The Quora post that killed Bitcoins. Please discuss if his arguments are valid. • Hacker News Board

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

#311

Post by adrianwaj » Fri, Jun 03, 2011, 9:35 AM UTC

bonch wrote: post #289

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…

So everyone knows, adrianwaj is a Bitcoin-obsessed nutjob who posted this comment before deleting it: "People that don't have the money to buy bitcoins and see them appreciate are jealous of the ones that do. They hide their insufficiency and jealousy by calling it a ponzi scheme or scam, so they can simultaneously feel superior to the bitcoiners whilst tricking themselves into thinking they wouldn't buy them anyway…

bonch = psychopath.

http://news.ycombinator.com/item?id=2614233

You're a failure, dickwad.

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

#312

Post by scott_s » Fri, Jun 03, 2011, 11:46 AM UTC

icarus_drowning wrote: post #296

scott_s wrote: post #294

Earlier quoted context omitted.

Utility for what . If things have real, actual value, then they can be exchanged for dollars, even if it's only on the black market. We don't mean there has to be an official exchange rate between bitcoins and dollars. We mean there has to be someone willing to say "I'll give you X USD for Y bitcoins" even if that's just under the table. If no one is willing to do that, then bitcoins have no value. What I, and others…

*there has to be someone willing to say "I'll give you X USD for Y bitcoins" Not really. They have to be willing to say "I'll give you X thing that you value in exchange for Y bitcoins." The entire point is that the design of bitcoin makes that scenario likely to always be true precisely because it is nearly impossible to stop. As I said above, the very fact that it represents a system that is very difficult for stat…

If people are willing to trade goods for it, then someone will be willing to trade dollars for it (or yen, euros, or any established currency).

For a reason that I am unaware of, you seem to think that just because something can be traded it will be traded. That's not true. People tend to only trade things that are readily exchangeable in the larger economy - things that have value.

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

#313

Post by scott_s » Fri, Jun 03, 2011, 11:49 AM UTC

icarus_drowning wrote: post #297

scott_s wrote: post #278

Earlier quoted context omitted.

I fail to see how their "anonymity" has value when it cannot be exchanged for real currency.

Currency is a placeholder for value. So long as I can exchange bitcoins for value, they will function as a currency. The design of bitcoin makes it very difficult for governments to make such a scenario impossible (or even difficult). For that reason alone, bitcoins will remain valuable, if for nothing other than goods or services that governments don't like.

People who participate in illegal trade (such as drugs, guns, prostitution, etc.) still need most of their purchases to be in the legal economy. Hence, illegal trade still uses real currency.

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

#314

Post by achompas » Fri, Jun 03, 2011, 7:01 PM UTC

beagle3 wrote: post #291

achompas wrote: post #231

Earlier quoted context omitted.

Can you exchange your bitcoins for gold or beans? Because right now, bitcoin purchasing power amounts to a hill of beans. Gold is a commodity, not a currency. It is a scarce commodity that is highly demanded as a part of luxury goods. Thus, it commands a high price on the open market. Beans are also commodities, but they are plentiful . Bean demand is easily met, so they're not priced very highly. Bitcoins are not pr…

> Can you exchange your bitcoins for gold or beans? At this point in time, you can. Next week, that might not be true. But the same could be said of the currency of Belarus, which was devalued 50% overnight last week (the USD in 1931 suffered the same fate after physical gold was confiscated). Which is all that is required to make it a currency. > Gold is a commodity, not a currency. It is a scarce commodity that is…

First: I admit I wasn't aware that retailers accepted bitcoins when I posted that comment. I've discovered otherwise now, so the "hill of beans" comment is wrong. Sorry.

:) That's a game of semantics. Gold's current price has little to do with its luxury good status, and everything to do with its scarcity and historical claim to fame as a currency.

"Semantics" have nothing to do with it. Commodities [0] != currencies [1], whether you're familiar with the definitions or not. One exists as a medium of exchange, while the other is a good with no differentiation between sources. Currencies are differentiated by the trustworthiness of the governments that issue them (you'd probably accept a US dollar today before accepting a German papiermark [2] in 1924).

Also, gold's price is a function of the market's supply and demand for gold as either (a) an investment vehicle or (b) an input in the production of goods. Investors don't give a damn that the US dollar was pegged to gold 200+ years ago--they're simply investing in it to make money.

The idea that gold is "currency" is ridiculous. Name a first-world country where gold is widely accepted as currency. Some places in some parts of the world might accept gold, but it's not backed by a central body nor does it carry a relatively stable value (unlike fiat money).

[0] http://en.wikipedia.org/wiki/Commodity

[1] http://en.wikipedia.org/wiki/Currency

[2] http://en.wikipedia.org/wiki/German_papiermark

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

#315

Post by achompas » Fri, Jun 03, 2011, 8:35 PM UTC

kragen wrote: post #285

achompas wrote: post #182

Earlier quoted context omitted.

Well it's more than people--my government believes the US dollar has value too, and it's willing to insure my bank accounts as a result. That's a hell of a vote of confidence.

There are several confusions in your short post. First, assuming you're talking about the US, your bank accounts are insured by the FDIC, and the FDIC is not part of or formally backed by the US government. There are lots of people who believe that if the FDIC were in danger of bankruptcy, the US government would step in to support it — as it did with Fannie Mae and Freddie Mac — but until the government actually pro…

Thanks for the great explanation on the US government's dollar position. I also thought about my comment some more later, and realized that inflation really devalues the FDIC's deposit insurance.

I'll take issue with the government being "just people," but that's just a nit in a great post.

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

#316

Post by beagle3 » Fri, Jun 03, 2011, 11:13 PM UTC

achompas wrote: post #314

beagle3 wrote: post #291

Earlier quoted context omitted.

> Can you exchange your bitcoins for gold or beans? At this point in time, you can. Next week, that might not be true. But the same could be said of the currency of Belarus, which was devalued 50% overnight last week (the USD in 1931 suffered the same fate after physical gold was confiscated). Which is all that is required to make it a currency. > Gold is a commodity, not a currency. It is a scarce commodity that is…

First: I admit I wasn't aware that retailers accepted bitcoins when I posted that comment. I've discovered otherwise now, so the "hill of beans" comment is wrong. Sorry. :) That's a game of semantics. Gold's current price has little to do with its luxury good status, and everything to do with its scarcity and historical claim to fame as a currency. "Semantics" have nothing to do with it. Commodities [0] != currencies…

> "Semantics" have nothing to do with it. Commodities [0] != currencies [1]

Semantics have everything to do with it, as I will demonstrate below.

> One exists as a medium of exchange, while the other is a good with no differentiation between sources.

Well, as long as the USD is not fake, you don't care what the source is :) Similarly, for non-fake gold.

> Currencies are differentiated by the trustworthiness of the governments that issue them.

Today, that is true. However, the Chumash people had a currency that -- like bitcoin -- was not centrally managed, and reflected work put into something, rather than any fiat or backing store of value. http://en.wikipedia.org/wiki/Chumash_people#Culture - I can't remember where I read a more detailed account. Basically, you could sit on the beach all day and make money -- and it took slightly longer than the equivalent exchange rate would get you in food (so you could hunt/gather food, or make money, with comparable time expenditure, and exchange them). The whole system broke down when European drills (as manufacturing tools) were introduced and made money making simple.

> First: I admit I wasn't aware that retailers accepted bitcoins when I posted that comment. I've discovered otherwise now, so the "hill of beans" comment is wrong. Sorry.

So - let's get back to semantics: do you agree bitcoin is currency? (exists as a medium of exchange), or commodity? (a good with no differentiation between sources) because it has both properties, thus showing that the definitions are not mutually exclusive. A USD is currency but not commodity; Beans are commodity but not currency. Gold, Chumash beads and bitcoin are both.

> Name a first-world country where gold is widely accepted as currency.

In NYC where I live, hundreds of stores will accept your gold in exchange for other merchandise (at a bad exchange rate for you...). You can identify them by the sign "We buy gold". You must have seen them in other places too.

> but it's not backed by a central body

True, but ....

> nor does it carry a relatively stable value (unlike fiat money)

Wrong, and if you truly believe that you might be beyond help. The US devalued the USD by 50% in 1931. Belarus did it to their fiat currency last week. Between 2002 and 2006, the EUR/USD exchange rate went from 0.8 to 1.5 (almost 100%) - "stable"?

In fact, up until 1971, the backing for the USD (and most other currencies) was gold - it only became a true fiat currency in 1971! Before that, it was a claim on some amount of gold in fort knox, and value was derived from that.

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

#317

Post by cookiecaper » Sat, Jun 04, 2011, 5:30 AM UTC

barrkel wrote: post #208

smokeyj wrote: post #141

Earlier quoted context omitted.

>> Can't the same be said for people who bought Apple or Google stocks early on? > Ownership of a stock is a claim on the net value and future profit of the company. Ownership of currency is a claim on the net value and future profit of the currency. How does this address OP?

In principle, you're right, currency is just traded like anything else; but the fundamentals are different. A company is (presumably) engaged in profitable production (the future profit, i.e. it does something) and is composed of various capital assets (the net value, i.e. it has something). A currency has neither attributes; its claim on future production and assets is only valid in so far as people have confidence…

Currency can have its own features that make it worthwhile. No matter what happens with btc's popularity, as long as I have one other party to trade with, some features will be available to me through btc that are not available through normally denominated national currencies. Can't I buy btc because I think these are valuable features and their desirability will drive interest and users, just like I would buy Google because the desirability of its features drives interest and users?

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

#318

Post by gwern » Sat, Jun 04, 2011, 9:11 PM UTC

jessedhillon wrote: post #276

gwern wrote: post #146

Earlier quoted context omitted.

I am not an expert either, but I can't see what Grover's algorithm has to do with quantum computers. When you look at the known algorithms for them, quantum computers seem pretty useless... It's not hashes that fear quantum computers but existing public key crypto.

Inverting a function in O(N^0.5) is useless?

Double the hash length (use SHA-512 rather than SHA-256) and you're done, no?

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

#319

Post by Iv » Mon, Jun 06, 2011, 9:03 AM UTC

Gormo wrote: post #283

beefman wrote: post #224

Earlier quoted context omitted.

Hi Adam, I'm Carl Lumma. I usually upvote your posts on Quora but I didn't upvote this one because of "scam" and also because you gave more reasons than necessary. "Built-in deflation" is alone the reason bitcoin cannot work as a currency (at least, not without a prevailing currency to act as a 'heat sink'). This can be remedied of course by the practice of holding bitcoins on deposit in exchange for demand receipts,…

Why is built-in deflation necessarily a problem? If the real economy continues to generate investment opportunities, wouldn't the deflation rate just supplement that? Sure, you could put money in your mattress for 5%, but if you can invest for a nominal 10% and thus yield a real 15%, why would you choose the mattress?

And also what is the difference between this scenario and a scenario where you can get a saving account that has a higher rate than inflation ?

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

#320

Post by jshort » Tue, Jun 07, 2011, 2:44 AM UTC

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…

There is a currency that has been created in an attempt to have a vehicle currency that is not tied to any one currency. With the US dollar being the vehicle currency of today it ties the US economy with the global economies must to tightly. It's finding a floating exchange rate that isn't closely tired to any one currency. As seen after Bretton-Woods global economies ties to one currency is not optimal. Creating this new currency is the hard part.