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The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

• adrianwaj 15y ago
  I found that post painful to read (I disagreed on all headline points,) but I see bitcoin as the start of a new financial reality. I hope bitcoin becomes a new core currency: to me it is like ogg, rather than a bank produced equivalent, which would be like mp3. Money is fully moving into the digital age, as has media with mp3 and mpeg. It is the medium that will shape its container. - early adopters can help create or adapt financial institutions - exchanges are and will go open source - when something goes wrong the network will adapt. Bitcoin has financially supported developers - I think all it takes is 1 large company and 1 country to support the existence of bitcoin on a global scale as a test case whilst the rest live in fear Check out slide 4 of http://www.slideshare.net/15Mb/ages-of-money http://www.slideshare.net/15Mb/ages-of-money that is the best way to think about bitcoin in my view: money 5.0.
  • inoop 15y ago
    To me Bitcoin is more like Gnutella. Massively overhyped and fundamentally flawed.
    • deleted 15y ago
      [deleted]
    • greyman 15y ago
      It takes just a few keystrokes to type "fundamentally flawed", but people seems to not agree whether that's really the case. So why do you think it is flawed?
      • deleted 15y ago
        [deleted]
      • inoop 15y ago
        I don't know shit about economics, so I can't say anything useful about that aspect of Bitcoin. I do know a little about distributed systems and p2p however. Disclaimer: Bitcoin is a bit of black magic so I'm not going to claim I know every detail about it. I did read the original paper, so I'll focus on what I got from reading it. First of all, Bitcoin replicates work over all nodes. This means you need a global broadcast mechanism to inform all nodes of transactions and new blocks. For transaction broadcast, you'll need O(m*n) messages with m the number of transactions and n the number of nodes. This is scalability problem number one. Then you have the blocks. Each represents a transaction history of a given period of time (magic number is 10 minutes iirc). When the number of transactions/second (tps) goes up, so does the size of the blocks. The calculations found here: https://en.bitcoin.it/wiki/Scalability https://en.bitcoin.it/wiki/Scalability give >1GB per block for 2000tps, which is what VISA is doing right now. If you're connected to k peers, that means you're going to need kGB of bandwidth per 10 minutes. Network-wide, regardless of your topology, you'll still need at least nGB of global traffic every ten minutes. When you have a thousand nodes, you have 1TB of data flying around the internet every 10 minutes, and that's on top of the global transaction broadcast traffic. Now remember that if Bitcoin wants to replace the US dollar they'll have to scale way beyond 2000tps (for example, when China and India join the party), but let's say 2000tps is the goal. The only way that's going to function is to have a two-tier system with big clusters on top and people like you and I below that, just to move that much data around. Introducing supernodes in a p2p system is a cheap way of buying some scalability, but it doesn't solve the fundamental problem, all it does is buy you some time before the entire thing keels over. Then there's the computational effort. The idea of calculating useless hashes is meant to keep botnets from taking over the majority vote. One CPU cycle is one vote, rather than one IP is one vote. To take Moore's law into account, the system automatically adjusts the difficulty to keep everything chugging along in an orderly fashion. This is a nice idea, but a botnet can still ddos a node, at which point it doesn't matter how much video cards that node has. As long as those nodes are on the internet they are still vulnerable. This is happening right now btw, most miners are mining in so-called pools, and taking out an entire pool by ddossing it means you can increase your own chances of mining coins. This is why the pools are having trouble staying up. Another attack vector is ddossing the entire network by sending a single bitcoin back and forth between two addresses. Transaction fees can help a bit here, but if someone is willing to spend some money to dramatically raise the TPS count for just a short time you're already in a lot of trouble.
    • michael_dorfman 15y ago
      Unlike Gnutella, in this case, there are people with a strong financial interest in keeping it massively overhyped, for the reasons described in the OP.
    • hugh3 15y ago
      To me, Bitcoin is more like the Jehovah's Witnesses. They believe that only 144,000 people will get into heaven, and that who gets in will be decided by who recruits the most people to the Jehovah's Witnesses, so once you have the Jehovah's Witnesses meme you have a super-strong incentive to spread it widely.
  • bonch 15y ago
    So everyone knows, adrianwaj is a Bitcoin-obsessed nutjob who posted this comment before deleting it: "People that don't have the money to buy bitcoins and see them appreciate are jealous of the ones that do. They hide their insufficiency and jealousy by calling it a ponzi scheme or scam, so they can simultaneously feel superior to the bitcoiners whilst tricking themselves into thinking they wouldn't buy them anyway even if they had the money. It'd also be a fear that one day they'd have to work on a bitcoin project, which would be rubbing salt in the wounds. Fact is, there are tons of hackers that could contribute a lot to the bitcoin ecosystem, but they take the negative route instead: they don't want to give anyone a free ride (or they like their rut.) I could go on, but there are some anti-Israel type tones in the anti-bitcoin brigade, that's my feeling when I write anything positive about bitcoin: I may as well write something positive about Israel. For many, bitcoin.org is the startup, and buying the currency is the investment. People would upvote any story about their startup, and they'd upvote anything about bitcoin. It's a fair thing to do. Bitcoin is an extremely hacker-ish thing. It is a hack on the money supply. It is as revolutionary to money (the concept, perhaps not the implementation as yet) as mp3 was to music, or blogs to writers. It has hugely positive implications, so people that hate it, will Really hate it."
    • adrianwaj 15y ago
      bonch = psychopath. http://news.ycombinator.com/item?id=2614233 http://news.ycombinator.com/item?id=2614233 You're a failure, dickwad.
• wintersFright 15y ago
  As an zeroHedge reading, armchair economist i think there are a lot of flaws in that guys argument "Bitcoin does not have a central bank capable of printing and lending bitcoins" >>I rather think thats the point. Lending is inflationary. "Built in Deflation" >> God knows how the computer industry makes money when if i hold my $$$ just a little longer, i can buy an even better machine. "For Bitcoin to work as a currency, it would have to act as a predictable store of value" >>No, currency does not have to store value. The USD is a terrible store of value. Gold is a store of value. Govt paper is not. " That's called a bank run, and for obvious reasons we want to avoid them." >> um - I'm not an expert on bitcoin but there are no banks i thought. your money is in your e-wallet. you dont need a bank to keep your money away from theives. there are no banks with fractional reserve lending that are fragile to a run on deposits This guy is dunning kruger at its best.
  • faski99 15y ago
    "God knows how the computer industry makes money when if i hold my $$$ just a little longer, i can buy an even better machine" Not really. Because if you expect the value of your cash to rise, you would probably hold onto your cash. The liquidity of the system would drop as people hoard their cash (what happened during the Great Depression), depressing an economy. "bank run" He's talking about the need to inject cash into the system during economic shocks (the reason for the Fed injecting money into the system). This, again, happened during the Great Depression, as perfectly sound and profitable banks toppled left and right because of the bank runs, taking down the rest of the economy.
    • anonymoushn 15y ago
      > Because if you expect the value of your cash to rise, you would probably hold onto your cash. Right, that's why the computer industry doesn't make any money. > This, again, happened during the Great Depression Yes. A large part of what made the Great Depression last much longer than the Depression of 1920-1921 was that insolvent businesses were given money instead of being allowed to fail. One might compare this to recent events, and have a look at the present employment rate of the U.S. population: http://market-ticker.org/akcs-www?get_gallerynr=1631 http://market-ticker.org/akcs-www?get_gallerynr=1631
• tariqk 15y ago
  http://www.quora.com/Is-the-cryptocurrency-Bitcoin-a-good-idea/answer/Sean-Lynch-18469 http://www.quora.com/Is-the-cryptocurrency-Bitcoin-a-good-id... Jury's still out, but that's okay. All we need to do now is wait.
• jasonkolb 15y ago
  Some of the primary arguments he uses against Bitcoin are actually its strengths. Fundamentally, Bitcoins will be in higher demand than dollars because their value will continue to rise instead of fall. This means that goods and services as priced in bitcoins will be discounted compared to dollars, driving their adoption. You can see this same dynamic at work in black markets around the world where the USD is the de facto currency vs the highly unstable local currency. It's all about the "reserve currency", which is the currency that sellers around the world prefer to receive. If bitcoins are more attractive to sellers because of built-in deflation then they'll not only accept them but offer their products at a discount to get them. All of this creates an ecosystem and drives adoption, it does not make the currency a scam as he implies.
  • madamepsychosis 15y ago
    Correct me if I'm wrong, but it seems to me that at some point Bitcoin will stop its deflation. Once Bitcoin has mainstream success, if that ever happens, the value of a Bitcoin will stop growing and people will start spending Bitcoin. At some point, the value of a Bitcoin lost through hoarding will equal the value gained by new adapters.
    • anonymoushn 15y ago
      In the eventual steady state (assuming Bitcoin becomes popular and the number of coins created through mining becomes small compared to the number of existing coins), Bitcoin should constantly experience deflation as the world population continues to grow and per-capita productivity continues to increase.
      • prodigal_erik 15y ago
        By design, the rate of coin creation must asymptotically approach zero as the supply approaches 21 million. And every lost wallet of addresses (failed backup-restore, Scrooge McDuck died without writing down his password, whatever) will take coins out of circulation, causing some additional deflation.
• nl 15y ago
  His arguments are valid to some extent. They may not be fatal though. Taking each one in turn: 1) Seeding Initial Wealth This isn't really a problem. It's not very fair, but I don't think he argues that is actually a problem. 2) Built in Deflation This is a big, big problem. It seems the creators of Bitcoin have a philosophical disagreement with conventional economic theories that state that increases in money supply (and some limited inflation) are outcomes of a healthy economy. Unconventional thinking is fine, but the outcomes he predicts here are real problems. 3) Lack of Convertibility Yes, there is a problem here. It could actually be worse than the author suggests, because if state actors move against Bitcoin they could easily introduce high penalties for Bitcoin conversion. Even without that state actors, the dependability and predictability of convertibility is currently unacceptable. At the same time, it's possible this could be overcome. It is basically a matter of trust, and modern fiat currencies all rely on trust. Usually that is trust in a government (or system of governments in the case of the euro), but it isn't inconceivable that "the internet" could be as trustworthy as a government. People trust billions of dollars or transactions to operating systems and databases that were built by "the internet", so it is possible this could be the same. 4) When Something Goes Wrong, It Will Die This is the trust issue again. However, there is one additional point - if someone wanted to deliberately attack the currency it would be fairly easy to buy a large number of Bitcoins, then deliberately destroy them. Once that occurs, they disappear from circulation, which causes instant deflation.
  • richardw 15y ago
    Why is deflation a problem? Keep in mind that it's just one currency out of many worldwide. If inflation is required in the service of a country, nothing stops them from inflating. Same with point 4 - instant deflation would just raise the value of existing bitcoins, unless it affected the confidence levels in the currency. What would happen if somebody smoked half the gold world-wide? Deflation of gold, which most gold investors would love.
    • nl 15y ago
      Yes, you are right about deflation increasing the value of Bitcoins. That might make them a great investment. But Bitcoins are supposed to be a currency, not an investment. A currency needs to be used to transfer value, not sit around appreciating. If people sit on their Bitcoins as an investment then it will fail, because no one will ever accept it as a currency.
• jparicka 15y ago
  Qoura clearly inviding ycombinator....... sick!
• mycroftiv 15y ago
  The current design of Bitcoin is obviously not correct for the long term, and I am sure it will be supplanted by more evolved crypto-currency systems. There is absolutely nothing preventing people from taking the open-source code and creating an alternative "Bittoken" currency which changes problematic design elements such as the minting/issuance model. Given the rewards that have already accrued to Bitcoin early adopters, I am surprised other competing cryptocurrency networks have not yet already been created. Lots of people who wish they had started mining coins back in the days before GPU mining would be eager to get in on the ground floor of an alternative. Most problems with the critiques of Bitcoin like those in the linked Quora post is that they are debunking a straw man - the idea that Bitcoin is intended as a universal replacement for all other currency systems. By those standards of course it will fail. Looked at in another way, think of Bitcoin as something more like MMORPG loot. If people are willing to spend vast amounts of "real money" on items for their WoW character, spending that money on Bitcoins instead makes it seem like a sane investment rather than just flushing it away. I've mentioned before that I think governmental action to criminalize Bitcoin and analogous technology is an even more serious threat to long-term value. If there is one thing that really might make the world's governments team up to completely ban strong encryption, it is a potential threat to governmental control over taxation and currencies.
  • jasonkolb 15y ago
    Agree 100% with your last paragraph. The bank lobby, effectively an arm of the Federal Reserve system, is not going to stand by and watch any alternative currency gain traction. My guess is that they'll try to paint any legitimate alternative--Bitcoin or some successor--as a tool for terrorism and try to get it banished from the face of the earth that way.
  • coderrr 15y ago
    I think the most interesting aspect of this whole thing is, like you mention, how new bitcoin-like currencies are perceived, valued, and participated in. Will everyone start jumping into new bitcoin-like currencies in hope of massive bitcoin-style investment gains? Will massive bitcoin miners attack new currencies networks with their computing power to protect their or others' investments in bitcoin? Will new bitcoin currencies be like social networks where only one dominates at a time for many years? What would happen if a new gold-like element was discovered? "Red Gold" that had almost all the attributes of gold but it had a somewhat redish color and was actually a different element and it was proven to be of about the same scarcity worldwide. Would that halve the price of gold and would everyone jump onto red gold immediately or would it be shunned as not the real thing and be mostly worthless? I'd be interested to know others' insights on this.
• ap22213 15y ago
  I would love to see a currency like this work, and I would be interested in using one, but the major issue for bitcoin, for me, is that deflation is built into its core. Inflation is a good thing. Inflation encourages holders of capital to use it to invest in other things. That is, inflation encourages productivity. The inflation has to be relatively low, of course. Probably low enough to allow someone to retire without worry.
  • tomjen3 15y ago
    An inflationist currency is great if you are deep in debt or like cheap consumer credit. Deflation (or really constant value) means that those who save, build things and invest wisely will benefit. And no, I am not going to starve today, so that I can get marginally more bread a year from now.
    • ap22213 15y ago
      I don't know. Maybe. It seems like it would just create aristocracy. If I inherit a large sum of money, I have incentive to ensure that my large sum of money increases (or at least doesn't decrease) in value in the easiest, least risky way possible. If my wealth was in bitcoin, I wouldn't have to do much, except ensure that more people join bitcoin and that the bitcoin didn't disappear. Otherwise, I would just play warcraft all day, procreate, and then die and split my wealth amongst my children to continue the cycle. If my wealth was in an inflationary currency, I would have much more incentive to take on risk. Perhaps through that risk taking, I end up losing my wealth, and others gain. Or, perhaps I gain more wealth. At least I have incentive to take productive action.
      • njs12345 15y ago
        Of course, most forms of wealth people have aren't inflationary anyway - the very wealthy tend to have little in terms of actual liquid currency and more stock and property. It has been argued (http://en.wikipedia.org/wiki/Inflation_tax http://en.wikipedia.org/wiki/Inflation_tax) that inflation can be thought of as a regressive tax for this reason.
• dynosaur 15y ago
  To be honest, Cohen sounds envious of the early adopters.
• spot 15y ago
  When he showed the graph of the number of tweets vs the number of bitcoins he lost me. This is an apples and oranges comparison. http://bitcoinreport.blogspot.com/2011/01/bitcoin-transactions-per-day-and-other.html http://bitcoinreport.blogspot.com/2011/01/bitcoin-transactio... It's just FUD.
  • larelli 15y ago
    What he wanted to point to with the twitter stats is the concept of exponential growth of economic (and most other complex) systems.
    • spot 15y ago
      and if you look at the transaction graph for bitcoin it could just as easily be the start of the twitter graph.
      • 3am 15y ago
        He's talking about the amount of currency in circulation, not the aggregate transaction volume. And BitCoin cannot follow the Twitter graph, because the money supply growth is controlled algorithmically. You are incorrectly interpreting the graph (which, to be fair, is a bad analogy).
        • spot 15y ago
          right it's a bad analogy (apples to oranges) that's what i said.
  • krschultz 15y ago
    It's FUD because you misinterpretted one statement out of a multi-hundred word essay?
    • spot 15y ago
      it was one of the few quantitative things he said the rest was emotional and obviously fear based.
• weinerk 15y ago
  Since this post - the value of Bitcoin went from aprox $2 to over $10 :-))))))))) proof: https://mtgox.com/trade/megaChart https://mtgox.com/trade/megaChart
  • jacques_chester 15y ago
    Since that idiot last poo-pooed tulips I've made an absolutely massive return. My retirement is assured! I'm thinking about buying shares in the South Sea Company next.
    • anonymoushn 15y ago
      It is worrying to me that the public exchanges have so few bids and offers most of the time, and that it is extremely common for people to deal in these things privately to avoid moving the price.
      • sbierwagen 15y ago
        Your first point is real and valid. Mtgox is neat, but has quite low volume compared to pretty much any other forex in the world. The second point is specious. How, precisely, do you propose to outlaw private deals, without using universal surveillance, or trained psychics?
        • three14 15y ago
          The GP doesn't want it outlawed, just doesn't want people to specifically choose to have transactions privately for fear of moving the price, because that's a sign that the market isn't healthy. A healthy market should be resilient against normal trading.
      • Kadin 15y ago
        This is an issue right now because it's much easier to go long on BTC than it is to go short. Since virtually everyone in the market is long BTC, they desperately want the price to go up, rather than down. This creates an incentive to do OTC (some might say "under" the counter) trades rather than go through MtGox, particularly if the true market rate is less than what MtGox is showing. However, if it was easier to go short BTC then you'd have people who wouldn't be afraid (and would in fact very much like!) to see the market price go down, and would be more than happy to see declining prices show up in the public order book. There's a lot of strange behavior in the BTC market and I think a lot of it is because you can't trade it like most currencies or even commodities. You can't easily go short, you can't trade futures, etc. Allegedly MtGox and others are working on those issues, but it's hard to do significant margin and futures trading where everyone is anonymous. But the sooner they make other forms of trading available, the sooner I think we'll see the unrealistic bullishness calm down.
• lorax 15y ago
  Talk about an overly dramatic headline, the "post that killed Bitcoins"? but the submitter isn't even sure if the arguments are valid? (And has hacker news turned into bitcoin news? it seems like there are several bitcoin links a day)
  • jacques_chester 15y ago
    HN goes in cycles. (This is a trivial observation, since pretty much everything goes in cycles). * Subject X is broached in an exciting blog post. * The submission receives massive upvotes and hundreds of comments. * Subject X simmers. Soon various HN link-targets (AVC, that Steve fellow, TechCrunch, the other guy here called Jacques) begin weighing in, netting their initial submitters still hundreds more karma. * Before long, karma farming means that the front page is overrun with links to posts covering Subject X from every conceivable angle. "Why Subject X is the Future". "Why Subject X is a fad". "Launch a Subject X statup right now!". "Subject X is retarded, here's why". * Then, one day, somebody posts about Subject Y.
    • hugh3 15y ago
      In this particular case, the whole process is made easier by the fact that bitcoin enthusiasts form a self-organizing PR machine.
  • Duff 15y ago
    It's a PR campaign.
  • trotsky 15y ago
    HN has turned into bitcoin news because bitcoin speculators (enthusiasts if you'd prefer) are constantly spamming social media and other outlets to drive the price up. Hopefully sometime soon HN editors will see their way to giving it a manual penalty similar to politics, or re-evaluate the definition of a voting ring to include this minority spamming and voting.
    • weavejester 15y ago
• dogas 15y ago
  I think the other article (http://apenwarr.ca/log/?m=201105 http://apenwarr.ca/log/?m=201105) written about bitcoin failing is more detailed and contains potentially more plausible ways of how bitcoin can fail. The openwarr article refers to potential failures with the SHA256 backbone of bitcoins. "With bitcoin, a single failure of the cryptosystem could result in an utter collapse of the entire financial network. Unlimited inflation. Fake transactions. People not getting paid when they thought they were getting paid. And the perpetrators of the attack would make so much money, so fast, that they could apply their fraud at Internet Scale on Internet Time.)" IANA cryptography expert. Is this feasible in the way the author predicts? Could SHA256 be cracked quickly, a la MD5? My gut is that it won't be able to, but I can't back up my argument.
  • nodata 15y ago
    I'm definitely not a crypto expert, but the way I read it was simply that if sha256 gets defeated, bitcoin is screwed. I don't so why it couldn't be defeated, most of the other crypto systems which were going to last us for centuries got defeated..
  • sbierwagen 15y ago
    This is more along the lines of "SHA256 has not been proven to be secure, therefore, it may be cracked." It would require novel discoveries in mathematics to do so.
    • bad_user 15y ago
      Actually many cryptographic algorithms that got defeated, haven't been defeated with "new discoveries in mathematics". Also, you can't really prove that such an algorithm is secure. You can only prove that it exhibits certain properties that make it more secure versus other algorithms. Judging by how cryptographic methods got defeated in the past, I think it's safe to assume that it's only a matter of time.
      • sbierwagen 15y ago
        Also, you can't really prove that such an algorithm is secure. Incorrect. One Time Pad encryption is provably secure. (Proven by Claude Shannon, no less; as in, the guy who invented information theory.) It is impossible to decrypt if you do not have the key.
• vladd 15y ago
  Bitcoin is a marketing-based currency in the sense that it has no real value besides the fact that it was the first currency with cryptographic properties that gained widespread adoption: if someone would take the code and fork it into an alternative ("Webcoins"), the intrinsec value of a Webcoin would be zero (unless it also found a way to gain market share or early adopters). That's very similar with a Ponzi scheme, where you need early adopters to pour money in, so you can have a positive cashflow on which to iterate with other customers. But otherwise you don't have an underlying asset to sustain the value.
  • powertower 15y ago
    > that gained widespread adoption No. What it has gained is: speculation.
    • hugh3 15y ago
      Exactly. If I asked the first thousand people I passed on the street what a bitcoin was, I doubt any of 'em would be able to tell me.
  • owenmarshall 15y ago
    >But otherwise you don't have an underlying asset to sustain the value. That's the biggest problem with Bitcoin, I think. Now, if I could purchase more goods and services with Bitcoins, this might mitigate the risk of using it. But as of now, not many retailers accept it. As a result, the Bitcoin market is being driven solely by speculation.
  • util 15y ago
    It seems like this in particular applies to most government-issued currencies as well (except that they have very good marketing and market share). Each currency itself has no intrinsic value and depends on "marketing" (reputation of the government minting it) and market share (number of places accepting it). If people lose faith that a government will do a good job managing its currency or even think that the government will disappear soon, the worth of the currency (in terms of what people will give you for it) will probably fall.
• rglover 15y ago
  The problem that Bitcoins will have in gaining traction is inherent in this post. Experienced economists and financial experts will stomp it into the ground. Granted, this post made a lot of strong points, however, it was a bit of a witch hunt at the same time. To call Bitcoins a scam outright is the sign of a person who may not have tried putting money into the system to see how it actually works. As with anything new that might present problems, I guess you'll just need to practice caution. Bitcoin isn't dead because of this, though.
  • useflyer 15y ago
    Economist/founder here. And somebody who has not yet commented on bitcoins. Watching otherwise intelligent people adopt these is hilarious. I won't speak to the tech side (I'm sure its strong). Bitcoins are, in fact, an outright disaster/scam. 1 - as highlighted by the author: bitcoins are equity positive in their creation. we can trade with seashells as the medium (painted red so distinguish them as special currency, of course), but every time somebody goes to the beach with a bucket of paint, they get rich. money creation in its traditional sense (generally, except countries with serious issues) does not create equity, it only increases liquidity. major difference. tomorrow we could all adopt a new currency, but we would generally have to back it with something else of value (sort of authors point #2, weakly explained). bitcoins are the creation of 'free money' out of thin air. we can assign it value (if we dupe others into taking it for goods/services), but its value-less 2 - the computing power devoted to this game is completely wasted. look at this from 30,000 feet -- all of these smart people with smart computers are crunching numbers on a frivolous exercise and not for something productive. total deadweight loss bitcoins are the equivalent of beanie babies. you could buy a car with those, and they became currency, albeit very briefly. but the inherent value is that of a stuffed doll. bitcoins have a negative inherent value
    • Kadin 15y ago
      > all of these smart people with smart computers are crunching numbers on a frivolous exercise and not for something productive. total deadweight loss That's true of gold mining as well, insofar as the price of gold is significantly higher due to speculation and its use as a currency and store of value than it would just for industrial uses (see comparisons to ruthenium). This increase in price drives a whole lot of mining that wouldn't otherwise occur. But the whole reason for allowing Bitcoin "mining," I think, is because it provides an incentive to early adopters, solving what would otherwise be a chicken-and-egg problem that might be extremely difficult. Other digital currencies (e.g. Flooz) used various marketing gimmicks to spur adoption, but Bitcoin's method is much cheaper.
• cturner 15y ago
  Trollish headline. One fair non-structural criticism, a weak, temporary criticism and two things billed as criticisms that aren't. 1) Early adopters. I couldn't find a point here. I think he's saying that it's unfair that some people get in early. But in the current system, it's unfair that government (through tax law and control of force) mandates that you use a form of money that doesn't function well as a store of value. Bitcoin wins here - it has a bootstrap disadvantage, and I'd expect that to diffuse. 2) Deflation. There's a creed in mainstream economics that deflation is bad, repeated here. "if your money is getting predictably more valuable, why would you want to spend it?" It's just false. Would you buy a computer today if you can buy a more powerful one by waiting until tomorrow? People do. Mainstreamers like the leaves-on-the-fire effect of inflation and also like to overlook the fact that stimlus impairs cyclic corrections and detracts from the role of money as a store of value. 3) Convertability. It's valid to criticise the use of bitcoins on this basis, but it's not a systemic problem. If we had a period of high inflation, it's reasonable to expect people would trust finite-supply bitcoins over an unending supply of newly-minted, inflating notes. 4) "When Something Goes Wrong, It Will Die." I found the logic here non-sequiter. Bitcoin will be tested but from what we know about it at the moment, it looks solid.
  • junklight 15y ago
    I have no idea if it is solid or not but statements like: "Bitcoin will be tested but from what we know about it at the moment, it looks solid." worry me. Its easy to make things for ideal conditions. If bitcoin becaomes mainstream the stresses will be incredible. Where there is money to be made there are smart people looking for an angle and leverage. Even governments suffer: http://en.wikipedia.org/wiki/Black_Wednesday http://en.wikipedia.org/wiki/Black_Wednesday This is an experimental mechanism. It is not based on main stream economics and it has no government or bank protecting it with regulation or defending it. The originators may have hit upon something new that is solid and can stand on its own two feet or they may have initiated the construction of a tower of cards. Even if you are a full on supporter of bitcoin you would be mad to assume that it doesn't have a fatal flaw at this stage.
  • deleted 15y ago
    [deleted]
• njharman 15y ago
  Not a fan of bit coin. Convertibility is the only issue in author's diatribe. Author has not understood several concepts re bit coin. Bc is not a normal currency, it's not reserve currency. It's much more like a stock that's tradable without exchange. Limited quantity, market set price, Mining is not free. When something succeeds early adopters always mKe out big. It's their payoff for risk.
• foxhill 15y ago
  having just read the article, it's apparent that the author has misunderstood, or entirely does not understand the principles behind what's going on. the number of new bitcoins, for instance, that are allocated for a time period, is fixed, and from what i understand, is allocated to users by the proportion of time spent "mining". ie, 10x more mining on everyone's part does not mean 10x more coins mined. secondly, the idea that a currency with a finite supply is a bad thing, is just rubbish. gold backed and silver backed currencies have all existed at one time or an other. some would argue that they have more benefits than fiat currency. his final point is almost entirely non-sensical, and is related to the part before. during the bank bailouts in the financial crisis (which again, some would argue we are still in the midsts of), the bailouts created money out of air - devaluing the currency for everyone, increasing inflation, and THEN passed the debt to tax payers. how this is construed as a benefit for citizens of respective governments is beyond me. during recessions, the poor get poorer and the richer get richer. money doesn't disappear, it gravitates to those that already have it. his 3rd point is the only one that comes close to making sense, alas, it's not really an issue. people are their own converters. how much someone will pay for something is entirely up to them, and whilst i don't see there ever being an extra column in XE.com, that's really neither here nor there.
• jcr 15y ago
  > When the federal reserve "prints money", it doesn't just mail million-dollar checks to random Americans. It does one of two things. It either (a) purchases some other asset [generally US treasury bonds] on the free market, thereby injecting more cash into the system than there had been before, or (b), loans money to a bank, who will then loan it to other people who will then spend it. The part (a) about "purchases" is not specifically incorrect, but it is misleading and shows the author may not completely understand how things work. Typically the federal reserve SELLS treasury bonds. They are sold for less than face value with a promise to pay the full value on the redemption date. The difference, of course, is the yield, or more commonly the "interest" earned by holding the bond to maturity.
  • tatsuke95 15y ago
    No, money is created when the Fed purchases an asset. Generally, they do so through a repo, whereby they sell an asset with the intention of buying it back with interest on a very short term.
    • jcr 15y ago
      Thanks. I think I'm hung up on the term "creating." What I described is typical fed borrowing through selling bonds.
  • cmelbye 15y ago
    Money supply is increased by purchasing bonds, reducing the discount rate, or lowering the required reserve ratio.
• Vivtek 15y ago
  It's a pyramid scheme, just dressed up in high-tech, vaguely libertarian clothing. That's why sensible governments (not the "bank lobby") are starting to ban it - it's inherently a bad idea (unless you're an early adopter - just like any pyramid scheme). Bitcoins are no different from tulip bulbs.
  • awt 15y ago
    Why is it inherently a bad idea? Why is it a pyramid scheme?
    • achompas 15y ago
      Because Bitcoins are being suggested as an alternative to fiat money. However, given their current rate of appreciation, Bitcoins are actually an investment, not a currency. What is their inherent value, then? Commodities (whether precious or industrial) can be used in production or for luxury goods. Equities generate profits, which are subsequently shared with investors. What do Bitcoins do? Nothing.
      • weavejester 15y ago
        What do Bitcoins do? Nothing. That's not true. Bitcoins can be securely transferred between accounts without the need for a centralized broker. That's not "nothing".
        • achompas 15y ago
          So their unique value comes from private transactions...but there's only a finite supply of bitcoins? How many of these transactions can actually occur in 2013-2014, when every bitcoin has been mined and their value is skyrocketing?
          • weavejester 15y ago
            The amount of transactions that can take place is unlimited, and even though there is a maximum of 2.1 million coins, each coin is divisible to 8 decimal places, giving 2.1 quadrillion units of currency. Also, mining won't be completed this century, although the rate at which coins are generated decreases over time.
• Vlasta 15y ago
  Deflation is the big big big problem. The only bigger problem is that many people in the bitcoin community refuse to consider deflation a problem - some even deny it is happening. The consequence is that bitcoins are good for investors and speculators, but bad for actual sellers and buyers. People just hoard bitcoins, and sellers are constantly lowering their prices every day while no one buys from them, because who would buy in a deflation? Bitcoin bubble will burst unless they manage to give incentive to actual sellers and buyers. I am a fan of digital currency and currently accept bitcoins, but I am considering to stop doing that, unless bitcoin changes from investing commodity to a real currency.
• ignifero 15y ago
  Treating bitcoin as a currency is kind of wrong. It's a commodity with limited and predictable supply, like gold for example. You wouldn't call it a pyramid scheme, just like you wouldn't the gold market a pyramid scheme. His points against its use as currency are sound.
  • paulgb 15y ago
    It's a commodity designed to only be useful as a unit of trade. How does this differ from a fiat currency?
    • ignifero 15y ago
      By definition fiat currency relies on governent regulation (and an internet protocol cannot be considered representative government, unless you create a committee to oversee the protocol, in which case we're back where we started).
• pbhjpbhj 15y ago
  I'm wondering if this is an attempt to force down the bitcoin trading price - not necessarily by the author but possibly by the publicists. Force down price, buy up bitcoins, profit. It's like playing at being a city trading firm.
  • pbhjpbhj 15y ago
    HN has gone to the dogs I think. What in my idle wondering was so deserving of down voting? It should be impossible to downvote below 0 without an upvoted response.
• doctororange 15y ago
  Wow. Have to disagree with every one of his points. Total link bait here - I really doubt the success or failure of bitcoin will depend much on what one guy on the internet reckons. I love that his final argument is just "Something will go wrong - I dunno what, but something will." Mm. Top notch.
• pnathan 15y ago
  I think his arguments sum up to, "It's not a government currency", and represent a fear of the unknown. Further, after I spent some time reading economics books, economics sounds nothing so much like some people with suits on giving opinions, and then having their opinions proved wrong, then claiming that people should still listen to them.
• motters 15y ago
  I agree that deflation is probably the biggest criticism of Bitcoin. The finite supply means that there's more of a temptation to sit on your heap of gold rather than to participate in transactions. This could lead to the currency becoming increasingly static and difficult to obtain over time. A better system would be to have a modest but constant rate of inflation, such that there is an incentive not to stash your cash for too long.
• acslater00 15y ago
  Hi, I'm Adam, I wrote this answer on Quora. Against my better judgement, I'm going to wade in here and make a couple of clarifying points. 1 - Scam. I regret using the word "scam" in my answer, because I think it overshadows the broader point I was making about Bitcoin's severe structural design flaws. After watching the community react to this debate, I'm pretty confident that the average bitcoin supporter is not intentionally defrauding people. Consider my inflammatory rhetoric redacted and apologized for. 2 - Volatility. Since April 1, the average change (up or down) of the bitcoin/dollar exchange rate has been just under 8%. That's unprecedented. It's a clean order of magnitude more volatile than the stock market, which is considered a "volatile", "risky" class of asset. It's two orders of magnitude more volatile than a legitimate currency pair like the Dollar/Euro. Now, it's all fun and games while the exchange rate is basically trending up, but if that trend reverses look out below. 3 - Liquidity. All of that volatility comes on an average bitcoin volume of something like 20,000 per day. If I put in an order for $15,000 worth of Bitcoin right now, I'm pretty sure I could move the market between 5% and 10% to the upside. It's probably even worse to the downside. Call me a skeptic, but with that kind of easy price manipulation, I'm not quite ready to denominate my paycheck in Bitcoins quite yet. 4 - What It Means. A number of people criticized me for not understanding that Bitcoin is designed to be complementary to traditional currencies, and that analyzing it as an alternative is invalid. A number of different people criticized me for not understanding that Bitcoin is a different kind of currency, which will inevitably replace traditional fiat money, and that analyzing it as a component of the fiat currency system is invalid. The Bitcoin community is diverse, and no one really knows what this is supposed to be yet. That's totally fine with me. I can assure you I don't have any skin in this game. My money is in LinkedIn stock.* But I've studied world currencies extensively (and trust me, a normal currency debate is not this lively). So, I don't know what Bitcoin will end up as, but I know two things with certainty: a) that it's unstable as a currency b) that it's currently behaving as a speculative vehicle in an aggressive bubble * That was a joke
  • achompas 15y ago
    Thanks for posting here and on Quora. As someone with an economics background, it's nice to hear a sane explanation based on fundamental theory. I'm just surprised people aren't considering Bitcoins from a supply-demand standpoint. Why purchase Bitcoins in the long run unless you're laundering money or hiding from the government?
• marckremers 15y ago
  All that article did for me was make me want to become an early adopter and download bitcoin mining apps.
• peteretep 15y ago
  These points are weak - there are other weaknesses of BitCoin, but these aren't really them. Almost every issue he raises attacks BitCoin as a medium of exchange (which it doesn't need to be) rather than as a medium for storing value. Taking them one at a time: > Severe Problem Number 1: Seeding Initial Wealth He doesn't really explain why this 'problem' is a bad thing. There is a limited supply, and there needs to be a distribution system. While this one may not be perfect, it doesn't cause any systemic weakness in the system. Early adopters will do well, yes. But the degree to which people mine or buy bitcoins now is the degree to which they think they'll be valuable in the future - bitcoins already have a price. People who have mined them will sell them to you. Nothing stops you purchasing bitcoins now if you believe the price will go up. This is how markets work. Hearing someone complain about it is like hearing someone complain that people who buy assets cheaply on the stockmarket will make a significant return. > Severe Problem Number 2: Built in Deflation A bad thing if you're trying to replace a country's currency system with it, and excellent thing if you see them as a store of value. This is the same as people complaining that any other asset deflates over time. > Severe Problem Number 3: Lack of Convertibility This is the closest point he has to being right. Lack of convertibility is a current problem, but economics should solve that. All you need in order to convert your bitcoins is a person who is willing to trade. To have an efficient market, you need an exchange. Here's the crux: bitcoins have a value as long as someone is willing to buy them off you. His key point here seems to be that 'no one is completely invested in the long-term success of the system' - yes. This is also true of your MSFT shares. No-one is guaranteeing that they will be worth anything in the long run. > Severe Problem Number 4: When Something Goes Wrong, It Will Die Perhaps. I went for dinner with some Fx quants last night. One of them brought up this point, and then they all laughed and said "And that's when you invest heavily in it". All assets change their prices based on bad news - most recover again and people who doubled-down at that point make money.
  • cube13 15y ago
    Re: Deflation >A bad thing if you're trying to replace a country's currency system with it, and excellent thing if you see them as a store of value. This is the same as people complaining that any other asset deflates over time. Currencies aren't investments. They have little to no inherent worth. They're the medium used to make investments, and the medium that investments pay out to the investors. If you're approaching Bitcoins as an investment asset, you're missing the entire point of creating a new currency. Assets, on the other hand, have inherent worth. Gold is used for jewelery and in electronics. Fine art's worth is it's existence itself. BTC does not have any worth past the confidence in the other currencies used to exchange for them. The fundamental problem with deflationary currencies is that there is no risk in keeping it around, which removes a lot of the incentives for investing. People are encouraged to not use BTC because they will appreciate more doing nothing than actively going out and investing it. Instead, they'll hoard it until the point where it becomes too expensive for people to buy. At that point, there will be a run on the exchanges, which will kill the entire worth of the economy around it.
• brad22 15y ago
  balls. i'd rather sink with a digital economy than a follish one. google for "stable economy". you get no useful results.
• mchusma 15y ago
  I think each of these arguments do not hold up. Most people have already discussed but I will summarize. Severe Problem Number 1: Seeding Initial Wealth This problem is similar to Gold Miners or anyone initially to an asset class. You already retracted your scam comment, so thanks. Remember, governments are currently seeding banks and itself with wealth through inflation. Its a different set of winners based upon market forces. Severe Problem Number 2: Built in Deflation The money supply is actually inflating (slowly). People will make educated, market based choices about how to act with their money once the currency settles down. That will likely be assigning higher value over time to Bitcoin. The Euro or Dollar have the opposite, and many would argue much worse problem: you don't want to hold them because the issuing government slowly saps value through effectively built in inflation. Severe Problem Number 3: Lack of Convertibility Try trading government currency in a collapse situation, you will encounter problems. Right now, Bitcoins are roughly as easy to convert as any other currency. Bitcoins are inheritly no more or less convertable except for the lack of current market makers (a good point you brought up). Severe Problem Number 4: When Something Goes Wrong, It Will Die Look at Zimbabwe to see an example of governmental currency collapse. Any currency can die. People used seashells at one point, they died. I'm not sure Lyra or Franks are worth anything today. Bottom line: Yes, Bitcoin can fail (so can any other currency). It is earlier than other currencies in its lifecycle, so has a different set of risks. Is there speculation going on right now, almost surely. Bitcoins appeal to people because it is not government based, electronic, and low cost. Many of the problems you note are just different problems than existing currency, for better or worse.
• TerraHertz 15y ago
  I've only recently begun paying attention to Bitcoin, and am still evaluating. Have yet to read the technical details, for instance. So I have nothing to say on the validity of the technology. However I can offer some comments from a political perspective. I find the timing of Bitcoin's appearance rather interesting. Here we are, entering into a whole mess of interconnected monetary crises - * Crisis of confidence in the ubiquitous fiat currency systems, with ALL the world's currencies in an inflationary race to the bottom. A race that will very likely blow up into hyperinflation on the way to demonetization, followed by some as-yet unknown replacement monetary system. * Crisis of legitimacy of the US Federal Reserve Bank. Which is neither federal, or a reserve, or really even a bank. It's actually a cartel of private bankers; many would say a criminal cartel. * An ongoing raging battle between fiat currency in general (unbacked by anything other than 'faith') vs traditional stores of wealth - gold and silver. The forward trenches of this battle lie in the bullion vaults of COMEX and the LBMA, and the bullion holdings of the SLV and GLD funds. Right now, the Silver Liberation Army fights to expose the current economic order as the paper illusion it certainly is. When COMEX inevitably defaults (because they have less than one hundredth the actual metal they should have to back all the paper silver and gold they have sold over the years to suppress precious metals prices), then silver and gold will suddenly resume their rightfull place as the only reliable, inviolable store of value. And thus actual currency, or backing for currency. Now, there's a method for manipulation of mass psychology called 'well poisoning'. It goes like this. If you are in a position of power and control, and you become aware of a concept or information that if it became widely accepted could threaten your position, you 'poison the well' from which that concept could rise into public awareness. You do this by introducing very similar concepts, but all with fatal attachments or flaws. This conditions people to automatically reject anything in that whole class of concepts. For example, if you know someone has gone to Kenya and obtained a copy of a genuine birth certificate of interest, you whip up a series of obviously faked 'Kenyan birth certificates' and saturate the opposition media with them. Result: no one wants to look at any more damned fake birth certificates, especially not one that's being offered on ebay. Heck, a while later you can even officially release your own grossly fake certificate, and still no one pays attention! So, supposing you are the rulers of the global fiat monetary/banking system, and being able to print as much of that virtual funny money as you like is working very nicely for you. Then a small problem arises, as the fundamental systemic instability of 'never enough money to pay it all back plus interest' has unprotected sex with assorted hideous creatures from the banking black lagoon (derivatives, credit default swaps, collateralised debt obligations, mortgage/title/MERS nightmare.) All of a sudden you are up to your ears in Hellspawn like massive naked short positions on precious metals, PIIGS running wild and Vikings seeking banker blood, mark-to-market guillotines, the head of the august International Maid Fxckers organization casting aspersions about the gold in Fort Knox (or not), and your global reserve currency about to go pooof! What to do, what to do? Worst of all, there's this damned idea of a non-fiat currency raising its head again. Curses, you thought you had that one permanently dead, thanks to that fast deal you did back in 1913, after a private chat among friends on Jekyll Island. And why _shouldn't_ your banks create the national currency and lend it at interest to governments and the peasants? Stupid idea that Constitutional rubbish, about the government issuing silver money, interest free. Ugh! Where's the profit in that? Not to mention the inability to steal virtually everything over time via inflation and unpayable compounding interest on the entire monetary base. However... you and your banking mates haven't quite finished God's Work of stealing absolutely all assets from everyone else. Needs a bit more time. But here's this bloody idea of a specie-based currency popping up again all over. States declaring silver coins valid as money, what next FFS! Time for some well poisoning! And fast! What you (as an Elite banker) want to do, is set up something that is going to badly burn all the early adopters of alternate currency. Something that will make them wish they'd never seen or heard or even dreamed of anything but nice safe paper dollars. Distract them asap from any thoughts of buying (shudder) actual physical silver and gold. Definitely you want to minimize the numbers of these ... financial terrorists ... who end up holding an ounce of physical silver or gold in their hand for the first time and having that no-return moment of 'AH HA!' where they suddenly, at gut level understand what _real_ money is. Also preferably something that will brand them on the forehead as currency outlaws, all the better to round them up and send to the camps if it comes to that. Enter, stage left... Bitcoin. Riding in to save the day. I don't think so. There are a few other concerns I have, besides the awfully suspicious coincidence of timing. Firstly, there's this thing about digital patterns and copyright, intellectual property rights and so on. I'm solidly in the camp that says you can't own information, and efforts to legally enforce ownership of information are fundamentally incompatible with deep principles of the Universe. Data is like Time, Matter, Energy and Space - it's a component of reality, with its own unalterable properties. One of those properties is that it can be duplicated indefinitely, without data loss. It can also be very easily destroyed, leaving nothing. It's a huge topic of course, with sub-issues like secrets, lies vs truth, cryptography, the difference between data and knowledge, the philosophy of data/knowledge sharing and its social benefits, etc. But as it relates to Bitcoin, I find myself very, very uncomfortable with the concept of founding a medium of exchange on pure data - both infinitely copyable, and utterly ephemeral. Regardless of the soundness of the cryptographic methods, it sounds to me like asking for trouble. And that trouble might possibly have been intended from the start. It might hurt, a lot. Particularly if it's the fiat-banker ancien régime holding the other end of the cane, and it's you with your Patriot Act pants around your ankles. Then there's a few more practical matters, that one shouldn't overlook these days. * How do you bury Bitcoins in your backyard or out in the bush somewhere? (Silver & gold - no problem.) * More to the point, even if you can somehow bury them, how will they be any use when someone digs them up in 10, 50 or 200 years? (Silver and gold - no problem!) * When the police, BATF and FBI break down your door without a warrant, trash your place and take your computer, do your Bitcoins go with it? Ditto for burglars without badges and guns. (Silver and gold - at least you have some chance of hiding them.) * TSA, airports, laptops and latex gloves. Where do Bitcoins go in this scene? * Is it possible to melt down Bitcoins and cast bullets from them, and does Bitcoin ammo work against zombies, vampires and other flesh eating ravenous menaces? * That '21 million Bitcoins max' figure. What?! Regardless of how that limit is set, and how dollar-Bitcoin exchange rates are determined, that figure tells me this was never intended to be a real currency, not even for one small nation. Less than one Bitcoin per person? Huh? Bitcoin was clearly designed as a 'crippleware demo', as opposed to a workable system. But a demo of what? Of pain-bringing, I suspect. (Silver and gold - there's enough to serve as a global currency. That there are two kinds, with about a 17:1 natural abundance ratio helps a lot too.) * Quantum computers. Are now commercially available. How will this affect Bitcoin? * Wishful thinking. Yes, we the people of the world do desperately need some medium of exchange that isn't owned by the banker and government flesh eating monsters. It would be great if it had all the good features of Bitcoin - electronic, anonymous, untraceable, unstoppable, untaxable transactions. This doesn't mean we should leap joyfully at Bitcoin. Take a very close look, for strings, hooks, bear traps, punji-pits, etc. It's a mean world, and there are powerful, wiley forces who'll do anything, ANYTHING to preserve the existing fiat banking system a while longer.
• richcollins 15y ago
  Question: if your money is getting predictably more valuable, why would you want to spend it? Answer: marginally speaking, you wouldn't. This argument never made any sense to me. You can't eat money, watch it for entertainment ... etc. You might be more inclined to save money that you would otherwise have spent carelessly to avoid its loss of value, but how is this a bad thing? Wouldn't our economy be stronger if the effort we spent was on making things people actually want / need instead of making things people kinda want because their money is burning a hole in their pocket?
• Dove 15y ago
  That's an excessively linkbaitish title. Please use original titles.
• mrerrormessage 15y ago
  As I write this, the value of bitcoin is at an all-time high. I dispute that this article has actually "killed" bitcoins.
• joeycfan 15y ago
  Totally wrong. I write this guy off as clueless.
• pathjumper 15y ago
  None of his arguments are invalid save the "early adopter wins" scenario. On every other count he either misunderstands current banking systems, bitcoin, presents a pseudo-argument, or some combination of all three. Honestly, except for the early adopter winning part, the whole thing reads like a shill post designed to do nothing but defame bitcoin. He even calls it a scam. By that measure The Fed is the biggest scam that ever invented if you look at who receives the "printed money" first. They are the "early adopters" in his "bitcoin is a scam" analogy. And they are still in power. So does that really make it any worse?
• socrates1024 15y ago
  The most important lesson to learn from the Bitcoin experiment is that 'money == speech' on a fundamental, cryptographic level. Anonymous speech (i.e. using public keys) enables anonymous trades with other people. Transactions are signed and can't be forged, just like publishing a blog post signed with your public key. And a distributed network can be strong, just like bittorrent or Tor. Regardless of whether the current implementation and economy surrounding Bitcoin succeeds (I think it will), this is without a doubt how our future information-enlightened society will develop
• richcollins 15y ago
  But Bitcoin is not designed to be a functioning currency, it's designed to enrich early adopters. Again, that is why it is a scam. Period. How is this different from our current currencies, which first go to banks that then use fractional reserve to lend out money that they don't have. At least with Bitcoin anyone can mine them.
• seles 15y ago
  Everyone keeps debating whether or not the built in deflation is good or bad. But... how does bitcoin have built in deflation? It only has a decreasing rate of inflation, which can't go negative (since bitcoins aren't destroyed). So assuming the demand for bitcoins becomes constant, their value will be constant.
• hippich 15y ago
  Not sure how it killed bitcoins, but while most of authors points are valid, conclusion - is not. People get in to this "Ponzi schema" exactly for reasons pointed by author - deflation currency, unable to track down, limited supply, free/crazy market value. They look for such currency. Why it could not co-exists with rest fiat, gold, game currencies? If bitcoins will pass test of time, eventually its exchange rate to major currencies will settle down. But for now when accepting payment in bitcoins in my store I immediately convert these to dollars on mtgox.com, since I do not know will tomorrow exchange rate be +50% or -50% =) and I need to pay my supplier in dollars, not bitcoins.
• jongraehl 15y ago
  All that matters it the ratio of nominal risk-free return to inflation. I guess nobody offers depositors of bitcoins a risk-free return in bitcoins. If there's a positive risk-free interest rate available to depositors, and inflation is less than X, then you effectively have deflation already. TIPS sometimes offer this for $USD (depending on demand and whether the measure of inflation they're indexed to is fair). Nominal price stability is a psychological benefit only (albeit important).