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Mind saying more or linking? I keep hearing strong opinions against bitcoin but haven't heard details.

by whit537 14y ago

kingkilr 14y ago
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... is a pretty good summary.
- whit537 14y ago
  Thanks, linked on the ticket.
rjsamson 14y ago
The biggest problem I have with bitcoin is that the fixed bitcoin supply and decreased rate at which coins can be mined rewards hoarding behaviors. If you know that the bitcoins you have in your account today will be worth more in the future, you have a powerful disincentive to spend.
- kiba 14y ago
  If you know that the bitcoins you have in your account today will be worth more in the future, you have a powerful disincentive to spend. That's only if you're a scrooge and don't like spending anything. Since bitcoin started, I spent bitcoin on hosting and domain, t-shirt, musics, development bounties, writers, and other things that I forgot to mention. I never spent a bitcent on mining hardware, though. You have to remember that humanity is a not a paper wealth maximizing function. We don't exists to horde money, but to spend it doing things that we like.
  - natrius 14y ago
    "We don't exists to horde money, but to spend it doing things that we like." Deflation increases the incentive to hoard cash. People respond to incentives. Economies based on deflationary currencies end up suffering from problems caused by this. You may not agree, but pretty much every economist does.
    - kiba 14y ago
      I don't dispute the incentive, I only dispute the preference and the outcome.
      - natrius 14y ago
        So you're saying that people won't respond to the incentive to hoard cash? An economy based on a currency with low, predictable inflation will have less hoarding than a deflationary currency. Hoarding in itself causes deflation, so deflationary currencies risk causing a deflationary spiral. Do you have an example of a vibrant economy based on a deflationary currency? I have several historical counterexamples.
        mindcrime 14y ago
        So you're saying that people won't respond to the incentive to hoard cash? I'm hungry... really f%!#ng hungry, right now. I have $10.00, which - today - buys me 2 hotdogs and a soda. But, if I wait a year, that same $10.00 will buy me a nice steak, some corn chowder, a side of sweet potato fries and a margarita. What do I do? Hmmm....
        natrius 14y ago
        That's not how economics works. Sure, some decisions won't be affected by the increased incentive to hoard. However, there are some decisions where the marginal incentive to hoard pushes people over the edge to decide to hoard. Instead of focusing on the sentence of my argument you chose, try disproving the one that followed: "An economy based on a currency with low, predictable inflation will have less hoarding than a deflationary currency."
        mindcrime 14y ago
        Sure, some decisions won't be affected by the increased incentive to hoard. However, there are some decisions where the marginal incentive to hoard pushes people over the edge to decide to hoard. Instead of focusing on the sentence of my argument you chose, try disproving the one that followed: "An economy based on a currency with low, predictable inflation will have less hoarding than a deflationary currency." No doubt... just emphasizing the point that we aren't dealing with absolutes here. People do spend money, even with deflationary currency. I'm not saying deflationary currencies are a good thing, or that there aren't some ramifications. But I think some bitcoin critics overstate the importance of the deflationary aspect, that's all.
  - michaelochurch 14y ago
    You're making a subjective and emotional argument ("a scrooge") when it's well-established across societies that deflationary currencies have this effect (of discouraging spending and investment). Bitcoin, with its very tight supply, is inherently deflationary-- so long as it continues to gain traction.
    - kiba 14y ago
      A scrooge is someone who is reluctant to spend money. There's nothing emotional about it. I also happens to disagree with the idea of deflation being necessarily bad for society or actually discouraging spending and investment. I contend it that it only shift the timeframe longer into the future, and saving enabling people to buy higher quality lasting goods. With inflation, it encourages short term thinking and shorter term investment.
- witten 14y ago
  The Bitcoin money supply is currently inflating at a rate of 33.3% a year.
nhaehnle 14y ago
The most clear-cut argument against Bitcoin is that it is a ridiculous waste of energy. The nature of mining in the protocol implies that if Bitcoin takes off on any significant scale, there is a dichotomy going on: either there are so few miners that single large actors can dominate the total hashing power of the network, making it vulnerable; or, a significant fraction of the total world computing power goes towards mining - which means that the electricity used up by the Bitcoin network would be much larger on any reasonable measure than what you need to maintain other currencies. Wasting energy is not exactly a good plan for the future.
- kiba 14y ago
  Miners will generally operate when their revenue is greater than their loss in term of electricity bill(if they're not being parasites). Let calculate the revenue a miner would get if they win all the blocks: 50 bitcoin every 10 minutes mean 300 bitcoin, which mean 7200 bitcoin a day. The price of a bitcoin at the time I am writing this is 6.54 USD, so the total revenue is 47,088 USD per day. That mean, assuming a miner can win all blocks at 50 bitcoin forever assuming the price and difficulty stay the same, he can afford to pay an electric bill of 47,088 per day assuming that the price hold stable. This equals to 17,187,120 USD in revenue every year. The market cap of bitcoin is only 60,951,475 USD, which mean miner revenue equals 28% of the market cap. However, most economic activities are certainly not miners, but actually trading bots and speculators across exchanges. In the MtGox USD alone, about 8.7 million dollars worth of bitcoin were exchanged in 30 days. You can also add in the various economic activities other than trading currencies, such as virtual goods, hosting, ice creams, t-shirts, porn, illegal drugs, etc. You can conclude that the miners are guaranteeing more than just revenues for themselves, as the various activities in the bitcoin economy which actually probably dwarf what the miners are making in term of revenues. As far as being actually efficient method of security for a currency? Probably not right now, assuming that security measures actually scale economically. It could be that the actual electricity cost grows slower as more and more efficient method of hashing are found.
- cabalamat 14y ago
  Mining bitcoins is useless work to exactly the same extent that mining gold is useless work. > which means that the electricity used up by the Bitcoin network would be much larger on any reasonable measure than what you need to maintain other currencies This is only true if the other currencies are fiat money. For a non-fiat currency, it is necessary that either (i) it is hard to make (or people will just make enormous amounts and its value will go away), or (ii) it has intrinsic value.

Mind saying more or linking? I keep hearing strong opinions against bitcoin but haven't heard details.

by whit537 14y ago

Mind saying more or linking? I keep hearing strong opinions against bitcoin but haven't heard details.

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... is a pretty good summary.

whit537 14y ago
Thanks, linked on the ticket.

rjsamson 14y ago

The biggest problem I have with bitcoin is that the fixed bitcoin supply and decreased rate at which coins can be mined rewards hoarding behaviors. If you know that the bitcoins you have in your account today will be worth more in the future, you have a powerful disincentive to spend.

kiba 14y ago
If you know that the bitcoins you have in your account today will be worth more in the future, you have a powerful disincentive to spend. That's only if you're a scrooge and don't like spending anything. Since bitcoin started, I spent bitcoin on hosting and domain, t-shirt, musics, development bounties, writers, and other things that I forgot to mention. I never spent a bitcent on mining hardware, though. You have to remember that humanity is a not a paper wealth maximizing function. We don't exists to horde money, but to spend it doing things that we like.
- natrius 14y ago
  "We don't exists to horde money, but to spend it doing things that we like." Deflation increases the incentive to hoard cash. People respond to incentives. Economies based on deflationary currencies end up suffering from problems caused by this. You may not agree, but pretty much every economist does.
  - kiba 14y ago
    I don't dispute the incentive, I only dispute the preference and the outcome.
    - natrius 14y ago
      So you're saying that people won't respond to the incentive to hoard cash? An economy based on a currency with low, predictable inflation will have less hoarding than a deflationary currency. Hoarding in itself causes deflation, so deflationary currencies risk causing a deflationary spiral. Do you have an example of a vibrant economy based on a deflationary currency? I have several historical counterexamples.
      - mindcrime 14y ago
        So you're saying that people won't respond to the incentive to hoard cash? I'm hungry... really f%!#ng hungry, right now. I have $10.00, which - today - buys me 2 hotdogs and a soda. But, if I wait a year, that same $10.00 will buy me a nice steak, some corn chowder, a side of sweet potato fries and a margarita. What do I do? Hmmm....
        natrius 14y ago
        That's not how economics works. Sure, some decisions won't be affected by the increased incentive to hoard. However, there are some decisions where the marginal incentive to hoard pushes people over the edge to decide to hoard. Instead of focusing on the sentence of my argument you chose, try disproving the one that followed: "An economy based on a currency with low, predictable inflation will have less hoarding than a deflationary currency."
        mindcrime 14y ago
        Sure, some decisions won't be affected by the increased incentive to hoard. However, there are some decisions where the marginal incentive to hoard pushes people over the edge to decide to hoard. Instead of focusing on the sentence of my argument you chose, try disproving the one that followed: "An economy based on a currency with low, predictable inflation will have less hoarding than a deflationary currency." No doubt... just emphasizing the point that we aren't dealing with absolutes here. People do spend money, even with deflationary currency. I'm not saying deflationary currencies are a good thing, or that there aren't some ramifications. But I think some bitcoin critics overstate the importance of the deflationary aspect, that's all.
- michaelochurch 14y ago
  You're making a subjective and emotional argument ("a scrooge") when it's well-established across societies that deflationary currencies have this effect (of discouraging spending and investment). Bitcoin, with its very tight supply, is inherently deflationary-- so long as it continues to gain traction.
  - kiba 14y ago
    A scrooge is someone who is reluctant to spend money. There's nothing emotional about it. I also happens to disagree with the idea of deflation being necessarily bad for society or actually discouraging spending and investment. I contend it that it only shift the timeframe longer into the future, and saving enabling people to buy higher quality lasting goods. With inflation, it encourages short term thinking and shorter term investment.
witten 14y ago
The Bitcoin money supply is currently inflating at a rate of 33.3% a year.

nhaehnle 14y ago

The most clear-cut argument against Bitcoin is that it is a ridiculous waste of energy. The nature of mining in the protocol implies that if Bitcoin takes off on any significant scale, there is a dichotomy going on: either there are so few miners that single large actors can dominate the total hashing power of the network, making it vulnerable; or, a significant fraction of the total world computing power goes towards mining - which means that the electricity used up by the Bitcoin network would be much larger on any reasonable measure than what you need to maintain other currencies. Wasting energy is not exactly a good plan for the future.

kiba 14y ago
Miners will generally operate when their revenue is greater than their loss in term of electricity bill(if they're not being parasites). Let calculate the revenue a miner would get if they win all the blocks: 50 bitcoin every 10 minutes mean 300 bitcoin, which mean 7200 bitcoin a day. The price of a bitcoin at the time I am writing this is 6.54 USD, so the total revenue is 47,088 USD per day. That mean, assuming a miner can win all blocks at 50 bitcoin forever assuming the price and difficulty stay the same, he can afford to pay an electric bill of 47,088 per day assuming that the price hold stable. This equals to 17,187,120 USD in revenue every year. The market cap of bitcoin is only 60,951,475 USD, which mean miner revenue equals 28% of the market cap. However, most economic activities are certainly not miners, but actually trading bots and speculators across exchanges. In the MtGox USD alone, about 8.7 million dollars worth of bitcoin were exchanged in 30 days. You can also add in the various economic activities other than trading currencies, such as virtual goods, hosting, ice creams, t-shirts, porn, illegal drugs, etc. You can conclude that the miners are guaranteeing more than just revenues for themselves, as the various activities in the bitcoin economy which actually probably dwarf what the miners are making in term of revenues. As far as being actually efficient method of security for a currency? Probably not right now, assuming that security measures actually scale economically. It could be that the actual electricity cost grows slower as more and more efficient method of hashing are found.
cabalamat 14y ago
Mining bitcoins is useless work to exactly the same extent that mining gold is useless work. > which means that the electricity used up by the Bitcoin network would be much larger on any reasonable measure than what you need to maintain other currencies This is only true if the other currencies are fiat money. For a non-fiat currency, it is necessary that either (i) it is hard to make (or people will just make enormous amounts and its value will go away), or (ii) it has intrinsic value.