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Yes, they are. The fundamental problem of Bitcoin is the massive number that were accumulated when they were cheap. It's a problem more-so than any of the techn

Yes, they are. The fundamental problem of Bitcoin is the massive number that were accumulated when they were cheap. It's a problem more-so than any of the technical problems that have been discovered to date or even a moral preference for derivatives that permit greater anonymity. The problem with Bitcoin being a major currency is that the early miners have accumulated large portions of the total share of Bitcoin wealth. That's a fundamental problem that does not exist with fiat currency like money, and while many consider it an asset that Bitcoin's inflation is highly regulated, very few individuals would be comfortable with the idea that certain individuals would own billions or trillions of USD worth of them in the future. And that is what will happen if Bitcoin maintains its upward trajectory in value and more and more people use Bitcoins as a form of wealth. What banks would feel vastly more comfortable with would be certain technological abuses of the Bitcoin protocol to make it a substitute for real money. For example, using the transactions to create cryptographic, trusted proofs of USD transfers with negligible amounts of BTC actually involved. Yes, Bitcoins are the New Pogs, and some folks early on bought out the first few production runs of them hoping that people would eventually replace currency with their New Pogs. That notion should be deeply disconcerting to anyone who invests in BTC (either in mining or with money) because at some point those people that have a large portion of the total amount of BTC that can ever exist might decide to cash out or abuse the market.

Detrus 13y ago
Weren't there some attempts to regulate?
possibilistic 13y ago
> The fundamental problem of Bitcoin is the massive number that were accumulated when they were cheap. [...] The problem with Bitcoin being a major currency is that the early miners have accumulated large portions of the total share of Bitcoin wealth. Should (yet another) digital currency be created to address this issue? Imagine if every person on earth was assigned an equal amount of such a digital currency (ignore the infeasibility). Would that be a healthier market?
vectorpush 13y ago
I'm not an economist, I don't see why this is a deal breaking issue. Could you please elaborate? If they spend or trade the coins, then they are distributed, if they do not, then its just cash under a mattress. Additionally, it seems to me that a trillion USD "worth" of bitcoin is only a theoretical trillion seeing as there aren't any institutions capable of (or willing to) cash such a sum.
- tedunangst 13y ago
  People who are wealthy today but don't own bitcoins have little incentive to welcome the bitcoin nouveau riche to their ranks. Typically when you swap out old pesos for new pesos, you have a fixed exchange rate such that the rich stay rich and the poor stay poor.
- deleted 13y ago
  [deleted]
skinnycow 13y ago
Man oh man are you going to be upset when you find about the distribution of USD in America.
tolmasky 13y ago
Because it's not like a small percentage of the population owns a disproportionate amount of the capital already right?
DustinCalim 13y ago
If it weren't for the early miners, who believed in the currency enough to invest time and money in machines to mine them, I don't think there would be Bitcoin wealth to distribute... If this is your belief, there are plenty of Altcoins trading for < $0.25 that you can buy up now and have this theory work to your advantage. The problem is nobody wants to be the first to leap(it's very human to avoid risk); they wait first for social confirmation but in doing so, lose their advantage. I suggest you read about coin coloring and take a closer look at the altcoins.
WizzleKake 13y ago
> The problem with Bitcoin being a major currency is that the early miners have accumulated large portions [...] That's a fundamental problem that does not exist with fiat currency like money You have identified this as a problem without explaining why it is a problem. Can you elaborate?
- glomph 13y ago
  If it is true that a large proportion of bitcoins belong to s a small number of people it has some pretty extreme consequences. It puts the effective monetary policy of bitcoin in the hands of random individuals. If they want the value to go down they can sell more, if they want it to go up they can sell less. Controlling that amount of the market makes them a defacto mint. That is a worrying scenario. It also is a complete opposite of the decentralization that bitcoin is supposed to represent.
iamjustin 13y ago
Could I transfer my Pogs anywhere in the world, in a matter of minutes, for an incredibly small fee? Were Pogs also a distributed public ledger? Was there any reason to use Pogs over the dollar? If the answer is 'No', maybe you should re-think your position. The amazing thing about Bitcoin is the network. Saying it's "the new pogs" shows a huge lack of understanding of what Bitcoin is.
greyman 13y ago
I think the real question now is, whether Bitcoin can be stopped. For example, banks are "not feeling comfortable", since more fiat money are being extracted from their money network and put into BTC network. For example, I took about half of my savings and bought bitcoins - all my bank can see is, that the money "vanished", and they can't collect any more fees from services they could offer me handling those money. Actually, no bank knows where the value now is, since I made a lot of BTC transactions since then. It's same with the wealthy people - yes, they will not feel comfortable about the idea that other individuals will own most wealth in the future. But what can they do about it? It's like today: most people are not comfortable with the fact that just a few individuals or their families control 90% of the total wealth, but that is about all they can do, feel uncomfortable about it. With bitcoin it's similar, it's not that bitcoin will succeed only by making banks and rich people comfortable, bitcoin might succeed despite that. Also, I realized an interesting property about the BTC network, which is not talked about much. Namely, people who invested into BTC, do not have much incentive to do damage to the network, since that would only cause the BTC value to go down, and they would incur loses to themselves - they will realize, that by behaving "properly" they can gain more. It's more possible that some hostile government or other entity will try to sink bitcoin, but it might be hard to achieve. And if their attack will not be very quick, the BTC owners can detect that something is wrong, and could quickly transfer the money to alternative cryptocurrency.
- diminoten 13y ago
  That money didn't "vanish". You paid someone for those coins, and that person put their money into a bank.
- dragonwriter 13y ago
  > For example, I took about half of my savings and bought bitcoins - all my bank can see is, that the money "vanished" Nope. Your bank can see that that money was transferred out of your bank account and where it went -- quite likely, to another bank account (possibly, even, at the same bank -- so many of them being global institutions). Currency isn't consumed when its used to buy things, whether its a car or a bitcoin.
- notahacker 13y ago
johnwyles 13y ago
You whole argument is based on the premise that these early miners have not already sold Bitcoin and still hold it. Besides, even if they were holding it, the market could not absorb them selling it all at once so those miners would be very wise to sell slowly over time and at the demand. In my opinion I think most of the early miners have already cashed out and what we are seeing now is the exchange of already "used" bitcoins.
- maxerickson 13y ago
  There are millions of bitcoin that have never changed hands.
  - johnwyles 13y ago
    I am not claiming you are wrong by asking, I am genuinely curious, how do you know?
    - maxerickson 13y ago
      People have analyzed the blockchain. Here is a paper that discusses an only somewhat out of date analysis: http://cseweb.ucsd.edu/~smeiklejohn/files/imc13.pdf http://cseweb.ucsd.edu/~smeiklejohn/files/imc13.pdf So in April of this year, 64% of bitcoin had never traded hands and there were about 4 million bitcoins circulating. I also think it is fairly likely that there are people monitoring the 'Satoshi addresses'.
letstryagain 13y ago
Luckily Bitcoin's success does not depend on the banks 'feeling comfortable' with it.
maurycy 13y ago
It could be argued that in the long term it simply does not matter: http://en.wikipedia.org/wiki/Coase_theorem http://en.wikipedia.org/wiki/Coase_theorem

Detrus 13y ago

Weren't there some attempts to regulate?

possibilistic 13y ago

> The fundamental problem of Bitcoin is the massive number that were accumulated when they were cheap. [...] The problem with Bitcoin being a major currency is that the early miners have accumulated large portions of the total share of Bitcoin wealth. Should (yet another) digital currency be created to address this issue? Imagine if every person on earth was assigned an equal amount of such a digital currency (ignore the infeasibility). Would that be a healthier market?

vectorpush 13y ago

I'm not an economist, I don't see why this is a deal breaking issue. Could you please elaborate? If they spend or trade the coins, then they are distributed, if they do not, then its just cash under a mattress. Additionally, it seems to me that a trillion USD "worth" of bitcoin is only a theoretical trillion seeing as there aren't any institutions capable of (or willing to) cash such a sum.

tedunangst 13y ago
People who are wealthy today but don't own bitcoins have little incentive to welcome the bitcoin nouveau riche to their ranks. Typically when you swap out old pesos for new pesos, you have a fixed exchange rate such that the rich stay rich and the poor stay poor.
deleted 13y ago
[deleted]

skinnycow 13y ago

Man oh man are you going to be upset when you find about the distribution of USD in America.

tolmasky 13y ago

Because it's not like a small percentage of the population owns a disproportionate amount of the capital already right?

DustinCalim 13y ago

If it weren't for the early miners, who believed in the currency enough to invest time and money in machines to mine them, I don't think there would be Bitcoin wealth to distribute... If this is your belief, there are plenty of Altcoins trading for < $0.25 that you can buy up now and have this theory work to your advantage. The problem is nobody wants to be the first to leap(it's very human to avoid risk); they wait first for social confirmation but in doing so, lose their advantage. I suggest you read about coin coloring and take a closer look at the altcoins.

WizzleKake 13y ago

> The problem with Bitcoin being a major currency is that the early miners have accumulated large portions [...] That's a fundamental problem that does not exist with fiat currency like money You have identified this as a problem without explaining why it is a problem. Can you elaborate?

glomph 13y ago
If it is true that a large proportion of bitcoins belong to s a small number of people it has some pretty extreme consequences. It puts the effective monetary policy of bitcoin in the hands of random individuals. If they want the value to go down they can sell more, if they want it to go up they can sell less. Controlling that amount of the market makes them a defacto mint. That is a worrying scenario. It also is a complete opposite of the decentralization that bitcoin is supposed to represent.

iamjustin 13y ago

Could I transfer my Pogs anywhere in the world, in a matter of minutes, for an incredibly small fee? Were Pogs also a distributed public ledger? Was there any reason to use Pogs over the dollar? If the answer is 'No', maybe you should re-think your position. The amazing thing about Bitcoin is the network. Saying it's "the new pogs" shows a huge lack of understanding of what Bitcoin is.

greyman 13y ago

I think the real question now is, whether Bitcoin can be stopped. For example, banks are "not feeling comfortable", since more fiat money are being extracted from their money network and put into BTC network. For example, I took about half of my savings and bought bitcoins - all my bank can see is, that the money "vanished", and they can't collect any more fees from services they could offer me handling those money. Actually, no bank knows where the value now is, since I made a lot of BTC transactions since then. It's same with the wealthy people - yes, they will not feel comfortable about the idea that other individuals will own most wealth in the future. But what can they do about it? It's like today: most people are not comfortable with the fact that just a few individuals or their families control 90% of the total wealth, but that is about all they can do, feel uncomfortable about it. With bitcoin it's similar, it's not that bitcoin will succeed only by making banks and rich people comfortable, bitcoin might succeed despite that. Also, I realized an interesting property about the BTC network, which is not talked about much. Namely, people who invested into BTC, do not have much incentive to do damage to the network, since that would only cause the BTC value to go down, and they would incur loses to themselves - they will realize, that by behaving "properly" they can gain more. It's more possible that some hostile government or other entity will try to sink bitcoin, but it might be hard to achieve. And if their attack will not be very quick, the BTC owners can detect that something is wrong, and could quickly transfer the money to alternative cryptocurrency.

diminoten 13y ago
That money didn't "vanish". You paid someone for those coins, and that person put their money into a bank.
dragonwriter 13y ago
> For example, I took about half of my savings and bought bitcoins - all my bank can see is, that the money "vanished" Nope. Your bank can see that that money was transferred out of your bank account and where it went -- quite likely, to another bank account (possibly, even, at the same bank -- so many of them being global institutions). Currency isn't consumed when its used to buy things, whether its a car or a bitcoin.
notahacker 13y ago

johnwyles 13y ago

You whole argument is based on the premise that these early miners have not already sold Bitcoin and still hold it. Besides, even if they were holding it, the market could not absorb them selling it all at once so those miners would be very wise to sell slowly over time and at the demand. In my opinion I think most of the early miners have already cashed out and what we are seeing now is the exchange of already "used" bitcoins.

maxerickson 13y ago
There are millions of bitcoin that have never changed hands.
- johnwyles 13y ago
  I am not claiming you are wrong by asking, I am genuinely curious, how do you know?
  - maxerickson 13y ago
    People have analyzed the blockchain. Here is a paper that discusses an only somewhat out of date analysis: http://cseweb.ucsd.edu/~smeiklejohn/files/imc13.pdf http://cseweb.ucsd.edu/~smeiklejohn/files/imc13.pdf So in April of this year, 64% of bitcoin had never traded hands and there were about 4 million bitcoins circulating. I also think it is fairly likely that there are people monitoring the 'Satoshi addresses'.

letstryagain 13y ago

Luckily Bitcoin's success does not depend on the banks 'feeling comfortable' with it.

maurycy 13y ago

It could be argued that in the long term it simply does not matter: http://en.wikipedia.org/wiki/Coase_theorem http://en.wikipedia.org/wiki/Coase_theorem