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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.

#91

Post by jcr »

tatsuke95 wrote: post #82
jcr wrote: post #73

> When the federal reserve "prints money", it doesn't just mail million-dollar checks to random Americans. It does one of two things. It either (a) purchases some other asset [generally US treasury bonds] on the free market, thereby injecting more cash into the system than there had been before, or (b), loans money to a bank, who will then loan it to other people who will then spend it. The part (a) about "purchases"…

No, money is created when the Fed purchases an asset. Generally, they do so through a repo, whereby they sell an asset with the intention of buying it back with interest on a very short term.

Thanks. I think I'm hung up on the term "creating." What I described is typical fed borrowing through selling bonds.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#92

Post by hugh3 »

powertower wrote: post #62
vladd wrote: post #39

Bitcoin is a marketing-based currency in the sense that it has no real value besides the fact that it was the first currency with cryptographic properties that gained widespread adoption: if someone would take the code and fork it into an alternative ("Webcoins"), the intrinsec value of a Webcoin would be zero (unless it also found a way to gain market share or early adopters). That's very similar with a Ponzi scheme…

> that gained widespread adoption No. What it has gained is: speculation.

Exactly. If I asked the first thousand people I passed on the street what a bitcoin was, I doubt any of 'em would be able to tell me.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#93

Post by ignifero »

Treating bitcoin as a currency is kind of wrong. It's a commodity with limited and predictable supply, like gold for example. You wouldn't call it a pyramid scheme, just like you wouldn't the gold market a pyramid scheme. His points against its use as currency are sound.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#94

Post by scythe »

cturner wrote: post #49

Trollish headline. One fair non-structural criticism, a weak, temporary criticism and two things billed as criticisms that aren't. 1) Early adopters. I couldn't find a point here. I think he's saying that it's unfair that some people get in early. But in the current system, it's unfair that government (through tax law and control of force) mandates that you use a form of money that doesn't function well as a store of…

>Deflation. There's a creed in mainstream economics that deflation is bad, repeated here. "if your money is getting predictably more valuable, why would you want to spend it?" It's just false. Would you buy a computer today if you can buy a more powerful one by waiting until tomorrow? People do.

s/spend/invest/. I mean, why would anyone spend money on food? There's no storable value! I can dream up silly situations too, y'know.

Meanwhile, there's a bit more to modern economic theory than a single pithy quote. Like, when deflation actually happens, you get this:

http://en.wikipedia.org/wiki/Deflation#Historical_examples

And this is deflation over a short scale. Bitcoin will experience constant, effectively unstoppable deflation every day after 2020.

>Mainstreamers like the leaves-on-the-fire effect of inflation and also like to overlook the fact that stimlus impairs cyclic corrections

Got some numbers on that? I seem to recall basically no problems occurring during periods when inflation rates are 0-10%.

>and detracts from the role of money as a store of value.

Money isn't supposed to be a store of value; the object of money is to facilitate exchange, not to inhibit it. Investments are a store of value. If you want to store value, invest in the S&P 500.

>"When Something Goes Wrong, It Will Die." I found the logic here non-sequiter. Bitcoin will be tested but from what we know about it at the moment, it looks solid.

SHA256 will -never- be broken, that's for sure!

>If we had a period of high inflation, it's reasonable to expect people would trust finite-supply bitcoins over an unending supply of newly-minted, inflating notes.

The medium that is more easily exchanged will be exchanged. Ever wonder why e-gold never took off, even before governments tried to stop it?

Mind you, I really, really want Bitcoin to succeed. I don't like the Federal Reserve and it bothers me that the federal government has control over the money system. However, I'm not going to disregard science to make myself feel better.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#95

Post by pbhjpbhj »

bad_user wrote: post #57
sbierwagen wrote: post #40

Earlier quoted context omitted.

This is more along the lines of "SHA256 has not been proven to be secure, therefore, it may be cracked." It would require novel discoveries in mathematics to do so.

Actually many cryptographic algorithms that got defeated, haven't been defeated with " new discoveries in mathematics ". Also, you can't really prove that such an algorithm is secure. You can only prove that it exhibits certain properties that make it more secure versus other algorithms. Judging by how cryptographic methods got defeated in the past, I think it's safe to assume that it's only a matter of time.

As someone says, one-time pads are impossible to decrypt without they key. But you can guess the key or use some other brute force mechanism.

My guess, SHA-256 will fall to a quantum computing algo in a few years.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#96

Post by hugh3 »

inoop wrote: post #5
adrianwaj wrote: post #2

I 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.

To me, Bitcoin is more like the Jehovah's Witnesses. They believe that only 144,000 people will get into heaven, and that who gets in will be decided by who recruits the most people to the Jehovah's Witnesses, so once you have the Jehovah's Witnesses meme you have a super-strong incentive to spread it widely.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#97

Post by shubble »

barrkel wrote: post #87
coderrr wrote: post #80

Earlier quoted context omitted.

I think the most interesting aspect of this whole thing is, like you mention, how new bitcoin-like currencies are perceived, valued, and participated in. Will everyone start jumping into new bitcoin-like currencies in hope of massive bitcoin-style investment gains? Will massive bitcoin miners attack new currencies networks with their computing power to protect their or others' investments in bitcoin? Will new bitcoin…

"Red gold" would be exactly as valuable as gold is in the same way that gold is; that is, if everybody agreed that red gold was valuable, then it would be valuable. If they didn't, then it wouldn't. Scarcity doesn't give rise to value. You also need demand. In so far as red gold acted in the same way as gold for jewellery and industrial uses, it would probably decrease the value of gold to some proportion, and set a…

I've heard that unlike say steel, the majority of gold ever mined is still in circulation, and by circulation I mean locked vaults. A few large organizations control the vast majority of it, and this is especially true since governments have not needed to hold gold for years. The reason for the scarcity of gold, and it's value, is that this gold is not for sale. One gold owning organization could make a great deal in other currencies by attacking the gold market, much as quantum fund used it's sterling holdings to attack the British currency with great success.

Lots of people seem to think gold is 'safer' than paper currencies, while it seems the same. Am I missing something important here?

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#98

Post by sethg »

cturner wrote: post #49

Trollish headline. One fair non-structural criticism, a weak, temporary criticism and two things billed as criticisms that aren't. 1) Early adopters. I couldn't find a point here. I think he's saying that it's unfair that some people get in early. But in the current system, it's unfair that government (through tax law and control of force) mandates that you use a form of money that doesn't function well as a store of…

in the current system, it's unfair that government (through tax law and control of force) mandates that you use a form of money that doesn't function well as a store of value

The governors of the Federal Reserve are appointed by the President and confirmed by Congress, and politicians, for all their numerous faults, understand that if the economy goes in the crapper it hurts their chances of getting re-elected. So there is democratic accountability, albeit democracy on a long fuse, that discourages the Fed from doing something stupid with the dollar.

Bitcoin’s early adopters, by contrast, are only special because they got on the bandwagon first. They don’t have any special talents that they are being rewarded for, and they aren’t accountable to anyone.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#99

Post by mike_esspe »

limmeau wrote: post #59
dogas wrote: post #22

I think the other article ( http://apenwarr.ca/log/?m=201105 ) written about bitcoin failing is more detailed and contains potentially more plausible ways of how bitcoin can fail. The openwarr article refers to potential failures with the SHA256 backbone of bitcoins. "With bitcoin, a single failure of the cryptosystem could result in an utter collapse of the entire financial network. Unlimited inflation. Fake transac…

While attacks against the basic building blocks of cryptosystems (like the SHA256 hash or AES block cipher) are rare, the protocols built upon those blocks can be independently vulnerable. Take the Needham-Schroeder public key protocol from 1979, for example. http://en.wikipedia.org/wiki/Needham-Schroeder_protocol#The_... . It's simple and "obviously" foolproof, but a vulnerability was published in 1995, 16 years lat…

Such switch happened once.

It was found, that due to overflow, someone issued a lot of bitcoins to themselves in the block. During several hours was released a new client, which ignored flawed blockchain. When most people moved to a new client, the new blockchain overcame the exploited one.

Though it was when bitcoin wasn't popular.

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