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Bitcoin: A flawed currency with a useful application for the Eurozone (2014)
- plasmid0h 11y agoThis post is from February 2014 !
- pjc50 11y agoShould be marked (2014), Yanis Varoufakis is a little busy at the moment to be blogging about bitcoin.
- wslh 11y agoI think he is missing Valve now except if his game theory calculations turn to be right.
- chinathrow 11y agoBusy? Yes Blogging? Yes http://yanisvaroufakis.eu/2015/07/03/imf-backs-ever-so-peculiarly-the-syriza-governments-debt-assessment/ http://yanisvaroufakis.eu/2015/07/03/imf-backs-ever-so-pecul...
- codeulike 11y agoDamn good post too.
- chinathrow 11y agoIndeed. I wonder how the world would look like if all politicians have that background, insight and fairness in their DNA.
- TillE 11y agoThroughout this whole mess, Varoufakis is one of the very few who bothers to talk about the specifics of what's being negotiated and what the consequences are. From everyone else, it's mostly been a lot of childish accusations, vague threats, moralizing, and pointless rhetoric. To the extent that the vast majority of the German public, for example, don't have the slightest clue what the Greek government is even asking for.
- atmosx 11y agoS. Keen believes he dwarfs everybody in the EU/ECB/IMF: http://www.debtdeflation.com/blogs/2015/02/05/talking-about-yanis-on-the-bbc/ http://www.debtdeflation.com/blogs/2015/02/05/talking-about-... After listening to statements and interviews by Lagarde, Dijsselbloom, Juncker, Draghi and Scheuble speaking, I don't think that's a compliment. It's easy very easy to dwarf them.
- brugidou 11y agoI like that he points to the actual IMF DSA but reading it gives an entirely opposite view point... He clearly picked the convenient graphs.
- justincormack 11y agoAlthough right now he may well be thinking about some way to increase liquidity, and future taxes look appealing. I doubt if it will be blockchain based though, unless they have had a lot of prep work going on.
- yc1010 11y agoYet another "deflation is bad hence bitcoin is bad" post, except due to the rate of mining Bitcoin has been highly inflationary if anything. See this graph http://i.imgur.com/vRsIMvt.png http://i.imgur.com/vRsIMvt.png edit: Oh I see now who the author is :D well euros or bitcoins the way Greece is going inlation or deflation will be the least of their worries....
- celticninja 11y agoWith an added "bitcoin is bad but if we take the idea and reshape it so it works in tandem with the existing financial system as a support system then it could be good"
- nabla9 11y agoInflation without specifier means rise in the price level. If you mean monetary inflation, call it monetary inflation. Bitcoin is deflationary (as negative inflation) in the first sense and this is the deflation yanisv is talking about.
- sp332 11y agoBitcoin has not in fact been deflationary, according to the graph. Maybe it will be in the future.
- mike_hearn 11y agoIt's been in severe deflation price wise over the long run, the idea is that it means bitcoin holders won't spend their coins. However that doesn't really match reality: transactions have been going up over time. Additionally I recall BitPay saying that their traffic goes up when the price goes up, as people find that they are suddenly rich and splash out. Like a lot of macroeconomics, the whole "falling prices means falling skies" theory doesn't hold up to close inspection: https://www.minneapolisfed.org/research/sr/sr331.pdf https://www.minneapolisfed.org/research/sr/sr331.pdf
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- thomasfoster96 11y agoFor those who don't know, the author is now Greece's Finance Minister.
- celticninja 11y agoAnd was previously employed to monitor the economy of EVE.
- kbody 11y agoYannis Varoufakis consulted Valve regarding micro-transactions, but had nothing to do with EVE online. EVE Online's economist was Dr. Eyjólfur Guðmundsson https://twitter.com/ccp_dreyjog https://twitter.com/ccp_dreyjog and really did wonders with the economy, you should watch some of his presentations on the state of EVE online's economy. He was doing several pieces for their EVE FanFest.
- celticninja 11y agoI sot corrected, thank you. I will watch some of the presentations.
- jessaustin 11y agoSince two hours have not yet passed, you could delete the original, mistaken, comment.
- celticninja 11y agoIt would ruin the discussion though. And mistakes are fine if you learn from them a d I learned something here today. I'm not afraid of making or admitting to my mistakes. I'm afraid of not learning from them.
- jessaustin 11y agoKudos; that's an admirable attitude. In cases like this specific one, in which the original comment contained exactly one false proposition, and the immediate contradicting reply is easy to understand on its own, I have decided (and have seen others also decide) to just delete it so that no one is confused. (Like possibly 'Havoc in the sibling comment.) If there were something wrong with deletion then HN wouldn't have it. YMMV!
- mike_hock 11y agoThis proposal has nothing to do with Bitcoin, though. This FT-coin is a currency (parallel to the Euro) issued by a central authority, just as any other fiat currency. This is completely different from Bitcoin, whose value arises from the cost of mining (hardware purchase, power, maintenance, and time spent), and people's willingness to exchange that for other currencies and/or goods.
- deleted 11y ago[deleted]
- caf 11y agowhose value arises from the cost of mining (hardware purchase, power, maintenance, and time spent) This is not true, and represents a fundamental misunderstanding. The value of bitcoin arises solely from the demand for it. The cost of mining is driven by the value of bitcoin, not the other way around - if demand for bitcoin were to collapse, the price would drop, and all rational miners whose current operating costs exceed the new price would stop mining. This would result in the next blocks being mined very slowly, and would eventually result in the mining difficulty dropping, bringing the cost of mining back into line with the market price.
- 666_howitzer 11y agoBitcoin is disinflationary, not deflationary currency.
- salibhai 11y agoWhat's the difference exactly?
- thescriptkiddie 11y agoBitcoin are not destroyed except by accident, it's just that the creation of new bitcoins will eventually taper off to zero. Deflation will only occur if demand continues to rise, which is likely but not guaranteed.
- jackgavigan 11y agoThis is actually nothing to do with Bitcoin - it's about using blockchain technology to issue what is effectively government debt in crypto-currency form - i.e. what Overstock have done.
- kspaans 11y agoThat's really interesting, I hadn't heard about it[0]! Thanks for sharing! 0 - http://www.wired.com/2015/04/overstock-files-offer-stock-works-like-bitcoin/ http://www.wired.com/2015/04/overstock-files-offer-stock-wor...
- fragsworth 11y agoBut if it's government-issued, why not use a centralized server manage the ledger? Since the government is going to be capable of producing as much currency as it wants, at will, there's no reason to have a blockchain.
- jackgavigan 11y agoA blockchain could be a lot quicker and cheaper to set up and get running than a centralised system.
- dpc_pw 11y agoIt's way easier to have a centralized system than decentralized one. Bitcoin in it' current form can handle around 7 transactions per seconds, and scaling it upwards is costly. 7 transcations per seconds is laughably small number. Your smartphone using LTE connection could serve 7 transcations per seconds as trusted centralized server.
- thescriptkiddie 11y agoI'm not sure where you're getting the 7 TPS number. Satoshidice alone is responsible for more than that. It's trivial for anyone to send hundreds of transactions per second if you're willing to pay the miner fees.
- rurban 11y agoBitcoin has its biggest potential these days. E.g. http://www.reuters.com/article/2015/07/03/us-eurozone-greece-bitcoin-idUSKCN0PD1B420150703 http://www.reuters.com/article/2015/07/03/us-eurozone-greece... However, Coinbase is not accessible for greeks. So, I would count it as huge lost opportunity.
- celticninja 11y agoTo be fair it would not help Greeks now as they cannot access Euros with which to buy BTC. It would have helped them if they could have had access 3 weeks ago, before capital controls were enacted. However I would be surprised if Spanish, Irish and Portuguese citizens are not looking at the Greek situation and wondering if they need to take some action. Coinbase, circle etc need to target these markets before they experience capital controls.
- k-mcgrady 11y agoNot sure about Spain and Portugal but I was under the impression Ireland was in the middle of a good recovery.
- toyg 11y agoThey still have a noticeable 109% debt-to-GDP ratio, which means quite a bit of debt to service. At crisis peak, their public spending was 66% of GDP (now 40%). At the first hint of recession, they will be in trouble. You would be forgiven for thinking there are more troubled countries that could be targeted by speculation. Italy has a 130% debt-to-GDP ratio, is still basically in recession, and has 50% public spending to GDP. Spain is approaching 100% debt, 44% public spending, and it looks like it's getting worse. Then there is Portugal, Cyprus and so on. However, if Greece goes in full default, the Euro will likely get battered and all these positions will potentially unravel, including the Irish one.
- nova 11y ago> Spain is approaching 100% debt, 44% public spending, and it looks like it's getting worse. It is. Spain is scheduled to elect the local Syriza equivalent in November.
- madez 11y agoHe agrees that there are a lot of goods and services that are getting cheaper. But then he says that they only are getting cheaper because the buyer spends more time informing himself and not just because time passes by. This is wrong. There are widespread deflationary effects in current economies.
- mcguire 11y agoThere are widespread deflationary effects in some segments of current economies.
- dataker 11y agoAlong with, http://yanisvaroufakis.eu/2013/04/22/bitcoin-and-the-dangerous-fantasy-of-apolitical-money/ http://yanisvaroufakis.eu/2013/04/22/bitcoin-and-the-dangero... I'd ask him one question: how is the idea of regulated, political and centralized money working out for you?
- chimeracoder 11y ago> I'd ask him one question: how is the idea of regulated, political and centralized money working out for you? That's kind of a straw man, because the Euro is all of the burdens of a centralized fiat currency while lacking almost all of the benefits (or at least the ones most relevant to Greece's current situation). Having a unified monetary policy among countries with incredibly fragmented and disparate fiscal policies is a recipe for disaster. Even in the US, fiscal policies are relatively unified at the federal level and states are prohibited from backing their own debt the way nation-states (like the US federal government and Eurozone countries) can. And on that note, look at the USD. It's the strongest fiat currency in the world and the preferred medium of exchange worldwide, even despite all of the outstanding issues with the US economy and the state of the US national debt. Clearly a centralized, fiat currency can be powerful if you don't set it up for failure from day one (as the Euro was).
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- Nursie 11y agoReplying to (I think) undo accidental downvote. Oops
- cbd1984 11y agoAs simple matter of showing how the local software works: The comment was gray when I found it and upvoted it, so I don't think replies undo downvotes. The UI of this place is terrible on mobile. Fingers aren't styluses, and nobody (out to three decimal places...) uses a stylus to interact with a mobile phone.
- 1053r 11y agoWhile I can't say with certainty whether mild and predictable deflation is bad for the economy, I don't think that these standard arguments that are used are sufficiently persuasive. 1) It is clear that a deflationary spiral, defined as possessing the characteristics of being unexpected, not written into contracts or loans, and relatively severe (double digits) while accelerating is bad. The great depression makes this clear. We can also see it in the current Greek situation. However, runaway inflation is equally bad, as we can see from post WW1 Germany, and modern day Venezuela and Argentina. Is it the fact that the change in the buying power of money is large and unexpected, or is it the sign of the inflation percentage that is bad? 2) Under the current debt based money system, the negative effects of inflation fall primarily on the poor. The wealthy purchase government bonds, which protect them inflation. They also have bank accounts, or finance debt either directly or indirectly. This means that instead of inflation falling on the populace evenly, it falls doubly on the poor. 3) Under a constant money supply system that eschews debt, the rich must seek out investment that actually increases productivity, rather than doing parasitic zero-sum investments (such as bond purchases and loan giving) that merely transfer value from one person to another. This would tend to grow the economy faster. 4) Under a constant money supply (like Bitcoin in a few years), wages and prices would tend fall by however much the economy was growing (2% - 3% a year), but the raises that people give out for seniority would tend to overwhelm the wage issues.
- oleganza 11y agoGreat depression was caused not by deflation, but by previously unleashed inflation (as in "inflated money supply"). Collapse of the bubble is a logical consequence of any bubble. Alternative - ever-increasing inflation was experimented in Weimar Germany, Zimbabwe and few other places. Hard money (Bitcoin or physical scarce collectibles) prevents people from inflating money supply, thus preventing global bubbles and thus preventing subsequent depressions. Of course, local stock-specific bubbles can still exist, but they are always subject for arbitrage and voluntary exits. Global money bubble is more destructive because use of a certain money is enforced by laws and therefore people cannot easily exit or switch to alternative.
- JamesBarney 11y ago
- Havoc 11y agoI'd be a little worried if my countries finance minister starts posting about bitcoin... Nothing against BT...but sheesh.
- HugoDaniel 11y agoAnd now for something completely different: dracmacoin !! :O
- pinaceae 11y agoas if greece was a-ok when it had the drachma. exposes the underlying problem that the greek economy in itself is pretty useless, hence all the drama right now is focused on financial shenanigans. the EU expansion to the east broke greece's neck. a well educated, motivated workforce entered the EU, but smartly like Poland did not join the Euro. Amazing growth in Poland throughout the crisis of the last 7-8 years, catastrophe in Greece. See comments from Lithuania's prime minister and others who are getting fed up with Greece. Interestingely enough this fits Samuel P. Huntington's predictions of the Clash of Cultures. He had Greece as part of the orthodox area, separated from catholic/protestant Europe which spanned from UK to Poland. He got a lot of shit for his theories at the time, was quite prescient in hindsight.
- stevedekorte 11y agoSaying deflation is the cause of a bad economy is like saying a wet head causes rain. Chain of causation is: money printing used to buy debt -> underpricing of debt risk -> unsustainable debt funded malinvestment -> debt collapse -> deflation as effective money supply shrinks The irony is that they use fear of deflation to justify the very act that causes the malinvestment and debt collapse.