5 ms·

I don't know a book to recommend. basic scheme is explained in any money & banking textbook. if you know what a bank run is, why it occurs and how it is being p

by thkim 9y ago

I don't know a book to recommend. basic scheme is explained in any money & banking textbook. if you know what a bank run is, why it occurs and how it is being prevented then you will see why bitcoin's decentralization makes no sense. only part that is probably not on textbook is this blind faith that volume guarantees stability. it does not.

UncleEntity 9y ago
I know what a bank run is, why it occurs and how it is being prevented (probably better than your average bear) and I see no correlation between that and bitcoin. The only problem I see, if you could even call it that, is that bitcoin "banks" (exchanges?) are restricted to being 100% warehousing operations since there is nobody to bail them out if (when?) they decide they can make more profit earning interest by loaning out the funds they are contractually obligated to hold. If you want to avoid a run on your bitcoin exchange then simply don't engage in fractional reserve banking...or, I suppose, don't lose all your holdings to hackers.
- thkim 9y ago
  i am saying that when bitcoin value takes a hit by some global event, and people panic to sell, there is nothing that will stop the value from gyrating to zero. what are you talking about? what does charging interest or reserve have anything to do with this? you make no sense.
  - UncleEntity 9y ago
    You know that's totally, completely different from a bank run, right? Central banks have very little influence on the value of their currency once people lose faith in it, people will buy anything instead of holding on to their (usually rapidly devaluing) currency. One thing every holder of bitcoin knows is it will never suffer through hyperinflation, ever.
    - thkim 9y ago
      central bank scheme is not perfect. however central bank has proven to be very effective at providing stability to currency. bitcoin's scheme is vastly inferior. protection from hyperinflation is not a great benefit compared to unstable currency value bitcoin is designed to suffer. also hyperinflation doesn't occur unless the government is essentially defunct. I'm sure people would just switch to some other reputable currency before it happens.
  - blueprint 9y ago
    There's at least one thing to stop them: fundamentals and speculation. People buy back in (in part) because Bitcoin is designed to strengthen itself (not price, I'm mainly referring to incentives to mine and to steward). (And it's not equivalent to the shitcoins that it spawned so the assumption it it's not special is invalid.) That makes Bitcoin a completely different asset to model than a fiat currency. If there's one difference, there are probably more. And there certainly are.

by thkim 9y ago

UncleEntity 9y ago

I know what a bank run is, why it occurs and how it is being prevented (probably better than your average bear) and I see no correlation between that and bitcoin. The only problem I see, if you could even call it that, is that bitcoin "banks" (exchanges?) are restricted to being 100% warehousing operations since there is nobody to bail them out if (when?) they decide they can make more profit earning interest by loaning out the funds they are contractually obligated to hold. If you want to avoid a run on your bitcoin exchange then simply don't engage in fractional reserve banking...or, I suppose, don't lose all your holdings to hackers.

thkim 9y ago
i am saying that when bitcoin value takes a hit by some global event, and people panic to sell, there is nothing that will stop the value from gyrating to zero. what are you talking about? what does charging interest or reserve have anything to do with this? you make no sense.
- UncleEntity 9y ago
  You know that's totally, completely different from a bank run, right? Central banks have very little influence on the value of their currency once people lose faith in it, people will buy anything instead of holding on to their (usually rapidly devaluing) currency. One thing every holder of bitcoin knows is it will never suffer through hyperinflation, ever.
  - thkim 9y ago
    central bank scheme is not perfect. however central bank has proven to be very effective at providing stability to currency. bitcoin's scheme is vastly inferior. protection from hyperinflation is not a great benefit compared to unstable currency value bitcoin is designed to suffer. also hyperinflation doesn't occur unless the government is essentially defunct. I'm sure people would just switch to some other reputable currency before it happens.
- blueprint 9y ago
  There's at least one thing to stop them: fundamentals and speculation. People buy back in (in part) because Bitcoin is designed to strengthen itself (not price, I'm mainly referring to incentives to mine and to steward). (And it's not equivalent to the shitcoins that it spawned so the assumption it it's not special is invalid.) That makes Bitcoin a completely different asset to model than a fiat currency. If there's one difference, there are probably more. And there certainly are.