6 ms·

Bitcoin seems to be in another bubble, so I'm going to wade back into this insane discussion. There are two main goals of "money". To facilitate exchange, and

Bitcoin seems to be in another bubble, so I'm going to wade back into this insane discussion. There are two main goals of "money". To facilitate exchange, and to store value. Bitcoin is moderately good at the first one and atrocious at the second one. It is not designed to be a stable store of value. It is designed to _appreciate_ in value, but this encourages intense speculation that results in wild, sickening swings in the exchange rate. It's at best a goofy but terrible idea, and at worst has all the red flags of an outright pyramid scheme. If you want to read Rothbard and convince yourself that "currency debasement" caused the fall of the Roman empire, that modern monetary policy is going to lead to a Zimbabwean dystopia, and that you can solve all of these problems by dropping us into the hard-money currency policies of the 1800s [that, for the record, didn't actually work all that well], go right ahead. There are subreddits for this sort of thing. But if you're going to stand here and imply that Bitcoin is a superior store of value to the US dollar, well I cannot abide that sort of nonsense, sir. Not one bit.

kiba 14y ago
Bitcoin seems to be in another bubble, so I'm going to wade back into this insane discussion. I agree that we're in a potential bubble, but bitcoin was never ever a pyramid scheme. Bitcoin is a fully transparent cryptocurrency system and investors were never promised anything.
- wmf 14y ago
  The fixed number of BTC is effectively a "promise" that the value of your holdings will increase if you recruit new people into the Bitcoin ecosystem.
  - mattm 14y ago
    So you would say company stock is a pyramid scheme as well? There is usually a set amount and it benefits you to recruit others to buy the stock.
    - wmf 14y ago
      Companies ought to have fundamental value (although one may be skeptical if a company has no plans to give investors access to that value via dividends or acquisition) but Bitcoin doesn't. Also, I think of Bitcoin as more of a bubble machine than a pyramid scheme.
  - daniel-cussen 14y ago
    The number of BTC is not fixed.
    - pyre 14y ago
      The maximum number of BTC is fixed.
niggler 14y ago
'There are two main goals of "money".' There are 3 main goals of money: - medium of exchange (for trade) - unit of account (fungibility, divisibility) - store of value (saving with an expectation that it will be useful later) Right now Bitcoin only really satisfies the second. There is a growing set of companies and people accepting bitcoins as payment, but it is still very nascent and you can't do much in your ordinary life with it in the US. And the extreme volatility really calls into question the last. https://www.youtube.com/watch?v=0UKC7iaBKvs#t=830s https://www.youtube.com/watch?v=0UKC7iaBKvs#t=830s is a very interesting discussion about issues like trust which underpin currencies.
- kaonashi 14y ago
  Actually, it doesn't satisfy the second one. Unit of account traditionally has meant that it can settle all debts "public and private". It might allow you to settle private debts, but it will never allow you to settle public debts (which is really what drives a currency's value).
gcb0 14y ago
Bitcoin has it's shortcomings (and yes, the implementations have pyramid scheme feels) but your argument was laid out as a banker/politician would say. who started the pyramid scheme with gold? Just because it's the current one should we make it the only and agree to live under it? and the dollar pyramid scheme? does that one feels good as well? the current model will not lead to a zimbabwean dystopia, as long as the banks do not want to. atrocious at storing value? what do you use for that? dollar? gold? traded company shares? please do say more how bitcoin is worse than those. also, just like this post only bashes yours, your lacks any argument or reasoning as well besides the bashing. ;) bottom line is, every and any large economic agreement is there for one reason. it's convenient for a lot of people and profitable for a group with decision power. This is just any other kind of revolution. One group moving out of the control of another group. and as with any revolution it will succeed if the rest is out of the convenience threshold. with decent widespread implementation, i think bitcoin is a better way for ME. if it's better for you, no clue. but i will try to convince you that it is for the above reasons.
kyledrake 14y ago
I'm glad you responded. My goal is exactly to dispel some of these myths: - It's not a pyramid scheme. It is designed to work just like other currencies do. The idea that Bitcoin is some kind of scam comes from ignorance on the topic of mediums of exchange. This talk was my attempt at showing how all currencies work, so that you can compare Bitcoin to all other currencies, and see that similarity. - You are correct that it is not designed to be a stable store of value. Gold shares a similar problem. Price stability is probably not going to be one of Bitcoin's strong suits, for sure. It's primary role might be simply as a highly liquid store of value that cannot easily be controlled by a central authority, which is still incredibly profound. - A lot of things caused the fall of the Roman empire. I don't see devaluation of Roman currency as -the- reason, but I do see it was major component. It's pretty hard to run a stable empire when economic exchange breaks down. - Regarding Rothbard: I am not an Austrian (school of economics). I like a lot of their older macroeconomic works, but I think that the school has (in the last 30ish years) been hijacked by hard-core libertarians to justify things that I would never agree with. There are some things that markets seem to do a worse job at than governments, and as a citizen with access to clean drinking water, I am perfectly comfortable with that compromise. - I think the "jury is still out" as to whether it will be a better store of value to the US Dollar. But the store of value of the USD is simply that our government exists, and is stable. And I don't know if you've paid attention to the recent ineptitude (like the fiscal cliff), but it's not a strong vote of confidence. That's the question: Do you believe more in your government, or in a predictable, documented software algorithm? Either could fail. We'll find out which fails first.
- bitcartel 14y ago
  Devil's advocate: "Any counter-proof that Satoshi Nakamoto did not design a ponzi scheme on purpose?" Cached copy (original was deleted): http://webcache.googleusercontent.com/search?q=cache:XJ8SqHgjQl8J:bitcoin.stackexchange.com/questions/8671/any-counter-proof-that-satoshi-nakamoto-did-not-design-a-ponzi-scheme-on-purpose+&cd=1&hl=en&ct=clnk&gl=us http://webcache.googleusercontent.com/search?q=cache:XJ8SqHg... More discussion here: https://bitcointalk.org/index.php?topic=158111.msg1673645#msg1673645 https://bitcointalk.org/index.php?topic=158111.msg1673645#ms...
- deleted 14y ago
davidhollander 14y ago
USD is only one currency. There are many places in the world where banking in and holding only USD would be impractical, and where banking in and holding only local currency would be higher risk. Bitcoin doesn't have to be intrinsically "superior" to USD for rational agents to use it as a store of value. It simply has to hedge current assets against a non identical set of risks.
jamoes 14y ago
> But if you're going to stand here and imply that Bitcoin is a superior store of value to the US dollar, well I cannot abide that sort of nonsense, sir. Not one bit. The cool thing about bitcoin is that it doesn't matter if you abide by it or not. It doesn't matter what some politicians decide. It doesn't matter who wins the arguments. It doesn't matter who has the guns. All that matters is the bits. As long as information can be exchanged, then bitcoin will stand, and people will use it as both money and a store of value. It is actually happening, and there is nothing your arguments can do to stop it.
- gusgordon 14y ago
  What, exactly, is "happening"? I'm all for bitcoin, and I think it would be kind of a cool form of currency. Bitcoin is more elegant than standard currency, but many of the interactions that happen with standard currency are not possible with bitcoin. Right now, the value of bitcoin is in the increase of price in bitcoin. I assume that's what you mean by "happening". That doesn't mean anything. Store owners, starting with online store owners, have to at least start accepting the currency, which they have shown no signs of doing. So again what, exactly, is "happening"?
  - intelliot 14y ago
    "Store owners, starting with online store owners, have to at least start accepting the currency, which they have shown no signs of doing." Actually, that is happening. Namecheap now accepts bitcoins.
    - gusgordon 14y ago
      I realize some are, but there lack of pickup by pretty much everyone else is concerning. It makes bitcoin basically useless at this point. Maybe it will pick up, but it hasn't been happening.
      - mattm 14y ago
        Bitcoin is still a baby. I think many people who say stuff like this are missing the point and not seeing long term. This is like saying the internet will never be useful because it's just text and 14.4 kbps is the fastest modem.

kiba 14y ago

Bitcoin seems to be in another bubble, so I'm going to wade back into this insane discussion. I agree that we're in a potential bubble, but bitcoin was never ever a pyramid scheme. Bitcoin is a fully transparent cryptocurrency system and investors were never promised anything.

wmf 14y ago
The fixed number of BTC is effectively a "promise" that the value of your holdings will increase if you recruit new people into the Bitcoin ecosystem.
- mattm 14y ago
  So you would say company stock is a pyramid scheme as well? There is usually a set amount and it benefits you to recruit others to buy the stock.
  - wmf 14y ago
    Companies ought to have fundamental value (although one may be skeptical if a company has no plans to give investors access to that value via dividends or acquisition) but Bitcoin doesn't. Also, I think of Bitcoin as more of a bubble machine than a pyramid scheme.
- daniel-cussen 14y ago
  The number of BTC is not fixed.
  - pyre 14y ago
    The maximum number of BTC is fixed.

niggler 14y ago

'There are two main goals of "money".' There are 3 main goals of money: - medium of exchange (for trade) - unit of account (fungibility, divisibility) - store of value (saving with an expectation that it will be useful later) Right now Bitcoin only really satisfies the second. There is a growing set of companies and people accepting bitcoins as payment, but it is still very nascent and you can't do much in your ordinary life with it in the US. And the extreme volatility really calls into question the last. https://www.youtube.com/watch?v=0UKC7iaBKvs#t=830s https://www.youtube.com/watch?v=0UKC7iaBKvs#t=830s is a very interesting discussion about issues like trust which underpin currencies.

kaonashi 14y ago
Actually, it doesn't satisfy the second one. Unit of account traditionally has meant that it can settle all debts "public and private". It might allow you to settle private debts, but it will never allow you to settle public debts (which is really what drives a currency's value).

gcb0 14y ago

Bitcoin has it's shortcomings (and yes, the implementations have pyramid scheme feels) but your argument was laid out as a banker/politician would say. who started the pyramid scheme with gold? Just because it's the current one should we make it the only and agree to live under it? and the dollar pyramid scheme? does that one feels good as well? the current model will not lead to a zimbabwean dystopia, as long as the banks do not want to. atrocious at storing value? what do you use for that? dollar? gold? traded company shares? please do say more how bitcoin is worse than those. also, just like this post only bashes yours, your lacks any argument or reasoning as well besides the bashing. ;) bottom line is, every and any large economic agreement is there for one reason. it's convenient for a lot of people and profitable for a group with decision power. This is just any other kind of revolution. One group moving out of the control of another group. and as with any revolution it will succeed if the rest is out of the convenience threshold. with decent widespread implementation, i think bitcoin is a better way for ME. if it's better for you, no clue. but i will try to convince you that it is for the above reasons.

kyledrake 14y ago

I'm glad you responded. My goal is exactly to dispel some of these myths: - It's not a pyramid scheme. It is designed to work just like other currencies do. The idea that Bitcoin is some kind of scam comes from ignorance on the topic of mediums of exchange. This talk was my attempt at showing how all currencies work, so that you can compare Bitcoin to all other currencies, and see that similarity. - You are correct that it is not designed to be a stable store of value. Gold shares a similar problem. Price stability is probably not going to be one of Bitcoin's strong suits, for sure. It's primary role might be simply as a highly liquid store of value that cannot easily be controlled by a central authority, which is still incredibly profound. - A lot of things caused the fall of the Roman empire. I don't see devaluation of Roman currency as -the- reason, but I do see it was major component. It's pretty hard to run a stable empire when economic exchange breaks down. - Regarding Rothbard: I am not an Austrian (school of economics). I like a lot of their older macroeconomic works, but I think that the school has (in the last 30ish years) been hijacked by hard-core libertarians to justify things that I would never agree with. There are some things that markets seem to do a worse job at than governments, and as a citizen with access to clean drinking water, I am perfectly comfortable with that compromise. - I think the "jury is still out" as to whether it will be a better store of value to the US Dollar. But the store of value of the USD is simply that our government exists, and is stable. And I don't know if you've paid attention to the recent ineptitude (like the fiscal cliff), but it's not a strong vote of confidence. That's the question: Do you believe more in your government, or in a predictable, documented software algorithm? Either could fail. We'll find out which fails first.

bitcartel 14y ago
Devil's advocate: "Any counter-proof that Satoshi Nakamoto did not design a ponzi scheme on purpose?" Cached copy (original was deleted): http://webcache.googleusercontent.com/search?q=cache:XJ8SqHgjQl8J:bitcoin.stackexchange.com/questions/8671/any-counter-proof-that-satoshi-nakamoto-did-not-design-a-ponzi-scheme-on-purpose+&cd=1&hl=en&ct=clnk&gl=us http://webcache.googleusercontent.com/search?q=cache:XJ8SqHg... More discussion here: https://bitcointalk.org/index.php?topic=158111.msg1673645#msg1673645 https://bitcointalk.org/index.php?topic=158111.msg1673645#ms...
deleted 14y ago

davidhollander 14y ago

USD is only one currency. There are many places in the world where banking in and holding only USD would be impractical, and where banking in and holding only local currency would be higher risk. Bitcoin doesn't have to be intrinsically "superior" to USD for rational agents to use it as a store of value. It simply has to hedge current assets against a non identical set of risks.

jamoes 14y ago

> But if you're going to stand here and imply that Bitcoin is a superior store of value to the US dollar, well I cannot abide that sort of nonsense, sir. Not one bit. The cool thing about bitcoin is that it doesn't matter if you abide by it or not. It doesn't matter what some politicians decide. It doesn't matter who wins the arguments. It doesn't matter who has the guns. All that matters is the bits. As long as information can be exchanged, then bitcoin will stand, and people will use it as both money and a store of value. It is actually happening, and there is nothing your arguments can do to stop it.

gusgordon 14y ago
What, exactly, is "happening"? I'm all for bitcoin, and I think it would be kind of a cool form of currency. Bitcoin is more elegant than standard currency, but many of the interactions that happen with standard currency are not possible with bitcoin. Right now, the value of bitcoin is in the increase of price in bitcoin. I assume that's what you mean by "happening". That doesn't mean anything. Store owners, starting with online store owners, have to at least start accepting the currency, which they have shown no signs of doing. So again what, exactly, is "happening"?
- intelliot 14y ago
  "Store owners, starting with online store owners, have to at least start accepting the currency, which they have shown no signs of doing." Actually, that is happening. Namecheap now accepts bitcoins.
  - gusgordon 14y ago
    I realize some are, but there lack of pickup by pretty much everyone else is concerning. It makes bitcoin basically useless at this point. Maybe it will pick up, but it hasn't been happening.
    - mattm 14y ago
      Bitcoin is still a baby. I think many people who say stuff like this are missing the point and not seeing long term. This is like saying the internet will never be useful because it's just text and 14.4 kbps is the fastest modem.