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There are a couple of core points that this article seems to get completely wrong about bitcoin. I'm certainly no expert, but quotes like: > the perfect digita

by skore 14y ago

There are a couple of core points that this article seems to get completely wrong about bitcoin. I'm certainly no expert, but quotes like: > the perfect digital currency: they’re frictionless, anonymous[...] seem to suggest that the author has read a lot about bitcoin (by other authors), but not investigated that deeply. (As for the content: It's bogus mainly because they're at best pseudo-anonymous, or rather: Actual anonymous payment via bitcoin takes a lot of effort to conceal. And it may only be frictionless for now - looking at the way transaction fees develop in the future is one of the most exciting concepts about it, to me.) > Inflation is bad, but deflation is worse. [...] People hoard their cash, and spend it only begrudgingly, on absolute necessities. I see how that is very different from the way capitalism works at the moment. But, conceptually, would it really be that bad? I think an economy that builds on people buying loads of crap they don't need is at least comparatively bad. We certainly seem to have a problem with using more than we need from the planet. > And they certainly don’t spend it on hiring people — no matter how productive their employees might be, they’d still be better off just holding on to that money and not paying anybody anything. Again, wouldn't the result just be that you only hire people who create more value than deflation? And wouldn't "nobody paying anybody anything" eventually cause inflation? Finally, a lot of the arguments employed seem rather shoddy. This is the argument against being your own bank: > In Hollywood, if you show someone counting out huge sums of cash, that’s an easy way for the director to say that he’s a criminal. This is the argument trying to discredit bitcoins principle of mistrust: > Bitcoin, in that sense, is anti democratic. It’s based on mistrust rather than trust, it refuses to take any responsibility onto itself – indeed, it doesn’t even have a self to take responsibility onto. So far so half-good... It’s nihilistic[...]. Nope, does not follow. > I do have hope that in the future, someone, somewhere, is going to learn from bitcoin’s mistakes, and build a better system. The author seems to suggest that this is his conclusion, but I thought that was the main idea in bitcoin itself. That it's artificial limit is a rather clear "we will have to come up with something better by then". Not as a "we will never need more bitcoins than this many". I may be wrong here, but didn't Satoshi set up bitcoin precisely to be a testing ground? Beta Software? The author seems to be a little too occupied putting words in his mouth to actually read the concepts. Instead, he claims that Satoshi wants bitcoin "to be the perfectly anonymous payment mechanism for a digital world". I don't think that's true.

jeremyjh 14y ago
> Inflation is bad, but deflation is worse. [...] People hoard their cash, and spend it only begrudgingly, on absolute necessities. I see how that is very different from the way capitalism works at the moment. But, conceptually, would it really be that bad? Would it be better to have government responsible for most investment ? I don't really care about consumers hoarding their cash - they'll buy the things they really need or want. But I am concerned if investors are better served by hoarding than by demand deposits or any other kind of debt instrument. This could drive up interest rates to unprecedented levels. Higher interest rates mean higher cost of goods and thus higher costs for consumers.
- skore 14y ago
  I'm really no expert on finance, which is why I put up my question as that. Your reply actually raised more questions than it answered. I get that high interest rates are bad for a market that is built mostly on credit and I can kinda-sorta see how that would slow down an economy. But I don't see how that completely eliminates investment. At some point, people have to exchange goods. People have labor to provide and goods to sell and services that they need provided and goods to buy. How is credit the only thing that enables that? Or is the argument that only credit enables it at the level that we see in current day capitalism?
  - dragontamer 14y ago
    Its a simple matter really. If twice as many people are eating twice as much food, you'll need to print twice as much money to keep prices stable. Otherwise, the price of food will double. The central bank prints money. That is a fact. What people forget is the fact that this is useful to an economy. The central bank can abuse its power, and inflate away your cash holdings. (ie: print too much money). That is why BTC are pegged at 21 Million coins. So the question now is, what will an economy based off of a heavily depreciating asset look like. What are the risks?
- dragontamer 14y ago
  Higher interest rates will correlate to higher inflation. So on the contrary, Bitcoins are a deflationary economy. Deposits will have a negative interest rate (ie: holding your money in a bitcoin bank will correlate to fees), and borrowing BTC means you only will have to return bits of it. (ie: if I borrow 100 BTC from you today, I only will have to repay you 75 BTC two months from now). It is only fair, as people learn to expect BTC to keep growing in price. I don't think its a very healthy economy to be in, but its a completely different endgame scenario than what you describe.

by skore 14y ago

jeremyjh 14y ago

> Inflation is bad, but deflation is worse. [...] People hoard their cash, and spend it only begrudgingly, on absolute necessities. I see how that is very different from the way capitalism works at the moment. But, conceptually, would it really be that bad? Would it be better to have government responsible for most investment ? I don't really care about consumers hoarding their cash - they'll buy the things they really need or want. But I am concerned if investors are better served by hoarding than by demand deposits or any other kind of debt instrument. This could drive up interest rates to unprecedented levels. Higher interest rates mean higher cost of goods and thus higher costs for consumers.

skore 14y ago
I'm really no expert on finance, which is why I put up my question as that. Your reply actually raised more questions than it answered. I get that high interest rates are bad for a market that is built mostly on credit and I can kinda-sorta see how that would slow down an economy. But I don't see how that completely eliminates investment. At some point, people have to exchange goods. People have labor to provide and goods to sell and services that they need provided and goods to buy. How is credit the only thing that enables that? Or is the argument that only credit enables it at the level that we see in current day capitalism?
- dragontamer 14y ago
  Its a simple matter really. If twice as many people are eating twice as much food, you'll need to print twice as much money to keep prices stable. Otherwise, the price of food will double. The central bank prints money. That is a fact. What people forget is the fact that this is useful to an economy. The central bank can abuse its power, and inflate away your cash holdings. (ie: print too much money). That is why BTC are pegged at 21 Million coins. So the question now is, what will an economy based off of a heavily depreciating asset look like. What are the risks?
dragontamer 14y ago
Higher interest rates will correlate to higher inflation. So on the contrary, Bitcoins are a deflationary economy. Deposits will have a negative interest rate (ie: holding your money in a bitcoin bank will correlate to fees), and borrowing BTC means you only will have to return bits of it. (ie: if I borrow 100 BTC from you today, I only will have to repay you 75 BTC two months from now). It is only fair, as people learn to expect BTC to keep growing in price. I don't think its a very healthy economy to be in, but its a completely different endgame scenario than what you describe.