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>the global currency of the future, that they need to buy some, and that he’s the man to safeguard it. Looks like in the future people hoard currency instead o

by simias 9y ago

>the global currency of the future, that they need to buy some, and that he’s the man to safeguard it. Looks like in the future people hoard currency instead of spending and investing it then. That ought to be interesting. It also demonstrates the costs associated with non-reversible transactions, these vaults aren't storing gold ingots or priceless artifacts, just private keys. Banks around the world don't need to worry too much about this (well, within reason) because if somebody manages to break into their digital vault not everything is lost and they can mitigate the damages retroactively. With bitcoin "if you don't hold the keys, you don't own the coins" but if you do hold the keys you better be absolutely paranoid with them because there's no plan B if they get compromised or destroyed. For this reason I think that even if cryptocurrencies manage to become mainstream many people (including myself) would rather let a bank manage and insure their wallet than manage it themselves. Too stressful otherwise.

kfrzcode 9y ago
> in the future people hoard currency People hoard(ed) currency in the past and present as well
- buckthundaz 9y ago
  Indeed. The stockholm syndrome of Keynesianism is pervasive and unnoticed by many. The correct response to erosion of value is hoarding.
  - api 9y ago
    The correct response to erosion of value is investing as long as there are good investments to be found. This is the idea behind inflationary money (which is a broader concept than Keynesianism). The important ideas of Keynes in a nutshell: * Monetary velocity: wealth is a verb, not a noun. The wealth of nations is measured in their rate of transactions, not how much cash or idle assets they are hoarding. * Idle vs. productive investment: if currency is deflationary people will store currency, a non-productive investment. If currency is inflationary people will invest it in productive activities. I don't agree absolutely 100% with these, but I think Keynes was at least onto something especially with the first. The problem with the first is that velocity also includes transactions that don't actually do anything or that even "create" negative value. Gambling increases monetary velocity but doesn't accomplish anything and may actually destroy value. A real value-centric velocity statistic is impossible because value is a biological/humanistic concept and is non-computable. The main problem with the second is that if people are pessimistic about investments they will still hoard, but using things like real estate and gold. Another problem with the second point is that over-using this strategy to drive investment creates bubbles, as we have seen. Finally I must point out that Keynes gets a ton of flak for stuff he did not advocate, like insane levels of public and private debt. Keynes would have been shocked and horrified at the levels of debt in our current system, and in fact his whole counter-cyclic government spending strategy was designed to prevent this. Blame politicians and banks for the debt problem, not Keynes. Politicians invoke Keynes when they want to ratchet up spending during downturns but then they conveniently forget the other part-- namely that Keynes also advocated reducing government spending and repaying debt proportionally during times of abundance. Keynes basically argued that government could be used as ballast against economic oscillation.
    - buckthundaz 9y ago
      I said nothing about Keynes -- I said Keynesianism. You understood this meaning well. Would you concede that the economic policies rooted in Keynes's ideas created an environment that allowed for the snowballing issues we have? The issue that isn't present in your comment is top-down imposed order vs. bottom-up emergent order. To me, the former is degenerative, while the latter is sustainable.
- frockington 9y ago
  Who is hoarding currency on a notable scale? Why would they at the very least not invest in short-term bonds/mmfs
  - emodendroket 9y ago
    Mostly drug traffickers and other people involved in illegal businesses. Hey, maybe Bitcoin isn't that different from other currencies after all.
  - hapnin 9y ago
    It used to be called "savings".
    - mkirklions 9y ago
      Savings accounts were replaced by checking accounts after the great depression. They still called them savings accounts, but people had no idea that 'savings' meant people did not have instant + reliable access to it. So now we have 0.01% interest 'savings' accounts! They are just as liquid as our checking accounts.
    - frockington 9y ago
      Do people still use savings accounts on any significant amount of money? I'll admit I live in a bubble and don't know how most Americans store wealth
      - deleted 9y ago
        [deleted]
    - misja111 9y ago
      But there's a huge difference. With old fashioned "savings", the money was in a bank, which in turn would use it to invest it elsewhere. In other words, the money would still circulate in the economy. On the other hand, these bitcoins that are hoarded in a bunker are extracted from the economy as long as they are there. The implications are big: with the current trend of concentrating wealth to only a small fraction of the population, at least all that money is not 'gone'. Even though the rich probably don't pay much taxes over it, their banks will invest it in other companies. If this bitcoin hoarding ever becomes a trend, the consequences for the economy will be disastrous.
api 9y ago
Bitcoin seems to have already undergone a deflationary collapse. Its original goal of Internet money has been abandoned in favor of the concocted idea that it is a "store of value." Unfortunately it's a poor store of value since it requires a constant stream of electricity to maintain. Gold, land, and other traditional idle stores of value just sit there and are free to maintain with the exception of the cost of physical security. On top of this Bitcoin is fragile as it requires an operating Internet or at least operating computers. In the event of a severe stress or collapse scenario it will cease to exist, while gold and other assets will continue to be viable units of tradable value. I still don't understand why significant deflation is a desirable characteristic for a currency. Mild deflation is tolerable unless the economy is experiencing hyper-growth like the early 20th century, but Bitcoin is more deflationary than gold. Strong economic arguments that I don't have time to type in can be made that an ideal currency (as a medium of exchange) is slightly inflationary (in the monetary base sense) to the degree that the economy as a whole is growing. Edit: collapse you say? But its value has held up! But this is exactly what happens (for a while) in a deflationary collapse. The value of money skyrockets but its velocity tanks. http://charts.woobull.com/bitcoin-velocity/ http://charts.woobull.com/bitcoin-velocity/ Of course given all of Bitcoin's undesirable characteristics as a store of value I suspect that its value in USD/EUR/etc. will eventually tank as well. This might take a while unless something causes a panic since the market for BTC is slow and thinly traded. IMHO all deflationary cryptocurrencies will undergo this kind of collapse. Of course not all cryptocurrencies need be deflationary. Software defined money can be programmed to do anything you want it to do within the bounds of what is possible under e.g. the CAP theorem and other relevant concepts from distributed systems. Cryptocurrency as a system is also inflationary in a whole-systems sense as new money can be created by forking a code base or creating a token on those coins (e.g. Ethereum) that support it. This argument holds as long as all these currencies are reasonably fungible without too much hassle. As it stands things like shapeshift.io make converting them fairly easy at least for the popular ones.
- deleted 9y ago
  [deleted]
- blueprint 9y ago
  > Unfortunately it's a poor store of value since it requires a constant stream of electricity to maintain. "Earth is a poor store of life because it requires a constant stream of light to maintain." Hm no, that doesn't work...
Cthulhu_ 9y ago
That's because - and everyone but the uninformed or idealists know this - it's an investment product. It's simply not suitable as a currency, because one, inflation / instability, and two, it can only do what, a dozen transactions a second, if that? That's not nearly enough to become a viable currency.
- TomMarius 9y ago
  What do you mean, what inflation?
  - piqalq 9y ago
    I think he means the volatility/instability of it.
  - Balero 9y ago
    Bitcoin has no inflation, there are only a given number of total bitcoins in existence, which many (myself included) would argue makes it a poor currency.
    - TomMarius 9y ago
      I know, that's why I'm asking what does the commenter mean with inflation in their comment.
      - emodendroket 9y ago
        Probably meant deflation.
    - mkirklions 9y ago
      > there are only a given number of total bitcoins in existence, which many (myself included) would argue makes it a poor currency. I have always question who says this. What makes you think deflation would be bad? My conspiracy is that governments require inflation to print themselves out of bad policy. Without government abilities to do this, the government performs poorly. Common citizens do not lose 2-4% of their income in inflation.
kajumix 9y ago
>if you do hold the keys you better be absolutely paranoid with them because there's no plan B if they get compromised or destroyed One could do multi-signature wallets with Bitcoin. So, for example, there could be three keys: one with you, one with your significant other, and one with a third party custodian, and it'd take, say, 2 out of 3 signatures to spend out of the wallet. It doesn't change the bearer nature of Bitcoin, which, some would argue, is a feature.
- deleted 9y ago
  [deleted]
- mr_spothawk 9y ago
  > multi-signature wallets this, among the myriad other points missed by the discussion, is what's special about BTC (arguably, other digital "currencies", as well) there's so much more to BTC. it's not simply any one of the [currency, investment, speculation] because it's also a [transaction network, messaging platform, clock, vault].
chiefalchemist 9y ago
> "Looks like in the future people hoard currency instead of spending and investing it then. That ought to be interesting." That sounds like the current to me. Too much is locked up (in too few hands) instead of doing what currency should do. That is, reduce the friction of trade (i.e., goods, skills, etc.) Currency is a lubricant. It's no surprise things are drying up.
- conanbatt 9y ago
  A poor village in africa has starvation. They do not produce enough food to feed themeslves properly. So they are given an aid of 10,000 U$S. So they turn to their own farmers and say "Behold the currency, we were dry of it before and we were dry of food because of it. Now take the money and transform it into abundance and plenty!" The farmers put the bills in the ground, right next to the seeds, but it does not make the farm more plentiful. The villagers learnt the hard lesson: that plenty does not follow money.
  - GavinMcG 9y ago
    This is a really pat analogy that needs a lot of justification.
  - zeth___ 9y ago
    Then the village chief said >You fucking idiots stop burying the money in the ground and use it as a medium of exchange. And lo, as everyone has more faith in the US treasury than the village tin roof hut a market was opened in the middle of the village and they exchanged the dollars for food grown by farmers less stupid then them. The villagers then became wealth investment managers and charged fees to the farmers to invest their money, which involved holes in the ground.
  - imtringued 9y ago
    Your analogy is flawed because the larger issue is that poor villagers can only buy US products with US dollars which means they import food from the US which then displaces domestic production. This causes even more poverty because of the high percentage of subsistence farmers in africa. If you really wanted to help them grow their economy then you would try to offshore production into that country which leads to infrastructure investments and productivity growth.
gambiting 9y ago
You can at the very least make copies of the keys, and have your protection protocol be "wipe when anything suspicious is detected". You can't do that with gold.
loceng 9y ago
If you're incentivized (as these incentivized crypto-assets are) to hold onto something until enough other people perceive it's value as being higher (whether tricked into it through various methods or other), needing them to legitimize and realize the value, then people will hold onto it - and they'll use part of their resources to bring other people into the game. If society adopts these incentivized crypto-assets that $10B the could become valued at trillions of dollars, which then is buying power shifted away from society as a whole - and where those holders have done no work to actual make those gains. This attracts enough bad actors and incentives bad behaviour.
bufferoverflow 9y ago
Safety deposit boxes are cheap. Put your encrypted PK on paper, store copies in 2 or 3 separate boxes. Your password can be stored in your memory. Or it can be something like the 100th sentence in your favorite book.
- clarkmoody 9y ago
  Don't use any portion of any written work as your private key! Brute-force attacks will use every bit of written literature to do this same search. You must use securely-generated random key phrases, or you will lose your coins.
  - dsfyu404ed 9y ago
    No key is safe from a brute force attack that covers the alphabet of key and the length of the key. What you're describing is a dictionary attack and it trades comprehensiveness for speed. There's many more words than characters in any language. Using words as your alphabet gets you ($WORDS)^N possible passwords of length N instead of 128^N for an ascii alphabet. For humans remembering random words is easier. Choosing a grammatically correct sentence instead of random words is little different in terms of complexity reduction than choosing a word based password (e.g. Password1) instead of random characters. Obviously if the attacker can build a target specific dictionary they'll have a higher probability of success.
    - clarkmoody 9y ago
      Indeed. My caution is against keys that are already in the clear in a written work. Bitcoin is cryptography's biggest bug bounty.
  - bufferoverflow 9y ago
    I said password for the private key, not the private key itself. I store my PKs in KeePass databases with a crazy number of rounds, so each password guess attempt takes 2-3 seconds on a modern CPU. Good luck bruteforcing that.
canoebuilder 9y ago
let a bank manage and insure their wallet than manage it themselves. Too stressful otherwise. This just goes to show where the hype and misunderstanding around this has led. It is not too far off to say bitcoin's only reason for being, is to "hold them yourself," i.e. conduct all your financial dealings with zero third parties. A bank holding your bitcoins is just nonsensical if you understand the relative merits of each system. The merits of the banking system are a centralized efficiency in conducting "transactions at a distance," and economies of scale in preventing fraud, theft, and other losses, Trying to inject bitcoin into the banking system is like trying to re-insert a vestigial organ into a species long after the organ has been pruned from the evolutionary tree. Nobody seems to have much interest in bitcoin's purported raison d'etre, but are more interested in a perceived potential for appreciation. That much of past appreciation has been shown to be the result of various systemic manipulations, rather than genuine organic demand, seems not to register with most people, or is unknown. That perceived potential for appreciation would seem to eventually rest on people having an interest in using bitcoin for the uses around which it was designed. Should that day come, a shift from the game of "musical chairs-hot potato-hype machine," to a system of digital cash, the system would require a major re-working to support the number of users one would think would be proportional to the current valuation. But like you said most people aren't comfortable or willing to shoulder this sort of risk in their financial lives. Another curiosity, or countervailing force to bitcoin's design goals is the ever growing 'blockchain' record that needs to be stored locally to partake in the bitcoin system in the spirit it was conceived. The blockchain is growing at a fairly constant rate, has anyone ever plotted blockchain growth relative to projected future storage costs and bandwidth capabilities necessary to onboard new users? So what is the point of bitcoin other than the original goal of "be your own bank"? But not just your own bank, your own datacenter as well!
um_ya 9y ago
The people hording bitcoin makes the value of the ones spending it more valuable. Without people hording it, you wouldn't have any of the profits regular people have been getting.
nunya213 9y ago
You are implying that the wealthy aren't already doing hoarding currency instead of spending? Seems like a strange statement to make.
jel9392mdke 9y ago
People hoard capital now (currency being one form). Look at the result of the tax cuts leading to stock buy backs This is more motivation to transition from currency based societies and focus on outcomes that benefit labor first It’s plain there is no free market when currency monopolists can control not just what we work on looks like, but whether anything is worked on at all There is great demand for the end of war, housing, social services, and universal healthcare. Cottage industry can rise around that instead of digital assistants that schedule hair cuts. But we’re forced to prioritize the tasks the currency monopolists dictate, putting our own communities second Adam Smith only mentions a markets in the context of a free labor market for workers of equal condition to move about freely Mandate universal healthcare. It’s just as important to a secure and free nation as guns and is a potent first step to saying “we’re not interested in addressing the needs of stock markets and distant currency monopolists.”
- Spooky23 9y ago
  No, it’s a motivation to abandon monetary policy focused on eliminating inflation and re-prioritizing employment. The solution to hoarding capital is inflation or direct taxation of asssts.
  - daxorid 9y ago
    What? In what world is QE 1,2, and 3, the dramatic and unprecedented expansion of the ECB's balance sheet, and the BOJ and SNB openly buying equities "focused on eliminating inflation"?
    - Spooky23 9y ago
      When all of that happened, inflation never increased above 5%. Look at an inflation chart from 1900-today. 1984-today is basically flat. It’s never been less risky to hoard dollars.
  - jel9392mdke 9y ago
    You have your notions, I have mine Economics are not physics. They rely only assumptions that only make sense in our culture Capitalism is like metric or imperial measuring systems; human invention to service human motivation Like metric and imperials there’s nothing in physics that prevents us from being more socialist It’s a matter of public will, as has been shown in the past with revolution and fall of empires. I’d rather we focus on enabling those that want to meet the demand on display in the contexts I’ve mentioned If people with all the dollars won’t enable that, to hell with their claims of being rich. They can hang onto all them dollars while we instead focus on getting those demands met
TimmyMustGo 9y ago
So if we let a bank manage bitcoin, perhaps the bank could issue paper receipts that are backed by said bitcoin, and those pieces of paper could circulate instead of using the blockchain. What I don't understand is if fiat currencies are so bad, why do people express the value of bitcoin in a fiat currency (like USD)? They are just like the goldbugs, hoping and praying that the world will collapse back into the dark ages
- TACIXAT 9y ago
  >why do people express the value of bitcoin in a fiat currency (like USD)? Mostly because businesses do accounting and pay taxes in usd, so bitcoin is just used as a pass through gimmick to make sales. There is no path to the price stabilization of bitcoin, it's purely deflationary, no one is going to set prices in something that has no monetary policy.
- Qasaur 9y ago
  There is a very important difference between fiat currencies backed by nothing and fiduciary media that is backed by a commodity like gold. You can't walk into the Federal Reserve with a thousand dollars and demand them to be converted into physical gold - that right was abolished in the 1930s.
- ric2b 9y ago
  > perhaps the bank could issue paper receipts that are backed by said bitcoin, and those pieces of paper could circulate instead of using the blockchain. Feel free to use them, I won't. There's no point when Bitcoin is so simple to move. > What I don't understand is if fiat currencies are so bad, why do people express the value of bitcoin in a fiat currency (like USD)? Because it's one of the most practical things to measure against, because almost everything is also measured against it? I don't get this argument, if I say a car is worth $20k that means the car is actually worthless because I'm measuring it's value in USD? Or someone in the US saying that meters are actually a stupid and useless unit because before everyone gets used to using it you have to constantly convert it to imperial.
csomar 9y ago
People will always hoard. It is just that currency is a bad hoard. People already hoard gold which is hard to store and secure.
gm-conspiracy 9y ago
Is this not like every movie's "bearer bonds" plot requirement?
ataturk 9y ago
Let's do this little thought experiment: If some wealthy people stored their keys on a ship and that ship sunk to the bottom of the Atlantic, would anyone go diving there to retrieve those keys in say 50 years? What if it was gold on the ship?
sireat 9y ago
This is a problem/misfeature with cryptocurrencies: You are never truly sure that you own any of it, until you spend/send it elsewhere. No matter what layers of indirection(multi-party-sigs,bio-metric based encryption, etc) you put on it, at the end the private key has to come out in order to use it. With Gold, you see gold in your vault, you know it is yours. You see dollar in your pocket you can be sure you can spend that dollar tomorrow. You see a strip of paper with your private key in your pocket, there is no guarantee that you can spend those cryptocoins tomorrow. You see a private key(encrypted or not) on that Gold Bar, you do not know that it is truly yours unless you managed all steps of the encryption yourself. If you did manage all the steps of encryption yourself, then storing that information in a vault was pretty much pointless. I suppose one way these vaults can offer some sort of safety is that you come to them with your wallet, you make an onchain transaction into wallet whose private keys require both you and the vault to decrypt. This way both parties can be reasonably sure that the wallet stays unaffected until you come with a request to open it. Still a problem remains, you have to trust the vault to stick around and not lose their encryption keys. If you do not need vault's keys to open your wallet you've gained nothing by storing your keys at the vault. If you need the vault's keys you have to put your faith in vault not mishandling those keys, which means a single point of failure.
- ric2b 9y ago
  There's this thing called a Bitcoin address, which you can just watch on the block-chain and be sure that your money is still there. It's easier to verify than opening a vault to check on your gold.

by simias 9y ago

kfrzcode 9y ago

> in the future people hoard currency People hoard(ed) currency in the past and present as well

buckthundaz 9y ago
Indeed. The stockholm syndrome of Keynesianism is pervasive and unnoticed by many. The correct response to erosion of value is hoarding.
- api 9y ago
  The correct response to erosion of value is investing as long as there are good investments to be found. This is the idea behind inflationary money (which is a broader concept than Keynesianism). The important ideas of Keynes in a nutshell: * Monetary velocity: wealth is a verb, not a noun. The wealth of nations is measured in their rate of transactions, not how much cash or idle assets they are hoarding. * Idle vs. productive investment: if currency is deflationary people will store currency, a non-productive investment. If currency is inflationary people will invest it in productive activities. I don't agree absolutely 100% with these, but I think Keynes was at least onto something especially with the first. The problem with the first is that velocity also includes transactions that don't actually do anything or that even "create" negative value. Gambling increases monetary velocity but doesn't accomplish anything and may actually destroy value. A real value-centric velocity statistic is impossible because value is a biological/humanistic concept and is non-computable. The main problem with the second is that if people are pessimistic about investments they will still hoard, but using things like real estate and gold. Another problem with the second point is that over-using this strategy to drive investment creates bubbles, as we have seen. Finally I must point out that Keynes gets a ton of flak for stuff he did not advocate, like insane levels of public and private debt. Keynes would have been shocked and horrified at the levels of debt in our current system, and in fact his whole counter-cyclic government spending strategy was designed to prevent this. Blame politicians and banks for the debt problem, not Keynes. Politicians invoke Keynes when they want to ratchet up spending during downturns but then they conveniently forget the other part-- namely that Keynes also advocated reducing government spending and repaying debt proportionally during times of abundance. Keynes basically argued that government could be used as ballast against economic oscillation.
  - buckthundaz 9y ago
    I said nothing about Keynes -- I said Keynesianism. You understood this meaning well. Would you concede that the economic policies rooted in Keynes's ideas created an environment that allowed for the snowballing issues we have? The issue that isn't present in your comment is top-down imposed order vs. bottom-up emergent order. To me, the former is degenerative, while the latter is sustainable.
frockington 9y ago
Who is hoarding currency on a notable scale? Why would they at the very least not invest in short-term bonds/mmfs
- emodendroket 9y ago
  Mostly drug traffickers and other people involved in illegal businesses. Hey, maybe Bitcoin isn't that different from other currencies after all.
- hapnin 9y ago
  It used to be called "savings".
  - mkirklions 9y ago
    Savings accounts were replaced by checking accounts after the great depression. They still called them savings accounts, but people had no idea that 'savings' meant people did not have instant + reliable access to it. So now we have 0.01% interest 'savings' accounts! They are just as liquid as our checking accounts.
  - frockington 9y ago
    Do people still use savings accounts on any significant amount of money? I'll admit I live in a bubble and don't know how most Americans store wealth
    - deleted 9y ago
      [deleted]
  - misja111 9y ago
    But there's a huge difference. With old fashioned "savings", the money was in a bank, which in turn would use it to invest it elsewhere. In other words, the money would still circulate in the economy. On the other hand, these bitcoins that are hoarded in a bunker are extracted from the economy as long as they are there. The implications are big: with the current trend of concentrating wealth to only a small fraction of the population, at least all that money is not 'gone'. Even though the rich probably don't pay much taxes over it, their banks will invest it in other companies. If this bitcoin hoarding ever becomes a trend, the consequences for the economy will be disastrous.

api 9y ago

Bitcoin seems to have already undergone a deflationary collapse. Its original goal of Internet money has been abandoned in favor of the concocted idea that it is a "store of value." Unfortunately it's a poor store of value since it requires a constant stream of electricity to maintain. Gold, land, and other traditional idle stores of value just sit there and are free to maintain with the exception of the cost of physical security. On top of this Bitcoin is fragile as it requires an operating Internet or at least operating computers. In the event of a severe stress or collapse scenario it will cease to exist, while gold and other assets will continue to be viable units of tradable value. I still don't understand why significant deflation is a desirable characteristic for a currency. Mild deflation is tolerable unless the economy is experiencing hyper-growth like the early 20th century, but Bitcoin is more deflationary than gold. Strong economic arguments that I don't have time to type in can be made that an ideal currency (as a medium of exchange) is slightly inflationary (in the monetary base sense) to the degree that the economy as a whole is growing. Edit: collapse you say? But its value has held up! But this is exactly what happens (for a while) in a deflationary collapse. The value of money skyrockets but its velocity tanks. http://charts.woobull.com/bitcoin-velocity/ http://charts.woobull.com/bitcoin-velocity/ Of course given all of Bitcoin's undesirable characteristics as a store of value I suspect that its value in USD/EUR/etc. will eventually tank as well. This might take a while unless something causes a panic since the market for BTC is slow and thinly traded. IMHO all deflationary cryptocurrencies will undergo this kind of collapse. Of course not all cryptocurrencies need be deflationary. Software defined money can be programmed to do anything you want it to do within the bounds of what is possible under e.g. the CAP theorem and other relevant concepts from distributed systems. Cryptocurrency as a system is also inflationary in a whole-systems sense as new money can be created by forking a code base or creating a token on those coins (e.g. Ethereum) that support it. This argument holds as long as all these currencies are reasonably fungible without too much hassle. As it stands things like shapeshift.io make converting them fairly easy at least for the popular ones.

deleted 9y ago
[deleted]
blueprint 9y ago
> Unfortunately it's a poor store of value since it requires a constant stream of electricity to maintain. "Earth is a poor store of life because it requires a constant stream of light to maintain." Hm no, that doesn't work...

Cthulhu_ 9y ago

That's because - and everyone but the uninformed or idealists know this - it's an investment product. It's simply not suitable as a currency, because one, inflation / instability, and two, it can only do what, a dozen transactions a second, if that? That's not nearly enough to become a viable currency.

TomMarius 9y ago
What do you mean, what inflation?
- piqalq 9y ago
  I think he means the volatility/instability of it.
- Balero 9y ago
  Bitcoin has no inflation, there are only a given number of total bitcoins in existence, which many (myself included) would argue makes it a poor currency.
  - TomMarius 9y ago
    I know, that's why I'm asking what does the commenter mean with inflation in their comment.
    - emodendroket 9y ago
      Probably meant deflation.
  - mkirklions 9y ago
    > there are only a given number of total bitcoins in existence, which many (myself included) would argue makes it a poor currency. I have always question who says this. What makes you think deflation would be bad? My conspiracy is that governments require inflation to print themselves out of bad policy. Without government abilities to do this, the government performs poorly. Common citizens do not lose 2-4% of their income in inflation.

kajumix 9y ago

>if you do hold the keys you better be absolutely paranoid with them because there's no plan B if they get compromised or destroyed One could do multi-signature wallets with Bitcoin. So, for example, there could be three keys: one with you, one with your significant other, and one with a third party custodian, and it'd take, say, 2 out of 3 signatures to spend out of the wallet. It doesn't change the bearer nature of Bitcoin, which, some would argue, is a feature.

deleted 9y ago
[deleted]
mr_spothawk 9y ago
> multi-signature wallets this, among the myriad other points missed by the discussion, is what's special about BTC (arguably, other digital "currencies", as well) there's so much more to BTC. it's not simply any one of the [currency, investment, speculation] because it's also a [transaction network, messaging platform, clock, vault].

chiefalchemist 9y ago

> "Looks like in the future people hoard currency instead of spending and investing it then. That ought to be interesting." That sounds like the current to me. Too much is locked up (in too few hands) instead of doing what currency should do. That is, reduce the friction of trade (i.e., goods, skills, etc.) Currency is a lubricant. It's no surprise things are drying up.

conanbatt 9y ago
A poor village in africa has starvation. They do not produce enough food to feed themeslves properly. So they are given an aid of 10,000 U$S. So they turn to their own farmers and say "Behold the currency, we were dry of it before and we were dry of food because of it. Now take the money and transform it into abundance and plenty!" The farmers put the bills in the ground, right next to the seeds, but it does not make the farm more plentiful. The villagers learnt the hard lesson: that plenty does not follow money.
- GavinMcG 9y ago
  This is a really pat analogy that needs a lot of justification.
- zeth___ 9y ago
  Then the village chief said >You fucking idiots stop burying the money in the ground and use it as a medium of exchange. And lo, as everyone has more faith in the US treasury than the village tin roof hut a market was opened in the middle of the village and they exchanged the dollars for food grown by farmers less stupid then them. The villagers then became wealth investment managers and charged fees to the farmers to invest their money, which involved holes in the ground.
- imtringued 9y ago
  Your analogy is flawed because the larger issue is that poor villagers can only buy US products with US dollars which means they import food from the US which then displaces domestic production. This causes even more poverty because of the high percentage of subsistence farmers in africa. If you really wanted to help them grow their economy then you would try to offshore production into that country which leads to infrastructure investments and productivity growth.

gambiting 9y ago

You can at the very least make copies of the keys, and have your protection protocol be "wipe when anything suspicious is detected". You can't do that with gold.

loceng 9y ago

If you're incentivized (as these incentivized crypto-assets are) to hold onto something until enough other people perceive it's value as being higher (whether tricked into it through various methods or other), needing them to legitimize and realize the value, then people will hold onto it - and they'll use part of their resources to bring other people into the game. If society adopts these incentivized crypto-assets that $10B the could become valued at trillions of dollars, which then is buying power shifted away from society as a whole - and where those holders have done no work to actual make those gains. This attracts enough bad actors and incentives bad behaviour.

bufferoverflow 9y ago

Safety deposit boxes are cheap. Put your encrypted PK on paper, store copies in 2 or 3 separate boxes. Your password can be stored in your memory. Or it can be something like the 100th sentence in your favorite book.

clarkmoody 9y ago
Don't use any portion of any written work as your private key! Brute-force attacks will use every bit of written literature to do this same search. You must use securely-generated random key phrases, or you will lose your coins.
- dsfyu404ed 9y ago
  No key is safe from a brute force attack that covers the alphabet of key and the length of the key. What you're describing is a dictionary attack and it trades comprehensiveness for speed. There's many more words than characters in any language. Using words as your alphabet gets you ($WORDS)^N possible passwords of length N instead of 128^N for an ascii alphabet. For humans remembering random words is easier. Choosing a grammatically correct sentence instead of random words is little different in terms of complexity reduction than choosing a word based password (e.g. Password1) instead of random characters. Obviously if the attacker can build a target specific dictionary they'll have a higher probability of success.
  - clarkmoody 9y ago
    Indeed. My caution is against keys that are already in the clear in a written work. Bitcoin is cryptography's biggest bug bounty.
- bufferoverflow 9y ago
  I said password for the private key, not the private key itself. I store my PKs in KeePass databases with a crazy number of rounds, so each password guess attempt takes 2-3 seconds on a modern CPU. Good luck bruteforcing that.

canoebuilder 9y ago

let a bank manage and insure their wallet than manage it themselves. Too stressful otherwise. This just goes to show where the hype and misunderstanding around this has led. It is not too far off to say bitcoin's only reason for being, is to "hold them yourself," i.e. conduct all your financial dealings with zero third parties. A bank holding your bitcoins is just nonsensical if you understand the relative merits of each system. The merits of the banking system are a centralized efficiency in conducting "transactions at a distance," and economies of scale in preventing fraud, theft, and other losses, Trying to inject bitcoin into the banking system is like trying to re-insert a vestigial organ into a species long after the organ has been pruned from the evolutionary tree. Nobody seems to have much interest in bitcoin's purported raison d'etre, but are more interested in a perceived potential for appreciation. That much of past appreciation has been shown to be the result of various systemic manipulations, rather than genuine organic demand, seems not to register with most people, or is unknown. That perceived potential for appreciation would seem to eventually rest on people having an interest in using bitcoin for the uses around which it was designed. Should that day come, a shift from the game of "musical chairs-hot potato-hype machine," to a system of digital cash, the system would require a major re-working to support the number of users one would think would be proportional to the current valuation. But like you said most people aren't comfortable or willing to shoulder this sort of risk in their financial lives. Another curiosity, or countervailing force to bitcoin's design goals is the ever growing 'blockchain' record that needs to be stored locally to partake in the bitcoin system in the spirit it was conceived. The blockchain is growing at a fairly constant rate, has anyone ever plotted blockchain growth relative to projected future storage costs and bandwidth capabilities necessary to onboard new users? So what is the point of bitcoin other than the original goal of "be your own bank"? But not just your own bank, your own datacenter as well!

um_ya 9y ago

The people hording bitcoin makes the value of the ones spending it more valuable. Without people hording it, you wouldn't have any of the profits regular people have been getting.

nunya213 9y ago

You are implying that the wealthy aren't already doing hoarding currency instead of spending? Seems like a strange statement to make.

jel9392mdke 9y ago

People hoard capital now (currency being one form). Look at the result of the tax cuts leading to stock buy backs This is more motivation to transition from currency based societies and focus on outcomes that benefit labor first It’s plain there is no free market when currency monopolists can control not just what we work on looks like, but whether anything is worked on at all There is great demand for the end of war, housing, social services, and universal healthcare. Cottage industry can rise around that instead of digital assistants that schedule hair cuts. But we’re forced to prioritize the tasks the currency monopolists dictate, putting our own communities second Adam Smith only mentions a markets in the context of a free labor market for workers of equal condition to move about freely Mandate universal healthcare. It’s just as important to a secure and free nation as guns and is a potent first step to saying “we’re not interested in addressing the needs of stock markets and distant currency monopolists.”

Spooky23 9y ago
No, it’s a motivation to abandon monetary policy focused on eliminating inflation and re-prioritizing employment. The solution to hoarding capital is inflation or direct taxation of asssts.
- daxorid 9y ago
  What? In what world is QE 1,2, and 3, the dramatic and unprecedented expansion of the ECB's balance sheet, and the BOJ and SNB openly buying equities "focused on eliminating inflation"?
  - Spooky23 9y ago
    When all of that happened, inflation never increased above 5%. Look at an inflation chart from 1900-today. 1984-today is basically flat. It’s never been less risky to hoard dollars.
- jel9392mdke 9y ago
  You have your notions, I have mine Economics are not physics. They rely only assumptions that only make sense in our culture Capitalism is like metric or imperial measuring systems; human invention to service human motivation Like metric and imperials there’s nothing in physics that prevents us from being more socialist It’s a matter of public will, as has been shown in the past with revolution and fall of empires. I’d rather we focus on enabling those that want to meet the demand on display in the contexts I’ve mentioned If people with all the dollars won’t enable that, to hell with their claims of being rich. They can hang onto all them dollars while we instead focus on getting those demands met

TimmyMustGo 9y ago

So if we let a bank manage bitcoin, perhaps the bank could issue paper receipts that are backed by said bitcoin, and those pieces of paper could circulate instead of using the blockchain. What I don't understand is if fiat currencies are so bad, why do people express the value of bitcoin in a fiat currency (like USD)? They are just like the goldbugs, hoping and praying that the world will collapse back into the dark ages

TACIXAT 9y ago
>why do people express the value of bitcoin in a fiat currency (like USD)? Mostly because businesses do accounting and pay taxes in usd, so bitcoin is just used as a pass through gimmick to make sales. There is no path to the price stabilization of bitcoin, it's purely deflationary, no one is going to set prices in something that has no monetary policy.
Qasaur 9y ago
There is a very important difference between fiat currencies backed by nothing and fiduciary media that is backed by a commodity like gold. You can't walk into the Federal Reserve with a thousand dollars and demand them to be converted into physical gold - that right was abolished in the 1930s.
ric2b 9y ago
> perhaps the bank could issue paper receipts that are backed by said bitcoin, and those pieces of paper could circulate instead of using the blockchain. Feel free to use them, I won't. There's no point when Bitcoin is so simple to move. > What I don't understand is if fiat currencies are so bad, why do people express the value of bitcoin in a fiat currency (like USD)? Because it's one of the most practical things to measure against, because almost everything is also measured against it? I don't get this argument, if I say a car is worth $20k that means the car is actually worthless because I'm measuring it's value in USD? Or someone in the US saying that meters are actually a stupid and useless unit because before everyone gets used to using it you have to constantly convert it to imperial.

csomar 9y ago

People will always hoard. It is just that currency is a bad hoard. People already hoard gold which is hard to store and secure.

gm-conspiracy 9y ago

Is this not like every movie's "bearer bonds" plot requirement?

ataturk 9y ago

Let's do this little thought experiment: If some wealthy people stored their keys on a ship and that ship sunk to the bottom of the Atlantic, would anyone go diving there to retrieve those keys in say 50 years? What if it was gold on the ship?

sireat 9y ago

This is a problem/misfeature with cryptocurrencies: You are never truly sure that you own any of it, until you spend/send it elsewhere. No matter what layers of indirection(multi-party-sigs,bio-metric based encryption, etc) you put on it, at the end the private key has to come out in order to use it. With Gold, you see gold in your vault, you know it is yours. You see dollar in your pocket you can be sure you can spend that dollar tomorrow. You see a strip of paper with your private key in your pocket, there is no guarantee that you can spend those cryptocoins tomorrow. You see a private key(encrypted or not) on that Gold Bar, you do not know that it is truly yours unless you managed all steps of the encryption yourself. If you did manage all the steps of encryption yourself, then storing that information in a vault was pretty much pointless. I suppose one way these vaults can offer some sort of safety is that you come to them with your wallet, you make an onchain transaction into wallet whose private keys require both you and the vault to decrypt. This way both parties can be reasonably sure that the wallet stays unaffected until you come with a request to open it. Still a problem remains, you have to trust the vault to stick around and not lose their encryption keys. If you do not need vault's keys to open your wallet you've gained nothing by storing your keys at the vault. If you need the vault's keys you have to put your faith in vault not mishandling those keys, which means a single point of failure.

ric2b 9y ago
There's this thing called a Bitcoin address, which you can just watch on the block-chain and be sure that your money is still there. It's easier to verify than opening a vault to check on your gold.