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Hey, I know you hate Bitcoin and think it's a pyramid scheme and everything, but isn't it good for smart people, and wouldn't its success create fricture among

Hey, I know you hate Bitcoin and think it's a pyramid scheme and everything, but isn't it good for smart people, and wouldn't its success create fricture among the elites (like you are always advocating)?

michaelochurch 14y ago
It's a simplification to say that I hate it. The work is impressive. If there were a Bitcoin course on Coursera on how the thing works, I'd sign up and take it. I don't like the forced deflation. Deflation encourages hoarding and protects elites. With Magic: the Gathering (Mt. Gox has me connecting the two) the hoarding behavior is actually good because it keeps unbalanced cards out of play. With BitCoin, it's going to lock a lot of the stuff up with hoarders. That could destroy it, insofar as if no one's using it, the market becomes illiquid, compromising value and possibly causing panic sales. The thing certainly isn't ready for prime time as a currency. Also, there's a pretty easy (and legal) way one could destroy BitCoin. Right now, there are no reserve requirements, because it's not a real currency. Start a bank. Make sure it's a limited liability corporation, because this is a bit risky (bank runs). Let people deposit BTC and then lend them out. Now you've put a money multiplier on BTC, and without the reserve requirement, that's unbounded. Goodbye, scarcity. Goodbye, $147 BTC. At that point, it's unclear that BitCoin has any value, until regulations come in regarding reserve requirements.
- dasmoth 14y ago
  A fractional-reserve BitBank will only be noticeably inflationary if it can take a substantial amount in deposits, then find some people to borrow them. Since most of the "convenience" arguments for keeping traditional currencies in a bank rather than under your mattress don't seem to apply here, the only reason anyone's going to make a deposit is if the interest on offer appears to justify the risk. Without the backing of a government deposit insurance scheme, I reckon that translates to both a high interest rate AND probably some degree of transparency to convince depositors it's not a complete scam. Could be an interesting project, but hard to see it causing a major shift in BTC values.

michaelochurch 14y ago

It's a simplification to say that I hate it. The work is impressive. If there were a Bitcoin course on Coursera on how the thing works, I'd sign up and take it. I don't like the forced deflation. Deflation encourages hoarding and protects elites. With Magic: the Gathering (Mt. Gox has me connecting the two) the hoarding behavior is actually good because it keeps unbalanced cards out of play. With BitCoin, it's going to lock a lot of the stuff up with hoarders. That could destroy it, insofar as if no one's using it, the market becomes illiquid, compromising value and possibly causing panic sales. The thing certainly isn't ready for prime time as a currency. Also, there's a pretty easy (and legal) way one could destroy BitCoin. Right now, there are no reserve requirements, because it's not a real currency. Start a bank. Make sure it's a limited liability corporation, because this is a bit risky (bank runs). Let people deposit BTC and then lend them out. Now you've put a money multiplier on BTC, and without the reserve requirement, that's unbounded. Goodbye, scarcity. Goodbye, $147 BTC. At that point, it's unclear that BitCoin has any value, until regulations come in regarding reserve requirements.

dasmoth 14y ago
A fractional-reserve BitBank will only be noticeably inflationary if it can take a substantial amount in deposits, then find some people to borrow them. Since most of the "convenience" arguments for keeping traditional currencies in a bank rather than under your mattress don't seem to apply here, the only reason anyone's going to make a deposit is if the interest on offer appears to justify the risk. Without the backing of a government deposit insurance scheme, I reckon that translates to both a high interest rate AND probably some degree of transparency to convince depositors it's not a complete scam. Could be an interesting project, but hard to see it causing a major shift in BTC values.