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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.

#211

Post by icarus_drowning »

tptacek wrote: post #206
icarus_drowning wrote: post #205

Earlier quoted context omitted.

Bitcoin is, in a way, backed by the value that it brings as a currency-- privacy and anonymity. We can argue whether that value is $10 per BTC, but I also don't think any reasonable person thinks that it is zero.

No, in fact, plenty of reasonable people do believe it is zero, and you cannot nerd your way out of that fact.

But that's not reasonable. Its just ignoring the privacy/anonymity value of BTC. Again, we can argue about the monetary value as compared to dollars, (especially given the tradeoffs-- i.e., convertibility to established currency, places to spend, etc) but that's real, practical value. You can't simply ignore it.

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

#214

Post by [deleted] »

icarus_drowning wrote: post #211
tptacek wrote: post #206

Earlier quoted context omitted.

No, in fact, plenty of reasonable people do believe it is zero, and you cannot nerd your way out of that fact.

But that's not reasonable. Its just ignoring the privacy/anonymity value of BTC. Again, we can argue about the monetary value as compared to dollars, (especially given the tradeoffs-- i.e., convertibility to established currency, places to spend, etc) but that's real, practical value. You can't simply ignore it.

[deleted]

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

#215

Post by barrkel »

smokeyj wrote: post #140
barrkel wrote: post #84

Earlier quoted context omitted.

1) Bitcoin has a bootstrap advantage , not disadvantage; like all Ponzi schemes, it has the potential to return real profit to early adopters. 2) Deflation for a primary store of value in an economy is definitely a bad thing; not least, because it does weird things like causing the value of debts to increase over time, potentially to the point of requiring negative interest; and think about what that would mean - the…

> Deflation for a primary store of value in an economy is definitely a bad thing How can having your assets increase in value be harmful? Traders already account for many stock variables, why would deflation be any different? > and think about what that would mean - the bank pays you to borrow money from it. Oh no, not that :P > "when something goes wrong, it will die" Sort of like hyper inflation? > they don't under…

Suppose you need capital to commence on some enterprise. You'd like to borrow against and/or sell a share of future income. How can you convince a bank[1] to give you money, if the bank's money is already producing a healthy return just sitting in the bank's vault?

In an inflationary scenario, money is declining in value. People with a lot of it are actively looking for ways to put it to work, otherwise they'll end up poorer. But if the money is not losing value over time, and is in fact appreciating, what incentive do they have to put their capital to work? They need much larger returns on investment to make up for the loss of their existing risk-free return.

[1] For bank, read anyone who could lend to or finance you.

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

#216

Post by pathjumper »

None of his arguments are invalid save the "early adopter wins" scenario.

On every other count he either misunderstands current banking systems, bitcoin, presents a pseudo-argument, or some combination of all three. Honestly, except for the early adopter winning part, the whole thing reads like a shill post designed to do nothing but defame bitcoin. He even calls it a scam. By that measure The Fed is the biggest scam that ever invented if you look at who receives the "printed money" first. They are the "early adopters" in his "bitcoin is a scam" analogy. And they are still in power. So does that really make it any worse?

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

#217

Post by sigil »

acslater00 wrote: post #207
sigil wrote: post #201

Earlier quoted context omitted.

> As they should be, given that populations increase. Is the U.S. Population increasing like this? [1] That's what the U.S. monetary supply looks like. More correctly, fiat money supply should ideally match total economic output, not population. But the GDP graph also doesn't look anything like that monetary supply graph. Given this, the BitCoin phenomenon is understandable: savers are looking for a currency that's n…

Actually money supply should ideally match total demand for money. Real economic output is not super relevant.

Milton Friedman disagrees and measures inflation relative to output in his book on monetary phenomena [1]. Since you're an economist (right?) I'd be interested in why you think he's got the wrong measure.

[1] http://books.google.com/books?id=ZNAhXe2pz1cC&lpg=PA196&...

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

#218

Post by DennisP »

acslater00 wrote: post #148

Hi, I'm Adam, I wrote this answer on Quora. Against my better judgement, I'm going to wade in here and make a couple of clarifying points. 1 - Scam. I regret using the word "scam" in my answer, because I think it overshadows the broader point I was making about Bitcoin's severe structural design flaws. After watching the community react to this debate, I'm pretty confident that the average bitcoin supporter is not in…

I'm not sure you can start a new currency from scratch, and succeed, without extreme volatility. If it increased in value by a steady five percent a year it'd still be worthless in twenty years. The low volume is a function of it being new, not of it being a bad idea.

Aside from that, I thought this was an excellent rebuttal: http://www.reddit.com/r/NonAustrianEconomics/comments/hputj/...

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

#219

Post by WiseWeasel »

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…

Re: Deflation

You're thinking too small. Think of holders of vast wealth, who in an inflationary system, are forced to invest their money and earn a significant return in order simply to maintain the value of their wealth. In a deflationary system, they are no longer at risk of losing wealth by letting their money sit in a bank, and so the least risky course of action for them is to simply hold on to their money. This means that the markets for things like angel investing and venture capital, among others, dry up as holders of significant wealth are no longer incentivized to invest their money.

An inflationary currency is what gives us our social mobility. Without it, holders of wealth don't make risky investments, meaning socially mobile entrepreneurs don't get funding to allow them to join higher social classes, wealthy investors no longer lose their shirts and move down the social ladder, and the society at large becomes entrenched in its current economic makeup.

I would not like to live in a society with deflationary monetary policy; money is meant to be spent and made to work for you, not hoarded.

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

#220

Post by mcantelon »

anamax wrote: post #177
mcantelon wrote: post #136

Earlier quoted context omitted.

>Bitcoins have no intrinsic value. Part of the value is in their utility as an anonymous currency: try taxing the guy that's paid in Bitcoins. Another part is the integrity of the currency: the currency is backed by math, rather than men, and not subject to hyperinflation resulting from corruption (i.e. the US Fed can create money out of thin air, but there is no authority that can create Bitcoins out of thin air: th…

> Part of the value is in their utility as an anonymous currency: try taxing the guy that's paid in Bitcoins. Easy - I collect taxes at the point where physical goods are exchanged for bitcoins or are used to deliver products. If you can't use bitcoins for food, housing, netaccess, or energy....

>Easy - I collect taxes at the point where physical goods are exchanged for bitcoins or are used to deliver products.

The state does this, but people already get around this by conducting cash transactions. Bitcoin creates another option for this.

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