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Bitcoin and positive vs. normative economics

krugman.blogs.nytimes.com

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Re: Bitcoin and positive vs. normative economics

#451

Post by jessaustin »

As is often my habit, I skimmed the voluminous commentary here before reading TFA: I've got to stop doing that. I clicked through expecting a massive paper and got four original paragraphs, along with quotes of stuff we've already seen on HN.

I'll ignore the moralistic Stross material, both because that is wise and because Krugman takes pains to emphasize the positive nature of his argument. The tentpole of that is that there is no theoretical floor for the exchange value of BTC. This is roughly true, but I don't think it entails the disastrous consequences that excite so many BTC antagonists.

Even if it's difficult to imagine hyperinflation of USD (although I'm not quite so confident as Krugman in the Fed's dollar sink policy: if this is not a new policy why didn't it work in the 1970s; if it is new why shouldn't we expect it to change?) we've seen hyperinflation of many other currencies, a number of which were held by more investors than currently hold BTC. If such hyperinflation was disastrous, then it was mostly for those who held the affected currency, and mostly in proportion to their holdings. No tinpot dictator has decreed the use of BTC; if you think they're overvalued then just sell them.

Of course if there is eventually a giant terminal sell-off of BTC for reasons, investors might just choose some other set of cryptocoins, some of which might have an appropriately theoretical floor. Would Krugman care to opine on the positive fate of those theoretically worthier assets?

Re: Bitcoin and positive vs. normative economics

#452

Post by grinnbearit »

frabcus wrote: post #307
guscost wrote: post #126

Earlier quoted context omitted.

But can technology be immoral? I'm a bit rusty on all that stuff but it sounds like we're talking about two (subtly) different questions. I would argue that technology can be used for evil, but technology just sitting there by itself is no more evil than rocks or sand. If you can prove that a certain technology can not or will not be used for good, then that raises different questions.

It's pretty clear that the hydrogen bomb is, in the sense you give, "immoral". Sure, you can come up with complex, hypothetical scenarios where it has value, but fundamentally it has but one purpose, which is to murder millions of people. In most moral systems, murder of one person is immoral, never mind millions.

Or maybe mutual assured destruction prevents the potential murder of millions giving an atomic bomb positive moral value

Re: Bitcoin and positive vs. normative economics

#454

Post by ahquresh »

randallsquared wrote: post #450
ahquresh wrote: post #443

Earlier quoted context omitted.

But aren't we just introducing Bitcoin with conventional currencies as its backing?

No, backing implies that someone has a legal obligation to supply something in exchange for the thing backed. Gold originally backed USD because paper dollars were literally a contract to pay the bearer a certain amount of gold. Gold and USD now have the same sort of relationship that USD and bitcoin do: neither USD nor bitcoin is backed by anything. Both are still worth something, at the moment, though, which is all…

I see, I completely misunderstood what mattm was trying to say then. That makes much more sense.

Re: Bitcoin and positive vs. normative economics

#455

Post by d23 »

greyman wrote: post #306
DrJokepu wrote: post #265

Earlier quoted context omitted.

Voting is a solved problem. I’m not saying that the idea of using bitcoin technology to solve problems beside monetary systems is a bad idea (in fact, I think it’s a very interesting concept), but really, democracies around the world already have established and efficient voting systems that work well enough.

Yes, but you need a trusted authority. But I probably didn't explain it well enough. I didn't mean that you would vote which politicians will rule, you would vote on concrete decisions state such make. Nowadays, you vote politicians and they make decisions, and with blockchain network, you would directly vote for such decisions, making the politicians an unnecessary layer. ;-)

I hire politicians for the exact reason that I cannot possibly become informed and make intelligent decisions on all of the issues that affect me.

Re: Bitcoin and positive vs. normative economics

#456

Post by jessaustin »

XorNot wrote: post #355
dnautics wrote: post #276

Earlier quoted context omitted.

one, you're crazy thinking that wealthy people hoard their wealth in dollars. two, if you think people won't consume if the money is deflationary, you're crazy. The US had net deflation for most of its history (except during wars) from 1600-1910, and certainly there was plenty of growth. Also, analogous to the "why do you ever bother buying computers knowing that they depreciate rapidly". three. If you think laborers…

> one, you're crazy thinking that wealthy people hoard their wealth in dollars. You might want to consider what they do hoard their wealth in. It's not currency, and they also don't buy gold - they buy companies, stocks, and bonds. What do all those things have in common?

Umm... they exist on earth? They are the violence inherent in the system?

I'm sorry, but I need you to connect the dots a bit better if I'm to understand this.

Re: Bitcoin and positive vs. normative economics

#457

Post by Rhapso »

d23 wrote: post #455
greyman wrote: post #306

Earlier quoted context omitted.

Yes, but you need a trusted authority. But I probably didn't explain it well enough. I didn't mean that you would vote which politicians will rule, you would vote on concrete decisions state such make. Nowadays, you vote politicians and they make decisions, and with blockchain network, you would directly vote for such decisions, making the politicians an unnecessary layer. ;-)

I hire politicians for the exact reason that I cannot possibly become informed and make intelligent decisions on all of the issues that affect me.

And you expect them to be able to?

Re: Bitcoin and positive vs. normative economics

#458

Post by cabalamat »

nickbauman wrote: post #360
rokhayakebe wrote: post #272

Earlier quoted context omitted.

It is amazing how one word "COIN" added to this word has shaped everyone's thinking. Would we treat it the same if the guys behind it named it "Bitcard" or "Bitpoint?" That one word is what set apparently most people to speak of it, and treat it as money. BC is nothing like Money. BC is a card trading game where the players make the cards, the difficulty to make cards increases , and the value of the cards is decided…

Exactly this! Bitcoin is much more interesting as way of representing CREDIT, not MONEY. Credit is much older and much better way of representing of how humans make contracts with each other. Money is a sideline invention we did to make it possible to pay soldiers for fighting. (Soldiers are inherently bad credit risks because they kill and die for a living).

> CREDIT, not MONEY

What's the difference?

Re: Bitcoin and positive vs. normative economics

#459

Post by slurry »

roblev wrote: post #321
slurry wrote: post #125

Earlier quoted context omitted.

Inflation is a function of money supply and velocity. If everyone adopted bitcoin, the velocity of the dollar would approach zero. Which means that inflation would go down, not up. And yes, I would rather have my [savings] account in a hard, non-inflationary currency. On the other hand, I can only earn interest when someone is willing to take a loan in the currency and pay interest on it. And I am not about to take o…

>I am not about to take out a loan in a hard currency when perfectly good inflationary currencies are easily at hand. Sadly it is not so easy to make money this way, the forward exchange rates will cancel out any gain from the interest earned in the inflationary currency. Otherwise everyone would do this. You can make money doing this but really you are just taking a bet on exchange rates, you can easily lose money a…

Sorry, to clarify: I meant take out a loan as a borrower. Deflation will tend to increase my real interest rate over time, inflation the opposite. Obviously in equilibrium theory, interest rates will cancel out these effects; but they do not always do so in practice. So borrowers will tend to favor moderately inflationary currencies like the dollar.

Re: Bitcoin and positive vs. normative economics

#460

Post by aaren »

SectioAurea wrote: post #376
ansible wrote: post #135

Earlier quoted context omitted.

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

But not for ASICs mining bitcoin, unless they have a BOINC implementation that somehow uses sha256 as its core.
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