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A Prediction: Bitcoin Is Doomed to Fail

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Re: A Prediction: Bitcoin Is Doomed to Fail

#81

Post by sergiosgc »

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

Earlier quoted context omitted.

Is gold issued by governments?

No, and it failed as a currency.

Did it? Or was it Bretton-Woods that failed? If I remember my History, Nixon decoupled the USD from gold to regain the ability to devalue the dollar, as a tool for dealing with the huge debt accrued during the Vietnam war.

It wasn't a gold-currency world, it was a world of gold-backed US dollar. It makes a huge difference. While the advantages of being a reserve currency superceded the disadvantages of not having monetary control, Bretton-Woods stood. Once the tables turned, the US ended the gold backing.

Bretton Woods stood for close to 40yrs. The current system has about the same age and much as Bretton Woods is failing because the US abused its position as reserve currency to wage war financed by debt. History does repeat itself, in slightly different color tones...

Re: A Prediction: Bitcoin Is Doomed to Fail

#82

Post by aaronem »

Locke1689 wrote: post #73
adamnemecek wrote: post #53

Earlier quoted context omitted.

I mean, aren't you the one who should be providing citations?

Nope. It's good policy to expect that a govt. can do anything, unless presented with evidence to the contrary. This is a good rule of thumb, mostly because its true. I'm not sure why people have trouble understanding this (poor civics classes? too dense?) but the US govt. can do anything it physically can. Sure, it may require a constitutional amendment, but if the political will is there the govt. can do anything .…

Sovereignty, Citizen, is an obsolete concept.

Re: A Prediction: Bitcoin Is Doomed to Fail

#83

Post by Aqueous »

cs702 wrote: post #29

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 notar…

They are applying old-world money ideas to something that is so new that we don't have useful models yet for deciding how it will behave, thinking that they do apply without loss of content. The rules of supply and demand apply, sure, but none of the other common-sense intuitions about how money works.

BitCoins don't have any resistance to movement, or very little. Physical money does. This means the difference between BitCoins and physical money is perhaps comparable to the difference between massive particles like atoms and massless particles like photons, or to the difference between a classical conductor and a superconductor. Which is only to say that the same rules don't apply - new behaviors are observed.

We are in a new world and the study of economics is about to take a huge left-turn.

Re: A Prediction: Bitcoin Is Doomed to Fail

#84

Post by fat0wl »

jamestnz wrote: post #55
TylerE wrote: post #20

Earlier quoted context omitted.

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.

Something that might be considered an "intrinsic" value of bitcoin is its ability to instantly and securely transfer wealth across large distances at zero or near-zero cost. This is an feature not present in some of the incumbent currencies and store-of-value assets. For example, physically shipping hundreds of kilograms of gold (or physical, folding USD) is a costly exercise fraught with security risks, and the risk…

This intrinsic value can be mirrored by any cryptocurrency or even just a parallel network of Bitcoin. It is no justification for $1000/coin the way overzealous BTC investors claim.

Re: A Prediction: Bitcoin Is Doomed to Fail

#85

Post by aaronem »

chriswilmer wrote: post #56
cs702 wrote: post #29

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 notar…

Befuddles eh? I'll just leave this here... http://www.befuddled.org/

Amazingly useless!

Re: A Prediction: Bitcoin Is Doomed to Fail

#86

Post by relet »

As I see it, both governments (states) and the bitcoin algorithm are mechanisms that are endorsed by their community to simplify a control problem.

Governments have more mechanisms to adapt to changes in public opinion, while bitcoin deals with a more specific problem. If bitcoin loses endorsement, it will be replaced (traded) for other goods, probably the next generation cryptocurrency. The same goes for governments that don't adapt, and their currencies.

Re: A Prediction: Bitcoin Is Doomed to Fail

#87

Post by cLeEOGPw »

So basically what the writer is saying is that bitcoin will fail, because "bitcoin developers are trying to privatize money". The writer is either really incompetent or jumping in the bitcoin hype train with controversial articles to get cheap traffic. Adding comment so it get's penalized, since as I understand comments here work like downvotes.

Re: A Prediction: Bitcoin Is Doomed to Fail

#88

Post by Bootvis »

drcube wrote: post #79
adventured wrote: post #44

Earlier quoted context omitted.

Inflation definitely isn't a separate issue. It's a fundamental issue in the topic of currencies and money, as in deflation. Inflation is the expansion of money supply. Once bitcoin reaches full supply, by definition there can be no further inflation from bitcoin. There can be price fluctuations in the value of bitcoin, but not inflation. It's necessary to differentiate between prices going up / down, as opposed to i…

"Price fluctuations in the value of currency" is the definition of inflation/deflation. Monetary policy can cause inflation, but it's not the only way inflation can occur. Wikipedia: "In economics, inflation is a persistent increase in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently…

I'm not saying that Friedman is right but this is a thorny issue in economics:

   Inflation is always and everywhere a monetary phenomenon.
   —Milton Friedman, 1963

Re: A Prediction: Bitcoin Is Doomed to Fail

#89

Post by blahbl4hblahtoo »

vijayboyapati wrote: post #12

He is essentially giving the chartalist theory of money. Money cannot arise except through the fiat of the state. Chartalists hate the Mengerian theory on the origin of money because it posits that money arises as a market phenomena. Eventually the state co-opted money, but that does not mean money arose because of the state. The emergence of bitcoin is a thorn in the side to chartalists. We can't really go back and…

I think the idea that states co-opted money doesn't stand up to historical scrutiny. States have evolved for the purposes of providing situations where "markets" can arise.

I have to be honest though, I'm not an expert on the subject. Also, everything about the critique presented doesn't have to be false for the successes that bitcoin has had to be real. I think that bitcoin really serves as a form of regulatory arbitrage... its real value, the value that people are placing on it, represent gains that can be made by avoiding fees and oversight. Its an alternate currency that couldn't exist without a state system.

As for the inflationary ideas...I find it really very similar to gold or maybe some other more rare natural resource... don't all of the ideas about hoarding and "de beers" (sic) style monopoly still apply? I'm genuinely asking not trying to be a prick...

Re: A Prediction: Bitcoin Is Doomed to Fail

#90

Post by wuschel »

There are many arguments for and against Bitcoin. Only time will tell.

But I have three comments:

1. Personally,

I would probably be - out of self interest - a strong supporter of Bitcoin if I had any, or would have belonged to the first miners. But I have no BTC, and such I only observe as a bystander how this technology develops.

2. Energy and intrinsic value of BTC

For me, the argument that cryptocurrencies can be made out of thin air and thus BTC is just some digital data does not hold. Gold can be mined from many sources as well (e.g. in can be found in the oceans as Au2+). Or another currency can be created and printed/minted. However, with a currency such as BTC it takes a lot of energy to fire up such a system until a certain level of penetration is reached, and it takes energy to maintain it. Actually, this is one of the greatest drawbacks I see: every BTC that is created now now will be more expensive in terms of energy cost. I prefer a one time energy and material cost for the creation of a currency, and minimal energy/material costs that come with its operations.

3. Penetration and access.

I wonder if it might not have been better to distribute all BTC among all of mankind. That way, everyone would be in possession of an instant amount of currency and could readily engage in trading. The early mining process support the creation and distribution of bitcoin but gives extreme gains to early adopters. A better initial distribution might have helped to position BTC as the dominating cryptocurrency. Right now any follow up can beat BTC if it excels the parameters that define the adoption and usage rate of the currency as trading medium.

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