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As usual on HN, any submission about Bitcoin is met with concerned comments about its high volatility, present impracticality as a currency, disadvantages versu

• chasing 14y ago
  As hockey superstar Wayne Gretzky said, "Please stop trotting out that quote Steve Jobs once said because we've all heard it and there are very few hockey players who are actually great enough to really know where the puck's going, anyway. Don't automatically assume you're one of them."
  • fcatalan 14y ago
    True, apropos that today I heard someone call bitcoin "the Dunning-krugerrand"
    • RockyMcNuts 14y ago
      'digital pet rock' is what I've become partial to.
• niggler 14y ago
  I came across this last night: https://www.youtube.com/watch?v=7fvSYT7vhQY https://www.youtube.com/watch?v=7fvSYT7vhQY (https://news.ycombinator.com/item?id=5459304 https://news.ycombinator.com/item?id=5459304) The phrase that really resonated with me was https://www.youtube.com/watch?v=7fvSYT7vhQY#t=404s https://www.youtube.com/watch?v=7fvSYT7vhQY#t=404s : "When a few get something for nothing, at some point in a zero-sum game most will get nothing for something". That point may not happen anytime soon, but I think that's a very legitimate concern.
  • feral 14y ago
    That phrase isn't even logically valid. But lets say we accept its argument anyway, is it really applicable here? Would you really argue that the creation of a new cryptocurrency is a zero-sum event? Couldn't it instead be the case that enormous new wealth is created due to the existence of a new payment infrastructure, and that the people who get something are capturing some of this new wealth? I'm not saying Bitcoin is a sure thing by any means; just that its flawed to evaluate the wealth apparently coming from it as a zero-sum process.
    • pjscott 14y ago
      The situation is analogous to a mint for a traditional currency: it costs money to print money, and so some people are getting paid just to maintain the currency. That's fine, though, because they're creating economic value for the users of that currency. It's similar for the people who "get something for nothing" by mining bitcoins: they're getting paid for making the proof-of-work chain function correctly, and for distributing the initial bitcoin supply in a way that's not based on some central authority handing out bitcoins.
  • gyom 14y ago
    Calling it a zero-sum game makes it sound like some people are exploiting others. You can make the same argument with gold by saying that, if everybody stopped caring about gold on the same day, then everybody owning gold would be big losers in the zero-sum game of gold. Moreover, the argument that the cited video makes about criminals using the currency (i.e. "honor among thieves" doesn't exist) is fundamentally at odds with the concept of the infinitely iterated prisoner's dilemma. That's why the whole concept of "reputation" envolved (in Nature and online). Someone with 98.7% positive feedback might screw you to save $50, but doing so would not be beneficial in the long run.
• waffle_ss 14y ago
  There are some real concerns with Bitcoin. For example, I was going to write an app that accepts Bitcoins as payment. However, the problem is that the amount of time it takes for a transaction to become "verified," i.e. be part of the official block chain, can take up to 10 minutes. What am I supposed to present to the user during this time? Am I supposed to tell them that their payment may or may not have been accepted, please check back in ten minutes or wait for an email? How would you handle this if it were a real person in a real store, at a register checking out?
  • niggler 14y ago
    Sounds like an opportunity for a "bitcoin credit card" or "bitcoin charge card" where a trusted third party maintains complete control.
    • waterlesscloud 14y ago
      Perhaps YC could fund such a startup.
      • niggler 14y ago
        Coinbase doesn't fit that bill, if that's what you are pointing to.
        • waterlesscloud 14y ago
          Coinbase is a bitcoin payment processor. It addresses exactly those issues.
          • niggler 14y ago
            Original issue: "However, the problem is that the amount of time it takes for a transaction to become "verified," i.e. be part of the official block chain, can take up to 10 minutes." https://coinbase.com/merchants https://coinbase.com/merchants : "Confirmed in 1 hour" Underlying issue not addressed
• paulhauggis 14y ago
  "As usual on HN, any submission about Bitcoin is met with concerned comments about its high volatility, present impracticality as a currency, disadvantages versus precious metals, current concentration of transactions in a single exchange (MtGox), potential for market manipulation by governments and/or speculators, etc." So you're okay with a currency that has shifted a huge portion of its value in a day and insecure exchange after insecure exchange getting hacked (and thousands of dollars worth of Bitcoin getting stolen)? Right now, Bitcoin is like the stock market before it had any regulations. I feel like the people that tell me not to worry about these issues are the ones that invested lots of money in it (and don't want to lose it).
• 3am 14y ago
  Money itself is not a good asset. I don't understand the point of excessive cash savings - cash is a vehicle for trade and transfer assets, not an asset in and of itself. Ie, if I have leftover money, I will put it in investment funds that purchase ownership stakes in companies (stocks), loans it to borrowers (bonds), or pay off my mortgage (real estate). Even gold or other precious metals. I try to keep a conservative amount to cover cash flow requirements, but honestly I don't understand hoarding Bitcoins any more than hoarding US Dollars. Neither makes any sense or represents anything of value.
  • cookiecaper 14y ago
    Money is just an abbreviation, an emblem of value. People commonly agree to use this thing that is worthless by itself because it's much easier to trade little pieces of paper and metal (or, in today's economy, move bits around) than it is to trade solid, final goods. People horde both dollars and bitcoins on the presumption that persons will continue to prefer trades facilitated by these value emblems instead of the much clunkier trade-by-solid-goods only.
• bitcartel 14y ago
  What is the potential impact of Bitcoin forking, given that it's trivial[1]? Q1. We can differentiate between fiat currencies by looking at the qualities of the issuing authority, and thus determine that it's better to have savings in Swiss Francs rather than Zimbabwean Dollars. With Bitcoin, Litecoin and other forks, how do we differentiate apart from popularity of the network? Q2. I've heard the argument that Bitcoin is valuable because there is scarcity in the system, a limit to the number of coins, thus it is similar to gold. However, if tomorrow somebody discovered vast amounts of pink gold, with exactly the same chemical and physical properties as gold, except for the colour, it's likely the price of gold would fall. As Bitcoin is facing this exact scenario via forking, what are the potential consequences, and does it even matter? [1] http://litecoin.org http://litecoin.org (changed the hashing algorithm from SHA256 to Scrypt)
  • erikpukinskis 14y ago
    > how do we differentiate apart from popularity of the network? Currencies are all differentiated based on their ability to be spent. Qualities of the "issuing authority" is one measure of that, when there is such an authority. But even for dollars there are other properties: difficulty of counterfit, number of merchants who accept the currency, etc. Merchants in Argentina don't accept dollars because they can pay their taxes in dollars, or because the U.S. government is insuring their accounts. They accept dollars because they can be readily, stably traded for value in their country. Cryptocurrencies can be spent in places where no other currency can (international transactions, politically sensitive transactions, etc). Transactions can never be reversed. You can store them in your brain. You can keep your bitcoins in your brain while you are imprisoned in Iran, and spend them whenever you are released. These are all aspects of a currency's spending power. You may think that government deposit insurance, or promise to accept tax payments in a currency, or promises to stabilize prices by issuing debt are the Be All End All of spendability measures, but that's you. There are lots of other concerns people other have.
• anologwintermut 14y ago
  Doubts about volatility are a correct response to claims about monetary valuations. If, on the other hand, the response was given to "Bitcoin surpasses Dinner's club card in transaction volume," then it might well be off base.
• joe_the_user 14y ago
  This is analogous to being present at the creation of the World Wide Web, but instead of getting excited about its obvious potential, one decides to stay on the sidelines because it's still unproven technology, almost no content has been made available online, commercial opportunities are virtually non-existent, etc. As someone schooled in economics, I have to point out the fundamental difference between technologies and economic "innovations". The key thing is that any currency or investment scheme or similar phenomena is going to always contain risks as well as rewards (the US dollar contains risk right now, it's main virtue is being perceived as having less risk, not that it's "solved" the risk problem). If the Internet as it exists today, was able to "crash" tomorrow in a way that left everyone with less than they had before, it would be ambiguous, even twenty years into the project, whether it was a good thing. That's the distinction between an upsurge in a technology and an upsurge in an economic phenomena. Housing prices and Internet usage increased substantial in the period 2002-2007. Internet usage brought information and utility that pretty much couldn't go away and leave you worse off. Housing prices could and did.
• hazov 14y ago
  My problem with it right now is that it gives too much advantage to early adopters (I have some from some years ago), it always tries to make the situation sounds fair (in the FAQs) but for me it's just a seignoriage with other name. I hate the fact that it can be used by child pornographers or terrorists but hey, so can gold, a Ben Franklin or a €500 bill. A feature of technology is that it's neutral, it can be used for good as well. I have no problem with the idea, I think cryptocurrency and electronic money is the future but in my view bitcoin will just be one among many.
• zeteo 14y ago
  Your comment amounts to a rather naive "we should get excited about Bitcoin, it has great potential and critics are shortsighted". And it is precisely this excitement (with calls for more excitement) that generates Bitcoin's current value. But where will the decline stop once the first run inevitably occurs? All other currencies have a bottom floor that they can't fall below, be it either intrinsic value (jewelry, plate, industrial uses for precious metals) or the fact that they are legal tender in some country (and must be acquired to pay debts or taxes there). Unless and until Bitcoin becomes legal tender in some jurisdiction, it is very vulnerable to a sudden death spiral in its value. Interestingly enough, MMO worlds are probably prime candidates to become such "jurisdictions".
  • eric_bullington 14y ago
    "All other currencies have a bottom floor that they can't fall below" I suspect holders of the Zimbabwean Dollar would disagree, as would the holders of many other hyperflationary currencies going back many centuries. Such currencies were all legal tender, but it didn't make any difference.
    • zeteo 14y ago
      I'm not talking about the value of a single unit of currency, but about the aggregate value of the currency itself. A single Zimbabwean Dollar might have fallen very low indeed, but as long as it was legal tender - and the Zimbabwean government accepted payment in it - the value of all Zimbabwean dollars still had to be sufficient for paying taxes and debts in that country.
      • tinco 14y ago
        That's assuming the Zimbabwean government actually survives. At some point people will lose all trust in the currency and start to use a more solid one, this can mean currencies from neighbouring countries, or stable ones from far away like the dollar, euro or yuan. If it that point the Zimbabwean government would still print money it can't back it would go bankrupt, and not be able to pay its staff and cease to be.
• mikeash 14y ago
  "This is analogous to being present at the creation of the World Wide Web, but instead of getting excited about its obvious potential, one decides to stay on the sidelines because it's still unproven technology, almost no content has been made available online, commercial opportunities are virtually non-existent, etc." There's nothing wrong with that. For every WWW, there are a thousand technologies that looked similar when they were young, and were a flop.
• Helianthus 14y ago
  The reason people are hesitant is because other people are writing breathless comments like this.