The Quora post that killed Bitcoins. Please discuss if his arguments are valid.
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Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.
#2I found that post painful to read (I disagreed on all headline points,) but I see bitcoin as the start of a new financial reality. I hope bitcoin becomes a new core currency: to me it is like ogg, rather than a bank produced equivalent, which would be like mp3.
Money is fully moving into the digital age, as has media with mp3 and mpeg. It is the medium that will shape its container.
- early adopters can help create or adapt financial institutions
- exchanges are and will go open source
- when something goes wrong the network will adapt. Bitcoin has financially supported developers
- I think all it takes is 1 large company and 1 country to support the existence of bitcoin on a global scale as a test case whilst the rest live in fear
Check out slide 4 of http://www.slideshare.net/15Mb/ages-of-money that is the best way to think about bitcoin in my view: money 5.0.
Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.
#3As an zeroHedge reading, armchair economist i think there are a lot of flaws in that guys argument
"Bitcoin does not have a central bank capable of printing and lending bitcoins"
>>I rather think thats the point. Lending is inflationary.
"Built in Deflation"
>> God knows how the computer industry makes money when if i hold my $$$ just a little longer, i can buy an even better machine.
"For Bitcoin to work as a currency, it would have to act as a predictable store of value"
>>No, currency does not have to store value. The USD is a terrible store of value. Gold is a store of value. Govt paper is not.
" That's called a bank run, and for obvious reasons we want to avoid them."
>> um - I'm not an expert on bitcoin but there are no banks i thought. your money is in your e-wallet. you dont need a bank to keep your money away from theives. there are no banks with fractional reserve lending that are fragile to a run on deposits
This guy is dunning kruger at its best.
Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.
#4http://www.quora.com/Is-the-cryptocurrency-Bitcoin-a-good-id...
Jury's still out, but that's okay. All we need to do now is wait.
Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.
#5I found that post painful to read (I disagreed on all headline points,) but I see bitcoin as the start of a new financial reality. I hope bitcoin becomes a new core currency: to me it is like ogg, rather than a bank produced equivalent, which would be like mp3. Money is fully moving into the digital age, as has media with mp3 and mpeg. It is the medium that will shape its container. - early adopters can help create o…
To me Bitcoin is more like Gnutella. Massively overhyped and fundamentally flawed.
Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.
#6I found that post painful to read (I disagreed on all headline points,) but I see bitcoin as the start of a new financial reality. I hope bitcoin becomes a new core currency: to me it is like ogg, rather than a bank produced equivalent, which would be like mp3. Money is fully moving into the digital age, as has media with mp3 and mpeg. It is the medium that will shape its container. - early adopters can help create o…
To me Bitcoin is more like Gnutella. Massively overhyped and fundamentally flawed.
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Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.
#7Some of the primary arguments he uses against Bitcoin are actually its strengths. Fundamentally, Bitcoins will be in higher demand than dollars because their value will continue to rise instead of fall. This means that goods and services as priced in bitcoins will be discounted compared to dollars, driving their adoption. You can see this same dynamic at work in black markets around the world where the USD is the de facto currency vs the highly unstable local currency.
It's all about the "reserve currency", which is the currency that sellers around the world prefer to receive. If bitcoins are more attractive to sellers because of built-in deflation then they'll not only accept them but offer their products at a discount to get them. All of this creates an ecosystem and drives adoption, it does not make the currency a scam as he implies.
Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.
#8His arguments are valid to some extent. They may not be fatal though. Taking each one in turn:
1) Seeding Initial Wealth
This isn't really a problem. It's not very fair, but I don't think he argues that is actually a problem.
2) Built in Deflation
This is a big, big problem. It seems the creators of Bitcoin have a philosophical disagreement with conventional economic theories that state that increases in money supply (and some limited inflation) are outcomes of a healthy economy. Unconventional thinking is fine, but the outcomes he predicts here are real problems.
3) Lack of Convertibility
Yes, there is a problem here. It could actually be worse than the author suggests, because if state actors move against Bitcoin they could easily introduce high penalties for Bitcoin conversion. Even without that state actors, the dependability and predictability of convertibility is currently unacceptable.
At the same time, it's possible this could be overcome. It is basically a matter of trust, and modern fiat currencies all rely on trust. Usually that is trust in a government (or system of governments in the case of the euro), but it isn't inconceivable that "the internet" could be as trustworthy as a government. People trust billions of dollars or transactions to operating systems and databases that were built by "the internet", so it is possible this could be the same.
4) When Something Goes Wrong, It Will Die
This is the trust issue again.
However, there is one additional point - if someone wanted to deliberately attack the currency it would be fairly easy to buy a large number of Bitcoins, then deliberately destroy them. Once that occurs, they disappear from circulation, which causes instant deflation.
Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.
#9I found that post painful to read (I disagreed on all headline points,) but I see bitcoin as the start of a new financial reality. I hope bitcoin becomes a new core currency: to me it is like ogg, rather than a bank produced equivalent, which would be like mp3. Money is fully moving into the digital age, as has media with mp3 and mpeg. It is the medium that will shape its container. - early adopters can help create o…
To me Bitcoin is more like Gnutella. Massively overhyped and fundamentally flawed.
It takes just a few keystrokes to type "fundamentally flawed", but people seems to not agree whether that's really the case. So why do you think it is flawed?
Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.
#10I found that post painful to read (I disagreed on all headline points,) but I see bitcoin as the start of a new financial reality. I hope bitcoin becomes a new core currency: to me it is like ogg, rather than a bank produced equivalent, which would be like mp3. Money is fully moving into the digital age, as has media with mp3 and mpeg. It is the medium that will shape its container. - early adopters can help create o…
To me Bitcoin is more like Gnutella. Massively overhyped and fundamentally flawed.
Unlike Gnutella, in this case, there are people with a strong financial interest in keeping it massively overhyped, for the reasons described in the OP.