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Satire works when you hold folly up to ridicule. Central banking is possibly the greatest human invention since sanitation. The U.S. central banking system rank

by hapless 13y ago

Satire works when you hold folly up to ridicule. Central banking is possibly the greatest human invention since sanitation. The U.S. central banking system ranks among the finest of its kind. Bitcoin handles 7 transactions a second on a good day, has no reliable institutional actors, and I can neither pay taxes nor satisfy court judgments with it. It is an impressive proof-of-concept for decentralized trust in cryptosystems, but it is hardly a currency.

spindritf 13y ago
The article isn't ridiculing the central/fractional banking system. It's ridiculing the response to bitcoin.
- hapless 13y ago
  For the satire to work, the parodied criticisms have to make sense when applied to central banking systems. But they don't. When satire doesn't work, the author looks sillier than your target. I don't think this was a goal.
  - spindritf 13y ago
    Just the opposite. They can't make sense when applied to the current banking system because the idea is to show that criticism of bitcoin also misses the point. So the flaws of cash listed in the article are superficially plausible but we know they weren't much of a barrier to wide adoption.
    - hapless 13y ago
      Cash was "adopted" because it is backed by the United States Federal Reserve System. It is legal tender. It is fungible: every checking account is equal. It is issued by regulated institutions, people who sue you are obliged to accept it, and the IRS will take it as payment. This was not always the case. Before the advent of central banking, cash was just as dodgy as Mt. Gox internal transactions. You were unlikely to be able to use cash more than five miles from the bank that issued it. Balance statements were purely arbitrary because you had no insight into your (unregulated) bank's books. In the 19th century, transactions across long distances looked more like hawala than anything the modern man would recognize as banking. This satire was written by someone who does not understand what he or she is attempting to satirize.
      - waterlesscloud 13y ago
        Since you're aware of the history of the US central bank, you are also no doubt aware that its invention was the subject of highly contentious debate that lasted decades. It was by no means an easily accepted invention and many, many people ridiculed and mocked it along the way. Perhaps the author understands what they're satirizing a bit more than you're giving them credit for.
        e12e 13y ago
        There was a lot of (justified IMHO) controversy around the formation of the Euro union as well. I'd say it's a little crazy for one country to have 40+ currencies -- and apparently so did a lot of people -- but it certainly is a tool for independence (which is why I think the Euro was a bad idea and the Dollar was a good idea).
      - spuz 13y ago
        The fact that bitcoin is not legal tender is not an argument that the article parodies. Just because there are real arguments against bitcoin does not mean that the others cannot be parodied.
        hapless 13y ago
        Parodying only the convenient criticisms is an important editorial choice by the author.
      - anonymoushn 13y ago
        Being legal tender means a group of thugs who regularly rob me accept this currency but not others. If we must tolerate being regularly robbed by thugs, this is a desirable feature in a currency, but it would be better to not be robbed by thugs at all.
        hapless 13y ago
        You heard it here, first, folks. A citizen being asked to pay his legal due in taxes is exactly the same as being repeatedly robbed by thugs.
    - williamcotton 13y ago
      Our current systems evolved slowly over the course of thousands of years. They weren't dreamed up one night in some nerd's basement. They were formed over time through public debate and useful exchange of value. Farmers aren't using Bitcoin. Bridge builders aren't using Bitcoin. Armies aren't using Bitcoin. This isn't some situation like where we're choosing between two Ruby libraries that do S3 uploads. This is a situation where we have the institutions that evolved over time vs. some dudes with a new idea on the Internet. Ya'll be ignorant.
      - anigbrowl 13y ago
        Quite. Bitcoin has built-in authentication, which is a key feature of a traditional currency, and scarcity as well. But as long as it's not any kind of legal tender, there's no guarantee that any transaction or payment of debt offered in Bitcoin will be accepted, and that introduces considerable friction into its use as a currency. Also, the scarcity is arguably deflationary; nobody goes into solo mining any more because it's obviously not worth it, and the more coins that are mined the lower the incentive to go into mining. This means holding bitcoin results in appreciation proportional to population growth, even though no useful economic activity is taking place when someone sits on top of a pile of cash. The whole point of inflation is to reflect the natural rate of economic growth and to discourage economically inefficient hoarding. Runaway inflation is of course a bad thing, but no inflation at all, or deflation, is just as bad in economic terms.
        Sheepshow 13y ago
        > even though no useful economic activity is taking place Saving is a useful economic activity. Why should I let some filthy money lender touch my money? It's my money!
        nunb 13y ago
        >The whole point of inflation is to reflect the natural rate of economic growth and to discourage economically inefficient hoarding. Runaway inflation is of course a bad thing, but no inflation at all, or deflation, is just as bad in economic terms. Consider where that initial cash came from. You worked your ass off between 18 and 60 and you got a bunch of cash in exchange. Some you spent on consumption, some you saved for use later. In fact, cash is just 'tokens for exchange later' where later is a time window that varies from 1 hour (hand-to-mouth) to 50+ years (surplus productive capacity people). Wouldn't it be great if you could use your tokens for their promised exchange-value through your retirement and see those years of hard work payoff? In fact, multiply, because as you said the population grows, more goods are produced, and your cash tokens buy more and more of those goods. It's a great way to retire. Unfortunately for the retired, they are on fixed incomes (pensions) in an inflationary world: those people get SCREWED to the extent where they can't afford heating in some US States. These are people who worked hard all their lives and just wanted to live off the proceeds, the surplus they had generated. Think of the chi^H^H^H grandparents!
  - GavinB 13y ago
    Criticisms like "perfect for criminals" and "no consumer protection" do make sense. Cash is great for money laundering and has no reversibility. The whole point is that these weaknesses are 100% real--and yet not necessarily a barrier to adoption or successful use.
    - Retric 13y ago
      Cash sucks for serious money laundering. It's fairly anonymous in small quantities but start talking about millions/ billions and it's bulky enough to be hard to transport across borders and each bill is tracked by serial number which means spending it involves a lot of leg work. Gold is way better than cash when it comes to money laundering. PS: Drug kingpins have been known to dump small denomination bills as not worth the hassle.
      - cschmidt 13y ago
        I thought that was the main use of the $100 bill. Supposedly 2/3 of the $100 bills circulate outside the US [1], presumably for money laundering type activities. [1] http://en.wikipedia.org/wiki/United_States_one_hundred-dollar_bill http://en.wikipedia.org/wiki/United_States_one_hundred-dolla...
        Retric 13y ago
        US Cash is often used for Legal transactions outside the US. Basically, people often trust USD more than there local currency's. Either from inflation concerns or simply there ability to spend it outside of there home country.
    - rtpg 13y ago
      Someone mentioned this in a bitcoin thread but money laundering is harder with cash than bitcoin for the simple fact that at one point somebody needs to take the physical bills. A seller of an object must expose himself when he tries to collect his cash. With bitcoin, he can simply give a wallet.
  - the_watcher 13y ago
    Not all of the satire works, but enough works that I found it to be damn clever. The "perfect for criminals" part was especially enjoyable, given that it's easier to trace the history of bitcoin payments than cash transactions if you aren't marking bills.
- hawkharris 13y ago
  As hapless said, the author's defense of Bitcoin is intertwined with a critique of the central banking system. Consider lines like this one: "...it would be hard to recommend that the average consumer or merchant becomes involved in what is still today a very buggy [central banking] system, filled with risk, inconvenience, high transaction costs, and possible disease transmission."
  - user24 13y ago
    Again, that's just making fun of the way the press misrepresent bitcoin. In fact, the fact that these 'critiques' don't actually apply to central banking is what makes this piece so funny.
    - cpncrunch 13y ago
      Actually, the critiques do apply to bitcoin. Perhaps if: - bitcoin's biggest user wasn't a douchebag who thinks its ok to hire hitmen to kill people - mtgox didn't have so much trouble staying online - the currency wasn't so volatile - there was some way of storing bitcoin with a guarantee that you'll get fully refunded if it gets stolen ...then perhaps this satire would make some sense. As it is, the 'satire' is just making the authors look like idiots.
martindale 13y ago
Actually, you can pay the government in Bitcoin: http://www2.egovlink.com/press-release-bitcoin.cfm http://www2.egovlink.com/press-release-bitcoin.cfm Also, the ~7 transaction per second limit is completely artificial: https://github.com/bitcoin/bitcoin/blob/master/src/main.h#L37 https://github.com/bitcoin/bitcoin/blob/master/src/main.h#L3... Institutional actors: http://allthingsd.com/20131212/bitcoins-biggest-bet-andreessen-horowitz-leads-25-million-investment-in-coinbase/ http://allthingsd.com/20131212/bitcoins-biggest-bet-andreess...
- hapless 13y ago
  To address these one by one: 1. My local government can choose to accept anything they want. The IRS, however, will want cash. They are not obligated to talk to your broker-of-choice about BTC. 2. Yes, "completely artificial." I just have to convince 51% of the distributed net to accept my patches, and then I can change any parameter I wish! 3. What does a VC investment have to do with anything?
oskarth 13y ago
> Central banking is possibly the greatest human invention since sanitation. The U.S. central banking system ranks among the finest of its kind. How did you come to that conclusion? Is this a common viewpoint? EDIT: I am genuinely curious. It doesn't strike me as a great invention, but I could be wrong. I'd love to be convinced otherwise, for example by reasoned arguments of how things were before central banking and why things were so much better after and compared to all other alternatives, as well as what sets U.S. central banking system apart from the rest of the central banking systems in the world. Do you have any links to this type of reasoning?
- hapless 13y ago
  I came to this conclusion after spending a significant fraction of my too-short lifespan studying how money works. I am hardly an expert. But I (apparently) know a lot more than the average Joe. Seeing the rash of "end the fed" madness on the internet makes me very sad.
  - Eleutheria 13y ago
    Only one simple question. Did you read Rothbard's "What has government done to our money?" If not, do so, and come back to tell us how your mind changed, for good or bad.
    - mark_l_watson 13y ago
      Thanks, I just bought that for the Kindle for a few dollars. Another book in a similar vein is "The Currency Wars" which I really enjoyed, and then shared with my family. TLDR: the financial system is rigged to make the rich richer; getting off a fiat currency would in general (and long term) help 99% people. BTW, it still blows my mind that so many friends think the US economy is so great right now, ignoring the $3 trillion in money created out of nothing in the last few years; sure stock and home prices were maneuvered higher.
    - hapless 13y ago
      I have not, and I will not in the future. Just as one does not read alchemical texts for insight into modern chemistry, I have not spent very much of my life reading the Austrian school. There is certainly a great deal of historical interest for students of philosophy, but that isn't in line with my personal interests. Broadly speaking, the Austrian school has little relevance to the study of economics or finance.
ctdonath 13y ago
Satire works when most people get the joke and a few write scathing condemnations of why it's not funny.
nateabele 13y ago
> Central banking is possibly the greatest human invention since sanitation. The greatest human invention since sanitation is that a tiny elite can control the value of money (and money over time)? Is that a joke? Are you joking? Edit: Really...? Really? You know the devaluation of currency over time and the resulting increase in the cost of goods disproportionately affects the poor and middle class, as well as retirement savers who's interest rates can't keep up, right? Is that also a feature?
- hapless 13y ago
  I am absolutely not joking, and the fact that the value of money can be controlled by a central authority is a feature not a bug.
  - deleted 13y ago
    [deleted]
    - enraged_camel 13y ago
      >>It is in fact a major bug that you effectively lose just by holding. Not taking sides here, but I think it could be argued that devaluation is good because it encourages economic activity (i.e. spending) instead of mindless hoarding. I mean, money is supposed to be a medium of transfer, not an investment/saving mechanism. We don't want people hoarding cash in a bank account. We want them to invest that cash in actual assets that can then be developed.
      - SilasX 13y ago
        >Not taking sides here, but I think it could be argued that devaluation is good because it encourages economic activity (i.e. spending) instead of mindless hoarding. So would threatening to execute anyone who spends less than n% of their take-home pay, but people don't advocate that, do they? Before you object to the comparison, I know: "That's different: the costs would vastly exceed the benefits!" Right, but there would be costs! There are costs any time you force people to spend (commit to purchases) earlier than they would like to -- whether you do it by inflation or the sword. One cannot simply say, "well, economic activity [that we measure] went up, so that must have been a good idea!" But anytime someone brings up the "encourages economic activity" argument for inflation, they rarely offer any way to model the cost of moving up purchases like this, nor do they even realize it's necessary to do so! (Edited to avoid excessive attribution of the argument.)
antr 13y ago
Let's not forget fractional reserve banking, and how this fuels investment. Bitcoin's current design can't do this. Maybe some other crypto-currency will win the war by having this monetary mechanism in mind.
- nateabele 13y ago
  > Let's not forget fractional reserve banking, and how this fuels investment. s/investment/bubbles/
  - antr 13y ago
    SMBs live in a space where equity financing (like VC money) or bonds are not available. I've yet to see a bubble driven by excessive/greedy/etc lending to SMB. Or are you implying that Bitcoin should only be used by large corporates, speculators, money managers and so on?
- hapless 13y ago
  Nothing about bitcoin's design prevents fractional reserve banking. You just have to place an inordinate amount of trust in your BTC bank (perversely misnamed "exchanges") Central banking and fractional reserve banking are orthogonal concepts. One could, in theory, accomplish one without the other. (but I do not see why one would wish to do so.)
  - antr 13y ago
    where do i talk about central banking? on "You just have to place an inordinate amount of trust in your BTC bank (perversely misnamed "exchanges")" my understanding of Bitcoin is that no same Bitcoin can be in two accounts at the same time. How is this a "trust" issue vs a design one?
    - zmk_ 13y ago
      Im not a fan of bitcoin. But it cannot be in two wallets at the same time. If you deposit money in a bank it no longer is in your wallet but starts being a number on a screen. You transfer the money to the banks wallet. Then the bank can lend it to others by transferring it to their wallets. I think the biggest obstacle for bitcoin is that it is not a legal tender and it will not be because it comes with one to many sacrifice. You lose ability to have independent monetary policy while not getting benefits of a fixed currency.
jsmcgd 13y ago
I think you've missed the point which is to ridicule the criticism of crypto-currencies, not cash. Also the article talks about the properties of cash in general, not central banking.
jsmcgd 13y ago
I think you've missed the point which is to ridicule the criticism of crypto-currencies, not cash. Also the article talks about the properties of cash in general, not central banking.
agilebyte 13y ago
I do not know where you hail from but if you are a US taxpayer you can apparently pay the IRS using Bitcoin: https://www.joinsnapcard.com/ https://www.joinsnapcard.com/ More: http://pando.com/2014/01/15/pay-your-taxes-in-bitcoin-snapcard-launches-bill-pay-makes-the-irs-its-first-payee/ http://pando.com/2014/01/15/pay-your-taxes-in-bitcoin-snapca...
- gamblor956 13y ago
  No, you can pay a 3rd party that claims it will remit your bitcoin payment in the form of USD to the IRS. The IRS doesn't accept Bitcoin.
  - icebraining 13y ago
    Pretty sure that's how most people pay their taxes; they don't usually carry wads of cash to the IRS building, they use a third-party (a bank).
hrktb 13y ago
I don't think bitcoin is usable as a currency (because of the scarcity mainly) but if we had to judge every potential currency by whether institutionnal actors accept it we might never accept anythig as currency until the end of the world. I would think of a currency as anything that has recognized value while being transferable. Let's imagine starbucks prepaid point card get's accepted in some drugstore also, the. Some super markets, gas station, theaters, airports. It really explodes and you can start paying with them at millions of stores, and you are allowed to exchange them with other people via some procedure. The starbucks point system becomes a currency IMO. You'll never pay your taxes with it, but you can use them for exchange and commerce purpose.
jamoes 13y ago
> Central banking is possibly the greatest wealth confiscation technique since taxation. FTFY
tbrownaw 13y ago
Central banking is possibly the greatest human invention since sanitation. No, that's either packet switching, internal combustion, penicillin, or sliced bread.
- lotsofmangos 13y ago
  I'd opt for the slinky.
logicallee 13y ago
My impression is that you completely misunderstood. (I only skimmed the article.) The folly that is being held up to ridicule are the objections to bitcoin. The means by which it is held up is to show that bills as a medium of exchange can be attacked just as strongly. People still use it. Nobody is going to make you go to the bank to give them $5 back, they use bills. And if you only have a $10 note, they'll make change for you. This is directly what's being compared to bitcoin (for example) - by pointing out that whatever objections anyone might have against bitcoin (theft, etc), could be made - ridiculously - against paper currency. The reason it is ridiculous is because the benefits of paper currency far outweigh the inconvenience stemming from using it. Likewise, bitcoin can have tons of problems - but the benefits far outweigh them. That is the point being made. "It is folly to criticize bitcoin".
fredgrott 13y ago
hmm, I do not think you understand currency.. For example, if we post on HN an offer to do something in return for something..what currency are we using and is that said currency some sort of fiat system?
SilasX 13y ago
Are we looking at the same article? It's satirizing paper vs digital money -- the focus is on money transfer tech, not monetary policy. The central bank stuff is about two paragraphs out of thirty. Also, whether bitcoin is a "true" currency is orthogonal to the (satirical) point of the article, which is that paper currency would look weird if it weren't the traditional way and we were going to it from digital money. Whether Bitcoin currently handles 1, 7, or a trillion transactions per second is irrelevant here.
lotsofmangos 13y ago
The satire was not of money or central banking, it was of the public reaction to a new form of it. Also, if you think that central banking is the greatest invention since sanitation, I think you may have your priorities slightly skewed, though that is only an opinion. As to whether bitcoin is a currency. It is a currency when it is used as one. Sometimes it is and then it is a currency, mostly it is a speculative investment vehicle. This is why I think dogecoin is more of a currency than bitcoin at the moment.
igivanov 13y ago
"The U.S. central banking system ranks among the finest of its kind." I'll take it as a fine example of satire. The Fed officials' conflict of interest, the financial crisis, using it as a tool to achieve political goals internationally, you name it.
branchan 13y ago
You can't fault a relatively new cypto-currency for having limitations in terms of adoption rates. For now, it's still a proof of concept and improvements are constantly being made. The article is not making fun of cash, but making fun of people who mock the concept of bitcoins.
cmapes 13y ago
slow clap I am genuinely impressed with how many people were trolled by your well-placed satirical comment.
stalcottsmith 13y ago
> The U.S. central banking system ranks among the finest of its kind. I agree... > Central banking is possibly the greatest human invention since sanitation. This is a most deceptive and inherently political statement. Sanitation is a great invention for everyone. Central banking not so much. Central banking and centralised control of the money supply serve to concentrate the greatest opportunity for skimming the surplus generated by vast productive populations into the hands a very few people to direct as they wish. Whether this process is controlled democratically or not (and in the US it most certainly is not) is not the point. The way this is done in the US is no different in principle to the way it is done by elite in more obviously "corrupt" countries. In the US, it is more sophisticated and over the last century it has attained the patina of established respectability. In the US they have managed to set this system up without killing the goose that lays the golden eggs. (the surplus-producing population) The skimming in the US is accomplished first through powerful central taxation which requires centralised record keeping and control of the banking sector. Secondly wealth and accumulated surplus is skimmed (redistributed upwards) through the control of credit extended by banks to generally expand and potentially to "contract" the money (credit) supply. Inflation generally rewards large debtors and punishes savers. Skimming is also accomplished by helping to grow and trade in government debt (granting incredibly valuable concessions to favoured dealers), assisting in managing capital flows into and out of the country, extending vast credits to powerful interest groups (mostly bankers) thereby helping powerful private borrowers to lean on the public credit for private gain, and most importantly and tragically to make possible and in fact encourage wars of choice which are clearly to the benefit of private interests and clearly not of any benefit to the general public. Is it any wonder that the Fed was created by bankers and war financiers, for the benefit of bankers and war financiers? This goes back to Morgan and others and their intimate involvement in the financing of Britain and France and subsequent agitation for American entry into WWI. Central banking is most convenient and necessary for anyone wishing to control or direct economic activity and hence the lives of others. That is why it appeals to statists of all persuasions who perceive it as powerful lever or tool they hope employ in their fantasies of control. Prominent early communists saw state-controlled central banking as an essential step for converting a capitalist system to a communist one. That is also why most "crazy libertarians" find their way to a stance opposing central banking. Central banking is anathema to Liberty. Jefferson killed the first Bank of the United States and exposed it as an agent of foreign interests. (The capital for the first bank was created by an early scam which had people talk down the debts of the continental congress and buy up the IOUs from the poor soldiers who fought for the revolution for a few pennies on the dollar, and then lobby successfully for the debts to be assumed and honored at face value by the new constitutional government. This was a similar scam to the way the oligarchs in Russia convinced newly enriched peasants to sell their shares in state assets for cheap.) Jackson killed the Second Bank of the United States for much the same reasons as Jefferson had a generation before. Seventy years later, a true, well documented conspiracy of financiers, gave the US its third central bank. I agree with other posters, that one must look at the actions and histories of many different central banks in different countries to understand the nature of the beast. The US is only the most competent in obfuscating its nature, purpose and origin. It has "won" at the central banking game for almost 100 years. Your praise of the US's central bank comes at the zenith of its power. I suspect over the next 10 years, it will resemble its cousins in less competent regimes and juridictions more and more. The US central bank, aka the Fed, is a brilliant creation. It is a brilliant creation of the fevered minds of oligarchs to defend and advance their oligarchy. It has lasted 100 years. I hope it will not last another 100. With Idiocracy increasingly fast upon us, the prospects for change are not good. Bitcoin to the moon.
kristianp 13y ago
Satire: "the use of humour, irony, exaggeration, or ridicule to expose and criticize people's stupidity or vices". What is being held up to ridicule are the various criticisms of bitcoin, not central banking. For example the article quotes an economist saying that paper money is evil, satirising Krugman's article about bitcoin. Quite entertaining!
acd 13y ago
Don't forget the Egyptian Obelisk standing in the middle of the Vatican. Obelisks are a tribute to the Egyptian Sun god Ra, they are also a phallus symbol read Shaft of Baal. http://en.wikipedia.org/wiki/Obelisk http://en.wikipedia.org/wiki/Obelisk Picture proof http://en.wikipedia.org/wiki/File:Vatican_Piazza_San_Pietro_Obelisk_slim.jpg http://en.wikipedia.org/wiki/File:Vatican_Piazza_San_Pietro_... Really tired of central banks and banks stealing 97% of the peoples wealth through inflation of FIAT currency backed by nothing than debt out of nothing. Here is a graph of median income vs GDP(average income), note that it diverges in the 1975, when by coincidence the dollar was decoupled from the gold by Nixon. http://lanekenworthy.net/2008/09/03/slow-income-growth-for-middle-america/ http://lanekenworthy.net/2008/09/03/slow-income-growth-for-m...

by hapless 13y ago

spindritf 13y ago

The article isn't ridiculing the central/fractional banking system. It's ridiculing the response to bitcoin.

hapless 13y ago
For the satire to work, the parodied criticisms have to make sense when applied to central banking systems. But they don't. When satire doesn't work, the author looks sillier than your target. I don't think this was a goal.
- spindritf 13y ago
  Just the opposite. They can't make sense when applied to the current banking system because the idea is to show that criticism of bitcoin also misses the point. So the flaws of cash listed in the article are superficially plausible but we know they weren't much of a barrier to wide adoption.
  - hapless 13y ago
    Cash was "adopted" because it is backed by the United States Federal Reserve System. It is legal tender. It is fungible: every checking account is equal. It is issued by regulated institutions, people who sue you are obliged to accept it, and the IRS will take it as payment. This was not always the case. Before the advent of central banking, cash was just as dodgy as Mt. Gox internal transactions. You were unlikely to be able to use cash more than five miles from the bank that issued it. Balance statements were purely arbitrary because you had no insight into your (unregulated) bank's books. In the 19th century, transactions across long distances looked more like hawala than anything the modern man would recognize as banking. This satire was written by someone who does not understand what he or she is attempting to satirize.
    - waterlesscloud 13y ago
      Since you're aware of the history of the US central bank, you are also no doubt aware that its invention was the subject of highly contentious debate that lasted decades. It was by no means an easily accepted invention and many, many people ridiculed and mocked it along the way. Perhaps the author understands what they're satirizing a bit more than you're giving them credit for.
      - e12e 13y ago
        There was a lot of (justified IMHO) controversy around the formation of the Euro union as well. I'd say it's a little crazy for one country to have 40+ currencies -- and apparently so did a lot of people -- but it certainly is a tool for independence (which is why I think the Euro was a bad idea and the Dollar was a good idea).
    - spuz 13y ago
      The fact that bitcoin is not legal tender is not an argument that the article parodies. Just because there are real arguments against bitcoin does not mean that the others cannot be parodied.
      - hapless 13y ago
        Parodying only the convenient criticisms is an important editorial choice by the author.
    - anonymoushn 13y ago
      Being legal tender means a group of thugs who regularly rob me accept this currency but not others. If we must tolerate being regularly robbed by thugs, this is a desirable feature in a currency, but it would be better to not be robbed by thugs at all.
      - hapless 13y ago
        You heard it here, first, folks. A citizen being asked to pay his legal due in taxes is exactly the same as being repeatedly robbed by thugs.
  - williamcotton 13y ago
    Our current systems evolved slowly over the course of thousands of years. They weren't dreamed up one night in some nerd's basement. They were formed over time through public debate and useful exchange of value. Farmers aren't using Bitcoin. Bridge builders aren't using Bitcoin. Armies aren't using Bitcoin. This isn't some situation like where we're choosing between two Ruby libraries that do S3 uploads. This is a situation where we have the institutions that evolved over time vs. some dudes with a new idea on the Internet. Ya'll be ignorant.
    - anigbrowl 13y ago
      Quite. Bitcoin has built-in authentication, which is a key feature of a traditional currency, and scarcity as well. But as long as it's not any kind of legal tender, there's no guarantee that any transaction or payment of debt offered in Bitcoin will be accepted, and that introduces considerable friction into its use as a currency. Also, the scarcity is arguably deflationary; nobody goes into solo mining any more because it's obviously not worth it, and the more coins that are mined the lower the incentive to go into mining. This means holding bitcoin results in appreciation proportional to population growth, even though no useful economic activity is taking place when someone sits on top of a pile of cash. The whole point of inflation is to reflect the natural rate of economic growth and to discourage economically inefficient hoarding. Runaway inflation is of course a bad thing, but no inflation at all, or deflation, is just as bad in economic terms.
      - Sheepshow 13y ago
        > even though no useful economic activity is taking place Saving is a useful economic activity. Why should I let some filthy money lender touch my money? It's my money!
      - nunb 13y ago
        >The whole point of inflation is to reflect the natural rate of economic growth and to discourage economically inefficient hoarding. Runaway inflation is of course a bad thing, but no inflation at all, or deflation, is just as bad in economic terms. Consider where that initial cash came from. You worked your ass off between 18 and 60 and you got a bunch of cash in exchange. Some you spent on consumption, some you saved for use later. In fact, cash is just 'tokens for exchange later' where later is a time window that varies from 1 hour (hand-to-mouth) to 50+ years (surplus productive capacity people). Wouldn't it be great if you could use your tokens for their promised exchange-value through your retirement and see those years of hard work payoff? In fact, multiply, because as you said the population grows, more goods are produced, and your cash tokens buy more and more of those goods. It's a great way to retire. Unfortunately for the retired, they are on fixed incomes (pensions) in an inflationary world: those people get SCREWED to the extent where they can't afford heating in some US States. These are people who worked hard all their lives and just wanted to live off the proceeds, the surplus they had generated. Think of the chi^H^H^H grandparents!
- GavinB 13y ago
  Criticisms like "perfect for criminals" and "no consumer protection" do make sense. Cash is great for money laundering and has no reversibility. The whole point is that these weaknesses are 100% real--and yet not necessarily a barrier to adoption or successful use.
  - Retric 13y ago
    Cash sucks for serious money laundering. It's fairly anonymous in small quantities but start talking about millions/ billions and it's bulky enough to be hard to transport across borders and each bill is tracked by serial number which means spending it involves a lot of leg work. Gold is way better than cash when it comes to money laundering. PS: Drug kingpins have been known to dump small denomination bills as not worth the hassle.
    - cschmidt 13y ago
      I thought that was the main use of the $100 bill. Supposedly 2/3 of the $100 bills circulate outside the US [1], presumably for money laundering type activities. [1] http://en.wikipedia.org/wiki/United_States_one_hundred-dollar_bill http://en.wikipedia.org/wiki/United_States_one_hundred-dolla...
      - Retric 13y ago
        US Cash is often used for Legal transactions outside the US. Basically, people often trust USD more than there local currency's. Either from inflation concerns or simply there ability to spend it outside of there home country.
  - rtpg 13y ago
    Someone mentioned this in a bitcoin thread but money laundering is harder with cash than bitcoin for the simple fact that at one point somebody needs to take the physical bills. A seller of an object must expose himself when he tries to collect his cash. With bitcoin, he can simply give a wallet.
- the_watcher 13y ago
  Not all of the satire works, but enough works that I found it to be damn clever. The "perfect for criminals" part was especially enjoyable, given that it's easier to trace the history of bitcoin payments than cash transactions if you aren't marking bills.
hawkharris 13y ago
As hapless said, the author's defense of Bitcoin is intertwined with a critique of the central banking system. Consider lines like this one: "...it would be hard to recommend that the average consumer or merchant becomes involved in what is still today a very buggy [central banking] system, filled with risk, inconvenience, high transaction costs, and possible disease transmission."
- user24 13y ago
  Again, that's just making fun of the way the press misrepresent bitcoin. In fact, the fact that these 'critiques' don't actually apply to central banking is what makes this piece so funny.
  - cpncrunch 13y ago
    Actually, the critiques do apply to bitcoin. Perhaps if: - bitcoin's biggest user wasn't a douchebag who thinks its ok to hire hitmen to kill people - mtgox didn't have so much trouble staying online - the currency wasn't so volatile - there was some way of storing bitcoin with a guarantee that you'll get fully refunded if it gets stolen ...then perhaps this satire would make some sense. As it is, the 'satire' is just making the authors look like idiots.

martindale 13y ago

Actually, you can pay the government in Bitcoin: http://www2.egovlink.com/press-release-bitcoin.cfm http://www2.egovlink.com/press-release-bitcoin.cfm Also, the ~7 transaction per second limit is completely artificial: https://github.com/bitcoin/bitcoin/blob/master/src/main.h#L37 https://github.com/bitcoin/bitcoin/blob/master/src/main.h#L3... Institutional actors: http://allthingsd.com/20131212/bitcoins-biggest-bet-andreessen-horowitz-leads-25-million-investment-in-coinbase/ http://allthingsd.com/20131212/bitcoins-biggest-bet-andreess...

hapless 13y ago
To address these one by one: 1. My local government can choose to accept anything they want. The IRS, however, will want cash. They are not obligated to talk to your broker-of-choice about BTC. 2. Yes, "completely artificial." I just have to convince 51% of the distributed net to accept my patches, and then I can change any parameter I wish! 3. What does a VC investment have to do with anything?

oskarth 13y ago

> Central banking is possibly the greatest human invention since sanitation. The U.S. central banking system ranks among the finest of its kind. How did you come to that conclusion? Is this a common viewpoint? EDIT: I am genuinely curious. It doesn't strike me as a great invention, but I could be wrong. I'd love to be convinced otherwise, for example by reasoned arguments of how things were before central banking and why things were so much better after and compared to all other alternatives, as well as what sets U.S. central banking system apart from the rest of the central banking systems in the world. Do you have any links to this type of reasoning?

hapless 13y ago
I came to this conclusion after spending a significant fraction of my too-short lifespan studying how money works. I am hardly an expert. But I (apparently) know a lot more than the average Joe. Seeing the rash of "end the fed" madness on the internet makes me very sad.
- Eleutheria 13y ago
  Only one simple question. Did you read Rothbard's "What has government done to our money?" If not, do so, and come back to tell us how your mind changed, for good or bad.
  - mark_l_watson 13y ago
    Thanks, I just bought that for the Kindle for a few dollars. Another book in a similar vein is "The Currency Wars" which I really enjoyed, and then shared with my family. TLDR: the financial system is rigged to make the rich richer; getting off a fiat currency would in general (and long term) help 99% people. BTW, it still blows my mind that so many friends think the US economy is so great right now, ignoring the $3 trillion in money created out of nothing in the last few years; sure stock and home prices were maneuvered higher.
  - hapless 13y ago
    I have not, and I will not in the future. Just as one does not read alchemical texts for insight into modern chemistry, I have not spent very much of my life reading the Austrian school. There is certainly a great deal of historical interest for students of philosophy, but that isn't in line with my personal interests. Broadly speaking, the Austrian school has little relevance to the study of economics or finance.

ctdonath 13y ago

Satire works when most people get the joke and a few write scathing condemnations of why it's not funny.

nateabele 13y ago

> Central banking is possibly the greatest human invention since sanitation. The greatest human invention since sanitation is that a tiny elite can control the value of money (and money over time)? Is that a joke? Are you joking? Edit: Really...? Really? You know the devaluation of currency over time and the resulting increase in the cost of goods disproportionately affects the poor and middle class, as well as retirement savers who's interest rates can't keep up, right? Is that also a feature?

hapless 13y ago
I am absolutely not joking, and the fact that the value of money can be controlled by a central authority is a feature not a bug.
- deleted 13y ago
  [deleted]
  - enraged_camel 13y ago
    >>It is in fact a major bug that you effectively lose just by holding. Not taking sides here, but I think it could be argued that devaluation is good because it encourages economic activity (i.e. spending) instead of mindless hoarding. I mean, money is supposed to be a medium of transfer, not an investment/saving mechanism. We don't want people hoarding cash in a bank account. We want them to invest that cash in actual assets that can then be developed.
    - SilasX 13y ago
      >Not taking sides here, but I think it could be argued that devaluation is good because it encourages economic activity (i.e. spending) instead of mindless hoarding. So would threatening to execute anyone who spends less than n% of their take-home pay, but people don't advocate that, do they? Before you object to the comparison, I know: "That's different: the costs would vastly exceed the benefits!" Right, but there would be costs! There are costs any time you force people to spend (commit to purchases) earlier than they would like to -- whether you do it by inflation or the sword. One cannot simply say, "well, economic activity [that we measure] went up, so that must have been a good idea!" But anytime someone brings up the "encourages economic activity" argument for inflation, they rarely offer any way to model the cost of moving up purchases like this, nor do they even realize it's necessary to do so! (Edited to avoid excessive attribution of the argument.)

antr 13y ago

Let's not forget fractional reserve banking, and how this fuels investment. Bitcoin's current design can't do this. Maybe some other crypto-currency will win the war by having this monetary mechanism in mind.

nateabele 13y ago
> Let's not forget fractional reserve banking, and how this fuels investment. s/investment/bubbles/
- antr 13y ago
  SMBs live in a space where equity financing (like VC money) or bonds are not available. I've yet to see a bubble driven by excessive/greedy/etc lending to SMB. Or are you implying that Bitcoin should only be used by large corporates, speculators, money managers and so on?
hapless 13y ago
Nothing about bitcoin's design prevents fractional reserve banking. You just have to place an inordinate amount of trust in your BTC bank (perversely misnamed "exchanges") Central banking and fractional reserve banking are orthogonal concepts. One could, in theory, accomplish one without the other. (but I do not see why one would wish to do so.)
- antr 13y ago
  where do i talk about central banking? on "You just have to place an inordinate amount of trust in your BTC bank (perversely misnamed "exchanges")" my understanding of Bitcoin is that no same Bitcoin can be in two accounts at the same time. How is this a "trust" issue vs a design one?
  - zmk_ 13y ago
    Im not a fan of bitcoin. But it cannot be in two wallets at the same time. If you deposit money in a bank it no longer is in your wallet but starts being a number on a screen. You transfer the money to the banks wallet. Then the bank can lend it to others by transferring it to their wallets. I think the biggest obstacle for bitcoin is that it is not a legal tender and it will not be because it comes with one to many sacrifice. You lose ability to have independent monetary policy while not getting benefits of a fixed currency.

jsmcgd 13y ago

I think you've missed the point which is to ridicule the criticism of crypto-currencies, not cash. Also the article talks about the properties of cash in general, not central banking.

jsmcgd 13y ago

I think you've missed the point which is to ridicule the criticism of crypto-currencies, not cash. Also the article talks about the properties of cash in general, not central banking.

agilebyte 13y ago

I do not know where you hail from but if you are a US taxpayer you can apparently pay the IRS using Bitcoin: https://www.joinsnapcard.com/ https://www.joinsnapcard.com/ More: http://pando.com/2014/01/15/pay-your-taxes-in-bitcoin-snapcard-launches-bill-pay-makes-the-irs-its-first-payee/ http://pando.com/2014/01/15/pay-your-taxes-in-bitcoin-snapca...

gamblor956 13y ago
No, you can pay a 3rd party that claims it will remit your bitcoin payment in the form of USD to the IRS. The IRS doesn't accept Bitcoin.
- icebraining 13y ago
  Pretty sure that's how most people pay their taxes; they don't usually carry wads of cash to the IRS building, they use a third-party (a bank).

hrktb 13y ago

I don't think bitcoin is usable as a currency (because of the scarcity mainly) but if we had to judge every potential currency by whether institutionnal actors accept it we might never accept anythig as currency until the end of the world. I would think of a currency as anything that has recognized value while being transferable. Let's imagine starbucks prepaid point card get's accepted in some drugstore also, the. Some super markets, gas station, theaters, airports. It really explodes and you can start paying with them at millions of stores, and you are allowed to exchange them with other people via some procedure. The starbucks point system becomes a currency IMO. You'll never pay your taxes with it, but you can use them for exchange and commerce purpose.

jamoes 13y ago

> Central banking is possibly the greatest wealth confiscation technique since taxation. FTFY

tbrownaw 13y ago

Central banking is possibly the greatest human invention since sanitation. No, that's either packet switching, internal combustion, penicillin, or sliced bread.

lotsofmangos 13y ago
I'd opt for the slinky.

logicallee 13y ago

My impression is that you completely misunderstood. (I only skimmed the article.) The folly that is being held up to ridicule are the objections to bitcoin. The means by which it is held up is to show that bills as a medium of exchange can be attacked just as strongly. People still use it. Nobody is going to make you go to the bank to give them $5 back, they use bills. And if you only have a $10 note, they'll make change for you. This is directly what's being compared to bitcoin (for example) - by pointing out that whatever objections anyone might have against bitcoin (theft, etc), could be made - ridiculously - against paper currency. The reason it is ridiculous is because the benefits of paper currency far outweigh the inconvenience stemming from using it. Likewise, bitcoin can have tons of problems - but the benefits far outweigh them. That is the point being made. "It is folly to criticize bitcoin".

fredgrott 13y ago

hmm, I do not think you understand currency.. For example, if we post on HN an offer to do something in return for something..what currency are we using and is that said currency some sort of fiat system?

SilasX 13y ago

Are we looking at the same article? It's satirizing paper vs digital money -- the focus is on money transfer tech, not monetary policy. The central bank stuff is about two paragraphs out of thirty. Also, whether bitcoin is a "true" currency is orthogonal to the (satirical) point of the article, which is that paper currency would look weird if it weren't the traditional way and we were going to it from digital money. Whether Bitcoin currently handles 1, 7, or a trillion transactions per second is irrelevant here.

lotsofmangos 13y ago

The satire was not of money or central banking, it was of the public reaction to a new form of it. Also, if you think that central banking is the greatest invention since sanitation, I think you may have your priorities slightly skewed, though that is only an opinion. As to whether bitcoin is a currency. It is a currency when it is used as one. Sometimes it is and then it is a currency, mostly it is a speculative investment vehicle. This is why I think dogecoin is more of a currency than bitcoin at the moment.

igivanov 13y ago

"The U.S. central banking system ranks among the finest of its kind." I'll take it as a fine example of satire. The Fed officials' conflict of interest, the financial crisis, using it as a tool to achieve political goals internationally, you name it.

branchan 13y ago

You can't fault a relatively new cypto-currency for having limitations in terms of adoption rates. For now, it's still a proof of concept and improvements are constantly being made. The article is not making fun of cash, but making fun of people who mock the concept of bitcoins.

cmapes 13y ago

slow clap I am genuinely impressed with how many people were trolled by your well-placed satirical comment.

stalcottsmith 13y ago

> The U.S. central banking system ranks among the finest of its kind. I agree... > Central banking is possibly the greatest human invention since sanitation. This is a most deceptive and inherently political statement. Sanitation is a great invention for everyone. Central banking not so much. Central banking and centralised control of the money supply serve to concentrate the greatest opportunity for skimming the surplus generated by vast productive populations into the hands a very few people to direct as they wish. Whether this process is controlled democratically or not (and in the US it most certainly is not) is not the point. The way this is done in the US is no different in principle to the way it is done by elite in more obviously "corrupt" countries. In the US, it is more sophisticated and over the last century it has attained the patina of established respectability. In the US they have managed to set this system up without killing the goose that lays the golden eggs. (the surplus-producing population) The skimming in the US is accomplished first through powerful central taxation which requires centralised record keeping and control of the banking sector. Secondly wealth and accumulated surplus is skimmed (redistributed upwards) through the control of credit extended by banks to generally expand and potentially to "contract" the money (credit) supply. Inflation generally rewards large debtors and punishes savers. Skimming is also accomplished by helping to grow and trade in government debt (granting incredibly valuable concessions to favoured dealers), assisting in managing capital flows into and out of the country, extending vast credits to powerful interest groups (mostly bankers) thereby helping powerful private borrowers to lean on the public credit for private gain, and most importantly and tragically to make possible and in fact encourage wars of choice which are clearly to the benefit of private interests and clearly not of any benefit to the general public. Is it any wonder that the Fed was created by bankers and war financiers, for the benefit of bankers and war financiers? This goes back to Morgan and others and their intimate involvement in the financing of Britain and France and subsequent agitation for American entry into WWI. Central banking is most convenient and necessary for anyone wishing to control or direct economic activity and hence the lives of others. That is why it appeals to statists of all persuasions who perceive it as powerful lever or tool they hope employ in their fantasies of control. Prominent early communists saw state-controlled central banking as an essential step for converting a capitalist system to a communist one. That is also why most "crazy libertarians" find their way to a stance opposing central banking. Central banking is anathema to Liberty. Jefferson killed the first Bank of the United States and exposed it as an agent of foreign interests. (The capital for the first bank was created by an early scam which had people talk down the debts of the continental congress and buy up the IOUs from the poor soldiers who fought for the revolution for a few pennies on the dollar, and then lobby successfully for the debts to be assumed and honored at face value by the new constitutional government. This was a similar scam to the way the oligarchs in Russia convinced newly enriched peasants to sell their shares in state assets for cheap.) Jackson killed the Second Bank of the United States for much the same reasons as Jefferson had a generation before. Seventy years later, a true, well documented conspiracy of financiers, gave the US its third central bank. I agree with other posters, that one must look at the actions and histories of many different central banks in different countries to understand the nature of the beast. The US is only the most competent in obfuscating its nature, purpose and origin. It has "won" at the central banking game for almost 100 years. Your praise of the US's central bank comes at the zenith of its power. I suspect over the next 10 years, it will resemble its cousins in less competent regimes and juridictions more and more. The US central bank, aka the Fed, is a brilliant creation. It is a brilliant creation of the fevered minds of oligarchs to defend and advance their oligarchy. It has lasted 100 years. I hope it will not last another 100. With Idiocracy increasingly fast upon us, the prospects for change are not good. Bitcoin to the moon.

kristianp 13y ago

Satire: "the use of humour, irony, exaggeration, or ridicule to expose and criticize people's stupidity or vices". What is being held up to ridicule are the various criticisms of bitcoin, not central banking. For example the article quotes an economist saying that paper money is evil, satirising Krugman's article about bitcoin. Quite entertaining!

acd 13y ago

Don't forget the Egyptian Obelisk standing in the middle of the Vatican. Obelisks are a tribute to the Egyptian Sun god Ra, they are also a phallus symbol read Shaft of Baal. http://en.wikipedia.org/wiki/Obelisk http://en.wikipedia.org/wiki/Obelisk Picture proof http://en.wikipedia.org/wiki/File:Vatican_Piazza_San_Pietro_Obelisk_slim.jpg http://en.wikipedia.org/wiki/File:Vatican_Piazza_San_Pietro_... Really tired of central banks and banks stealing 97% of the peoples wealth through inflation of FIAT currency backed by nothing than debt out of nothing. Here is a graph of median income vs GDP(average income), note that it diverges in the 1975, when by coincidence the dollar was decoupled from the gold by Nixon. http://lanekenworthy.net/2008/09/03/slow-income-growth-for-middle-america/ http://lanekenworthy.net/2008/09/03/slow-income-growth-for-m...