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A Prediction: Bitcoin Is Doomed to Fail

dealbook.nytimes.com

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Re: A Prediction: Bitcoin Is Doomed to Fail

#21

Post by dmix »

TylerE wrote: post #20
nostrademons wrote: post #14

I think Bitcoin's doomed to fail, but not for the reasons the article suggest. There're ample historical counterexamples of currencies that are not tied to a government. Gold is the most obvious example; if currency was inextricably tied to governments, there would not have been a mad rush to colonize the New World (and extract its gold reserves). In prisons cigarettes frequently serve as currency, as a medium of exc…

Also, with gold, there is intrinsic value beyond the monetary - jewelry use, or in these moderns days in electronics. That provides a value floor. Bitcoin doesn't have that.

Every bitcoin thread = groundhog day.

Re: A Prediction: Bitcoin Is Doomed to Fail

#23

Post by hacknat »

makerops wrote: post #5

"After all, no bank or bitcoin-emitter can be as public-minded as a government, and no private power can raise taxes or pass laws to unwind monetary excesses." I am not an expert by any stretch of the imagination, but this seems like a big point in the authors argument. Isn't the removal of this flaw baked into bitcoin by it's nature? " Besides, if bitcoin ever really started to take off, governments would either ban…

Isn't the removal of this flaw baked into bitcoin by it's nature?

No, it's not. Bitcoin isn't backed by any political will of any kind. It is a sheer market. That is the author's main point. That since it is money not backed by the, hopefully, benevolent will of a state it will be subject to the whims of market makers or the panic of the crowd. I think the author of the article is quite correct in making this point.

History has repeatedly shown that the mercy of the state is better than the chaos of the market, at least over the long term. Yes, every once in a while the state will take away a punch bowl that it didn't need to take away, but that doesn't mean that their overall goals aren't worthwhile. More rarely the state clamps down too hard, but history shows that in these instances the market's ability to correct an overbearing state has greater celerity than the body politic's ability to overcome the enormous chaos of a completely free market.

History isn't even necessary in the argument though. We all get to vote. Bitcoin has already failed as a currency. It is subject to incredible moodiness and instability, which are the characteristics of a very poor currency indeed. Currency, in a well functioning economy, is supposed to be the most stable and predictable security that one can invest their wealth; in theory, it is not even supposed to be a security. Bitcoin may have made some people wealthy, but I'm not going to trust all of my wealth in it like I would American dollars.

Re: A Prediction: Bitcoin Is Doomed to Fail

#24

Post by Xdes »

adamnemecek wrote: post #18
Locke1689 wrote: post #15

Earlier quoted context omitted.

Isn't this pretty damn hard as well? Nah. If all the govt. does is says that every merchant cannot accept bitcoin for transactions, that's enough to render every bitcoin market black.

I don't think that the gov't has the power to say that.

They did that with gold during the 1930s.

Re: A Prediction: Bitcoin Is Doomed to Fail

#25

Post by snowwrestler »

I think Bitcoin will succeed like gold has succeeded--as a highly liquid tradable commodity, which can be used for transactions as a form of barter. It's already succeeding in this way.

It won't succeed as a currency because it can't maintain a stable value--again, just like gold.

Re: A Prediction: Bitcoin Is Doomed to Fail

#26

Post by hacknat »

nostrademons wrote: post #14

I think Bitcoin's doomed to fail, but not for the reasons the article suggest. There're ample historical counterexamples of currencies that are not tied to a government. Gold is the most obvious example; if currency was inextricably tied to governments, there would not have been a mad rush to colonize the New World (and extract its gold reserves). In prisons cigarettes frequently serve as currency, as a medium of exc…

This assumes that stability comes from a lack of speculation. This is not true. A majority of any modern currency's stability comes from its government's ability to ease and tighten the money supply as they see fit.

Re: A Prediction: Bitcoin Is Doomed to Fail

#27

Post by asperous »

nostrademons wrote: post #14

I think Bitcoin's doomed to fail, but not for the reasons the article suggest. There're ample historical counterexamples of currencies that are not tied to a government. Gold is the most obvious example; if currency was inextricably tied to governments, there would not have been a mad rush to colonize the New World (and extract its gold reserves). In prisons cigarettes frequently serve as currency, as a medium of exc…

Personally, I don't believe in Bitcoin either, but one thing I was considering is that Bitcoin is usable as long as its value isn't 0 (though it might be incredibly difficult to use with fluctuations).

So the question is will it crash to 0? Seeing the price soar to 1,000 means that people in the future might always be willing to purchase it at some price, hoping that it will return to that level.

Though, as it stands I don't think speculation gives it credibility. People who believe that are creating the positive reinforcement cycle so common in economic bubbles.

Re: A Prediction: Bitcoin Is Doomed to Fail

#28

Post by johnrob »

nostrademons wrote: post #14

I think Bitcoin's doomed to fail, but not for the reasons the article suggest. There're ample historical counterexamples of currencies that are not tied to a government. Gold is the most obvious example; if currency was inextricably tied to governments, there would not have been a mad rush to colonize the New World (and extract its gold reserves). In prisons cigarettes frequently serve as currency, as a medium of exc…

It's possible that bitcoin simply functions as a casino (or "volatile asset") instead of a medium of exchange, given the large demand for gambling.

Re: A Prediction: Bitcoin Is Doomed to Fail

#29

Post by cs702 »

Bitcoin befuddles experts who analyze it from a narrow perspective, because it is not just a new medium of exchange or a new store of value: it is also a new kind of point-of-sale payment system (one that doesn't require payment processors), a new kind of global financial transfer system (one that doesn't require financial institutions), a new kind of time-stamping certification system (one that doesn't require notaries or county clerks), a new kind of contract-enforcing mechanism (one that doesn't require lawyers), etc.

With rising global adoption, many new kinds of applications are likely to be created to take advantage of the Bitcoin network, the design of which even specifies a built-in script for defining and executing new types of transactions involving any arbitrary number of parties.[1]

In short, Bitcoin is a technology platform -- one that is benefiting from network effects.

It may fail as "money" (in a narrow sense) and still succeed as a global platform.

In fact, Bitcoin is already a success.

--

[1] https://en.bitcoin.it/wiki/Script

Re: A Prediction: Bitcoin Is Doomed to Fail

#30

Post by Aqueous »

nostrademons wrote: post #14

I think Bitcoin's doomed to fail, but not for the reasons the article suggest. There're ample historical counterexamples of currencies that are not tied to a government. Gold is the most obvious example; if currency was inextricably tied to governments, there would not have been a mad rush to colonize the New World (and extract its gold reserves). In prisons cigarettes frequently serve as currency, as a medium of exc…

If you use a service like BitPay, which most BitCoin merchants too, you declare your price in dollars and the API uses the current exchange rate to convert it to BitCoin, minute-by-minute. The prices float up and down with the currency, so pricing is largely a non-problem.

It makes rational sense for merchants to accept BitCoin and to keep some holdings in BitCoin because the price is increasing at such a rapid pace. Why wouldn't you want to sell something for x BTC today when that amount could be worth twice as much tomorrow? For the same reason it doesn't make a whole lot of sense to spend a BitCoin. Eventually the currency will level out when the incentive to spend equalizes with the incentive to receive. This might not happen for a while as long as speculation remains the predominant driving force.

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