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Bitcoin money ≠ the Gold Standard.

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Re: Bitcoin money ≠ the Gold Standard.

#91

Post by dpatru »

kolinko wrote: post #81
Duff wrote: post #74

Earlier quoted context omitted.

Here's what what said about the gold standard to differentiate from Bitcoin: "There was no choice in how one could pay, payments were made in a vacuum. All transactions had to be made in a currency backed by gold. That meant that any abuse of the Standard could affect the economy negatively and runs on banks were almost inevitable." So what? People were and are always free to transact business in any way that they wo…

Saying that "bitcoin means freedom to choose a form of payment" is naive. Let's say that Bitcoin is success, and 98% of internet merchants accept bitcoins as a mean of payment. This will mean that once I open up a shop, I have to accept it as well, or I'll lose sales. Of course, in theory, nobody would force me to accept Bitcoins, but so is the case today - nobody forces me to use Dollars, or PayPal.

> nobody forces me to use Dollars

Actually, if you're in the US, you do have to use dollars. See http://en.wikipedia.org/wiki/Legal_tender#United_States and http://en.wikipedia.org/wiki/Liberty_Dollar.

Re: Bitcoin money ≠ the Gold Standard.

#92

Post by dpatru »

barrkel wrote: post #36
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 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 this is so, then why have plundering governments consistently sought to replace gold with paper?

Re: Bitcoin money ≠ the Gold Standard.

#93

Post by dpatru »

nateberkopec wrote: post #59

A gold standard is a tool used by a central banking authority to promote stable prices. A bitcoin is actually designed not to be controlled by a central monetary authority. So, of COURSE Bitcoins aren't the new gold standard. That's like comparing apples to giraffes.

The aim of both the gold standard and bitcoin are to limit the power of governments and banks to defraud their citizens by forcing them to use fiat money.

> gold standard is a tool used by a central banking authority to promote stable prices.

This is the wrong way to look at it. The reason for central banks is to allow banks/governments to devalue/print money, i.e., to deviate from a gold standard.

Re: Bitcoin money ≠ the Gold Standard.

#94

Post by nazgulnarsil »

olalonde wrote: post #65
hasenj wrote: post #57

Earlier quoted context omitted.

"as close to capitalism as it gets" is not necessarily a good thing. As someone else pointed out, in a pure capitalism, we'd have slaves, child porn, thugs for hire, assassination contracts, etc. I just got this idea right now, but I think a pure capitalism will deteriorate very quickly into a dictatorship. All it takes is for someone to accumulate enough military power so that he can take over. Assuming you can buy/…

You've got it all wrong. Those things are the antithesis of capitalism. I really don't know where to start... May I suggest you watch this documentary: http://www.freetochoose.tv/

I can summarize.

in a purely free market people won't want to do business with people who violate others' property rights since you have no guarantee they won't violate yours.

traditionally, guarantees against this have been ethnic. "well I know he won't enslave me since the norm is to only enslave blacks, therefore we can both happily profit from the slave trade and are no threat to each other."

Re: Bitcoin money ≠ the Gold Standard.

#95

Post by Duff »

dpatru wrote: post #91
kolinko wrote: post #81

Earlier quoted context omitted.

Saying that "bitcoin means freedom to choose a form of payment" is naive. Let's say that Bitcoin is success, and 98% of internet merchants accept bitcoins as a mean of payment. This will mean that once I open up a shop, I have to accept it as well, or I'll lose sales. Of course, in theory, nobody would force me to accept Bitcoins, but so is the case today - nobody forces me to use Dollars, or PayPal.

> nobody forces me to use Dollars Actually, if you're in the US, you do have to use dollars. See http://en.wikipedia.org/wiki/Legal_tender#United_States and http://en.wikipedia.org/wiki/Liberty_Dollar .

You don't have to pay in dollars, but you must accept dollars to settle a debt.

You and I can have a contract where I buy a cow from you today in exchange for an iPod next week, that's a valid contract. But if I cannot produce the iPod next week, you must allow me to give you a quantity of legal tender currency (US coins or paper dollars) to settle the debt.

If you require payment upon receipt, however, you can refuse to exchange the cow for cash.

Re: Bitcoin money ≠ the Gold Standard.

#96

Post by weavejester »

gritzko wrote: post #79
weavejester wrote: post #67

Earlier quoted context omitted.

> 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. That's not true. The Bitcoin protocol defines a "simplified payment verification" method that does not require clients to store the full block chain. The Bitcoin network does need a sufficient number of full clie…

So, the claim of being P2P goes to the wind first :) Second. When accepting a coin, a node needs to check the coin was not spent since the last time it changed hands. If the buyer claims he got it 1 month ago (and shows a proof), then the seller needs to check a month worth of transactions, just in case it was double-spent. Note the terrible asymmetry of the attacker's and the defender's costs . Third. Today I had to…

"So, the claim of being P2P goes to the wind first"

It depends on how pedantic you are about the term "P2P". I guess you could argue that any P2P network that includes supernodes is not a true P2P network, but in practise I've never heard that objection.

"If the buyer claims he got it 1 month ago (and shows a proof), then the seller needs to check a month worth of transactions, just in case it was double-spent. Note the terrible asymmetry of the attacker's and the defender's costs."

Not really. Finding out whether an address can spend a coin is just a hashtable lookup. It's not like we have to use linked lists!

So the cost for the defender is trivial. An attacker, however, has to orphan the current block chain, which requires controlling at least 50% of the computational power in the Bitcoin network.

For instance, let's say Alice gives Bob 1 BTC. Bob waits for 6 confirmations before accepting it as valid, which is the standard length the official Bitcoin client uses. This means that there is a chain of 6 blocks verifying the transaction; if Alice wants to double-spend, she needs to get rid of that chain, which she can only do if she can produce a longer alternative block chain. This means she has to produce blocks at a faster rate than everyone else on the network, which requires that she possess over 50% of the computational resources.

"Does he realize that in a distributed system nodes might have totally different opinions on the number and length of those branches? And that those opinions might change. It is easy to imagine nodes hopping between branches with no global agreement possible."

No, because clients always choose the longest block chain. It's possible that for a little while the block chain will branch, but that situation is inherently unstable; eventually one branch will produce a block faster than the other, and everyone will switch to the winning branch.

Re: Bitcoin money ≠ the Gold Standard.

#97

Post by weavejester »

pradocchia wrote: post #87
weavejester wrote: post #84

Earlier quoted context omitted.

How exactly bitcoin resemble a Ponzi scheme? It kinda sounds like you mean pyramid scheme, rather than Ponzi scheme. (Not that bitcoin is a pyramid scheme either...)

In that Bitcoin presents itself as a viable alternative currency, and encourages adoption by people looking for a safe haven from fiat currency. Eventually, though, it could become clear that certain factors, possibly the production function, preclude it from long term viability. The value drops, holding are wiped out, but not before the earliest adopters have already secured their gains.

It's only a Ponzi scheme if you're lying to investors about how much money you have. If you invest in something and then it fails due to some unforeseen factor, that's just bad luck (or bad planning), not a Ponzi scheme.

Re: Bitcoin money ≠ the Gold Standard.

#98

Post by gritzko »

weavejester wrote: post #96
gritzko wrote: post #79

Earlier quoted context omitted.

So, the claim of being P2P goes to the wind first :) Second. When accepting a coin, a node needs to check the coin was not spent since the last time it changed hands. If the buyer claims he got it 1 month ago (and shows a proof), then the seller needs to check a month worth of transactions, just in case it was double-spent. Note the terrible asymmetry of the attacker's and the defender's costs . Third. Today I had to…

" So, the claim of being P2P goes to the wind first " It depends on how pedantic you are about the term "P2P". I guess you could argue that any P2P network that includes supernodes is not a true P2P network, but in practise I've never heard that objection. " If the buyer claims he got it 1 month ago (and shows a proof), then the seller needs to check a month worth of transactions, just in case it was double-spent. No…

Finding out whether an address can spend a coin is just a hashtable lookup.

Trying to follow your perspective. You likely assume that every node has a dossier tracking every single coin. That dossier is summarized as a hash table. Right?

there is a chain of 6 blocks verifying the transaction

Does it mean a transaction needs 1 hour to settle or I'm confusing something for something? (1 block is created in 10 minutes)

everyone will switch to the winning branch

Well... suppose I'm an attacker who briefly mobilized some significant CPU resources (a GPU cluster, a million zombie PCs). I make nodes face two chains of equal length. Once new block arrives and nodes rush to the "winner" branch, I help the other branch win, so they rush back. You see, it is far more serious than "using it to defraud people by stealing back his payments" (Sec 6, last paragraph). The strategy of "alerts" (Sec 8) might be open to attacks as well. "Bad" nodes might also do alerts. etc etc ...and that is just off the top of my head.

In very general terms, I also don't like the approach on the following reason. With strong crypto, I may encipher something, so even the biggest Google cluster will not be sufficient to break it any time soon. So, it is mathematically strong, in a sense. BitCoin weakens it to a majority vote in terms of CPU cycles uselessly burnt. That appears really weird to me.

Re: Bitcoin money ≠ the Gold Standard.

#99

Post by jsn »

barrkel wrote: post #39
jsn wrote: post #8

Earlier quoted context omitted.

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 lik…

"Free market" is defined as environment of voluntary transactions. Slavery is not voluntary, so it has nothing to do with free market. The same applies to assassinations (unless the victim voluntary agrees to be assassinated).

As for your argument wrt gold, it's inconclusive to say the least. Specifically, PIIGS has failed not because they can't expand their money supply at will now, but because they could (and very much did) extend their money supply before (using ECB as a source of cheap money, which would be impossible on gold standard).

But that's a century old debate, Austrian school has made their very convincing case about fiat money w/ goverment controlled supply causing business cycles in, what, 1912? Something like that.

Re: Bitcoin money ≠ the Gold Standard.

#100

Post by barrkel »

olalonde wrote: post #88
barrkel wrote: post #86

Earlier quoted context omitted.

Gah! You've completely missed the point of my irony. There's scarcely any point discoursing with you.

Well, you're not talking about capitalism. Your whole reasoning is based on a false premise, because there are limits to the kind of transactions allowed in a free market. In a free market, you are free to do whatever you want as long as it doesn't interfere with someone else's freedom . Your freedom ends where someone else's begins. Hence, slavery not being compatible with capitalism is a fact, not a distortion of t…

We're talking about market freedom not individual freedom. You're confusing the two. Companies owned by larger companies can still both operate in a free market. It's no different in principle for people. And my irony was about phrasing the ownership of people issue in free market terms to show how it is distorting (and it straight out is), not to argue for it or that there aren't other approaches to the same problems.
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