focal_point_(game_theory) https://en.wikipedia.org/wiki/Focal_point_(game_theory) 3 - Most battle-tested codebase. No cryptocurrency has been successfully operating for as long.
  - acdha 9y ago
    That's arguing that the past will be like the future when things are still really early. Statistically almost nobody owns or uses Bitcoin, especially when you subtract the Bitcoin proponents who do most of their transactions using something like a credit card which actually uses local currency via Visa or where Bitcoin is converted into real currency immediately by the recipient, and who thus would have very little switching converting to something else. Ask how long either #1 or 2 would hold true if, say, a couple of large banks, Visa/Mastercard, Apple and/or Google, etc. launched a currency accessible to their existing customer bases. I'd give that a couple of days before Bitcoin would be a rounding error in the daily transaction volume. The big long-term reason I expect that to happen is the deflation model baked into Bitcoin: every player which didn't acquire a substantial holding years ago has a huge incentive to find an alternative which doesn't mean they're putting effort into making someone else rich. Right now there's very little mainstream demand for Bitcoin but if that change it's hard to believe the finance people wouldn't be obsessed with ways to capture that revenue going to a third-party.

sametmax 9y ago

Banks datacenters holding money are off the grid, and they have material goods for backing part of it. It doesn't mean they would not be affected by internet going down. They would be hit hard. But they would not disapear.

amluto 9y ago

Conventional digital currencyish things (e.g. credit cards) have at least some tolerance to network partitions. Current blockchains fail rather catastrophically if partitions occur.