4 ms·

You nailed it. My view is that bitcoin fans tend to be so enamoured with the cool technology that they wholly ignore the economics and social aspects of it. Fr

You nailed it. My view is that bitcoin fans tend to be so enamoured with the cool technology that they wholly ignore the economics and social aspects of it. From a mainstream view though, the technology is completely irrelevant - no one cares if iPhone apps are written in Objective C or Lisp - what matters is the end product and what people can do with it. When someone like Krugman looks at bitcoin, they do not see any of the technology (nor should they). They see a deflationary currency with vicious boom-bust cycles. Knowing the miserable experience with such currencies in the past, they don't think highly of this particular one.

cconroy 14y ago
Does it not have business appeal in that it allows transacting parties to pay direct -- without a middle man (banker) collecting fees? Also it being deflationary (to me) is as much as a problem as USD being inflationary. I don't spend all my USD as quickly as possible fearing next week those things will be more expensive. EDIT: Also rereading the post there is nothing substantial in his arguments to support his conclusion -- mostly focusing on red herrings to discredit it: He may not like it politically.
- AaronFriel 14y ago
  I think part of the deflationary problem is that as bitcoins become more valuable, the initial holders of bitcoins get an increasingly large share of global wealth. Suppose bitcoin continues on its current trajectory. The Winklevoss twins allegedly invested $11 million into Bitcoins, and they allege they own 1% of all the coins. If they hold onto that asset and say, the entire rest of the world switches over to bitcoin, various sources have suggested the total money supply is between 50 and 75 trillion dollars. Assume that this amount converts to 21 million bitcoins - the 110-120 thousand coins they own will be worth a quarter of a trillion dollars. The Winklevoss twins will have made over a two million percent return, doing nothing but joining a bandwagon with a decently sized investment. This is, I think, one of the big problems with bitcoin. The incentive to "join in" is going to be less and less and less because existing owners of bitcoins will have an enormous amount of wealth. That's not even the largest bitcoin account. There's one account listed[1] with nearly 450,000 coins - imagine them controlling 2.1% of the global monetary supply (over 1 trillion dollars) merely for being an early adopter. Ugh. Disgusting. [1] http://bitcoinreport.appspot.com/ http://bitcoinreport.appspot.com/

cconroy 14y ago

Does it not have business appeal in that it allows transacting parties to pay direct -- without a middle man (banker) collecting fees? Also it being deflationary (to me) is as much as a problem as USD being inflationary. I don't spend all my USD as quickly as possible fearing next week those things will be more expensive. EDIT: Also rereading the post there is nothing substantial in his arguments to support his conclusion -- mostly focusing on red herrings to discredit it: He may not like it politically.

AaronFriel 14y ago
I think part of the deflationary problem is that as bitcoins become more valuable, the initial holders of bitcoins get an increasingly large share of global wealth. Suppose bitcoin continues on its current trajectory. The Winklevoss twins allegedly invested $11 million into Bitcoins, and they allege they own 1% of all the coins. If they hold onto that asset and say, the entire rest of the world switches over to bitcoin, various sources have suggested the total money supply is between 50 and 75 trillion dollars. Assume that this amount converts to 21 million bitcoins - the 110-120 thousand coins they own will be worth a quarter of a trillion dollars. The Winklevoss twins will have made over a two million percent return, doing nothing but joining a bandwagon with a decently sized investment. This is, I think, one of the big problems with bitcoin. The incentive to "join in" is going to be less and less and less because existing owners of bitcoins will have an enormous amount of wealth. That's not even the largest bitcoin account. There's one account listed[1] with nearly 450,000 coins - imagine them controlling 2.1% of the global monetary supply (over 1 trillion dollars) merely for being an early adopter. Ugh. Disgusting. [1] http://bitcoinreport.appspot.com/ http://bitcoinreport.appspot.com/