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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

#61

Post by fat0wl »

asperous wrote: post #27
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…

this is the root of my belief as well -- that it is a speculative farce, but so long as it is above 0 it will continue to be in use.

Another poster made me aware of this joke that I think summarizes Bitcoin pretty accurately. http://www.getamused.com/jokes/pennystock.html

Only in this case it's not a single buyer.

Re: A Prediction: Bitcoin Is Doomed to Fail

#62

Post by novalis78 »

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…

Have you seen the interview with Bobby Lee recently? I think he made a great point. They asked him if he is worried that the bitcoin fluctuations undermine bitcoins' ability to function as a currency and discourages merchant adoption rate. He said that's what he initially thought as well, but since has come to the conclusion that bitcoin has to be seen foremost as a store of value and only through the "confidence" as you put it in a long term storage of value will the adoption as a currency eventually come all by itself. So he is not worried at all.

Found the link: http://www.youtube.com/watch?v=zz_yfB72S9c

Re: A Prediction: Bitcoin Is Doomed to Fail

#63

Post by vilda »

Edward doesn't know what money is. Whether it is issued by a government or not is a matter of convenience (or legal issues) and not a condition.

Everything can be a currency satisfying these criteria:

   (1) enough quantity

   (2) limited quantity

   (3) convenient to move/exchange

   (4) widely accepted
That's it, nothing else.

All currencies is based on "faith". Any currency is doomed if it looses trust. For instance cigarettes were used as currency in Germany between world wars.

And it seems to me that Edward admits that at the end: "governments are not fully living up to the responsibility". Yep, he is contradicting the claim that monetary policies are independent of the government. They are not and you can see it in the price of gold.

Since bitcoin is based on math and official currency on politics, bitcoin is inherently more trustworthy. Its deflationary tendency, limited supply, and lack of physical presence are common drawbacks of bitcoin as a "common" currency. Not trust. And they are actually advantageous for its particular area.

Re: A Prediction: Bitcoin Is Doomed to Fail

#65

Post by Tycho »

snowwrestler wrote: post #10
ewams wrote: post #6

Earlier quoted context omitted.

Is gold issued by governments?

No, and it failed as a currency.

It 'failed' as a currency (after centuries) because nation-states with central banks found it disadvantageous for their overall economies.

That doesn't mean the currency itself failed, just means it was abandoned by those seeking to implement monetary policy.

It would be like saying P2P networking failed because vendors prefer the iTunes model.

Re: A Prediction: Bitcoin Is Doomed to Fail

#67

Post by swswsw »

Excerpt from the article: "The developers of bitcoin are trying to show that money can be successfully privatized."

-- Not really. Bitcoin is open sourced. They did not try to privatize bitcoin.

Excerpt from the article: "The currency’s issuer is an unknown computer programmer"

-- No, bitcoin is not issued by Satoshi Nakamoto in the sense that cash is printed by the government. The currency is generated by mining, which can be participated by anyone with the right equipment.

I do not have a better crystal ball than anyone here, but the article's author made a mistake in trying to shoehorn bitcoin into his own concept of currency.

Re: A Prediction: Bitcoin Is Doomed to Fail

#68

Post by andyidsinga »

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…

I love your point about pricing - was just thinking the other day about how I might accept bitcoin for an item. Presumably there could be a mechanism for determining the right price on the fly (similar to share pricing) but volatility would still be killer - hence there would be desire for a bartered item or non-volatile currency.

Re: A Prediction: Bitcoin Is Doomed to Fail

#69

Post by kandalf »

Aqueous wrote: post #30
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.…

I would argue that it doesn't make sense for the average merchant to keep holdings in BitCoin. Most merchants have no desire to take on currency risk (http://en.wikipedia.org/wiki/Foreign_exchange_risk). They're not in the business of speculating, they're in the business of selling things.
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