7 ms·

Bitcoin: The future of money is at stake

61 points by neur0mancer 13y ago

chasing 13y ago
Ah, Bitcoin. The Esperanto of currency.
antonius 13y ago
.."Satoshi Nakamoto", its mysterious inventor, may have democratised finance – much as open internet protocols have democratised communication. But what about "turning off" the world wide web so to speak? I'm sure if governments really believe bitcoin is a threat to their currency, they will do whatever it takes to essentially shut it down. If it cannot be digitally traded on the internet, then that value of bitcoin is lost.
- kordless 13y ago
  > they will do whatever it takes to essentially shut it down Good luck on that.
  - 1qaz2wsx3edc 13y ago
    The rise of the darknets will be funded in blood & bitcoins. Someone should write a novel on this, it's juicy!
    - dllthomas 13y ago
      Strong parallels to Cryptonomicon.
      - arethuza 13y ago
        Wasn't the crypto currency in Cryptonomicon going to be backed by gold?
        dllthomas 13y ago
        Yes. Parallels, certainly not identity.
    - arkem 13y ago
      It's a minor theme in Halting State by Charles Stross
    - GFK_of_xmaspast 13y ago
      Someone has. http://www.amazon.com/King-Bitcoin-Kayleen-Knight-ebook/dp/B00FI83AWY http://www.amazon.com/King-Bitcoin-Kayleen-Knight-ebook/dp/B...
  - prestadige 13y ago
    >Good luck on that Yes, partly because there are too many countries and partly because each time the government of one country tries to shut it down, and fails, it makes bitcoin look stronger and more viable to the others.
- Sammi 13y ago
  Banning and blocking Bitcoin is exactly as easy as banning and blocking Bittorrent. And god knows they tried to do that.
ohashi 13y ago
If this didn't have the word bitcoin in it, people would have flagged it to oblivion.
brubaker 13y ago
Worthless article, the author should be outright ashamed of even bothering to write it.
atmosx 13y ago
> [...] "Satoshi Nakamoto", its mysterious inventor, may have democratised finance – much as open internet protocols have democratised communication. [...] This comparison is so erroneous that it's embarrassing. Too bad it's from NewScientist, I had much respect for the magazine. Now every time I'll read a NS article I'll think along the lines: who knows, they might got this one wrong too.
- vog 13y ago
  > This comparison is so erroneous that it's embarrassing Not disagreeing with you, but it would be nice if you could elaborate on that, rather than just stating that you disagree with the article.
  - atmosx 13y ago
    Democracy (orig: Δημοκρατία) it means "the rule of people", in the sense that people who are part of this socio-political happening are able to take part in the decision process in direct or indirect ways. The current system Today we have the ECB (I'm Greek) and you (I take for granted that most of you are from the US) the FED. So let's talk about the FED. The U.S. Congress established three key objectives for monetary policy in the Federal Reserve Act: Maximum employment, stable prices, and moderate long-term interest rates. From Wikipedia we can read: Before the founding of the Federal Reserve System, the United States underwent several financial crises. A particularly severe crisis in 1907 led Congress to enact the Federal Reserve Act in 1913. Today the Federal Reserve System has responsibilities in addition to ensuring the stability of the financial system. To simplify it more: You may or may not like the FED but it's main object is currency stability. Every US citizen chooses a candidate of a political party. This candidate, if elected, goes to congress. The senate and the US President, both elected by the majority of voters[1], appoint[2] the "chair of the FED". Now this is a DEMOCRATIZED process, although indirect: You don't get to vote directly for the chairman of the FED. There are arguments for and against this process, probably studies on how to make it less prone to corruption and so forth, but ultimately the voter's choice shapes the candidates and their odds. The FED uses inflation or deflation, in order to promote and ensure stability a central power, controlled by the government and indirectly by the people, must have the power create new money on demand (thus create inflation) or deflate the money (thus create deflation) according to what the economy (i.e. the large amount of the population) needs. Enter Bitcoin In bitcoin we have a crypto-currency which offers strong anonymity. There is no central control, so the currency inflates[4] or deflates according to the market. That's all good and well and may even work for a while, but if a strong player enters the market then he can make it go up, down and side-ways as he see fit. So, say you have a player owning as much as 20% of bitcoin. If he cashes out the price goes down. If he cashes the price flies up and so forth. By selling at price A+10 and buying double the amounts at price A-10 he could easily double his amounts by out-playing the market. That's not moral, but legal. Now, in wall street there are authorities against this sort of behavior (they don't act as expected of course, but still you have some sort of control and you have always the government that if decides at some point in time to become more responsible towards tax-payers it can regulate the financial market overnight). According to a paper by none other than Adi Shamir (one of the three founders of the RSA algorithm), 98% of BTC belongs to 2% of portfolios. Hence it's expected from them to act in an immoral self-serving way in the long run. So, did Satoshi democratize the financial system? No, not really. He did the opposite: He create a system which turned the shark totally loose. Of course, the average programmer who doesn't understand much about economics - and we have a huge amount here on HN, more than believed for sure - it seems as if the bitcoin set's him free from the bank but that's not exactly the true. The problem with people vs banks are not the extra fees on money transfers: The problem is people NOT having money to put on the bank. Bitcoin doesn't make you rich. If you are rich you have just one extra toy. If you don't have money, there's no way you could buy bitcoin. Mining? Sure, but minings costs equipment. Only early adopters got an edge and made some money out of the huge price-spike. But this price-spike does promote, hoarding and opportunistic behaviors and in no way promotes democracy. So although the bitcoin protocol is a huge step forward, because adjusts the double spending problem introducing a public ledger, the currency is useful as it has some attributes which you can't find elsewhere (speed, portability, etc.), but it's in no way more democratic or decentralized as many bigots would like to believe. Sorry the long post and any grammar mistakes, it's late here and I'm kinda sleepy. [1] In the US we have small % of population voting. That's an interesting problem: how to get larger part of the population interested in elections? [2] http://en.wikipedia.org/wiki/Chair_of_the_Federal_Reserve#Appointment_process http://en.wikipedia.org/wiki/Chair_of_the_Federal_Reserve#Ap... [3] http://en.wikipedia.org/wiki/Black_Wednesday http://en.wikipedia.org/wiki/Black_Wednesday [4] Bitcoin was not designed to be inflation: It's deflationary on purpose. No one would had any reason to own bitcoin if they were inflationary since you can't pay taxes with BTC.
lampooned 13y ago
Bitcoin is not the future of money.
beloch 13y ago
The one thing that bothers me the most about bitcoin is it's similarity to a ponzi scheme. Get in early, mine the low-hanging fruit, wait for the exchange rate to spike, and you're set for life! If you were to buy in right this moment, what would be the benefit?
- oleganza 13y ago
  Many people misunderstand what the Ponzi scheme is. In Ponzi scheme you get a dividend without selling off your shares. The fraud here is to tell you that the dividends are taken from real profits while they are paid from extra recently sold shares. You get both cash and keep your stock. Bitcoin is like a dividend-free stock or commodity: you have to sell your share to get some cash. Of course, those who come earlier get easier access to more shares, but they are exposed to a higher risk. Zuckerberg had 100% of Facebook initially and was selling it partially to get more cash to keep it going. When he started anyone could do the same, but not many succeeded. Later investors were willing to pay higher amounts of money when the value of the company became more certain in their eyes. But in each case, the owners of stock had to lose some part of it to enjoy extra cash. Also, consider this approach: http://auroracoin.org http://auroracoin.org These guys intend to distribute coins "fairly" to each individual in Iceland. Sounds like a fair distribution? Well, once some individuals get this weird coin, they will decide if they want to keep it. And some of them will sell them to collectors for cheap. This will make the price go down noticeably and cause more folks to get rid of such coins. So they will end up for very cheap in the hands of a very few "early adopters". Whether it will start growing organically from there or not - is another question, but you can see that you cannot force "equality and fairness" on the market. It will reconfigure itself according to everyone's personal preferences. And in case of a weird new tech it will always mean little number of early believers vs. big number of mainstream doubters.
  - asdkl234890 13y ago
    Bitcoin is like a dividend-free stock or commodity Yes, it is an asset. A very easy to trade purely electronic asset. Due to its easy tradeability it is similar to a currency, but much like stocks, it is not a currency.
dschiptsov 13y ago
"future of money"... Could I respond to a silly meme with another another meme? "Stupid people, stupid people everywhere".
blahbl4hblahtoo 13y ago
No its not. sigh.
fmdud 13y ago
I find it interesting how HN's opinion of Bitcoin fluctuates as wildly as the 'currency' itself.

61 points by neur0mancer 13y ago

Ah, Bitcoin. The Esperanto of currency.

.."Satoshi Nakamoto", its mysterious inventor, may have democratised finance – much as open internet protocols have democratised communication. But what about "turning off" the world wide web so to speak? I'm sure if governments really believe bitcoin is a threat to their currency, they will do whatever it takes to essentially shut it down. If it cannot be digitally traded on the internet, then that value of bitcoin is lost.

kordless 13y ago
> they will do whatever it takes to essentially shut it down Good luck on that.
- 1qaz2wsx3edc 13y ago
  The rise of the darknets will be funded in blood & bitcoins. Someone should write a novel on this, it's juicy!
  - dllthomas 13y ago
    Strong parallels to Cryptonomicon.
    - arethuza 13y ago
      Wasn't the crypto currency in Cryptonomicon going to be backed by gold?
      - dllthomas 13y ago
        Yes. Parallels, certainly not identity.
  - arkem 13y ago
    It's a minor theme in Halting State by Charles Stross
  - GFK_of_xmaspast 13y ago
    Someone has. http://www.amazon.com/King-Bitcoin-Kayleen-Knight-ebook/dp/B00FI83AWY http://www.amazon.com/King-Bitcoin-Kayleen-Knight-ebook/dp/B...
- prestadige 13y ago
  >Good luck on that Yes, partly because there are too many countries and partly because each time the government of one country tries to shut it down, and fails, it makes bitcoin look stronger and more viable to the others.
Sammi 13y ago
Banning and blocking Bitcoin is exactly as easy as banning and blocking Bittorrent. And god knows they tried to do that.

ohashi 13y ago

If this didn't have the word bitcoin in it, people would have flagged it to oblivion.

brubaker 13y ago

Worthless article, the author should be outright ashamed of even bothering to write it.

atmosx 13y ago

> [...] "Satoshi Nakamoto", its mysterious inventor, may have democratised finance – much as open internet protocols have democratised communication. [...] This comparison is so erroneous that it's embarrassing. Too bad it's from NewScientist, I had much respect for the magazine. Now every time I'll read a NS article I'll think along the lines: who knows, they might got this one wrong too.

vog 13y ago
> This comparison is so erroneous that it's embarrassing Not disagreeing with you, but it would be nice if you could elaborate on that, rather than just stating that you disagree with the article.
- atmosx 13y ago
  Democracy (orig: Δημοκρατία) it means "the rule of people", in the sense that people who are part of this socio-political happening are able to take part in the decision process in direct or indirect ways. The current system Today we have the ECB (I'm Greek) and you (I take for granted that most of you are from the US) the FED. So let's talk about the FED. The U.S. Congress established three key objectives for monetary policy in the Federal Reserve Act: Maximum employment, stable prices, and moderate long-term interest rates. From Wikipedia we can read: Before the founding of the Federal Reserve System, the United States underwent several financial crises. A particularly severe crisis in 1907 led Congress to enact the Federal Reserve Act in 1913. Today the Federal Reserve System has responsibilities in addition to ensuring the stability of the financial system. To simplify it more: You may or may not like the FED but it's main object is currency stability. Every US citizen chooses a candidate of a political party. This candidate, if elected, goes to congress. The senate and the US President, both elected by the majority of voters[1], appoint[2] the "chair of the FED". Now this is a DEMOCRATIZED process, although indirect: You don't get to vote directly for the chairman of the FED. There are arguments for and against this process, probably studies on how to make it less prone to corruption and so forth, but ultimately the voter's choice shapes the candidates and their odds. The FED uses inflation or deflation, in order to promote and ensure stability a central power, controlled by the government and indirectly by the people, must have the power create new money on demand (thus create inflation) or deflate the money (thus create deflation) according to what the economy (i.e. the large amount of the population) needs. Enter Bitcoin In bitcoin we have a crypto-currency which offers strong anonymity. There is no central control, so the currency inflates[4] or deflates according to the market. That's all good and well and may even work for a while, but if a strong player enters the market then he can make it go up, down and side-ways as he see fit. So, say you have a player owning as much as 20% of bitcoin. If he cashes out the price goes down. If he cashes the price flies up and so forth. By selling at price A+10 and buying double the amounts at price A-10 he could easily double his amounts by out-playing the market. That's not moral, but legal. Now, in wall street there are authorities against this sort of behavior (they don't act as expected of course, but still you have some sort of control and you have always the government that if decides at some point in time to become more responsible towards tax-payers it can regulate the financial market overnight). According to a paper by none other than Adi Shamir (one of the three founders of the RSA algorithm), 98% of BTC belongs to 2% of portfolios. Hence it's expected from them to act in an immoral self-serving way in the long run. So, did Satoshi democratize the financial system? No, not really. He did the opposite: He create a system which turned the shark totally loose. Of course, the average programmer who doesn't understand much about economics - and we have a huge amount here on HN, more than believed for sure - it seems as if the bitcoin set's him free from the bank but that's not exactly the true. The problem with people vs banks are not the extra fees on money transfers: The problem is people NOT having money to put on the bank. Bitcoin doesn't make you rich. If you are rich you have just one extra toy. If you don't have money, there's no way you could buy bitcoin. Mining? Sure, but minings costs equipment. Only early adopters got an edge and made some money out of the huge price-spike. But this price-spike does promote, hoarding and opportunistic behaviors and in no way promotes democracy. So although the bitcoin protocol is a huge step forward, because adjusts the double spending problem introducing a public ledger, the currency is useful as it has some attributes which you can't find elsewhere (speed, portability, etc.), but it's in no way more democratic or decentralized as many bigots would like to believe. Sorry the long post and any grammar mistakes, it's late here and I'm kinda sleepy. [1] In the US we have small % of population voting. That's an interesting problem: how to get larger part of the population interested in elections? [2] http://en.wikipedia.org/wiki/Chair_of_the_Federal_Reserve#Appointment_process http://en.wikipedia.org/wiki/Chair_of_the_Federal_Reserve#Ap... [3] http://en.wikipedia.org/wiki/Black_Wednesday http://en.wikipedia.org/wiki/Black_Wednesday [4] Bitcoin was not designed to be inflation: It's deflationary on purpose. No one would had any reason to own bitcoin if they were inflationary since you can't pay taxes with BTC.

lampooned 13y ago

Bitcoin is not the future of money.

beloch 13y ago

The one thing that bothers me the most about bitcoin is it's similarity to a ponzi scheme. Get in early, mine the low-hanging fruit, wait for the exchange rate to spike, and you're set for life! If you were to buy in right this moment, what would be the benefit?

oleganza 13y ago
Many people misunderstand what the Ponzi scheme is. In Ponzi scheme you get a dividend without selling off your shares. The fraud here is to tell you that the dividends are taken from real profits while they are paid from extra recently sold shares. You get both cash and keep your stock. Bitcoin is like a dividend-free stock or commodity: you have to sell your share to get some cash. Of course, those who come earlier get easier access to more shares, but they are exposed to a higher risk. Zuckerberg had 100% of Facebook initially and was selling it partially to get more cash to keep it going. When he started anyone could do the same, but not many succeeded. Later investors were willing to pay higher amounts of money when the value of the company became more certain in their eyes. But in each case, the owners of stock had to lose some part of it to enjoy extra cash. Also, consider this approach: http://auroracoin.org http://auroracoin.org These guys intend to distribute coins "fairly" to each individual in Iceland. Sounds like a fair distribution? Well, once some individuals get this weird coin, they will decide if they want to keep it. And some of them will sell them to collectors for cheap. This will make the price go down noticeably and cause more folks to get rid of such coins. So they will end up for very cheap in the hands of a very few "early adopters". Whether it will start growing organically from there or not - is another question, but you can see that you cannot force "equality and fairness" on the market. It will reconfigure itself according to everyone's personal preferences. And in case of a weird new tech it will always mean little number of early believers vs. big number of mainstream doubters.
- asdkl234890 13y ago
  Bitcoin is like a dividend-free stock or commodity Yes, it is an asset. A very easy to trade purely electronic asset. Due to its easy tradeability it is similar to a currency, but much like stocks, it is not a currency.

dschiptsov 13y ago

"future of money"... Could I respond to a silly meme with another another meme? "Stupid people, stupid people everywhere".

blahbl4hblahtoo 13y ago

No its not. sigh.

fmdud 13y ago

I find it interesting how HN's opinion of Bitcoin fluctuates as wildly as the 'currency' itself.