4 ms·

Even if I concede the point that Bitcoin is becoming a centralized bank - which I don't - how exactly is it "bad and unreliable"? At least this bank is run algo

by enmaku 14y ago

Even if I concede the point that Bitcoin is becoming a centralized bank - which I don't - how exactly is it "bad and unreliable"? At least this bank is run algorithmically by the crowd/cloud and can't rape pillage or otherwise screw you out of your money on the whim of a handful of rich white men... Perhaps I'm showing my politics too clearly here, but I do honestly believe that math is a better tool for deciding what happens to my money than the board of directors at Goldman-Sachs.

anologwintermut 14y ago
I may or may not subscribe to your politics, but you are sorely mistaken if you think bitcoin stops most of the problems with the worlds financial system( unless you consider how Central Banks handle the money supply such a problem). Using BTC instead of USD or GBP changes nothing for Goldman-Sachs or Barclays but the denomination used to value the financial instruments they manipulate ( oh and maybe who's tax laws they have to evade). Even if we are talking about comercial banking as apposed to investment banking, little changes.Bitcoin is just a protocol. However, as more people interact with it via exchanges that may hold their private keys(think mtgox,bitconica, etc), we start to see things that look a lot like comercial banks: organizations run by people entrusted with the currency you store with them. The owners of these "banks",whether we white guys tanned by trips to the cayman islands and the vineyard or monitor-tanned cipher-punks of some more cuddly ethnicity/gender, can and eventually will abuse that privilege. The will abscond with peoples money, commit fraud, issue bad lonas and do any number of other things with it. Moreover, in the case of bitcoin exchanges,there is very little regulation and no legal recourse in the event of theft or default(since all transactions are final and there is no FDIC for bitcoin).
- hammersend 14y ago
  You had me up until the "very little regulation and no legal recourse" part at the end. Theft is theft and believe me, there are regulations against that.
  - anologwintermut 14y ago
    There is regulation against theft( though does any legal authority investigate bitcoin thefts?) . I meant regulations dealing what bitcoin exchanges can do with your money or what steps they have to take to protect it. For example, although I don't think any bitcoin exchanges loan out money yet, if they did, there is no amount they are required to keep as a minimum balance to cover withdrawals (unless the government legally deems them a bank, in which case my entire post is irrelevant)
    - doasyouplease 14y ago
      ... You use the exchange for exactly that, exchanging bitcoins, not holding them. Yes an exchange may possess your coins right after you convert your dollars to BTC, but you can just put them in your own account to be held for free.... That wouldn't give the exchange much time to do anything with your money.
    - hammersend 14y ago
      I would imagine that even if for some strange reason the Secret Service (who likely would investigate something like this) didn't pick up your claim you would still have grounds for a civil suit. Just insert sympathetic jury!
quotemstr 14y ago
Bitcoin has deflation baked into the system. Deflation is _terrible_ for the economy because it encourages people to hide cash under mattresses instead of spending it on useful projects. (Or in more abstract terms, deflation raises the minimum viable rate of return on investment.) We've learned this lesson well. All the really terrible depressions --- the 1870s, the 1930s --- featured crippling deflation that kicked the economy while it was already down. When Williams Jennings Bryan seared "you shall not crucify mankind on a cross of gold", he was talking about how using gold for money kept inflation too low and hurt ordinary people in the economy. (Bryan's "free silver" movement would have been inflationary and beneficial.) One important thing stopping the current depression from being as catastrophic as the great depression is the policy of the Federal Reserve (which is hugely influenced by Goldman Sachs) of printing money and keeping interest rates at 0%. If they didn't do that, we'd be far worse off right now. So yes, as far as regulating the money supply goes, I'd trust the directors of Goldman Sachs over some algorithm any day, especially when that algorithm seems to have been designed by people with a very dogmatic theory of value, a theory that history demonstrates is incompatible with happiness.
- mkup 14y ago
  This is what one school of thought says. Another school of thought says that people still buy deflating computers, mobile phones and other electronics, and Intel would have gone bankrupt long time ago if "mattress theory of deflation" is valid. Another school of thought also says that inflation is a second form (after the taxes) of government oppression over the citizens; and that truely free currency should avoid both forms of government oppression: inflation and taxation.
  - gph1 14y ago
    He's talking about economy wide price level deflation, not some particular group of products. Inflation is a necessary element of capitalism, since productivity growth would have a deflationary outcome if prices staid flat.
- sgornick 14y ago
  If silver was a nice addition to a gold based money system, how isn't Bitcoin a nice addition to the existing monetary system just as well? It isn't an either/or scenario. Parallel currencies for the win!

by enmaku 14y ago

anologwintermut 14y ago

I may or may not subscribe to your politics, but you are sorely mistaken if you think bitcoin stops most of the problems with the worlds financial system( unless you consider how Central Banks handle the money supply such a problem). Using BTC instead of USD or GBP changes nothing for Goldman-Sachs or Barclays but the denomination used to value the financial instruments they manipulate ( oh and maybe who's tax laws they have to evade). Even if we are talking about comercial banking as apposed to investment banking, little changes.Bitcoin is just a protocol. However, as more people interact with it via exchanges that may hold their private keys(think mtgox,bitconica, etc), we start to see things that look a lot like comercial banks: organizations run by people entrusted with the currency you store with them. The owners of these "banks",whether we white guys tanned by trips to the cayman islands and the vineyard or monitor-tanned cipher-punks of some more cuddly ethnicity/gender, can and eventually will abuse that privilege. The will abscond with peoples money, commit fraud, issue bad lonas and do any number of other things with it. Moreover, in the case of bitcoin exchanges,there is very little regulation and no legal recourse in the event of theft or default(since all transactions are final and there is no FDIC for bitcoin).

hammersend 14y ago
You had me up until the "very little regulation and no legal recourse" part at the end. Theft is theft and believe me, there are regulations against that.
- anologwintermut 14y ago
  There is regulation against theft( though does any legal authority investigate bitcoin thefts?) . I meant regulations dealing what bitcoin exchanges can do with your money or what steps they have to take to protect it. For example, although I don't think any bitcoin exchanges loan out money yet, if they did, there is no amount they are required to keep as a minimum balance to cover withdrawals (unless the government legally deems them a bank, in which case my entire post is irrelevant)
  - doasyouplease 14y ago
    ... You use the exchange for exactly that, exchanging bitcoins, not holding them. Yes an exchange may possess your coins right after you convert your dollars to BTC, but you can just put them in your own account to be held for free.... That wouldn't give the exchange much time to do anything with your money.
  - hammersend 14y ago
    I would imagine that even if for some strange reason the Secret Service (who likely would investigate something like this) didn't pick up your claim you would still have grounds for a civil suit. Just insert sympathetic jury!

quotemstr 14y ago

Bitcoin has deflation baked into the system. Deflation is _terrible_ for the economy because it encourages people to hide cash under mattresses instead of spending it on useful projects. (Or in more abstract terms, deflation raises the minimum viable rate of return on investment.) We've learned this lesson well. All the really terrible depressions --- the 1870s, the 1930s --- featured crippling deflation that kicked the economy while it was already down. When Williams Jennings Bryan seared "you shall not crucify mankind on a cross of gold", he was talking about how using gold for money kept inflation too low and hurt ordinary people in the economy. (Bryan's "free silver" movement would have been inflationary and beneficial.) One important thing stopping the current depression from being as catastrophic as the great depression is the policy of the Federal Reserve (which is hugely influenced by Goldman Sachs) of printing money and keeping interest rates at 0%. If they didn't do that, we'd be far worse off right now. So yes, as far as regulating the money supply goes, I'd trust the directors of Goldman Sachs over some algorithm any day, especially when that algorithm seems to have been designed by people with a very dogmatic theory of value, a theory that history demonstrates is incompatible with happiness.

mkup 14y ago
This is what one school of thought says. Another school of thought says that people still buy deflating computers, mobile phones and other electronics, and Intel would have gone bankrupt long time ago if "mattress theory of deflation" is valid. Another school of thought also says that inflation is a second form (after the taxes) of government oppression over the citizens; and that truely free currency should avoid both forms of government oppression: inflation and taxation.
- gph1 14y ago
  He's talking about economy wide price level deflation, not some particular group of products. Inflation is a necessary element of capitalism, since productivity growth would have a deflationary outcome if prices staid flat.
sgornick 14y ago
If silver was a nice addition to a gold based money system, how isn't Bitcoin a nice addition to the existing monetary system just as well? It isn't an either/or scenario. Parallel currencies for the win!