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Bitcoin vs. Ben Bernanke
- joelberman 13y agoEvery article I read about Bitcoin has a picture of a metal bitcoin in it. I guess that is to make sure very few people get the point of what bitcoin is.
- superprime 13y agoIt's obviously a coin made out of a bit of metal.
- antonius 13y agoI'm sure people that read Bitcoin articles make their judgement through the articles' content as opposed to a picture.
- consz 13y agoI don't. Pictures are very appealing and easy to digest, I'd rather they be more clear with visual media than with the article itself.
- illuminate 13y agoThis is why USA Today exists.
- derefr 13y agoThey need a picture of something. The articles are laid out such that there's a hole labelled "insert illustration-team piece, falling back to relevant stock-image" on them before they ever get written. Suggest what else it could be for a Bitcoin article. Perhaps a visualization of a block-chain? A hash with a lot of zeroes in it? Satoshi walking away from his computer with a wheelbarrow of money?
- Falkon1313 13y agoPerhaps an illustration of a transaction occurring simply, directly, rapidly, and with a tiny fee compared to one requiring trips to the bank at both ends, forms to fill out, taking several days, passing through several intermediary financial organizations, and costing several expensive fees along the way. Cruft-free transactions are one of primary distinguishing characteristics of Bitcoin, right? But then when addressing the negatives, follow that up with an illustration of the current process to obtain Bitcoins.
- finnw 13y agoMetal bitcoins are real. https://www.casascius.com/ https://www.casascius.com/
- lolcraft 13y agoI'll admit that the WSJ here is not as laughably bad as some quotations from their infamous op-eds had led me to believe. Maybe I was too harsh with them. They seem to do the balance thing, or more correctly here, the common sense and economics thing, at least passably well. Either way, there are some real pieces of work here, misconceptions about economics that were dispelled before, again and again. You're going to have a laugh, I promise. Of course, let's start about some inflammatory comments about Mr. Leftwing Strawman, as per usual: did you know that hyperinflation is inevitable because ZIMBABWE!? "I'll use a visual aid," says Mr. Andresen. "He opens his wallet and presents me with a gift: a 10-trillion-dollar bill once issued by the government of Zimbabwe." Deflation is good, because SAVING! (Here the Calvinist roots of old-school good Flemish capitalism start showing again, with careless disregard to any theory of supply-demand equilibrium. How do I miss Schumpeter/Marx...) "If prices are falling, he says, it does encourage people to save instead of spend, because the currency will be worth more later. It encourages people to lend instead of borrow. [and that's a good thing]" (Yeah, because as we know, in a given economy at a given time there can be more lending than borrowing. Or that saving > spending doesn't mean a contraction in the economy, by the magic of Austerian Economics. You people...) A classic: fiat currency is a FAITH! Heathens! "Federal Reserve Bank of Dallas President Richard Fisher calls the U.S. dollar a 'faith-based currency.'" (Not pictured: other things based in "faith", like civil oversight over the military, the Constitution, the enforcement of laws, the concept of credit itself, the currently overpriced exchange value of gold... basically anything that isn't enforced by AK-47's, except of course those enforced by the promise of AK-47's) "[...] what about a digital currency programmed to maintain stable prices, avoiding mischief by central bankers as well as the possibility of deflation? He says the engineer in him likes the simplicity of Bitcoin's fixed money supply." Yeah, great engineering dude, let's disregard things like, you know, minimal acceptable performance for simplicity ;) You know, Unix was simple, but at least it didn't crash every five minutes. And the Apple II was simple, and it even had color! Had many laughs. Would read again.
- notahacker 13y agoI liked the anecdote about the delays in wire transfers for renting a house overseas whereas with Bitcoin "the whole world is your market". I'm going go out on a limb and suggest there's a bigger proportion of the world willing to accept rental deposits in dollars than Bitcoins...
- jrochkind1 13y agoIt's almost time for Mr. Andresen to get back to work. He shares some useful advice about Bitcoin: "I tell people it's still an experiment and only invest time or money you could afford to lose." If only investors could as easily follow that advice with fiat currencies.
- StavrosK 13y agoIsn't anybody else afraid of the implications of basically the equivalent of easily trackable cash? The government can easily mandate that each individual declare their wallets and track every single penny you spend and where you spent it. Sounds like a nightmare scenario to me.
- nwh 13y agoYou can make it fairly difficult to tract the movement of money through different wallets. Verging on money laundering at times.
- moe 13y agoYou can easily anonymize your coins, either by tumbling or by using any number of wallets that are not associated with you.
- StavrosK 13y agoYeah, but that's like saying "you can easily launder your cash by using a laundering service".
- moe 13y agoNo. It's not like saying that at all. All it means is that you can trivially have any number of wallets and it's up to you how you use them. Same as with cash.
- StavrosK 13y agoExcept cash isn't trackable. How are you going to do this in a world where undeclared wallets are illegal?
- Andrew_Quentin 13y agoWell, the government could make undeclared cash illegal.
- Symmetry 13y agoDecent enough article, but whenever talking about Bitcoins I find it helpful to separate the various roles that money performs. That is, Bitcoin is an awesome medium of exchange, a risky store of value, and a horrible medium of account. Just use it for what it's good for and everything's fine. http://en.wikipedia.org/wiki/Medium_of_exchange http://en.wikipedia.org/wiki/Medium_of_exchange http://en.wikipedia.org/wiki/Store_of_value http://en.wikipedia.org/wiki/Store_of_value http://en.wikipedia.org/wiki/Unit_of_account http://en.wikipedia.org/wiki/Unit_of_account
- eric_bullington 13y agoI actually think it's a mediocre medium of exchange, due to the fact that transactions are not immediate, but rather can take as long as an hour or more for a reasonable level of confidence in the integrity of a transaction. There are competing cryptocurrencies being developed now that are much better media of exchange since transactions are both secure and immediate. I think Bitcoin's real promise is as a store of value. Yes, it's extremely volatile now, and people are getting used to the fact that if you lose your Bitcoins, they're gone for good. But compare Bitcoins to cash (tends to lose its value over time) and gold (expensive to store, hard to exchange). It's also incredibly easy to exchange Bitcoins for other digital currencies, like the ones I refer to above. I think that once Bitcoin reaches a large market cap, like the size of gold, it will be much less volatile, and less risky. At that point, all the advantages above will become apparent. So Bitcoin's future may well be as a digital reserve currency.
- Retric 13y agoYour assuming it makes it that far, I still think Bitcoins will be dead within 50 years and a far more useful cripto currency will take it's place.
- eric_bullington 13y agoPerhaps, but historically, once a currency gains a foothold it is usually extremely durable. I think it's far more likely that a successful new cryptocurrency will integrate Bitcoin into its design, thereby increasing the utility of both currencies (this is what Ripple is aiming toward, for example). But this is uncharted territory, so who knows?
- irickt 13y agoThe biggest risk to Bitcoin is that it will become the Myspace of currencies as its many future competitors come along.
- drcode 13y agoYeah, I'm worried what happens if one of the big three (Apple/Amazon/Google) builds a bitcoin variant pegged to a baseline dollar price, which also has a large marketing budget.
- aakilfernandes 13y agoInteresting point: "And for those who wish to avoid both inflation and deflation, what about a digital currency programmed to maintain stable prices, avoiding mischief by central bankers as well as the possibility of deflation?" My gut is that this is not possible. Enforcing stable prices requires constant data about price levels, and with decentralized markets there doesn't seem to be an accurate way to get that data.
- ph0rque 13y agoI wonder if that part is crowdsourceable, somehow... basically, tie the transaction volume/demand/etc. to its worth.
- illuminate 13y agoIt is not crowdsourceable when the speculators move to work against such a motive.
- eric_bullington 13y agoUnless a large portion of the marketplace for those goods and services moves to the currency's p2p client itself, at which point it becomes trivial to integrate price levels (i.e., a "basket of goods and services") into the protocol. Imagine if an expanded ebay marketplace, including a wide range of goods and services, were integrated into today's Bitcoin protocol. Unlikely, and very hard to implement, but not impossible.
- skylan_q 13y agoHistorically speaking, the free market will gravitate to a currency that has a stable price and appreciates at least a little bit over time. No one wants to hold a depreciating currency. We use that fact to drive people to spend by driving interest rates down. Hence the lack of savings and the high levels of consumer spending.
- nhaehnle 13y agoThe "historically" is a bit misplaced. Historically speaking, people almost universally ended up using whichever currency was used for taxation and in use by other significant institutions for practical purposes. Inflation basically never had anything to do with that. Rich people might have been able to use other things as a store of value though, but things can only become lasting stores of value if they start out having some initial use.
- PaperclipTaken 13y agoThere are a few challenges facing Bitcoin, and I think that in the long run Bitcoin will not be the chosen digital currency of the world. The first problem is that there is a highly predictable and (at the moment) constant supply of bitcoins, which means that the value of the coin will adjust like a commodity as more or less people start to use it. It's like Gold or Oil in the sense that when people want it, it's worth a lot, and when people don't want it, it's not as expensive. That chains the value to the demand, meaning that any time you use bitcoin as a store-of-value, you are putting yourself at the complete mercy of the market. Many advocates believe that as the number of people using bitcoin grows the price will stabilize, but I think that using bitcoin as a store-of-value is going to end up like using the gold standard, especially because some early adopters have tens of thousands to even a million (Satoshi is believed to have a million) bitcoins, and any of them could decide to 'cash out', which would dramatically change the supply and potentially affect the whole market. Another problem is that the currency is highly traceable, and while you can do things to obfuscate your spending habits there are lots of techniques involving statistical analysis that shed doubt on the effectiveness of obfuscation. You can take this back to the "I have nothing to hide" argument, but there are plenty of powerful parties that will be more interested in a currency that can't be traced (imagine big business or big finance), and an untraceable currency would certainly be more attractive. But to me the biggest current problem with bitcoin is the uncertainty. There are many conflicting schools of thought in economics each with their own reasons why bitcoin is good or bad. But beyond the basics, macroeconomics often involves a lot of voodoo, and for any new paradigm there will be major schools of thought that will believe the new paradigm is bad or unstable in some way. There is no real way to fight this except to accept that we ultimately have no idea how new economic paradigms will affect our world, and that some of the naysayers may be correct and thus caution should be used.
- drcode 13y ago> ... you are putting yourself at the complete mercy of the market. This is the "No one will want bitcoins because everybody's buying them" argument- I don't see much credibility in it. Also, what is an example of a commodity that isn't at the mercy of supply and demand? > Another problem is that the currency is highly traceable ... I agree with you that that is a major issue, and might hurt the popularity of bitcoin in the long run. Bitcoin is strange in that it separates the argument of "I don't want the government to control what I do" and "I don't want the government to know what I do". I'm not sure how this will play out long term. (yes, I know there is pseudo-anonymity, but if the tax man comes to you and asks you "how did you get the money to buy that car?" the block chain makes it possible to confirm/refute your response.) > ... and thus caution should be used. Yeah, I'm tired of folks who think they know with 100% certainty how the economy works. I have some good guesses that suggest to me bitcoin is going to do very well, but things could play out any number of ways and I have no clue whether my guesses are right.
- bayesianhorse 13y agoCan we please stop talking about Bitcoin replacing the Dollar? Bitcoin isn't suited for local transactions or for contracts on a large scale. That might change, but the value of the bitcoin protocol is in other applications.
- lucian303 13y ago"Thousands of mostly small online merchants are already accepting payment in Bitcoin, though this virtual currency has no intrinsic value and isn't tied to anything that does." True and also true: Thousands of mostly small online merchants are already accepting payment in _US Dollars_, though this _physical_ currency has no intrinsic value and isn't tied to anything that does.
- em70 13y agoI have yet to see it being pointed out that none of the encryption in use for these cryptocurrencies will necessarily remain extremely hard to break for long. A good question is: what if bitcoin or something alike does effectively gain traction and one day a math breakthrough (or a computational tech one) make the crypto weak? How much wealth will be destroyed then? Who would you turn to for help? Our system is not perfect, but taking central banks out of the loop is not a way to improve it. It would be much more useful to find ways to push down financial transaction and currency exchange costs.
- nijk 13y agoStealing is wealth transfer, not wealth destruction. And it wouldn't be anonymous, so it could be investigated and relatiated. The same argument applies to bank robberies.
- em70 13y agoThe destruction would be by the lack of trust. Since there is nothing but supply and demand considerations keeping bitcoin's value high, guess what would happen if demand were to vanish
- em70 13y agoThe destruction would be by the lack of trust. Since there is nothing but supply and demand considerations keeping bitcoin's value high, guess what would happen if demand were to vanish
- nijk 13y agoStealing is wealth transfer, not wealth destruction. And it wouldn't be anonymous, so it could be investigated and relatiated. The same argument applies to bank robberies.
- nijk 13y agoStealing is wealth transfer, not wealth destruction. And it wouldn't be anonymous, so it could be investigated and relatiated. The same argument applies to bank robberies.
- wfunction 13y agoThe terrifying part of his job is that almost all of the current Bitcoin services now use the same software, so that "any change to the core code has potentially disastrous impact. If everybody rolls out a new version and there's some problem with it, the whole Bitcoin payment network could grind to a halt." This is the part that has always scared me.
- nijk 13y agoThis already happened in he 0.8 fork
- wfunction 13y agoI know, but it's not going to be as easy to fix if it happens on a massive scale, i.e. when everyone's using it.
- drcode 13y agoIf the core bitcoin team tells miners their mining is going to be ignored if it isn't part of a specific fork because of some credible reason, the miners will follow, no matter how many of them there are.
- querulous 13y agothat's not how bitcoin works. the blockchain (the ledger) can fork into competing chains. if your client and my client disagree about which is the live chain we can't transact. the core bitcoin team can only suggest which chain to consider the live chain. anyone who disagrees is free to use different chains.
- drcode 13y agoRight, and I'm saying almost everyone is going to use the chain recommended by the core bitcoin team.
- 13y ago
- hexonexxon 13y agoBitcoin transactions are visible/traceable, but doesn't mean you can match txn to identities. If there is one address in the middle of you paying somebody, and that address was generated either offline or through Tor, there's no way to prove you own that address unless somebody can extract the private keys from your seized hardware and match it up to the public address. Transactions don't prove anything, anyways. If you sell on localbitcoins or IRC, you have no idea that the anon guy who showed up to buy them with untraceable cash isn't directly 3rd party funding his Silk Rd account. If you look at the blockchain it would appear I paid into SR directly however I sold coins to some random guy I'll never see again, who's contact info I also don't have. Since I sell under my countries $10k cash transaction limit I don't need to take ID or retain contact info. Tracing that transaction proves nothing. I also can't recall any of the major bitcoin heists being recovered. Only one exchange (mtgox) has a history of holding transactions for ID if they appear to be stolen coins, and they've only done it twice: first time was cleared up with ID, second time they're still holding the coins (bitcoinica/linode theft). Every other bitcoin heist you've heard of through the years the trace leads to nowhere.
- deleted 13y ago[deleted]