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Why Bitcoin Matters

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Re: Why Bitcoin Matters

#261

Post by base698 »

Crito wrote: post #174
base698 wrote: post #147

Earlier quoted context omitted.

That's only people that read the 101 level of how the economy works and don't consider that bitcoin is infinitely divisible practically, unlike gold.

I'd say that gold is infinitely divisible in practice, as much or moreso than bitcoin. There is what, a USD dollar or two worth of gold leaf in Goldschläger? You can trivially get down to flakes of gold worth fractions of pennies. The only problem is the cost of division (making leaf is somewhat labor intensive, but not prohibitively so by any stretch). The hard limit is $1e-20, according to wolfram alpha. IIRC bitco…

Bitcoin is only fixed at that now, it can change as needed.

Re: Why Bitcoin Matters

#262

Post by base698 »

reqres wrote: post #156
base698 wrote: post #147

Earlier quoted context omitted.

That's only people that read the 101 level of how the economy works and don't consider that bitcoin is infinitely divisible practically, unlike gold.

Unless you're saying that you can split 1 bitcoin into 2 bitcoins, I think your reasoning is flawed. Or looking at it another way, inventing a new denomination like a millicent (= 0.001c) will automatically increase our money supply...

So with our currency if it becomes wildly deflationary with a single penny buying a car--how do you buy a cup of coffee? That is the practical problem with deflation. With bitcoin it can always be made smaller.

Re: Why Bitcoin Matters

#264

Post by marcamillion »

minimax wrote: post #16

Bitcoin is the first Internet-wide payment system where transactions either happen with no fees or very low fees (down to fractions of pennies). Existing payment systems charge fees of around 2 percent to three percent As long as consumers are paid in their local currency and vendors pay their employees, their taxes, and their other costs in local currency, then bitcoin as a payment technology has similar costs as cr…

I think the obvious flaw in your argument is that the market is very underdeveloped for BTC exchanges. As with any other market, as competitors file in the bid/ask spread will be squeezed significantly. See the currency market.

Also...as positive network effects kick in as Marc said, and more merchants accept it, there will be less incentive to convert to USD. That's where the real value is. As the network of merchants grows, then the transaction costs go to 0 - i.e. in a BTC to BTC world.

I expect companies to come up with products/services that allow you to 'lock in' prices without having to do conversions immediately (kinda like options).

So you can expect to see much more innovation in this space.

Either way...what is clear is that the current spread is the worst that it will ever be because as the network grows that will shrink.

Re: Why Bitcoin Matters

#265

Post by marcamillion »

asciimo wrote: post #121

I'm a Bitcoin believer but I feel a little embarrassed after reading this. I'm impressed that Marc Andreessen can get an entire Dealbook page to advertise a pet technology without any fact checking. (Is that the point of Dealbook? I almost never read it.) > Even Netflix, a completely virtual service, is only available in about 40 countries. The implication is that mere payment logistics are inhibiting Netflix's inter…

> Bernanke never said this (http://imaginarymarkets.com/reddit-corrects-bitcoin-quotes-a...), and it's tacky to perpetuate this falsehood.

I don't understand this. He did say it....here is the paragraph in it's entirety from his address to the Senate:

Historically, virtual currencies have been viewed as a form of “electronic money” or area of payment system technology that has been evolving over the past 20 years. Over time, these types of innovations have received attention from Congress as well as U.S. regulators. For example, in 1995, the U.S. House of Representatives held hearings on “the future of money” at which early versions of virtual currencies and other innovations were discussed. Vice Chairman Alan Blinder’s testimony at that time made the key point that while these types of innovations may pose risks related to law enforcement and supervisory matters, there are also areas in which they may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system.

He was using Vice Chairman Alan Blinder's testimony to prove the point that while those innovations may pose risks there are areas which they may hold long-term promise.

So not sure what you mean by he didn't say that.

Marc's original statement is indeed accurate, per the transcript of Bernanke's speech. [1]

[1] - http://qz.com/148399/ben-bernanke-bitcoin-may-hold-long-term...

Re: Why Bitcoin Matters

#266

Post by Guvante »

School-Cotton wrote: post #222
maaku wrote: post #110

Earlier quoted context omitted.

The fact that the work is useless is essential to the security of the system. It's a proof of sacrificed opportunity. If the proof of work was actually useful and monetizable, you might be able to pay for your mining via its utility, and that would completely destroy the security assumptions underlying bitcoin.

How so?

Say instead of hashes it was computation cycles, so long as your computer is doing something then it counted. (I am ignoring the bookkeeping problems)

I could take a supercomputer that I am using otherwise for economic benefit, and perform a whole bunch of mining with it, at no cost to me.

Even better, I can go to several supercomputers and do this, all without costing any actual computation power.

This would allow me to create a ton of power on the network, which could be used to overtake it and break the usual security guarantees.

However with Bitcoin I have to stop doing anything else with all of this computing power, which is a problem.

Re: Why Bitcoin Matters

#267

Post by reqres »

base698 wrote: post #262
reqres wrote: post #156

Earlier quoted context omitted.

Unless you're saying that you can split 1 bitcoin into 2 bitcoins, I think your reasoning is flawed. Or looking at it another way, inventing a new denomination like a millicent (= 0.001c) will automatically increase our money supply...

So with our currency if it becomes wildly deflationary with a single penny buying a car--how do you buy a cup of coffee? That is the practical problem with deflation. With bitcoin it can always be made smaller.

Governments can always invent a new denomination. Mostly its been in the other direction (take off orders of magnitude)

But the scenario you're citing isn't the central issue when it comes to deflation. Deflation leads to a negative spiral because it pays off to defer any kind of spending - thereby slamming on the economic brakes. Notable example is Japan in 90s - deflation has been a major factor in its meagre growth then and even into the 2000s. The BoJ's unwillingness to adopt a sufficiently expansionary monetary policy likely exacerbated the problem

Re: Why Bitcoin Matters

#268

Post by asciimo »

marcamillion wrote: post #265
asciimo wrote: post #121

I'm a Bitcoin believer but I feel a little embarrassed after reading this. I'm impressed that Marc Andreessen can get an entire Dealbook page to advertise a pet technology without any fact checking. (Is that the point of Dealbook? I almost never read it.) > Even Netflix, a completely virtual service, is only available in about 40 countries. The implication is that mere payment logistics are inhibiting Netflix's inter…

> Bernanke never said this ( http://imaginarymarkets.com/reddit-corrects-bitcoin-quotes-a... ), and it's tacky to perpetuate this falsehood. I don't understand this. He did say it....here is the paragraph in it's entirety from his address to the Senate: Historically, virtual currencies have been viewed as a form of “electronic money” or area of payment system technology that has been evolving over the past 20 years.…

He's paraphrasing Alan Blinder's 1995 testimony in the context of the history of virtual currencies. It is more accurate to say, "In 1995, Alan Blinder stated that virtual currencies hold long-term promise, particularly if..."

My larger point is that whenever you see the Bernanke "bitcoin statement," it implies that he is a Bitcoin advocate. He may very well be a Bitcoin fanboy in his private life, but there is not public evidence that this is true.

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