By 2140 we'll probably have a new currency that we can replace Bitcoin with.
2140? I'd expect the "new hotness" in cryptocurrencies to hit in 2014, not 2140.
Probably true, but I just used the same number that was in the article.
Bitcoin Is Fundamentally Flawed
51–60 of 209 posts
Re: Bitcoin Is Fundamentally Flawed
#52While I don't disagree with the author I would say that the finite supply shines a light on an even more direct problem. What happens to 'lost' coins? The BTC supply is not only finite but in fact dwindling over time, as inevitably the amount of currency is going to diminish due to digital loss. I have personally lost a few BTC due to computer crashes, wallet file lost etc. (In the early days) and considering this th…
Tens of Thousands of Bitcoins have been lost, easily.
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Re: Bitcoin Is Fundamentally Flawed
#53This fundamental flaw is absolutely glaring to anyone who has any understanding of economic history -- and it's amazing to me how many technologists willfully disregard several centuries of accumulated experience. Because of their built-in deflationary spiral, Bitcoins can never meaningfully be used as a medium of exchange: it will always be tempting to keep your Bitcoins in your pocket and let them appreciate instea…
On the flipside, doesn't this also incentivize vendors to accept BTC?
Re: Bitcoin Is Fundamentally Flawed
#54While I don't disagree with the author I would say that the finite supply shines a light on an even more direct problem. What happens to 'lost' coins? The BTC supply is not only finite but in fact dwindling over time, as inevitably the amount of currency is going to diminish due to digital loss. I have personally lost a few BTC due to computer crashes, wallet file lost etc. (In the early days) and considering this th…
Then Bitcoin increases in value, and you keep dividing a Bitcoin more. Nothing really changes. Does it really matter if you have 20 million Bitcoins that are worth $1 trillion or if you have 10 million Bitcoins that are worth as much? No, it doesn't. The 21 million number was pretty arbitrarily chosen to begin with. This would be a problem if say half of available Bitcoins would be wiped out overnight - somehow. But…
I think that was precisely the point: coin loss is yet another deflationary pressure.
Re: Bitcoin Is Fundamentally Flawed
#55This fundamental flaw is absolutely glaring to anyone who has any understanding of economic history -- and it's amazing to me how many technologists willfully disregard several centuries of accumulated experience. Because of their built-in deflationary spiral, Bitcoins can never meaningfully be used as a medium of exchange: it will always be tempting to keep your Bitcoins in your pocket and let them appreciate instea…
On the flipside, doesn't this also incentivize vendors to accept BTC?
no, because if persons with BTC hoard them as a value store rather than spending them as a currency, the merchant won't see (significant) spending from BTC holders.
Re: Bitcoin Is Fundamentally Flawed
#56This deflation argument seems to me it's an argument for the status quo, so if you are say Warren Buffet it is a vary valid concern. If on the other hand you just graduated undergrad and had a huge debt and your wage was actually set in bitcoins this would be great for you because the cost of paying off your dept would be from your bitcoin point of view spiraling to zero, as would the cost of everything else. That so…
> If on the other hand you just graduated undergrad and had a huge debt and your wage was actually set in bitcoins this would be great for you because the cost of paying off your dept would be from your bitcoin point of view spiraling to zero, as would the cost of everything else.
It would be good if your wage was fixed in bitcoins and your debt was set in dollars, but bad if the reverse was true.
I think, given a deflationary currency, it'll be a lot easier to find people willing to lend money with the loan obligation denominated in bitcoins than it is to find people willing to offer employment with a long-term salary base fixed in bitcoins.
Re: Bitcoin Is Fundamentally Flawed
#57Two issues: Firstly, the mining allocation rate isn't meaningfully part of the bitcoin protocol; it's just a setting. Any portion of the network large enough to survive as a detached economy can choose to change the (batty) monetary policy whenever it likes. Secondly, this probably won't be necessary, as nothing really prevents bitcoin holders from forming banks and issuing inflationary/debased/pegged notes to beat t…
Exactly. Everyone seems to be missing the fact that "bitcoin" is a protocol and the most prominent instance of its use.
Any government or group of people can go start their own blockchain.
Re: Bitcoin Is Fundamentally Flawed
#58While I don't disagree with the author I would say that the finite supply shines a light on an even more direct problem. What happens to 'lost' coins? The BTC supply is not only finite but in fact dwindling over time, as inevitably the amount of currency is going to diminish due to digital loss. I have personally lost a few BTC due to computer crashes, wallet file lost etc. (In the early days) and considering this th…
Then Bitcoin increases in value, and you keep dividing a Bitcoin more. Nothing really changes. Does it really matter if you have 20 million Bitcoins that are worth $1 trillion or if you have 10 million Bitcoins that are worth as much? No, it doesn't. The 21 million number was pretty arbitrarily chosen to begin with. This would be a problem if say half of available Bitcoins would be wiped out overnight - somehow. But…
That works for long as you keep more than you lose. If we get down to 1000000 btc at a reasonable value, what happens when I find my old thumb drive from 2011 that has 100k btc on it? That will be quite a shock to the btc economy.
I don't think this kills bitcoin, but this is part of the "lost coin" problem.
Re: Bitcoin Is Fundamentally Flawed
#59While I don't disagree with the author I would say that the finite supply shines a light on an even more direct problem. What happens to 'lost' coins? The BTC supply is not only finite but in fact dwindling over time, as inevitably the amount of currency is going to diminish due to digital loss. I have personally lost a few BTC due to computer crashes, wallet file lost etc. (In the early days) and considering this th…
Not sure this will kill the currency, but it will definitely lead to many fewer than ~21MM units being available. As average folks rather than computer wizards try to hold Bitcoin, many more bitcoins will be lost forever, because private key protection and backup is not a natural thing for humans!
In fact, protection and backup are at least a little at cross-purposes: better backup increases the possibilities for compromise.
So you will see adoption by some of the same kind of hoarders who, at death, are found to have millions in cash or gold hidden in their residence. (One vivid recent example: http://articles.latimes.com/2012/sep/17/nation/la-na-nn-cars... )
Except now with Bitcoin, their private keys and associated balances will be lost forever when they die. Or perhaps even earlier, when they go so batty they can't remember their 'brain wallet' seed.
Saw a great relevant tweet yesterday:
@lawremipsum: "There's always bitcoins on the banana stand hard drive." Alt-Future Arrested Development - https://twitter.com/lawremipsum/status/320970532260544512
Re: Bitcoin Is Fundamentally Flawed
#60"However, they are wrong because converting $100 into 10 x $10 bills or even 100 x $1 bills does not make you feel richer." This was also quoted in a Forbes article but I don't get it. Can someone explain what this means? What does lack liquidity or limited supply have to do with feeling richer by funging your bills? I'm not joking I seriously have no idea what this has to do with anything...
It doesn't make sense outside the context of an argument that a lot of pro-bitcoin people make:
That the problem with gold as a currency is not the unpredictable supply, but the lack of divisibility, causing it to be hard to buy a can of coke with gold because of the tiny amount of gold involved.