Bitcoin, The Economic Singularity: From Holland with Love • Hacker News Board

Re: Bitcoin, The Economic Singularity: From Holland with Love

#31

Post by maxerickson » Tue, Oct 29, 2013, 1:04 PM UTC

zorked wrote: post #18

innino wrote: post #4

What is Bitcoin's deeper significance? I don't know much, but here are some sketches. 1) Bitcoin has the potential to destroy the tools of monetary policy. 2) Bitcoin has the potential to hide taxable income from governments. 3) Governments with dwindling tax bases may react by printing traditional currency, hastening the flight to Bitcoin in a vicious cycle. 4) Traditional currencies may collapse as people rush to c…

I don't understand why people think Bitcoin necessarily leads to governments collapsing. Bitcoin can be regulated in many ways: 1. If you buy a house you must show evidence that you earned the money. You can't earn all your Bitcoins Breaking-Bad (or Silk-Road) style and expect that the government will think your new-found fortune is ok. Thanks to the blockchain you kind of can't lie too much, unlike, say, cash. 2. If…

It can play games though. It can buy and hold to tighten the market and then dump coins to loosen it up.

Given the current size of the market, a government budget of a few billion dollars can easily whipsaw the bitcoin supply.

Re: Bitcoin, The Economic Singularity: From Holland with Love

#32

Post by shazow » Tue, Oct 29, 2013, 1:04 PM UTC

zorked wrote: post #18

innino wrote: post #4

What is Bitcoin's deeper significance? I don't know much, but here are some sketches. 1) Bitcoin has the potential to destroy the tools of monetary policy. 2) Bitcoin has the potential to hide taxable income from governments. 3) Governments with dwindling tax bases may react by printing traditional currency, hastening the flight to Bitcoin in a vicious cycle. 4) Traditional currencies may collapse as people rush to c…

I don't understand why people think Bitcoin necessarily leads to governments collapsing. Bitcoin can be regulated in many ways: 1. If you buy a house you must show evidence that you earned the money. You can't earn all your Bitcoins Breaking-Bad (or Silk-Road) style and expect that the government will think your new-found fortune is ok. Thanks to the blockchain you kind of can't lie too much, unlike, say, cash. 2. If…

"Tainted Bitcoins" can be trivially laundered and mixed in with normal Bitcoins. This will only become easier in the future, and conceivably make it into the protocol itself with something like ZeroCoin.

It's funny but there is a lot of similar discussion on the other side of the fence, too: "Now that the FBI has a hold of DPR's Bitcoins, how do we blacklist these tainted Bitcoins so that we don't fall for honeypots/undercover agents?"

You can't, unless you want to fork the blockchain and start a new genesis block sans the Bitcoins you don't like, but that would be disasterous and no one would agree to it. It would defeat the whole premise of Bitcoin—why are your Bitcoins more special than my Bitcoins?

Truth is, tax collection works largely on the honour system, cooperation from employers, and through audits/investigation. Bitcoin is no different. The only real benefit the blockchain could give is to help automate some of the consensual tax collection further.

Re: Bitcoin, The Economic Singularity: From Holland with Love

#33

Post by oleganza » Tue, Oct 29, 2013, 1:05 PM UTC

MarcusVorenus wrote: post #26

innino wrote: post #4

What is Bitcoin's deeper significance? I don't know much, but here are some sketches. 1) Bitcoin has the potential to destroy the tools of monetary policy. 2) Bitcoin has the potential to hide taxable income from governments. 3) Governments with dwindling tax bases may react by printing traditional currency, hastening the flight to Bitcoin in a vicious cycle. 4) Traditional currencies may collapse as people rush to c…

The only thing that governments would need to do to stay in business is to tax things that can't be hidden, like land and real estate. I'm hoping they go with a single land value tax.

Then, governments cannot longer be "socialistic" by promising something for nothing. To do new awesome "government service" they'd have to raise taxes and then the lie will become obvious. Since no one really wants governments if they don't get free stuff, governments will quickly lose any moral support and will be viewed as plain thugs.

Re: Bitcoin, The Economic Singularity: From Holland with Love

#34

Post by oleganza » Tue, Oct 29, 2013, 1:09 PM UTC

zanny wrote: post #23

JonSkeptic wrote: post #14

The article is interesting in that it quotes Dutch Finance Minister Jeroen Dijsselbloem saying: "Bitcoin is not electronic money… At present its eventual impact on the real economy seems negligible…Bitcoin is not a financial product as defined by law. (Mediation in) the purchase or sale of Bitcoins is not a financial service either, so the Financial Supervision Act does not apply." Then the article goes on to say: >i…

> it will be recognized as a currency and regulated. I'm still wondering how any government would plan to "regulate" it. In the same way a lot of contractors want to pay by cash so they can go under the table on their annual income for tax purposes, if you don't publish a link between your bitcoin address and yourself then it would be impossible for a government to oversee your bitcoin activity until you somehow tied…

The world black market is estimated to be 2 trillion dollars (http://en.wikipedia.org/wiki/Black_market). It will only be bigger, but governments will still be able to tax land, real estate and big companies.

However, without inflation, QE and ad-hoc confiscations, no government will be able to have "budget deficit". That is, no government would be able to "borrow" money from nothing to build stuff for "free" for their electorate.

Since no politician will be able to do "free" stuff without raising taxes, no one would elect any government at all. This all brutal nonsense will simply fall out.

Re: Bitcoin, The Economic Singularity: From Holland with Love

#35

Post by oleganza » Tue, Oct 29, 2013, 1:09 PM UTC

wwwtyro wrote: post #22

JonSkeptic wrote: post #14

The article is interesting in that it quotes Dutch Finance Minister Jeroen Dijsselbloem saying: "Bitcoin is not electronic money… At present its eventual impact on the real economy seems negligible…Bitcoin is not a financial product as defined by law. (Mediation in) the purchase or sale of Bitcoins is not a financial service either, so the Financial Supervision Act does not apply." Then the article goes on to say: >i…

> If it grows too much, it will be recognized as a currency and regulated. Honest, non-rhetorical question: How? (In the sense of both the goals of the regulation and the means of enforcement.)

See my answer below in sibling comment thread.

Re: Bitcoin, The Economic Singularity: From Holland with Love

#36

Post by snitko » Tue, Oct 29, 2013, 1:10 PM UTC

pjc50 wrote: post #21

snitko wrote: post #9

> there’s a better chance that banks and governments of the world will start to get serious about cleaning up the global mess they’ve created Never gonna happen. Bitcoin is the cleaning we need. There's absolutely no incentive for governments or banks (which are in bed with governments) to make things better for those, who are not in the club. I don't think Bitcoin's gonna wipe out the very idea of government, but it…

Bitcoin seems to be a very good way of creating a new "club" of a small number of bitcoin-wealthy at the expense of everyone else. Being resistant to legal action is not an advantage, it will create an environment rife with fraud and security risks.

There must be some reason why people would prefer the currency of one club over another. Maybe it's because in "the Bitcoin club" no one tells you what you can do with your money, no one devalues your money at will and no one steals from you and says it's "legitimate taxation" because you allegedly signed some social contract you've never actually seen.

Re: Bitcoin, The Economic Singularity: From Holland with Love

#37

Post by TomGullen » Tue, Oct 29, 2013, 1:13 PM UTC

pjc50 wrote: post #21

snitko wrote: post #9

> there’s a better chance that banks and governments of the world will start to get serious about cleaning up the global mess they’ve created Never gonna happen. Bitcoin is the cleaning we need. There's absolutely no incentive for governments or banks (which are in bed with governments) to make things better for those, who are not in the club. I don't think Bitcoin's gonna wipe out the very idea of government, but it…

Bitcoin seems to be a very good way of creating a new "club" of a small number of bitcoin-wealthy at the expense of everyone else. Being resistant to legal action is not an advantage, it will create an environment rife with fraud and security risks.

Being resistant to legal action is an advantage in many parts of the world with repressive government.

There are more advantages when you look outside the narrow view of utility in modern western society. Now anyone in the world can explore entrepreneurship and all they need is a computer. Computers are becoming more and more accessible (Raspery Pi's, $100 laptops etc).

Now people in poverty stricken countries can establish their own businesses and trade on a world wide scale. No bank accounts needed. Ability to accept micro payments without abhorent fees.

> Bitcoin seems to be a very good way of creating a new "club" of a small number of bitcoin-wealthy at the expense of everyone else

Currently we live in a society where wealth disparity has reached sickening levels.

Bitcoin will significantly reward those who take the risk from an early stage if it does take off. The difference being that Bitcoin is not a fundamentally rigged system.

Re: Bitcoin, The Economic Singularity: From Holland with Love

#38

Post by oleganza » Tue, Oct 29, 2013, 1:13 PM UTC

maxerickson wrote: post #31

zorked wrote: post #18

Earlier quoted context omitted.

I don't understand why people think Bitcoin necessarily leads to governments collapsing. Bitcoin can be regulated in many ways: 1. If you buy a house you must show evidence that you earned the money. You can't earn all your Bitcoins Breaking-Bad (or Silk-Road) style and expect that the government will think your new-found fortune is ok. Thanks to the blockchain you kind of can't lie too much, unlike, say, cash. 2. If…

It can play games though. It can buy and hold to tighten the market and then dump coins to loosen it up. Given the current size of the market, a government budget of a few billion dollars can easily whipsaw the bitcoin supply.

That would be very expensive for government. First, it will basically give away a lot of money and invite 100 times more people and capital in the bitcoin economy. Then, after selling its stash it will affect the price much less (because it will also have been driven up by many additional speculators) and simply earn back much less USD than they have spent.

Of course, it will destabilize prices for some period of time, but only at great expense to itself and making millions of people aware of Bitcoin and thus accelerating its long-term growth.

Re: Bitcoin, The Economic Singularity: From Holland with Love

#39

Post by MarcusVorenus » Tue, Oct 29, 2013, 1:17 PM UTC

oleganza wrote: post #33

MarcusVorenus wrote: post #26

Earlier quoted context omitted.

The only thing that governments would need to do to stay in business is to tax things that can't be hidden, like land and real estate. I'm hoping they go with a single land value tax.

Then, governments cannot longer be "socialistic" by promising something for nothing. To do new awesome "government service" they'd have to raise taxes and then the lie will become obvious. Since no one really wants governments if they don't get free stuff, governments will quickly lose any moral support and will be viewed as plain thugs.

Yeah, sovereign debt will become a thing of the past and that's a good thing. Not sure how this is related to socialism though, at least in the strict sense of the word. It's more about short term thinking than anything else.

Re: Bitcoin, The Economic Singularity: From Holland with Love

#40

Post by oleganza » Tue, Oct 29, 2013, 1:17 PM UTC

pjc50 wrote: post #27

zorked wrote: post #18

Earlier quoted context omitted.

I don't understand why people think Bitcoin necessarily leads to governments collapsing. Bitcoin can be regulated in many ways: 1. If you buy a house you must show evidence that you earned the money. You can't earn all your Bitcoins Breaking-Bad (or Silk-Road) style and expect that the government will think your new-found fortune is ok. Thanks to the blockchain you kind of can't lie too much, unlike, say, cash. 2. If…

Except that finite money supply in a growing economy with positive interest rates is both deflationary and a driver of increasing inequality. Sensible active monetary policy and "lender of last resort" activities are vital to functioning modern economies. That's why they had to be enacted in Europe during the financial crisis despite not being properly provided for by the existing Euro framework.

The inflationary economy already created huge inequality. Do you think all Fed's printed dollars are equally distributed to the poor? In reality, they all go to banks that loan them to the poor. Increasing prices on energy and food + mortgage and other credits prevent poor people from saving money and becoming economically independent.

Bitcoin holders, on the other hand, have to sell bitcoin below tomorrow's price to eat something today. It is reversed trend: the more people want bitcoins, the more "equally" they will become distributed. Everyone who holds and doesn't spend bitcoins does not participate in the economy and thus doesn't earn his wealth yet. But to earn it he has to part with part of his stash, thus leaving less for himself in the future.