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Ah, Krugman... love that guy. He's my favorite comedian! > But Bitcoin isn't the anarchocapitalist utopia enabler that converts the world into Galt's Gulch [..

Ah, Krugman... love that guy. He's my favorite comedian! > But Bitcoin isn't the anarchocapitalist utopia enabler that converts the world into Galt's Gulch [...] I think the Austrians would be the first to admit that the world is complex.[0] ;-) To be fair, BitCoin has come extraordinarily far in an incredibly short period of time. Just imagine trying to explain its present-day state to almost anyone two to three years ago. It seems to me, the whole point of this posting is that trying to judge BitCoin as a technolibertarian savior today is a bit like judging the internet's equivalence to a fax machine in 1998: it's just too early to tell, especially if (like Krugman), you have so little vision. Who knows, maybe BitCoin is only cryptocurrency's ARPANET. Just give it a minute. [0] http://www.goodreads.com/quotes/102966-the-curious-task-of-economics-is-to-demonstrate-to-men http://www.goodreads.com/quotes/102966-the-curious-task-of-e...

parasubvert 14y ago
"Just give it a minute"? Krugman isn't saying "shut it down", he is making fun of the euphoric media reaction that looks a lot more like the Pets.com IPO than anything rational. The problem with Bitcoin is twofold, - it presumes (by some) to be changing the nature of money, but if you look closely, it really isn't; its just fiat currency with a different framework for issuing the fiat other than the nation-state. - there are some very old and obvious issues with its specific limitations (such as mining and being a fixed quantity). This is not necessarily a fundamental limitation, however - just limits its creators declared by fiat. But it betrays a misunderstanding of what money is. None of the critiques have anything to do with crypto currency in general or the cooler/geekier aspects of Bitcoin like the global ledger. Bitcoin is a useful experiment but let's also not get ahead of ourselves.
- richcollins 14y ago
  Maybe you can explain why the fixed quantity is a problem? If it had some way to allow bitcoins to "split" while maintaining their owner would that fix the problem?
  - nl 14y ago
    Maybe you can explain why the fixed quantity is a problem? See http://en.wikipedia.org/wiki/Deflation#Deflationary_spiral http://en.wikipedia.org/wiki/Deflation#Deflationary_spiral If it had some way to allow bitcoins to "split" while maintaining their owner would that fix the problem? No. The fact that Zimbabwe dollars were available in multiple of millions as a single note didn't fix hyperinflation in Zimbabwe.
    - richcollins 14y ago
      So that provides evidence that it doesn't work?
      - nl 14y ago
        Why would it work? As I said elsewhere: The original deflationary spiral was defined in 1933[1]. The spiral is caused by the growth in value of currency AND a decrease in velocity of circulation. Splitting bitcoins wouldn't solve either of these problems in the same way having higher denomination currency doesn't solve inflation.
        richcollins 14y ago
        Right so that shows that what Keynesians actually advocate is theft. They go about it the easy way, printing money instead of taking it directly.
  - parasubvert 14y ago
    The fixed quantity is a problem because of a general theory of how money works. Bitcoin is effectively an artifically limited gold standard, with all of its positive and negative attributes. In (very) short terms: consider an economy with three goods: money, bonds, and output (i.e. stuff or servcies we buy). There's a supply and demand for all three. Except one of them (money) has a finite supply limit. When supply of bonds is high and demand low (such as when we've had a financial crisis and people are paying down debt), we eventually run into a case where price of bonds (i.e. their interest rates) are 0%. That means that the price of money soars, and the price of output tanks. That's called deflation, and it's really painful to the productive economy. People sitting on money doing nothing are fine, but output falls dramatically. The working class are wiped out in a spiral of "making less & spending less". Most of us would rather have an economy where output grows and everyone is better off. In theory, the ability to "split" bitcoins infinitely would fix the problem, but I think people may have psychological problems with dealing with millionth's of a fraction of a bitcoin for no reason except that the Bitcoin creaters arbitrarily decided there would be no more than 21 million of them.

parasubvert 14y ago

"Just give it a minute"? Krugman isn't saying "shut it down", he is making fun of the euphoric media reaction that looks a lot more like the Pets.com IPO than anything rational. The problem with Bitcoin is twofold, - it presumes (by some) to be changing the nature of money, but if you look closely, it really isn't; its just fiat currency with a different framework for issuing the fiat other than the nation-state. - there are some very old and obvious issues with its specific limitations (such as mining and being a fixed quantity). This is not necessarily a fundamental limitation, however - just limits its creators declared by fiat. But it betrays a misunderstanding of what money is. None of the critiques have anything to do with crypto currency in general or the cooler/geekier aspects of Bitcoin like the global ledger. Bitcoin is a useful experiment but let's also not get ahead of ourselves.

richcollins 14y ago
Maybe you can explain why the fixed quantity is a problem? If it had some way to allow bitcoins to "split" while maintaining their owner would that fix the problem?
- nl 14y ago
  Maybe you can explain why the fixed quantity is a problem? See http://en.wikipedia.org/wiki/Deflation#Deflationary_spiral http://en.wikipedia.org/wiki/Deflation#Deflationary_spiral If it had some way to allow bitcoins to "split" while maintaining their owner would that fix the problem? No. The fact that Zimbabwe dollars were available in multiple of millions as a single note didn't fix hyperinflation in Zimbabwe.
  - richcollins 14y ago
    So that provides evidence that it doesn't work?
    - nl 14y ago
      Why would it work? As I said elsewhere: The original deflationary spiral was defined in 1933[1]. The spiral is caused by the growth in value of currency AND a decrease in velocity of circulation. Splitting bitcoins wouldn't solve either of these problems in the same way having higher denomination currency doesn't solve inflation.
      - richcollins 14y ago
        Right so that shows that what Keynesians actually advocate is theft. They go about it the easy way, printing money instead of taking it directly.
- parasubvert 14y ago
  The fixed quantity is a problem because of a general theory of how money works. Bitcoin is effectively an artifically limited gold standard, with all of its positive and negative attributes. In (very) short terms: consider an economy with three goods: money, bonds, and output (i.e. stuff or servcies we buy). There's a supply and demand for all three. Except one of them (money) has a finite supply limit. When supply of bonds is high and demand low (such as when we've had a financial crisis and people are paying down debt), we eventually run into a case where price of bonds (i.e. their interest rates) are 0%. That means that the price of money soars, and the price of output tanks. That's called deflation, and it's really painful to the productive economy. People sitting on money doing nothing are fine, but output falls dramatically. The working class are wiped out in a spiral of "making less & spending less". Most of us would rather have an economy where output grows and everyone is better off. In theory, the ability to "split" bitcoins infinitely would fix the problem, but I think people may have psychological problems with dealing with millionth's of a fraction of a bitcoin for no reason except that the Bitcoin creaters arbitrarily decided there would be no more than 21 million of them.