5 ms·

When that trust turns out to be misplaced, there is no recourse. If your bitcoin exchange gets hacked, you lose all of your money. If your bitcoin wallet gets h

When that trust turns out to be misplaced, there is no recourse. If your bitcoin exchange gets hacked, you lose all of your money. If your bitcoin wallet gets hacked, you lose all of your money. If you forget your login credentials, you lose all of your money. If there's a bug in the code of your smart contract, you lose all of your money. If someone successfully hacks the blockchain security, you lose all of your money. In many ways, trusting technology is harder than trusting people. Would you rather trust a human legal system or the details of some computer code you don't have the expertise to audit? In making the case for human systems over bitcoin, Bruce Schneider echoes the same arguments that eventually led to FDR stealing every US citizen's gold in 1933 to bail out the federal reserve. To me it seems deplorable for someone to advocate placating dishonest institutions founded on a legacy of screwing over people.

sparkie 8y ago
Not only 1933, they've been stealing money ever since through a monetary policy of constant inflation. Deliberate inflation is theft of a small percentage of the money of all savers.
- hannasanarion 8y ago
  You do realize that non-inflation was one of the main causes of the great depression, right? Are you telling me that you would spend your money on consumer products and employing people if you knew that it would be worth more if you left it sitting in your bank?
  - sparkie 8y ago
    Whether you think inflation is justified or not does not negate the argument. It is still theft. If savers did not have money, economists would not have anything to inflate. The inflation benefits the money printer, because they spend it at the market rate at the time of printing, but by the time it works its way through the economy, the effect is reduced purchasing power for the saver or consumer. Yes, inflation is a deterrent on saving, pushing people to instead invest their money. Whether it is a good thing that people blow all of their money on junk consumer goods is another question. What if some people just want to save, and not take risks? Well, it's their own choice, and now they are able to make such choice because there are no economists controlling the monetary policy of Bitcoin. What you think was justified previously, might no longer be possible. If we slip into depression due to deflation again, we might have to come up with some other solution, which isn't just kicking the can down the road.
    - api 8y ago
      I consider this debate an unresolved issue in economics. We don't know how to create a genuinely balanced and productive economy. Option #1: deflationary economy where monetary velocity collapses and with it employment, investment, and innovation, ending in permanent depression (dark age) and slavery to a money-hoarding landed rentier class. Board game: Monopoly. Option #2: inflationary economy that prioritizes spending and investment over saving, runs on debt, and ends with slavery to consumerism, bullshit jobs, and landfills overflowing with junk. Board game: Risk. Pick your poison. In the 20th century most nations went for option #2 because those that didn't tended to be overcome by the financial and military power of those that did. China is currently performing the most extreme inflationary economics experiment in history. This post makes me remember a definition I heard once in school of economics: "the science of why everything sucks."
      - armin_maurice 8y ago
        I mean it is resolved, and your two options kind of show it. The resolution is very low and slow inflationary economics, to match the growth rate in the economy. This should prioritize a safe level of saving and investment. Higher and lower rates of inflation can be enforced (via central banks) to help fight recession or demand driven inflation (price level increases). However constantly tweaking inflation rates to get the exact right level for the current period of countries economic cycle (debt/savings levels, price levels etc...) is quite difficult. So yes we do know "how" to balance an economy in a general sense, in the same way we know how to build a web application in the general sense, but there is always work do be done in the details.
        api 8y ago
        We've been trying to do that. The problem is that macroeconomic inflation is a big sausage number that doesn't really say much about the reality on the street. Take a look at this: http://thesoundingline.com/why-inflation-is-much-worse-than-the-headline-numbers-suggest/ http://thesoundingline.com/why-inflation-is-much-worse-than-... Price stability has only been achieved for a few categories of things and the divergence is huge.
  - lawn 8y ago
    I'm not arguing for non-inflation, but I'm spending money on consumer products all the time instead of investing it.
  - stale2002 8y ago
    What I believe is that if you want to use an inflationary currency, then that should be your choice. And if you disagree, you should also be free to use a deflationary currency. Both groups should be able to choose which currency that they want.
    - hannasanarion 8y ago
      A currency cannot be simultaneously deflationary and functional as a means of exchange facilitating commerce. The laws of economics don't bow to your personal preference.
      - sparkie 8y ago
        This is simply not true. If deflation is low, it is not a big issue, much like low inflation isn't a major issue. Hyperdeflation causes problems, as does hyperinflation. The arguments against deflation don't really add up. There are numerous examples of deflation working in economies today. Example: Cars which lose 20% of their value upon purchase, and around 10% per year until they're worth scrap metal. If the Keynesian economists are to be believed, then nobody would ever buy a car! If they just held onto the money, it would be worth more than the car will be worth 1 year later. What reason would anyone ever have to invest in a car? For some odd reason, nearly 80 million people do it every year. Computers and Moore's law are another example. Why would anyone buy a computer now when they can just wait 18 months and buy one twice as powerful? People change their spending habits when deflation occurs, moving from high time preference to a lower time preference, but investment doesn't stop. The most savvy investors will take the opportunity to try and increase their assets by productive means, so as to compound the effects of the deflation. If people end up out of bullshit jobs, perhaps they could learn to code or something, instead of begging to state to steal other people's money.
      - dredmorbius 8y ago
        The U.S. dollar was deflationary, excepting the 1812 and Civil Wars, from the 1780s through the 1890s. http://1.bp.blogspot.com/-QFYk6fgnd7c/UOr3hXo3LNI/AAAAAAAAkqc/LaIT4COTAug/s1600/cpi%2Bfrom%2Binception.PNG http://1.bp.blogspot.com/-QFYk6fgnd7c/UOr3hXo3LNI/AAAAAAAAkq...
- tim333 8y ago
  Inflation isn't really theft because: - you knew it was part of the deal when you chose to hold fiat - you can get interest on it to counter the inflation - it benefits borrowers - the money effectively goes to the government if not borrowers so it's more like taxation than theft.
creeble 8y ago
I don't read it as making a case for human systems over bitcoin. He is simply pointing out that bitcoin (and all cryptocurrencies) are more of a human system than the true believers believe.
- sparkie 8y ago
  The point of Bitcoin is that the trust is not in specific humans or groups of humans, but in a set of humans so diverse and distributed that there is no conceivable way for a minority of them to collude to screw over the other users. Moreover, they are deterred from attempting to screw over others, because they must exhaust massive amounts of electricity to attempt to cheat them, which can't be returned whether they succeed or not.
  - creeble 8y ago
    Unless the miners or mining groups collectively decide to fork. I found it interesting that one of the first things that happened as bitcoin grew was the creation of mining collectives - literally the opposite of decentralization.
    - sparkie 8y ago
      It's a mistake to look at pools as distinct entities in themselves or to think that their members are in cohesion to do anything other than increase their chance of monetary gain from their pool generating valid bitcoin blocks. The mining collective has no power of its own, but its power is distributed entirely among its members. A mining operator loses no autonomy by joining a pool, and can leave it just as easily as the joined. Nobody is loyal to a pool.
      - Qworg 8y ago
        This is a supreme "Homo economicus" argument - there are switching costs, human factors (do I like X, do they pay on time, are they charismatic and forceful?), and dumb money problems that thwart it.
    - 8y ago

sparkie 8y ago

Not only 1933, they've been stealing money ever since through a monetary policy of constant inflation. Deliberate inflation is theft of a small percentage of the money of all savers.

hannasanarion 8y ago
You do realize that non-inflation was one of the main causes of the great depression, right? Are you telling me that you would spend your money on consumer products and employing people if you knew that it would be worth more if you left it sitting in your bank?
- sparkie 8y ago
  Whether you think inflation is justified or not does not negate the argument. It is still theft. If savers did not have money, economists would not have anything to inflate. The inflation benefits the money printer, because they spend it at the market rate at the time of printing, but by the time it works its way through the economy, the effect is reduced purchasing power for the saver or consumer. Yes, inflation is a deterrent on saving, pushing people to instead invest their money. Whether it is a good thing that people blow all of their money on junk consumer goods is another question. What if some people just want to save, and not take risks? Well, it's their own choice, and now they are able to make such choice because there are no economists controlling the monetary policy of Bitcoin. What you think was justified previously, might no longer be possible. If we slip into depression due to deflation again, we might have to come up with some other solution, which isn't just kicking the can down the road.
  - api 8y ago
    I consider this debate an unresolved issue in economics. We don't know how to create a genuinely balanced and productive economy. Option #1: deflationary economy where monetary velocity collapses and with it employment, investment, and innovation, ending in permanent depression (dark age) and slavery to a money-hoarding landed rentier class. Board game: Monopoly. Option #2: inflationary economy that prioritizes spending and investment over saving, runs on debt, and ends with slavery to consumerism, bullshit jobs, and landfills overflowing with junk. Board game: Risk. Pick your poison. In the 20th century most nations went for option #2 because those that didn't tended to be overcome by the financial and military power of those that did. China is currently performing the most extreme inflationary economics experiment in history. This post makes me remember a definition I heard once in school of economics: "the science of why everything sucks."
    - armin_maurice 8y ago
      I mean it is resolved, and your two options kind of show it. The resolution is very low and slow inflationary economics, to match the growth rate in the economy. This should prioritize a safe level of saving and investment. Higher and lower rates of inflation can be enforced (via central banks) to help fight recession or demand driven inflation (price level increases). However constantly tweaking inflation rates to get the exact right level for the current period of countries economic cycle (debt/savings levels, price levels etc...) is quite difficult. So yes we do know "how" to balance an economy in a general sense, in the same way we know how to build a web application in the general sense, but there is always work do be done in the details.
      - api 8y ago
        We've been trying to do that. The problem is that macroeconomic inflation is a big sausage number that doesn't really say much about the reality on the street. Take a look at this: http://thesoundingline.com/why-inflation-is-much-worse-than-the-headline-numbers-suggest/ http://thesoundingline.com/why-inflation-is-much-worse-than-... Price stability has only been achieved for a few categories of things and the divergence is huge.
- lawn 8y ago
  I'm not arguing for non-inflation, but I'm spending money on consumer products all the time instead of investing it.
- stale2002 8y ago
  What I believe is that if you want to use an inflationary currency, then that should be your choice. And if you disagree, you should also be free to use a deflationary currency. Both groups should be able to choose which currency that they want.
  - hannasanarion 8y ago
    A currency cannot be simultaneously deflationary and functional as a means of exchange facilitating commerce. The laws of economics don't bow to your personal preference.
    - sparkie 8y ago
      This is simply not true. If deflation is low, it is not a big issue, much like low inflation isn't a major issue. Hyperdeflation causes problems, as does hyperinflation. The arguments against deflation don't really add up. There are numerous examples of deflation working in economies today. Example: Cars which lose 20% of their value upon purchase, and around 10% per year until they're worth scrap metal. If the Keynesian economists are to be believed, then nobody would ever buy a car! If they just held onto the money, it would be worth more than the car will be worth 1 year later. What reason would anyone ever have to invest in a car? For some odd reason, nearly 80 million people do it every year. Computers and Moore's law are another example. Why would anyone buy a computer now when they can just wait 18 months and buy one twice as powerful? People change their spending habits when deflation occurs, moving from high time preference to a lower time preference, but investment doesn't stop. The most savvy investors will take the opportunity to try and increase their assets by productive means, so as to compound the effects of the deflation. If people end up out of bullshit jobs, perhaps they could learn to code or something, instead of begging to state to steal other people's money.
    - dredmorbius 8y ago
      The U.S. dollar was deflationary, excepting the 1812 and Civil Wars, from the 1780s through the 1890s. http://1.bp.blogspot.com/-QFYk6fgnd7c/UOr3hXo3LNI/AAAAAAAAkqc/LaIT4COTAug/s1600/cpi%2Bfrom%2Binception.PNG http://1.bp.blogspot.com/-QFYk6fgnd7c/UOr3hXo3LNI/AAAAAAAAkq...
tim333 8y ago
Inflation isn't really theft because: - you knew it was part of the deal when you chose to hold fiat - you can get interest on it to counter the inflation - it benefits borrowers - the money effectively goes to the government if not borrowers so it's more like taxation than theft.

creeble 8y ago

I don't read it as making a case for human systems over bitcoin. He is simply pointing out that bitcoin (and all cryptocurrencies) are more of a human system than the true believers believe.

sparkie 8y ago
The point of Bitcoin is that the trust is not in specific humans or groups of humans, but in a set of humans so diverse and distributed that there is no conceivable way for a minority of them to collude to screw over the other users. Moreover, they are deterred from attempting to screw over others, because they must exhaust massive amounts of electricity to attempt to cheat them, which can't be returned whether they succeed or not.
- creeble 8y ago
  Unless the miners or mining groups collectively decide to fork. I found it interesting that one of the first things that happened as bitcoin grew was the creation of mining collectives - literally the opposite of decentralization.
  - sparkie 8y ago
    It's a mistake to look at pools as distinct entities in themselves or to think that their members are in cohesion to do anything other than increase their chance of monetary gain from their pool generating valid bitcoin blocks. The mining collective has no power of its own, but its power is distributed entirely among its members. A mining operator loses no autonomy by joining a pool, and can leave it just as easily as the joined. Nobody is loyal to a pool.
    - Qworg 8y ago
      This is a supreme "Homo economicus" argument - there are switching costs, human factors (do I like X, do they pay on time, are they charismatic and forceful?), and dumb money problems that thwart it.
  - 8y ago