If Krugman is short bitcoin, I'm long.
Bitcoin and positive vs. normative economics
371–380 of 520 posts
Re: Bitcoin and positive vs. normative economics
#372I am an on again off again fan of Krugman in some respects. In this case he has managed to clarify the discussion, which is good! The truth is that bitcoins derive most of their value from being a great medium of exchange and enabling things (smart contracts are ahead) that otherwise wouldn't be possible. Things like making no recourse payments online for the first time ever. Bank of America did an analysis on the va…
If you couldn't turn Bitcoins into USD, would you accept them as payment for something?
That's your floor price. It's 0.
Re: Bitcoin and positive vs. normative economics
#373Krugman is to Bitcoin as Ebert was to video games. The central failure of Krugman's understanding of cryptocurrencies is in the value of mining. It's not simply throwing energy away into solving useless math problems; it's spending energy to create infrastructure. That infrastructure is the part that does have intrinsic value, that can be used for something else in the same way gold can be made into useful things. Lo…
In the case of clones Namecoin/Primecoin/Gridcoin/Datacoin and others, there is even useful work being performed as part of the protocol of the software. Gridcoin's block rewards, for example, scale 30x in favor of those who devote enough computing resources to BOINC to achieve a BOINC score of 100.
Re: Bitcoin and positive vs. normative economics
#374Earlier quoted context omitted.
Ok, but I think the point is clear. USD has value because U.S. government said so and people trust that government, and Bitcoin has value because some people trust the Bitcoin network as the "currency issuer". If we imagine a scenario, where a majority of businesses will accept bitcoins, and people will be able to buy bitcoins and use either dollars or btc for payments, and both methods will be legal, we will see tha…
Right, the trust in the future spending power makes a currency not only a medium of exchange, but a medium of store. It seems that as far as alternative currencies are concerned, altcoins have a better chance of being spread. What's to prevent Amazon from coming up with AmazonCoin, pre-mining an entire AmazonCoin set for themselves, and then offer this altcoin with a liquidity guarantee on largest retail site. Nothin…
Amazon gift cards are already this.
Re: Bitcoin and positive vs. normative economics
#375Earlier quoted context omitted.
The typical US voting system allows coercion? When I voted, I went into a publicly visible booth, recorded my vote, pressed submit, and went about my business. I suppose I could have been forced to take a picture with a cellphone, but I could have just selected the option they wanted, taken the picture, and then swapped back to the candidate I wanted. Is there something I'm missing here? Any way you slice it, even if…
> Is there something I'm missing here? You're missing the fact that it's very possible to use coercion to discourage certain groups from voting at all. Just target the groups that are likely to vote for your opponent, and you've essentially used coercion to manipulate the election.
This is a problem which would be solved, somewhat ironically, by the US adopting mandatory voting. Shift a really nominal fine onto "not voting" (like $30), and it will become politically impossible to get away with marginalizing groups from voting.
Because people might ultimately think "well my vote probably wouldn't have mattered" when the line is 8 hours long on a Tuesday, but they will definitely care when they get fined $30 - but they're not going to simply argue the fine should go away, because it will be a little reminder of "oh yeah, and you didn't get a say in your government either!"
Re: Bitcoin and positive vs. normative economics
#376Krugman is to Bitcoin as Ebert was to video games. The central failure of Krugman's understanding of cryptocurrencies is in the value of mining. It's not simply throwing energy away into solving useless math problems; it's spending energy to create infrastructure. That infrastructure is the part that does have intrinsic value, that can be used for something else in the same way gold can be made into useful things. Lo…
It's not simply throwing energy away into solving useless math problems; it's spending energy to create infrastructure. I don't see how it is not the case that mining Bitcoins is throwing away energy. If someone had made a crypto currency based on, say, protein folding [1], I could get behind that. We could just create a crypto currency where we just hand out 100 units to every person. That certainly wouldn't require…
This has actually been done. You can now do protein folding and SETI (and a bunch of GMO research) while mining. Gridcoin is working with the full cooperation of the UC Berkeley BOINC project and is compatible with your choice of dozens of research projects: http://gridcoin.us
Re: Bitcoin and positive vs. normative economics
#377Earlier quoted context omitted.
My current answer to that question is that any industry that relies on trust could be structured in this way. If DNS were implemented on a blockchain, purchasing that chain's currency would be betting on increasing demand for that chain's transactions, domain names. What other industries are fundamentally about trust?
Virtually any service that can feasibly be arranged and delivered online is fundamentally about trust, and you don't even need Bitcoin to solve many of those. I'm reminded of an example which I believe was given by some libertarian writer, perhaps David Friedman. One big role of governments and private institutions is the regulation of service industries through testing and licensing. In many places it is illegal to…
Yeah, just gonna be a suckers game for all those people who get burned by people who provide bad legal advice while we churn through figuring out who knows what they're talking about it and can build up that "good" reputation.
EDIT: I mean sure, some people are going to die of contaminated food. But once the trustworthy labs are known, everything will be fine! It's not like companies or people ever change in quality either so it will be good for all time.
Re: Bitcoin and positive vs. normative economics
#378Earlier quoted context omitted.
Nearly 100% of the attractiveness of bitcoin is the promise of infinite rewards to the early investors in the Ponzi scheme. Bitcoin couldn't and wouldn't exist at all without that promise. So a simple system based on allocating 100 coins to everyone just wouldn't do at all.
Yes-it's a marketing trick.
Flowers trading food for pollination.
Re: Bitcoin and positive vs. normative economics
#379I'm most bullish on bitcoin when I read articles such as this one, and most skeptical when I read the thoughts of the bitcoin believers. It's truly the most interesting technological development in years, if only because it reveals how little anyone really understands money or economics. Here's another interesting (though imperfect) way of thinking about bitcoin: it's a decentralized corporation, where bitcoins are o…
Seems it's only decentralized to a degree. Go to the Bitcoin Foundation website, they say they want to keep Bitcoin decentralized. So how much influence does this Bitcoin Foundation have over the future of Bitcoin? No idea. There's only one (unpaid) Bitcoin developer responsible for the whole thing? Sounds like a tremendous responsibility for one person, considering what's potentially at risk. How are changes rolled…
Bitcoin is fully decentralized. Bitcoin is just a protocol. There are dozens, if not hundreds, of developers of alternative Bitcoin nodes and wallets.
The reference client is just that: a reference client. It is irrelevant how many or how few developers are working on it.
Re: Bitcoin and positive vs. normative economics
#380Earlier quoted context omitted.
> It's not simply throwing energy away into solving useless math problems; it's spending energy to create infrastructure. But it is also an arms race of energy spent. And the more valuable BTC becomes, the more energy a rational agent will use to mine it. Unlike mining gold, BTC mining does not have a fixed cost.
Gold mining doesn't have a fixed cost either. Different locations have different costs per gram of mining and refining gold, and whether it is worthwhile or not to mine in a given location depends on the price of gold.
And the yields from mining have decreased by orders of magnitude over the last several decades as technology increases have made it more possible, while less efficient, to extract additional known deposits.