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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

#261

Post by djur »

andrewla wrote: post #148
fiatmoney wrote: post #45

Earlier quoted context omitted.

That's not my reading; I believe what he is getting at (similarly brought up in Graeber's book) is that when the government controls a large enough share of the economy, the sine qua non of "money" is that you can pay taxes with it. That doesn't require anything about the historical origins of money.

I should probably read Graeber's book, though based on what I see here I might find it a bit exhausting. I hear this argument a lot in discussions about bitcoins, and I ask, but have not yet received, a good explanation. Let me ask you if you can summarize the reasoning for why paying taxes in a currency helps a currency? It seems very obvious that the opposite is true -- if you don't have to pay taxes by working in…

> if you don't have to pay taxes by working in an alternate currency, then you would obviously want to use that

Unless you want to legally live and do business in a country, in which case you're going to have to pay the taxes that country levies in the legal tender currency.

The value of the US dollar, in essence, is the value of being able to live and do business in the US plus the avoided cost and risk of doing so illegally (which is generally quite high).

Re: A Prediction: Bitcoin Is Doomed to Fail

#262

Post by jljljl »

andrewljohnson wrote: post #259
jljljl wrote: post #258

Earlier quoted context omitted.

IS this all really that big of a deal? Everything you've described above shouldn't really shatter any sort of economic models, it just increases the velocity at which money is exchanged, and reduces any frictions that might occur during transactions. Nothing that can't be accounted for in existing models.

You could have said the same for PayPal.

Are you saying PayPal has upended monetary economics?

Re: A Prediction: Bitcoin Is Doomed to Fail

#263

Post by j1z0 »

The three main reasons the article gives for why bit coin will fail:

"Its value is uncertain, its legal status is unclear, and it could easily become valueless if users lose faith"

Is this not also true of state run currency? Have we not seen massive deflation during the great depression, in Israel, in Russian and in many other part of the world?

The legal status is an interesting one, but given that the feds got some 31million (and rising) USD worth of BTC from the Silk Road seizure I doubt they will make BTC illegal.... But it could happen in the future.

Loosing faith, well believe it or not this is true of all currencies. That is why it's called Fiat, there is nothing other than faith behind currencies.

So really the only issue is the legality, which basically translates into government regulation, which is what we already have for "state run currencies", so at worst BTC becomes regulated by the state and becomes more of a "state run currency". In some views I guess that is failing, but that means that worst case it will end up like cash but with a lot of technical benefits.

I think the real issue with BTC is deflation, and that will probably continue for a long time. At least until all the BTC are out, if not for much longer.

Re: A Prediction: Bitcoin Is Doomed to Fail

#264

Post by jljljl »

Just out of curiosity: Has anyone throughly debunked the deflation argument against Bitcoin? Even the Bitcoin wiki seems fairly uncertain that deflation will not be a problem with Bitcoin.

I still struggle with how a fixed money supply vs. a steadily growing economy does not lead to deflation, and (eventually) hoarding.

Re: A Prediction: Bitcoin Is Doomed to Fail

#266

Post by tlrobinson »

andrewla wrote: post #155
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…

I'll jump on this and say that the script issue is irrelevant to Bitcoin's success. In fact, I would argue that the script functionality is a huge flaw in bitcoin, probably the largest flaw. The existence of a scripting language within the transaction log makes it much more difficult to analyze whether I hold bitcoins or not -- my ability to spend bitcoins "held" in my address is contingent on my having additional in…

"my ability to spend bitcoins "held" in my address is contingent on my having additional information at the time that I post the transaction."

Fortunately software excels at automating tasks like this.

You already need software to scan the entire blockchain to determine address balances, is it really that hard for it to keep track of non-trivial unspent transactions separately?

Re: A Prediction: Bitcoin Is Doomed to Fail

#267

Post by skinnycow »

fat0wl wrote: post #256
aryastark wrote: post #200

Earlier quoted context omitted.

$1000, for 1/12000000th the total current supply of bitcoins in existence? Sounds like a deal to me. The same fraction of USD is $100,000. There are 313 million people in the US. These are the majority of people using the dollar. There are 1.35 billion in China and another 1.2 billion in India. The former has already started using bitcoin. But only just barely . The market for bitcoin is enormous . Now let me ask you…

my god this is psychotic. i'm sorry, i try to be polite but.... jesus. i am 1000% confident that this particular bitcoin implementation of global currency is worth less than $12 billion USD. you are treating this currency like we are dividing up slices of the world money supply. We are not. People are paying $1000 and basically receiving an IOU from no one, with the hope they will be able to sell to future speculator…

Is there any chance of you giving it a rest? We get it. You think Bitcoin and Bitcoiners are stupid. You passed Intro to Econ in college. You've drawn completely arbitrary lines in the sand and given nothing to justify them but emotional appeal. You, like many others, seem to waltz into every thread thinking that you've just independently come up with the fatal flaw of Bitcoin as it chugs along it's third year of existence.

You display a nearly D-K effect when you act as if these are foregone conclusions with your "Just....... jesus, man." Especially after the catastrophe that was the last paragraph about price&divisibility. It's completely nonsense from an economic perspective. And there are clear benefits in using a highly divisible currency (and especially since it can be represented as a whole number... rather than a float. Ironic, whoops).

Re: A Prediction: Bitcoin Is Doomed to Fail

#268

Post by jnbiche »

jljljl wrote: post #260
jnbiche wrote: post #243

Earlier quoted context omitted.

Wrong. Have you actually tried to buy a Bitcoin? If not, ask someone who has. At the moment, it's hard for Bitcoin novices to buy Bitcoins, and much less hard to sell them. Actually, once you've been verified by an exchange (required prior to buying Bitcoins unless you do a private party sale), selling Bitcoins is easy; it's getting your USD wired/ACHed to your bank account that can be time-consuming. This is due to…

I think he's making a liquidity point. It may be easy from a process standpoint to cash out, but the question is how much the value of your bitcoins may change whenever you cash out. http://www.investopedia.com/terms/l/liquidity.asp Part of the value of dollars as a medium of exchange is that the value does not fluctuate greatly from day to day or minute to minute. In the short term, you can rely on prices remaining…

I'm familiar with the term liquidity. However, you seem to be making a point about Bitcoin's volatility, which is completely orthogonal to its liquidity. An asset could have no volatility, but have very poor liquidity (e.g., a house under normal circumstances).

Re: A Prediction: Bitcoin Is Doomed to Fail

#269

Post by TimCinel »

stevewilhelm wrote: post #178
mindstab wrote: post #149

Earlier quoted context omitted.

they can sure set them, and then no one would use them. do you not understand money? what are you, the owner of 100btc going to do: a) buy $100usd worth of goods at ebay directly b) cash out at a proper exchange for $100,000usd, then buy $100usb worth of goods on ebay and have $99,900usd left over? or cash out ONE btc for $1000usd, buy $100usd of goods and have $900 usd left over AND 99btc? How do you expect any even…

In any financial exchange, both parties, the buyer and seller, need to come to agreement on a price. Given the fact that current BTC to USD exchange volume is fairly small, it wouldn't take that many large global goods and service providers pegging their BTC/USD exchange rate to cause the speculation market to collapse. Those that recently bought their Bitcoins at $900 would sell below the current high price to reali…

If BTC is trading higher than $1, everybody would buy the undervalued BTC for $1 and sell at the market rate. If BTC is trading lower than $1, everybody would buy BTC at market rate and sell the overvalued BTC for $1.

Both cases lead to significant losses for whoever is trying to peg BTC to some arbitrary constant value.

Re: A Prediction: Bitcoin Is Doomed to Fail

#270

Post by nate_martin »

In so many of these BTC articles the authors spend the first few paragraphs explaining bitcoin to readers who don't know what it is. They often get a lot of the basic facts about the currency wrong (ex: anonymity of bitcoin in this article). Its honestly hard to take any of this seriously if these authors can't demonstrate that they actually understand the currency.
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