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Bitcoin money ≠ the Gold Standard.

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Re: Bitcoin money ≠ the Gold Standard.

#31

Post by contactdick »

corin_ wrote: post #22
contactdick wrote: post #16

Just on a brief look at BitCoin the question I have is generating blocks of bitcoins which requires computational power earns 50 bitcoins. Firstly that seems fairly arbitrary but secondly, what would happen if the currency became commonly used and a large company with a lot of computational power decided to get involved i.e google / facebook / microsoft. Wouldn't they end up monopolising a large portion of the bitcoi…

A good description of why that won't happen comes from a comment made on HN a week ago by Construct. "Meanwhile, hardware enthusiasts all over the internet are rushing to buy GPUs to dedicate to mining. They don't seem to realize that the bitcoin system automatically adjusts to keep the bitcoin generation rate constant at 50 BTC per 10 minutes. As the mining market becomes flooded with new 'miners' the difficulty wil…

Sounds like it's already happening - to quote construct "Some quick research shows a handful of big players in the mining market who have invested heavily in high-end GPUs for dedicated bitcoin mining, some with over 50 GPUs running 24/7 for months now. These guys are bound to have huge quantities of bitcoin they are eager to unload when the price is right. Meanwhile, news coverage is driving exploding popularity, which appears to be pulling the exchange rate sky high. On paper, many of these guys have become overnight millionaires just by running a bunch of computers 24/7."

Re: Bitcoin money ≠ the Gold Standard.

#32

Post by hasenj »

geon wrote: post #26
hasenj wrote: post #15

Earlier quoted context omitted.

This is not RMS's point of view. RMS doesn't care if you give him back your changes; he cares that you have the freedom to make any changes you wish. He wants you to be free from artificial restrictions imposed by copyright laws . He doesn't care if you share your changes with him.

> He doesn't care if you share your changes with him. Well, he does care if you make your changes available to the users of your software so that they too can make the changes they need. That's the whole point of the license, or you should just use MIT/BSD.

Yes, so he cares about the freedom of the user to change software. He doesn't care whether or not these users share these changes with each other and collaborate to develop the software. Although he thinks that's a nice-to-have side effect.

He cares that this freedom propagates to all users, not just you, and so just like he gave you this freedom, you also must pass on this freedom.

Re: Bitcoin money ≠ the Gold Standard.

#33

Post by msy »

I'd like to see some of the many bitcoin evangalists about the place convert their life savings, serious cash, into BitCoins and keep it that way. Talk is cheap, particularly when it's abstract economic theory.

Then I might think it's got something in it rather that looking like a volatile ponzi scheme that geeks are keen because they think they're in early and going to make mint.

Re: Bitcoin money ≠ the Gold Standard.

#34

Post by hasenj »

olalonde wrote: post #17
hasenj wrote: post #10

Earlier quoted context omitted.

GPL is a hack; its existence is not an approval of the system in any way, shape or form. That's not the point though. Whether Free Software is at odds (or not) with capitalism shouldn't matter at all in any intelligent discussion.

You're right in the sense that the free software movement as advocated by Richard Stallman is at odds with capitalism. I really meant "Open source software isn't at odds with capitalism". But I don't think we should exclude the capitalism debate from an intelligent discussion since it has pretty huge implications. If you're advocating a system that is incompatible with capitalism, you have to first make the case for…

It's not as if we live in a purely capitalistic system. In a pure capitalism, there would be no taxes. Yet here we are living in a system where the government takes money from you, specially if you're really rich.

It's not as though any idea that's at odds with capitalism will require "an alternative system". There's not gonna be any change to the system that requires a new theory of economics.

Suppose bitcoins are at odds with capitalism because they're just like gold (yes I know this is ridiculous, but just for argument's sake). What now? Should bitcoiners make a case for an "alternative to capitalism"? No. You will still be able to buy and sell and own property and trade and own factories and rent an office space and build a company and hire employees.

Re: Bitcoin money ≠ the Gold Standard.

#35

Post by corin_ »

contactdick wrote: post #31
corin_ wrote: post #22

Earlier quoted context omitted.

A good description of why that won't happen comes from a comment made on HN a week ago by Construct. "Meanwhile, hardware enthusiasts all over the internet are rushing to buy GPUs to dedicate to mining. They don't seem to realize that the bitcoin system automatically adjusts to keep the bitcoin generation rate constant at 50 BTC per 10 minutes. As the mining market becomes flooded with new 'miners' the difficulty wil…

Sounds like it's already happening - to quote construct "Some quick research shows a handful of big players in the mining market who have invested heavily in high-end GPUs for dedicated bitcoin mining, some with over 50 GPUs running 24/7 for months now. These guys are bound to have huge quantities of bitcoin they are eager to unload when the price is right. Meanwhile, news coverage is driving exploding popularity, wh…

I believe the idea is that mining was a solution for launching BitCoin, and that as BitCoin has become more popular, the value of mining has gone down, meaning that at some point (I don't know if it's already happened or not), mining won't be worth the returns.

Re: Bitcoin money ≠ the Gold Standard.

#36

Post by barrkel »

chipsy wrote: post #9

All economies are built on some combination of trust, fakery, coercion and hard work. The underlying rationale of a currency backed by "real material" is that it can be trusted to last. It can be trusted more than any government. Governments can fall quickly. Bitcoin hasn't proven itself to the degree of gold. It doesn't necessarily have to, though. It just has to look _better_ than alternatives, within some useful t…

Gold isn't "real material" any more than paper. It's only has its value because of supply and demand, just like fiat money. If someone finds a huge lump of gold underneath the ground, or in some other possibly accessible location, gold's value will dramatically drop. If a new industrial use for gold is found, its value might dramatically rise (assuming the industrial use returns higher value than current prices).

I think the chances of a flaw being found in the Bitcoin cipher system are a lot higher than e.g. a sudden disintegration of trust in the US dollar.

Re: Bitcoin money ≠ the Gold Standard.

#37

Post by hasenj »

msy wrote: post #33

I'd like to see some of the many bitcoin evangalists about the place convert their life savings, serious cash, into BitCoins and keep it that way. Talk is cheap, particularly when it's abstract economic theory. Then I might think it's got something in it rather that looking like a volatile ponzi scheme that geeks are keen because they think they're in early and going to make mint.

That's not a good idea. Being passionate about bitcoin doesn't imply you should convert all your money to bitcoins. In fact I would never advice anyone to invest too heavily in it: treat it like a side project, like an experiment. Maybe accept it as a form of payment for some non-essential products or services that you provide. Maybe try to make some trading with bitcoins. Try to see if you can buy a pizza maybe with bitcoins.

But only on the side.

Not because it's a ponzi scheme, but because it's still in its early days.

> ponzi scheme that geeks are keen because they think they're in early and going to make mint.

I just learned about it yesterday, but I'm excited about it because it has the potential to become a "Free" currency (free from the central control of a powerful authority).

Re: Bitcoin money ≠ the Gold Standard.

#38

Post by tlrobinson »

gritzko wrote: post #18

Technically, BitCoin is hardly scalable. As every participant needs to be aware of every transaction, that gives O(N^2) computational/storage cost, assuming N is participants and transactions~participants. May be cured by a dedicated central server storing all the transactions, but then it is not P2P anymore.

I was wondering about this after reading a little about how BitCoin worked. It sounded like every client needed to know about every transaction ever, which clearly can't scale to a mainstream currency.

Perhaps there's a way to partition/shard the historical data?

Re: Bitcoin money ≠ the Gold Standard.

#39

Post by barrkel »

jsn wrote: post #8
hasenj wrote: post #3

I don't like how people get defensive around capitalism; "our ideas are not at odds with capitalism", ok, so what if they were? If an idea is at odds with capitalism, that doesn't necessarily make it a bad idea. For instance, I think the idea of free software (RMS style) really is at odds with capitalism; but so what? This is not a good reason to agree or disagree with the idea.

Free software isn't at odds with capitalism (you don't have to extract monetary profit from everything you do in capitalism). Neither is bitcoin. Government-controlled paper money, on the other hand, definitely is at odds with free market.

Nobody wants a free market. That's a market that includes slaves, child pornography, assassination contracts, etc.

At the level of globally integrated economies, I think the gold standard has been pretty well proven to be disastrous. It especially doesn't deal well with trade imbalances that unwind suddenly. The trouble you see in the Euro area can be seen as a microcosm of what a gold standard is like; countries like Greece, Ireland, Portugal, Spain don't control their money supply - more or less, it's like gold - so they're caught in an extremely painful bind, when what would be best for them is to devalue their currency some. Instead, they're having to struggle under huge debt burdens, and some might have to default, or leave the Euro (i.e. by analogy leave the gold standard).

Re: Bitcoin money ≠ the Gold Standard.

#40

Post by msy »

hasenj wrote: post #37
msy wrote: post #33

I'd like to see some of the many bitcoin evangalists about the place convert their life savings, serious cash, into BitCoins and keep it that way. Talk is cheap, particularly when it's abstract economic theory. Then I might think it's got something in it rather that looking like a volatile ponzi scheme that geeks are keen because they think they're in early and going to make mint.

That's not a good idea. Being passionate about bitcoin doesn't imply you should convert all your money to bitcoins. In fact I would never advice anyone to invest too heavily in it: treat it like a side project, like an experiment. Maybe accept it as a form of payment for some non-essential products or services that you provide. Maybe try to make some trading with bitcoins. Try to see if you can buy a pizza maybe with…

Why not? If the crypto is bulletproof and the theory is sound shouldn't it be the ultimate place to keep your money?
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