Bitcoin is not for goverment. Bitcoin is digital currency of the internet • Hacker News Board

Re: Bitcoin is not for goverment. Bitcoin is digital currency of the internet

#11

Post by thephyber » Sat, Feb 28, 2015, 11:37 PM UTC

BariumBlue wrote: post #2

Let's extrapolate, and say that no country should adopt a purely digital currency. Would that be accurate? I don't know too much about the topic domain, so for those who do, what would be required of a purely digital currency to be a good candidate for a national currency?

For a currency to take off, there must be a large market that requires you to use the currency (such as paying taxes to the IRS). This creates a base market which can be used as a springboard for wider adoption. BitCoin managed to take off because, IMHO, the novelty of the "cryptocurrency" and some of the problems it solved.

For a fiat currency to work, there must be faith in the currency and the governing bodies that support it. The US dollar used to be tied to the price of gold and silver, then later entirely to gold, then it was turned fiat in the Nixon years.[1]

BitCoin, in particular, does not allow a central bank to "print" currency (which is a tool used to control the inflation rate). Without the ability for a central bank to regulate the creation of a fiat currency, there would eventually be an erosion of faith in the currency. Alternatively, a digital currency could be tied to a gold silver / other commodity standard, but then it's not much different than any other commodity.

The Canadian bank is experimenting with a digital currency, but it won't replace the paper+coin currency, only augment it.[2]

[1] https://en.wikipedia.org/wiki/Nixon_Shock [2] http://business.financialpost.com/2013/09/19/canadian-mint-p...

Re: Bitcoin is not for goverment. Bitcoin is digital currency of the internet

#12

Post by Frondo » Sat, Feb 28, 2015, 11:39 PM UTC

sj4nz wrote: post #3

BariumBlue wrote: post #2

Let's extrapolate, and say that no country should adopt a purely digital currency. Would that be accurate? I don't know too much about the topic domain, so for those who do, what would be required of a purely digital currency to be a good candidate for a national currency?

This slides in the assumption that you need a national currency. No traditional nation-state will _really adopt_ a crypto-currency unless it bakes in some ability to seize or inflate it's subject's currency. If that exists in their desired crypto-currency then, of course, no one will ever use it without the threat of violence. Catch-22 for modern nation-states.

What threat of violence are you describing?

Re: Bitcoin is not for goverment. Bitcoin is digital currency of the internet

#13

Post by entrop13 » Sat, Feb 28, 2015, 11:39 PM UTC

BariumBlue wrote: post #2

Let's extrapolate, and say that no country should adopt a purely digital currency. Would that be accurate? I don't know too much about the topic domain, so for those who do, what would be required of a purely digital currency to be a good candidate for a national currency?

digital/analog really makes no difference for fiat currencies. What matters is the way their managed and peoples belief that they will continue to hold value for the long term. I doubt any states will go digital for awhile due to purely cultural/psychological reasons.

Humans like physical objects even if they're worse, just ask any vinyl record enthusiasts to explain why they like vinyl and you'll see this dynamic.

Re: Bitcoin is not for goverment. Bitcoin is digital currency of the internet

#14

Post by leereeves » Sat, Feb 28, 2015, 11:40 PM UTC

Frondo wrote: post #12

sj4nz wrote: post #3

Earlier quoted context omitted.

This slides in the assumption that you need a national currency. No traditional nation-state will _really adopt_ a crypto-currency unless it bakes in some ability to seize or inflate it's subject's currency. If that exists in their desired crypto-currency then, of course, no one will ever use it without the threat of violence. Catch-22 for modern nation-states.

What threat of violence are you describing?

Taxes.

Re: Bitcoin is not for goverment. Bitcoin is digital currency of the internet

#15

Post by oafitupa » Sat, Feb 28, 2015, 11:49 PM UTC

thephyber wrote: post #11

BariumBlue wrote: post #2

Let's extrapolate, and say that no country should adopt a purely digital currency. Would that be accurate? I don't know too much about the topic domain, so for those who do, what would be required of a purely digital currency to be a good candidate for a national currency?

For a currency to take off, there must be a large market that requires you to use the currency (such as paying taxes to the IRS). This creates a base market which can be used as a springboard for wider adoption. BitCoin managed to take off because, IMHO, the novelty of the "cryptocurrency" and some of the problems it solved. For a fiat currency to work, there must be faith in the currency and the governing bodies tha…

You can't print gold either, but that's precisely why even central banks use it as a store of value.

Re: Bitcoin is not for goverment. Bitcoin is digital currency of the internet

#16

Post by leereeves » Sat, Feb 28, 2015, 11:51 PM UTC

s_q_b wrote: post #6

leereeves wrote: post #4

Earlier quoted context omitted.

The article is pointing out that governments like to increase the money supply every year and Bitcoin doesn't allow that. But a purely digital currency need not be a distributed cryptocurrency with a limited supply like Bitcoin. From electronic transactions with the Fed down to direct deposits and debit and credit card purchases, US currency could function without paper bills already.

> The article is pointing out that governments like to increase the money supply every year and Bitcoin doesn't allow that. But that's nonsense. If anything a sovereign digital currency would give governments even more fine-grained control over the money supply. Of course governments shouldn't use Bitcoin, but a sovereign altcoin is a very interesting idea. Sure, they couldn't use Bitcoin itself, but in a hypothetica…

Much of the appeal of Bitcoin is the limited supply. But from a Keynesian government point of view, that's a flaw.

A sovereign cryptocurrency without that limitation might be an interesting alternative to cash, but the bulk of our money couldn't be in a "hard" cryptocurrency unless we also eliminated fractional reserve banking.

(Why? In short, with fractional reserve banking, the total value of everyones checking and savings accounts is far greater than the supply of currency, whether paper or crypto.)

Re: Bitcoin is not for goverment. Bitcoin is digital currency of the internet

#17

Post by oafitupa » Sat, Feb 28, 2015, 11:51 PM UTC

kiba wrote: post #8

sj4nz wrote: post #3

Earlier quoted context omitted.

This slides in the assumption that you need a national currency. No traditional nation-state will _really adopt_ a crypto-currency unless it bakes in some ability to seize or inflate it's subject's currency. If that exists in their desired crypto-currency then, of course, no one will ever use it without the threat of violence. Catch-22 for modern nation-states.

Nothing prevent nation-states from adopting their own altcoin and altering the supply as they like.

Except they would have to also create their own mining industry to secure it, or enemy countries could easily attack it.

Re: Bitcoin is not for goverment. Bitcoin is digital currency of the internet

#18

Post by oafitupa » Sat, Feb 28, 2015, 11:55 PM UTC

anigbrowl wrote: post #5

sj4nz wrote: post #3

Earlier quoted context omitted.

This slides in the assumption that you need a national currency. No traditional nation-state will _really adopt_ a crypto-currency unless it bakes in some ability to seize or inflate it's subject's currency. If that exists in their desired crypto-currency then, of course, no one will ever use it without the threat of violence. Catch-22 for modern nation-states.

By that logic, private ownership of gold should be forbidden. That did happen once, during the Great Depression, but that policy was abandoned in the 1960s and nobody has made any attempt to reinstate it since. http://en.wikipedia.org/wiki/Gold_Reserve_Act

In many countries it's forbidden. Eg: Argentina, Venezuela, etc. The government doesn't like it when their people find ways of escaping inflation.

Re: Bitcoin is not for goverment. Bitcoin is digital currency of the internet

#19

Post by krapp » Sun, Mar 01, 2015, 12:03 AM UTC

Frondo wrote: post #12

sj4nz wrote: post #3

Earlier quoted context omitted.

This slides in the assumption that you need a national currency. No traditional nation-state will _really adopt_ a crypto-currency unless it bakes in some ability to seize or inflate it's subject's currency. If that exists in their desired crypto-currency then, of course, no one will ever use it without the threat of violence. Catch-22 for modern nation-states.

What threat of violence are you describing?

https://en.wikipedia.org/wiki/Monopoly_on_violence

Re: Bitcoin is not for goverment. Bitcoin is digital currency of the internet

#20

Post by PhasmaFelis » Sun, Mar 01, 2015, 12:03 AM UTC

Frondo wrote: post #12

sj4nz wrote: post #3

Earlier quoted context omitted.

This slides in the assumption that you need a national currency. No traditional nation-state will _really adopt_ a crypto-currency unless it bakes in some ability to seize or inflate it's subject's currency. If that exists in their desired crypto-currency then, of course, no one will ever use it without the threat of violence. Catch-22 for modern nation-states.

What threat of violence are you describing?

Some very silly people have concluded that, since ultimately no rule or law can be enforced against the unwilling without some sort of ability to exercise power over them, making a law is logically equivalent to saying that anyone who breaks it should be shot; and, therefore, people who make laws against any but the most extreme crimes are violent thugs.

And thus it naturally follows that you shouldn't have to pay taxes. Isn't that convenient?

(I think this formulation was originally conceived by anarchists, where it is at least logically consistent, but tax protestors and some libertarians have adopted and deformed it into a convenient catch-all for "anything the government does that I don't like is ZOMGviolence.")