4 ms·

Krugman has said over and over again that bitcoin is bubble. He is right. But Krugman has failed to understand a crucial aspect about bitcoin - it is truly an i

by jostmey 13y ago

Krugman has said over and over again that bitcoin is bubble. He is right. But Krugman has failed to understand a crucial aspect about bitcoin - it is truly an international currency. Here is why this is so important. Krugman argues that someday news about bitcoin will come out that is so bad it will scare people away from bitcoin. This will certainly happen, as it has happened already. But bad news is localized. Just because China may ban bitcoins does not mean that people will stop using it elsewhere. The "bad news" would have to be truly world-wide for everyone to abandon bitcoin altogether. Anything short of that, and the bubble will continue onward.

Estragon 13y ago
A key foundation of a modern nation's power over its citizens is the ability to arbitrarily create and destroy the national currency, to legitimately demand that taxes be paid in that currency, and to thus be able to use it to purchase arbitrary goods and services. It seems quite likely that major national governments will band together to ban transfers between bitcoin and their national currencies once they realize what a threat a wholesale shift to bitcoin would pose to their power to tax and spend.
- codex 13y ago
  To any given government, Bitcoin looks like just another foreign currency. In many foreign countries, you can get dollar denominated bank accounts. How is Bitcoin any different than this status quo?
  - etherael 13y ago
    Governments work hand in glove with banks, they control and are controlled by the world banking system in turn, they can see what money goes where via the SWIFT system, they can approve or deny transfers based on AML/KYC laws which they can enforce if it comes down to it by applying pressure on the banks themselves, the entire system is old, well understood and thoroughly controlled. The reserve bank of Bitcoin is completely immune to coercion, you can't freeze funds, you can't stop transactions, you can't do anything at all to the funds in one of those accounts without the consent of the account holder. If the account holder doesn't want you to, you can't even know who they are. Altogether, the entire system is the exact opposite of the global banking system, it is extremely poorly understood and almost entirely uncontrolled. And that's just with the bank analogies, if you take it up a notch and compare fiat issuance to bitcoin issuance it gets even more frightening from their perspective. There's no nation they can apply diplomatic pressure to to change the fiscal policy of Bitcoin, that fiscal policy is linked to interests utterly alien to their own, even. From their perspective it is indeed a dangerous thing, the only question to my mind is A) How long will it take them to figure this out and B) when they do figure it out, what kinds of actions will they take to try to destroy it.

by jostmey 13y ago

Estragon 13y ago

A key foundation of a modern nation's power over its citizens is the ability to arbitrarily create and destroy the national currency, to legitimately demand that taxes be paid in that currency, and to thus be able to use it to purchase arbitrary goods and services. It seems quite likely that major national governments will band together to ban transfers between bitcoin and their national currencies once they realize what a threat a wholesale shift to bitcoin would pose to their power to tax and spend.

codex 13y ago
To any given government, Bitcoin looks like just another foreign currency. In many foreign countries, you can get dollar denominated bank accounts. How is Bitcoin any different than this status quo?
- etherael 13y ago
  Governments work hand in glove with banks, they control and are controlled by the world banking system in turn, they can see what money goes where via the SWIFT system, they can approve or deny transfers based on AML/KYC laws which they can enforce if it comes down to it by applying pressure on the banks themselves, the entire system is old, well understood and thoroughly controlled. The reserve bank of Bitcoin is completely immune to coercion, you can't freeze funds, you can't stop transactions, you can't do anything at all to the funds in one of those accounts without the consent of the account holder. If the account holder doesn't want you to, you can't even know who they are. Altogether, the entire system is the exact opposite of the global banking system, it is extremely poorly understood and almost entirely uncontrolled. And that's just with the bank analogies, if you take it up a notch and compare fiat issuance to bitcoin issuance it gets even more frightening from their perspective. There's no nation they can apply diplomatic pressure to to change the fiscal policy of Bitcoin, that fiscal policy is linked to interests utterly alien to their own, even. From their perspective it is indeed a dangerous thing, the only question to my mind is A) How long will it take them to figure this out and B) when they do figure it out, what kinds of actions will they take to try to destroy it.