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This is naive in the extreme. We all live in nation-states and are required to abide by their laws as a result. Though it's theoretically possible to separate

This is naive in the extreme. We all live in nation-states and are required to abide by their laws as a result. Though it's theoretically possible to separate currency from governments, if that's not what the governments want, it will never be legally permissible. As it is, Bitcoin operates in a legal gray area. That's not going to improve. Most of the VCs I talked to about FaceCash refused to invest because they were afraid of the regulatory implications. But throw in some bad economics (verified as such by Paul Krugman, see http://krugman.blogs.nytimes.com/2011/09/07/golden-cyberfetters/ http://krugman.blogs.nytimes.com/2011/09/07/golden-cyberfett...), a catchy buzzword or two, and some political philosophy, and you've got yourself an investor? Venture capital is even more broken than I thought.

dabeeeenster 15y ago
What about gold?
omarchowdhury 15y ago
The popularity and usage of Bitcoin shows there is an emerging trend in the currency and payments market: digital peer to peer crypto-currencies. Wilson is only making a statement that this trend has materialized, and he is excited to see where it would go -- if any viable businesses spring up based on these currencies it would be a smart idea for him or other VCs to invest. Why? Well, Wilson at least is an investor in Internet products, and seeing as how these currencies are looking to establish themselves in a global market (Internet) whose GDP is in the trillions... you get the point. Though, I do think you are biased. Obviously.
kiba 15y ago
So you're jumping to conclusion based on what one venture capital investor says he will invest in?
- thinkcomp 15y ago
  I've talked to about sixty, and Fred Wilson's post exemplifies many of the patterns I've observed throughout. So no, I wouldn't say I'm jumping to conclusions.
badclient 15y ago
Most of the VCs I talked to about FaceCash refused to invest because they were afraid of the regulatory implications. Having followed your comments on this topic for a while, it seems just as plausible that VCs did not invest in FaceCash because they believed that you cannot take on the challenges(regulatory or otherwise). VCs invest all the time in enterprises that are in the gray area because the potential upside negates the obvious risks.
- thinkcomp 15y ago
  I think you have more of a problem with me than any of the VCs I talked to. Besides, I'm the only one suing the government over this issue, so the hypothetical case you reference wouldn't even be correct.
  - badclient 15y ago
    Willingness to sue the gov doesn't say much about your ability to take on a challenge. In fact, your inclination to litigate may well have scared VCs who'd rather you get traction with your product even if it means operating in a gray area and litigate when forced. I'm sure if payPal tried to meet every rule and take on what they deemed as unfair laws in their early days they'd never be able to focus much on their product.
    - thinkcomp 15y ago
      I didn't even think about suing California until months after meetings with VCs, so your implications are false. PayPal had to scramble at the last minute to deal with licensing issues right before its IPO, because it had ignored them up until then. This is well-documented. I have no idea who you are. I do know that you are critical of my abiding by the law, and critical of my challenging it. You don't think that building an incredibly complex technology from scratch and suing a government demonstrates an "ability to take on a challenge." (Which leads me to ask, what does?) I guess you can't please everyone.
      - badclient 15y ago
javert 15y ago
To put this in the nicest possible way: Krugman is a highly partian economist. While I haven't taken the time to try to deconstruct his argument line by line, I would be shocked if it's not disingenuous in more than one way. Yes, I know he won the economics version of the Nobel prize; no, that doesn't change my opinion of him.
- thinkcomp 15y ago
  Think what you like of Krugman, this is a completely apolitical issue and he knows his economics. He's also not the only one. Others who understand economics agree: http://www.quora.com/Bitcoin/Is-the-cryptocurrency-Bitcoin-a-good-idea/answer/Adam-Cohen-2 http://www.quora.com/Bitcoin/Is-the-cryptocurrency-Bitcoin-a...
  - javert 15y ago
    this is a completely apolitical issue This just couldn't me more false. Krugman's whole career is built around big government manipulating the money supply. and he knows his economics Lots of people who also "know their economics" disagree with Krugman. Economics, as a field, hasn't risen to the level of a science yet.
    - _delirium 15y ago
      I'm not much of a fan of Krugman's blogging (which is fairly partisan), but it's pretty inaccurate to summarize his academic work as "built around big government manipulating the money supply". Yes, he's some variety of neo-Keynesian, but so are conservatives like Gregory Mankiw; Krugman's a vaguely center-left one, solidly in the mainstream (and considerably to the "right" of the modern-monetary-theory group). By "partisan" do you just mean that, like most economists, he isn't a follower of Austrian economics?
      - javert 15y ago
        Yes, he's some variety of neo-Keynesian Krugman's a vaguely center-left one That's precisely what I meant by "built around big government manipulating the money supply" As for partisan: I think all economists that take a definite position fall under what I meant by "partisan." I meant: advocating a niche view that is not accepted by a majority of experts. (In economics, I don't think there is currently any view that doesn't fall under this description.) That's not to say there isn't a correct view; I think there is.
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- barrkel 15y ago
  Acting as a short-term store of value is very important for a currency, but it's bad for investment if it's good as a long-term store of value. Money at its core is not a store of value; that's one of the requirements, but at its core it is a common medium of exchange. It is the very indirection that makes markets using money more efficient than ones based on barter; having a single common medium of exchange means you only need to solve the price discovery problem for n products rather than n^2. Deflation is bad because it turns money into an appreciating investment asset; this means it reduces productive investments (i.e. those that actually incentivize people to create wealth). A (quasi-)fixed base of money as a root cause of deflation lets people with a lot of money to begin with siphon off wealth from people doing productive work that increases the size of the economy and the velocity of money. TL/DR: deflation means theft of wealth by people owning currency at the cost of the economy at large that uses the same currency.
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mckoss 15y ago
I think there is a valid argument that Bitcoin is an asset class, not a currency. As such, governments would have to make possession of BitCoin a crime. I would think any democratic state would find it very difficult to make possession of an asset illegal. BTW, I don't find Krugman's arguments very compelling, in that they don't account for the nearly infinite divisibility of Bitcoin and unlike gold reserves, notes held against them cannot be fraudulently inflated.
OstiaAntica 15y ago
A nation-state may move to adopt bitcoin (think Cayman Islands or similar) or it could operate outside of the old political regimes, like Sealand. We should cheer this development-- the nation-state historically is responsible for great misery and bloodshed, and most nation-states today operate as barely disguised petty criminal syndicates, shaking down their productive citizens.

dabeeeenster 15y ago

What about gold?

omarchowdhury 15y ago

The popularity and usage of Bitcoin shows there is an emerging trend in the currency and payments market: digital peer to peer crypto-currencies. Wilson is only making a statement that this trend has materialized, and he is excited to see where it would go -- if any viable businesses spring up based on these currencies it would be a smart idea for him or other VCs to invest. Why? Well, Wilson at least is an investor in Internet products, and seeing as how these currencies are looking to establish themselves in a global market (Internet) whose GDP is in the trillions... you get the point. Though, I do think you are biased. Obviously.

kiba 15y ago

So you're jumping to conclusion based on what one venture capital investor says he will invest in?

thinkcomp 15y ago
I've talked to about sixty, and Fred Wilson's post exemplifies many of the patterns I've observed throughout. So no, I wouldn't say I'm jumping to conclusions.

badclient 15y ago

Most of the VCs I talked to about FaceCash refused to invest because they were afraid of the regulatory implications. Having followed your comments on this topic for a while, it seems just as plausible that VCs did not invest in FaceCash because they believed that you cannot take on the challenges(regulatory or otherwise). VCs invest all the time in enterprises that are in the gray area because the potential upside negates the obvious risks.

thinkcomp 15y ago
I think you have more of a problem with me than any of the VCs I talked to. Besides, I'm the only one suing the government over this issue, so the hypothetical case you reference wouldn't even be correct.
- badclient 15y ago
  Willingness to sue the gov doesn't say much about your ability to take on a challenge. In fact, your inclination to litigate may well have scared VCs who'd rather you get traction with your product even if it means operating in a gray area and litigate when forced. I'm sure if payPal tried to meet every rule and take on what they deemed as unfair laws in their early days they'd never be able to focus much on their product.
  - thinkcomp 15y ago
    I didn't even think about suing California until months after meetings with VCs, so your implications are false. PayPal had to scramble at the last minute to deal with licensing issues right before its IPO, because it had ignored them up until then. This is well-documented. I have no idea who you are. I do know that you are critical of my abiding by the law, and critical of my challenging it. You don't think that building an incredibly complex technology from scratch and suing a government demonstrates an "ability to take on a challenge." (Which leads me to ask, what does?) I guess you can't please everyone.
    - badclient 15y ago

javert 15y ago

To put this in the nicest possible way: Krugman is a highly partian economist. While I haven't taken the time to try to deconstruct his argument line by line, I would be shocked if it's not disingenuous in more than one way. Yes, I know he won the economics version of the Nobel prize; no, that doesn't change my opinion of him.

thinkcomp 15y ago
Think what you like of Krugman, this is a completely apolitical issue and he knows his economics. He's also not the only one. Others who understand economics agree: http://www.quora.com/Bitcoin/Is-the-cryptocurrency-Bitcoin-a-good-idea/answer/Adam-Cohen-2 http://www.quora.com/Bitcoin/Is-the-cryptocurrency-Bitcoin-a...
- javert 15y ago
  this is a completely apolitical issue This just couldn't me more false. Krugman's whole career is built around big government manipulating the money supply. and he knows his economics Lots of people who also "know their economics" disagree with Krugman. Economics, as a field, hasn't risen to the level of a science yet.
  - _delirium 15y ago
    I'm not much of a fan of Krugman's blogging (which is fairly partisan), but it's pretty inaccurate to summarize his academic work as "built around big government manipulating the money supply". Yes, he's some variety of neo-Keynesian, but so are conservatives like Gregory Mankiw; Krugman's a vaguely center-left one, solidly in the mainstream (and considerably to the "right" of the modern-monetary-theory group). By "partisan" do you just mean that, like most economists, he isn't a follower of Austrian economics?
    - javert 15y ago
      Yes, he's some variety of neo-Keynesian Krugman's a vaguely center-left one That's precisely what I meant by "built around big government manipulating the money supply" As for partisan: I think all economists that take a definite position fall under what I meant by "partisan." I meant: advocating a niche view that is not accepted by a majority of experts. (In economics, I don't think there is currently any view that doesn't fall under this description.) That's not to say there isn't a correct view; I think there is.

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barrkel 15y ago
Acting as a short-term store of value is very important for a currency, but it's bad for investment if it's good as a long-term store of value. Money at its core is not a store of value; that's one of the requirements, but at its core it is a common medium of exchange. It is the very indirection that makes markets using money more efficient than ones based on barter; having a single common medium of exchange means you only need to solve the price discovery problem for n products rather than n^2. Deflation is bad because it turns money into an appreciating investment asset; this means it reduces productive investments (i.e. those that actually incentivize people to create wealth). A (quasi-)fixed base of money as a root cause of deflation lets people with a lot of money to begin with siphon off wealth from people doing productive work that increases the size of the economy and the velocity of money. TL/DR: deflation means theft of wealth by people owning currency at the cost of the economy at large that uses the same currency.
- deleted 15y ago
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mckoss 15y ago

I think there is a valid argument that Bitcoin is an asset class, not a currency. As such, governments would have to make possession of BitCoin a crime. I would think any democratic state would find it very difficult to make possession of an asset illegal. BTW, I don't find Krugman's arguments very compelling, in that they don't account for the nearly infinite divisibility of Bitcoin and unlike gold reserves, notes held against them cannot be fraudulently inflated.

OstiaAntica 15y ago

A nation-state may move to adopt bitcoin (think Cayman Islands or similar) or it could operate outside of the old political regimes, like Sealand. We should cheer this development-- the nation-state historically is responsible for great misery and bloodshed, and most nation-states today operate as barely disguised petty criminal syndicates, shaking down their productive citizens.