Bitcoin Is Fundamentally Flawed

Post by Sambdala » Mon, Apr 08, 2013, 8:14 PM UTC

kruhft wrote: post #96

bcantrill wrote: post #46

This 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…

Bitcoin is a commodity backed by Mathematics with the convenience of transfer of ownership through electronic rather than physical means. When the last coin is mined in 2140 the point of deflation might hold if it was a currency, but it's not. It is a faith based value store based on supply and demand, just like gold, which has next to no useful properties other than being shiny, non-tarnishing, conductive AND PEOPLE…

Post by ph0rque » Mon, Apr 08, 2013, 8:15 PM UTC

brazzy wrote: post #65

jnevelson wrote: post #19

"Eventually the Bitcoin economy is going to run into the problem of its algorithm and the Bitcoin-hoarding because; there will not be enough currency." There is an oscillation process at work here - as people hoard bitcoins, the value of each individual bitcoin increases. People will then sell off their bitcoins in exchange for a higher price than they initially payed for them, thus increasing the money supply and al…

Why would anyone sell when they see the price keep rising? Unless they fear it will go down - and then everyone wants to sell and the bubble pops...

Post by itsprofitbaron » Mon, Apr 08, 2013, 8:20 PM UTC

hilko wrote: post #80

gojomo wrote: post #28

This is essentially the "it will become so valuable, no one will want it anymore" argument. There are uses of Bitcoin that are complementary to traditional currencies, and can survive both volatility and a large level of hoarding. One example: an enabler of quick, distant, irreversible transfer under software mediation. That is, you get the transactional Bitcoin you need from a trusted source, then engage in a transa…

Very well put. I think past experiences are definitely reason to be cautious, but too often it seems that analysis neglects to even consider the fact that there is no direct equivalent to Bitcoin. It remains to be seen if Bitcoin is 'worth' its current valuation, but I think it's obvious that it has and will continue to have uses in the future.

Post by pixelcort » Mon, Apr 08, 2013, 8:22 PM UTC

basch wrote: post #57

bcoates wrote: post #44

Two 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.

Post by mrmiller » Mon, Apr 08, 2013, 8:23 PM UTC