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

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

#21

Post by cromwellian »

Another reason deflationary currency is perceived as bad is not just because it makes life harder for debt owners, but because it can lead to its own form of boom-and-bust cycles by reducing economic activity.

If you know, for example, that your cash holdings were going to grow at 10% per year, then you'd be far less willing to spend any or invest in other assets, as merely putting bitcoin under a mattress increases value. This will reduce consumption and investment in the larger economy, inducing a recession or depression until overall demand for currency fell, pushing those who hold it to spend or invest to avoid losses. Of course, that equilibrium won't be permanent, and the cycle would begin a new, but with the major disadvantage that central banks nor government monetary policy can reduce the severity of the swings. (Although it's a matter of faith among Austrians that somehow there would either not be any more business cycles, or somehow the boom/bust wouldn't be "as bad")

Bitcoin to me looks like a good way to have a distributed settlement/clearing house system for transactions. But as a replacement for fiat currency, nope.

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

#22

Post by themartorana »

leereeves wrote: post #16
s_q_b wrote: post #6

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 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…

Do you need fractional reserve banking with cryptocurrency? The physical object limitation of hard currency simply doesn't exist.

But the real hallmark of FRB is that banks only need hold in reserve a fraction of their depositors' account balances. I don't see how CC would change that requirement. As scary as FRB is, without it lending would be a much, much more limited activity.

Money is funny - it's just an IOU. An IOU blown up to massive scale, obviously, but since a business sets the price of something and the market determines if it fits well in to a tradable value comparison, then I don't see how a digital IOU is any worse than a paper one, considering how little that paper is worth when everyone decides it has no value.

And let's be honest. If the value of paper can crash when people agree it has no value, it's just as easy for everyone to agree gold isn't worth a lick either. So in the end, we're just choosing a representation of an IOU we all agree upon, and if that's paper, rock, or digital (or 4 ton coins [0]) what does it matter, in the end?

(This all presumes some degree of safety in CC - with the recent value of Bitcoin thefts, people would ditch it really quickly on a national scale.)

/rambling

[0] http://en.m.wikipedia.org/wiki/Rai_stones

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

#23

Post by sliverstorm »

oafitupa wrote: post #17
kiba wrote: post #8

Earlier quoted context omitted.

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.

Why would they allow other actors to be part of their mining?

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

#24

Post by leereeves »

themartorana wrote: post #22
leereeves wrote: post #16

Earlier quoted context omitted.

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…

Do you need fractional reserve banking with cryptocurrency? The physical object limitation of hard currency simply doesn't exist. But the real hallmark of FRB is that banks only need hold in reserve a fraction of their depositors' account balances. I don't see how CC would change that requirement. As scary as FRB is, without it lending would be a much, much more limited activity. Money is funny - it's just an IOU. An…

I didn't mean to start a discussion of FRB, simply consider that it's what we have, and abandoning it is an even more radical step than replacing cash with a cryptocurrency.

> But the real hallmark of FRB is that banks only need hold in reserve a fraction of their depositors' account balances. I don't see how CC would change that requirement.

My question is, what will a CC replace? If the answer is all cash and electronic transactions, will there be enough CC, with FRB? If the answer is simply cash transactions (already limited), what's the point?

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

#25

Post by s_q_b »

leereeves wrote: post #16
s_q_b wrote: post #6

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 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…

I understand the money supply and the multiplier effect of fractional reserve banking, but with an appropriately designed cryptocurrency you don't need it. You can literally just create more currency out of thin air and pump it into the economy like an instant perfectly efficient printing press.

In fact, you could probably utilize the increase in the money supply in much more productive ways than the current system, which primarily benefits banking institutions.

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

#26

Post by deweller »

cromwellian wrote: post #21

Another reason deflationary currency is perceived as bad is not just because it makes life harder for debt owners, but because it can lead to its own form of boom-and-bust cycles by reducing economic activity. If you know, for example, that your cash holdings were going to grow at 10% per year, then you'd be far less willing to spend any or invest in other assets, as merely putting bitcoin under a mattress increases…

> you'd be far less willing to spend any or invest ... This will reduce consumption and investment in the larger economy

Or maybe consumers will stop buying the latest and greatest just because advertisers convinced them it will make them happy. Instead, consumers will demand higher quality products, which increases overall spending on R&D instead and decreases spending on marketing. Then we will all have better products and be more productive.

I can at least dream, can't I?

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

#27

Post by xacaxulu »

Bloated governments are grasping at straws. Look at the US with FATCA, taxing it's citizens wherever they are. I prefer to keep socking away savings in my offline bitcoin account and then exchanging it for Euros when I'm back home. Just look at all the people who had 'safe' accounts in Cyprus, or in the US underwritten by FannieMae. Bitcoin is the Libertarian's / Anarcho-Capitalist's dream; true freedom from the whims of greedy governments.

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

#28

Post by darkFunction »

deweller wrote: post #26
cromwellian wrote: post #21

Another reason deflationary currency is perceived as bad is not just because it makes life harder for debt owners, but because it can lead to its own form of boom-and-bust cycles by reducing economic activity. If you know, for example, that your cash holdings were going to grow at 10% per year, then you'd be far less willing to spend any or invest in other assets, as merely putting bitcoin under a mattress increases…

> you'd be far less willing to spend any or invest ... This will reduce consumption and investment in the larger economy Or maybe consumers will stop buying the latest and greatest just because advertisers convinced them it will make them happy. Instead, consumers will demand higher quality products, which increases overall spending on R&D instead and decreases spending on marketing. Then we will all have better prod…

Agree completely. The argument that mindless consumption is a good thing just because it drives the economy is short-sighted and ridiculous. If money itself is wealth-generating then people are going to be much more mindful about their spending on worthless shit that serves no purpose other than to stall the degradation of their wealth and entertain then temporarily at the cost of our environment.

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

#29

Post by Retra »

deweller wrote: post #26
cromwellian wrote: post #21

Another reason deflationary currency is perceived as bad is not just because it makes life harder for debt owners, but because it can lead to its own form of boom-and-bust cycles by reducing economic activity. If you know, for example, that your cash holdings were going to grow at 10% per year, then you'd be far less willing to spend any or invest in other assets, as merely putting bitcoin under a mattress increases…

> you'd be far less willing to spend any or invest ... This will reduce consumption and investment in the larger economy Or maybe consumers will stop buying the latest and greatest just because advertisers convinced them it will make them happy. Instead, consumers will demand higher quality products, which increases overall spending on R&D instead and decreases spending on marketing. Then we will all have better prod…

I see a lot of non-sequiturs in your reasoning here.

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

#30

Post by TeMPOraL »

PhasmaFelis wrote: post #20
Frondo wrote: post #12

Earlier quoted context omitted.

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 ta…

AFAIK libertarians have this "principle of non-aggression" which basically defines "anything I don't like" as an attack, and thus pretty much anything that government does becomes violence.

But in general, "monopoly on violence" is a legitimate concept and I think it's a requirement for a state-sized group of people to live in (a relative) harmony. You need to have some means to enforce coordination or else people get trapped in various destructive behaviours.

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