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Gold also is usefull in the industry and electronics: http://en.wikipedia.org/wiki/Gold#Industry http://www.gold.org/technology/uses/
Gold's market value is far above what it would be if it wasn't used as a value store.
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My solution is to expire the BTC to force circulation.
If what you're suggesting is that coins can only sit in one address for a limited amount of time, then that would not do anything because people would just create new addresses to send the coins to.
Nobody wants to be sitting on a pile of this sort of cash at the end of the month, because they'll lose 10% of the pile of cash. The intended effect is to dramatically increase the velocity of the money, so that a small stock of it can sustain a very large flow.
I don't know enough about this stuff to sensibly evaluate the claims its proponents make for it.
Excellent article. I would only add that we're using a LOT of energy to create a fake (read: virtual) resource. The best part about virtual resources is that they don't use many real resources, but this one is the opposite. Granted, it's a 1-time cost, but as the article notes, it could be created with a much lower 1-time cost.
How much manpower and energy does it take to make a paper US dollar with nothing backing it up? [EDIT] Since I'm getting downvoted, I'll answer my own question: $0.042 every 18 months.
It'd be pretty interesting to get the total cost of printing, transport, and storage, and compare to the cost of maintaining a similar amount in bitcoins (which I calculated here: http://news.ycombinator.com/item?id=2602667).
Why can't we tie the bitcoin mining process to some sort of useful calculation? Maybe some variant of folding @home or something? We just need some problem with a hard to calculate, but easy to verify 'right answer' right?
To solve this problem, the input has to be bitcoin transactions, rather than biologically-relevant amino acid sequences.
The hypothetical solution is flawed: it would take not 50% of miners to adopt a 1% implementation; it would take 100%, since if only 1 defects, that one wins all the coins and all the cooperative 'prisoners' lose.
Any system of checks and balances will have its price. Look at what we do with gold: we dig it from a hole in Africa, we transport it in other countries, we dug holes or build vaults and throw it there. Like Warren Buffett said, it has no utility, if Martians were to look at the process they would scratch their heads. Except for the guarantee of uniqueness. Which is one of the most powerful invariants against corrupt…
Bitcoin is not quantum-hard. When quantum computing reaches a certain threshold, bitcoin will lose its uniqueness and collapse. There are post-quantum algorithms that are computable on ordinary computers, but they're still under research and they'd make Bitcoin's data set considerably larger.
Could you elaborate which aspect of bitcoin has efficient quantum algorithms? The proof-of-work system requires you to invert hashes and quantum algorithms only give you a quadratic speed up (brute force takes time O(\sqrt{size of range}) rather than O(size of range)). Right now there is no quantum attack on SHA-256 (which is what Bitcoin uses).
There are post-quantum algorithms that are computable on ordinary computers, ...
This sounds interesting, but could you elaborate? What does it mean for a post-quantum algorithm to be computable on ordinary computers?
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Printing money has in itself a cost in shifting resources from the market to the government or the central banks (or the financial sector in general).
Unless you live in Ted Kennedy's or Trent Lott's district, where the cotton farms and paper mills are. For decades these senators continuously sabotaged measures to eliminate the paper Dollar and get the US entirely on dollar coins. The US is probably the last major economy to still be using paper for such small denominations.
However, in my recent and local experience, small-denomination paper is not so unheard of:
Country Smallest paper bill in USD PPP GDP/year
Argentina $2 0.50 $640B
Brazil 2 reais 1.26 $2200B
Uruguay $5 (now rare; usu.$10) 0.27 $41BNo, you guys. You don't get it. Bitcoins are going to take over the world. We're ALL going to be part of an economy of Bitcoins, just like we all universally adopted Swatch Internet Time[1]! [*1] http://en.wikipedia.org/wiki/Swatch_Internet_Time
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If what you're suggesting is that coins can only sit in one address for a limited amount of time, then that would not do anything because people would just create new addresses to send the coins to.
The standard Silvio Gesell expiring-money scheme doesn't have anything to do with where the money is at any given time. The way it works is that for the government to accept a note, it must be up-to-date with stamps, one stamp for every month since it was issued. The stamps (traditionally, bought from the government) cost 10% of the value of the note. Nobody wants to be sitting on a pile of this sort of cash at the e…
The way I understand bitcoins might be flawed but would certainly appreciate clarification ... My problem with bit coins is that early people who start mining have a greater advantage than later ones. While that's not the classic definition of a Ponzi scheme (in the classic definition, payouts at each round are funded by new participants), it is a feature bitcoin shares with them. If someone started mining bitcoin wh…
"these people are getting a significant proportion of value for simply being early adopters" I'm not one of them but have no gripes with that. What you describe is also commonly known as the entrepreneurial taking-unknown-risks for an unknown-future-reward. It's the same with government currencies -- the government/banking complex gets newly created money first, and gets to spend it when the new money supply still ha…
I'd argue you're not exactly correct about the release path of currency in a fractional reserve system, although I don't disagree that elements are currently implemented in quite unfair ways. I'd also suggest, though, that government fiat currency works very much better than anything commodity based, or indeed than a partially fiat system that functions exactly like a commodity based system, as bitcoin does.