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Online Cash Bitcoin could Challenge Governments, Banks

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Re: Online Cash Bitcoin could Challenge Governments, Banks

#181

Post by prodigal_erik »

rick888 wrote: post #180

What's to stop someone from taking apart the software/building rogue software and generating their own bitcoins without going through any of the complicated math calculations? If they can't, then there must be some central authority preventing this..which means it's no different than the government It also doesn't really help with privacy. In fact, it does the exact opposite: Taken from: http://www.bitcoin.org/smf/in…

Forging a solved bitcoin block is like making counterfeit currency in crayon. No central authority is needed because every peer running correct tools will reject blatantly invalid blocks.

The history of each bitcoin is public, but the ownership of the sending and receiving addresses is not, and generating fresh anonymous addresses (keypairs) is nearly free. I don't know how resistant they are to traffic analysis attacks, though.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#182

Post by nerfhammer »

danenania wrote: post #176
nerfhammer wrote: post #163

Earlier quoted context omitted.

Deflation is almost invariably a sign of economic distress. This can easily be observed historically. By the way the term I think you mean is "quantity demanded" with respect to price, "demand" is invariant to price. Under deflation average income decreases. It's not like everyone is suddenly richer. Your employer gets less money, and so has to pay you less, or lay off a portion of their workforce. The price of labor…

America had steady deflation during a period of massive economic expansion in the late 1800s. Deflation is only a sign of distress historically when preceded by government-induced monetary expansion. A boom causes a bust. Wages are sticky so moderate deflation strongly benefits workers. Both wages and savings will gradually increase in purchasing power. Inflation punishes the lower classes disproportionately for the…

The deflationary periods in the 1800s correlate exactly with economic shocks during that time, especially the panic of 1837 and the Long Depression. If you think deflation is associated with growth you are simply wrong.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#183

Post by nerfhammer »

vrotaru wrote: post #177
nerfhammer wrote: post #171

Earlier quoted context omitted.

.... you think there was inflation between 1929 and 1933?

I think there was no deflationary spiral between the dates you mentioned. And... since GD lasted a lot longer than that how is that relevant?

1929-1933 was the steepest deflation in US history.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#184

Post by danenania »

nerfhammer wrote: post #182
danenania wrote: post #176

Earlier quoted context omitted.

America had steady deflation during a period of massive economic expansion in the late 1800s. Deflation is only a sign of distress historically when preceded by government-induced monetary expansion. A boom causes a bust. Wages are sticky so moderate deflation strongly benefits workers. Both wages and savings will gradually increase in purchasing power. Inflation punishes the lower classes disproportionately for the…

The deflationary periods in the 1800s correlate exactly with economic shocks during that time, especially the panic of 1837 and the Long Depression. If you think deflation is associated with growth you are simply wrong.

Wikipedia (emphasis mine):

"The Great Deflation or the Great Sag refers to the period from 1870 until 1890 in which world prices of goods, materials and labor decreased.This had a negative effect on established industrial economies such as Great Britain while simultaneously allowing incredible growth in the United States which was just beginning to industrialize. Deflation has historically been more associated with recession, than growth, but this is one of the few sustained periods of deflationary growth in the history of the United States."

http://en.wikipedia.org/wiki/The_Great_Deflation

This clearly refutes your statement:

"Deflation is almost invariably a sign of economic distress."

Perhaps deflation isn't traditionally associated with growth, but it clearly can be and has been in history. Note 'one of the few'. Deflationary growth isn't that rare of a phenomenon in history, though its rarity will be inversely proportional to the prevalence of central banking, monetary expansion, and economic authoritarianism. The market's had an uphill battle.

In general, deflations associated with recessions will also be associated with reckless monetary expansion. Including this form of deflation in statistics can be misleading. Its cause is entirely different from the cause of gradual, moderate deflation as the natural result of an expanding economy with limited currency.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#185

Post by Natsu »

lambda wrote: post #68
ataggart wrote: post #63

Earlier quoted context omitted.

>Why is Bitcoin a good currency again? It isn't, but almost anything can work if the community of users is small enough. As for why it isn't, we need to step back a bit. In a barter economy an exchange occurs when two individuals each produce something which takes time/labor/capital and which the other person values more than what they're giving up. For example, if I grow an apple, and you grow an orange, and we trad…

Is a $20 bill something of value? No, it's merely somewhat hard to forge, and accepted as currency by lots of people. Or how about an entry in a ledger on some bank's computer? The only reasons the $20 bill or the entry in the computer retain value are because there's a central entity that limits the creation of too many of them, and people accept it as currency in exchange for good, because they expect that other pe…

> Is a $20 bill something of value? No, it's merely somewhat hard to forge, and accepted as currency by lots of people.

It can be used to pay taxes levied by a government that will employ force if I refuse to pay them. How do I do that with bitcoins?

Re: Online Cash Bitcoin could Challenge Governments, Banks

#186

Post by danenania »

kronusaturn wrote: post #159
OstiaAntica wrote: post #142

Earlier quoted context omitted.

No one squirrels away money-- savings in a bank is still reinvested into the economy, by the bank through lending. Unless you are literally sticking money under a mattress, it gets circulated.

But we're talking about bitcoins, which are extremely easy to just leave sitting on your hard drive rather than invest.

Sounds like a market opportunity for making them easier to invest.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#187

Post by dublinclontarf »

tnt128 wrote: post #93
pyre wrote: post #76

Earlier quoted context omitted.

And that worked so well for copyright piracy! I'm glad we live in a world without pirated music and movies!

If the government can confiscate gold, what would prevent them from passing the law saying bitcoin ownership is illegal?

Yeah goodluck with that, proving someone has a particular private key. Of course this is all possible but would require the banning of cryptography, and that would take a disciplined dictatorship to pull that off.

The cryptography cat is out of the bag, you can't just ban it(sure you can try, but like I said, good luck enforcing it).

Re: Online Cash Bitcoin could Challenge Governments, Banks

#188

Post by vrotaru »

nerfhammer wrote: post #183
vrotaru wrote: post #177

Earlier quoted context omitted.

I think there was no deflationary spiral between the dates you mentioned. And... since GD lasted a lot longer than that how is that relevant?

1929-1933 was the steepest deflation in US history.

No, the 1920-21 was.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#189

Post by CJefferson »

tcoppi wrote: post #87
ZitchDog wrote: post #78

Bitcoin is a fantastic idea, with one crucial mistake: the finite nature of bitcoins. The fact that coins will one day "run out" will almost certainly lead to increased speculation, which will in turn lead to a deflationary spiral, followed by a "bubble burst" when speculators sell all their bitcoins and average coin holders are left holding the bag. Infinite coins would tie the value to the opportunity cost of compu…

There is a finite amount of bitcoins because it is designed to mimic a natural resource - easy to "mine" at first, much more difficult to mine as time goes on, and eventually there are none left. If there were an infinite amount of bitcoins that could be generated, there would always be inflation in place roughly proportional to the amount of computational power being used to mine, and soon your bitcoins would be wor…

That also sounds suspiciously like the description of a Ponzi scheme, where the first people in make all the profit, and the people at the end get shafted.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#190

Post by cabalamat »

tarkin2 wrote: post #80

I don't think Bitcoin solves the main problem of new currencies: confidence of their acceptance. John Law introduced paper money into France by getting the government to accept it for paying taxes. Every Frenchman and woman was confident the state, no matter who took over, would still collect taxes. And the state, knowing the currency was valuable to everyone--even foreigners, could also use it. Where's my confidence…

> Where's my confidence that people will desire a bitcoin in future?

This is important if you want to hold lots of Bitcoins. if you just want to use them as a medium of exchange, without holding large amounts, it's less important.

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