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I don't think it will be viewed as a currency (I agree with Krugman), but I do think it could viably be viewed as an asset backing a currency. Here's my idea: T

by heurist 13y ago

I don't think it will be viewed as a currency (I agree with Krugman), but I do think it could viably be viewed as an asset backing a currency. Here's my idea: There's nothing stopping cryptocurrencies from eventually becoming centralized. Successful alternative cryptocurrencies will pop up and will be backed by governments or businesses, giving them real value. There will be a market between all cryptocurrencies and centralized currencies will be built on top of that market. Inflation will happen whenever anyone creates a new currency and people want to buy it. So crypto-assets will serve as a base for viable (inflationary) currencies. It wouldn't matter if bitcoin or any other individual cryptocurrency succeeds or fails as long as that market remains, and it will due to all of the benefits of cryptocurrencies in general. I'd be happy to hear any flaws in this idea, I haven't talked about it with anyone yet.

fragsworth 13y ago
It may be a mistake to assume that small alternative cryptocurrencies are automatically viable. 51% attacks may become a severe problem, especially for very small mining networks. We may eventually see enough 51% attacks on altcoins that most people revert to the few largest networks (Bitcoin, Litecoin, and maybe a couple more). Or maybe we won't, and each new altcoin inflates the system.
- heurist 13y ago
  That's a good point, I'll have to think about that more. My initial thought is that at least exchanges wouldn't be limited to currencies with that vulnerability. Most small currencies would also have limited or no initial value and probably wouldn't be worth taking over unless it was a pump and dump scheme, but centralized exchanges might be able to mitigate that.. Interesting idea, thanks.
wmf 13y ago
Successful alternative cryptocurrencies ... backed by governments or businesses It seems like this could have been done 15 years ago with Chaumian digital cash (which requires no mining and is more anonymous than Bitcoin) or even earlier with plain public-key crypto if you don't care about anonymity. Why hasn't it?
- heurist 13y ago
  Right idea at the wrong time maybe. A large proportion of the US didn't own a PC 15 years ago and some people still thought the internet was a fad, I'm not sure what PC adoption was like in other countries. There are still some problems to be fixed with the general use of digital currencies, but Chaumian digital cash could make a comeback if there were broader digital currency exchanges and people saw value in it. As for why countries might switch to such a currency... probably to get off the US dollar, but I don't know much about that sort of thing. They'd also have greater control over their economy if they could control their own currency's source code. Also, if bitcoins do take off then the last countries to support them will be poorest and might be better off starting their own currency. I think it could end up being like a stock market, where each unit of currency would represent some unit of specific resources.

by heurist 13y ago

fragsworth 13y ago

It may be a mistake to assume that small alternative cryptocurrencies are automatically viable. 51% attacks may become a severe problem, especially for very small mining networks. We may eventually see enough 51% attacks on altcoins that most people revert to the few largest networks (Bitcoin, Litecoin, and maybe a couple more). Or maybe we won't, and each new altcoin inflates the system.

heurist 13y ago
That's a good point, I'll have to think about that more. My initial thought is that at least exchanges wouldn't be limited to currencies with that vulnerability. Most small currencies would also have limited or no initial value and probably wouldn't be worth taking over unless it was a pump and dump scheme, but centralized exchanges might be able to mitigate that.. Interesting idea, thanks.

wmf 13y ago

Successful alternative cryptocurrencies ... backed by governments or businesses It seems like this could have been done 15 years ago with Chaumian digital cash (which requires no mining and is more anonymous than Bitcoin) or even earlier with plain public-key crypto if you don't care about anonymity. Why hasn't it?

heurist 13y ago
Right idea at the wrong time maybe. A large proportion of the US didn't own a PC 15 years ago and some people still thought the internet was a fad, I'm not sure what PC adoption was like in other countries. There are still some problems to be fixed with the general use of digital currencies, but Chaumian digital cash could make a comeback if there were broader digital currency exchanges and people saw value in it. As for why countries might switch to such a currency... probably to get off the US dollar, but I don't know much about that sort of thing. They'd also have greater control over their economy if they could control their own currency's source code. Also, if bitcoins do take off then the last countries to support them will be poorest and might be better off starting their own currency. I think it could end up being like a stock market, where each unit of currency would represent some unit of specific resources.