Bitcoin Is Fundamentally Flawed • Hacker News Board

Re: Bitcoin Is Fundamentally Flawed

#181

Post by Houshalter » Tue, Apr 09, 2013, 4:41 AM UTC

base698 wrote: post #3

This is the classic argument you hear a lot, particuarly from Keynsian economists is: bitcoin is bad because it's deflationary like gold. In the past when we were using gold, like during the Civil War, we couldn't pay soldiers so we went to greenbacks (paper money like today). That allowed the soldiers to get paid so we could continue to fight the war. Gold obviously has a physical practical limit that can be traded…

Actually inflation causes the wealth divide, since the printed money goes to the top first, making them better off, then trickling to the bottom only after prices have gone up and people are poorer.

Re: Bitcoin Is Fundamentally Flawed

#182

Post by Houshalter » Tue, Apr 09, 2013, 4:46 AM UTC

bayesianhorse wrote: post #18

base698 wrote: post #3

This is the classic argument you hear a lot, particuarly from Keynsian economists is: bitcoin is bad because it's deflationary like gold. In the past when we were using gold, like during the Civil War, we couldn't pay soldiers so we went to greenbacks (paper money like today). That allowed the soldiers to get paid so we could continue to fight the war. Gold obviously has a physical practical limit that can be traded…

Actually, given the wealth divide, it's working extremely well. We sometimes underestimate the progress the world has made in the last 100 years. We tend to overlook that we live in the most peaceful times in the history of mankind, and that poverty and hunger in the world is declining steeply. We don't know what a bitcoin economy will look like. Stimulus packages over the decades have been known to work and not to w…

I think he meant that the wealth divide is worse in relative terms. Everyone is richer than a century ago, but the top x% are richer than before, than the poor are richer than before.

Re: Bitcoin Is Fundamentally Flawed

#183

Post by Houshalter » Tue, Apr 09, 2013, 4:54 AM UTC

pkulak wrote: post #49

zacharyvoase wrote: post #2

Wow. Currencies are supposed to be used as a medium of exchange where, they facilitate transactions thus the multiplier effect kicks in and increases the economies wealth. An example of this, is fiscal stimulus used by the Obama Administration with the American Recovery and Reinvestment Act of 2009[15] however, this is not happening with Bitcoin. So Bitcoin doesn't have fiscal stimuli like regular currencies, and the…

You're confusing two points just like the author. First you're saying that controlling your currency doesn't help (hurts?). Look at how many recessions the US had when it was pegged to gold vs now, then get back to me on that one. But, that doesn't really matter because Bitcoin is _not_ a national currency. It really is more like gold in that it's not really a currency in itself, but a way to store/transfer other cur…

I don't think that's true, that the economy was less stable a century ago than it is now. People used to give out 50 or even 100 year bonds, and recessions usually were not as bad and didn't last as long.

But even if I'm wrong, the currency not being based on gold is only one of a billion other things that has changed in the economy since then. It's a completely different world.

And while bitcoin is not a national currency it has the potential to become a universal currency online. People could work for bitcoins and use them to buy what they need online from other people that accept bitcoins. The currency could circulate through many hands without ever once being converted to another currency.

And since it's online any conversion could be done quickly and automatically so the effective difference between holding two different currencies wouldn't really matter. The only thing you would have to take into account is how likely they were to increase or decrease in value in the time that you aren't spending them, and bitcoin has a clear advantage in that regard.

Re: Bitcoin Is Fundamentally Flawed

#184

Post by stevenrace » Tue, Apr 09, 2013, 5:50 AM UTC

GhotiFish wrote: post #93

Has anyone worked out the math on the divisibility of bitcoin? Here are some questions: Bitcoin gets world wide adoption. It's used in transactions by ~3 billion people (right now). * What's the expected value of a bitcoin? (how much BTC for a stick of gum?) * What is the average permanent loss rate of bitcoins now? (when a bitcoin wallet is accidentally deleted, the coins are lost forever) What about in the future?…

  * How long can bitcoin last until it the satoshi 
    (the minimum divisible unit of currency) 
    is greater than a stick of gum?

Let's use a hypothetical 'nfc->btc' enabled gumball dispenser. And keep with $0.25 market rate.

A 'satoshi' is .00000001 btc. You'd need btc to equal $25,000,000 - or 250,000 trillions of dollar in market cap (assuming 100 million current coins) for a gumball to be priced at 1 satoshi.

Even being able to 'move the zero' in code later, we'll be fine for sometime...

Re: Bitcoin Is Fundamentally Flawed

#185

Post by stevenrace » Tue, Apr 09, 2013, 6:03 AM UTC

SODaniel wrote: post #68

mtgx wrote: post #35

Earlier quoted context omitted.

Then Bitcoin increases in value, and you keep dividing a Bitcoin more. Nothing really changes. Does it really matter if you have 20 million Bitcoins that are worth $1 trillion or if you have 10 million Bitcoins that are worth as much? No, it doesn't. The 21 million number was pretty arbitrarily chosen to begin with. This would be a problem if say half of available Bitcoins would be wiped out overnight - somehow. But…

I agree that it's not a 'currency killer' in the short run BUT if we speculate that BTC reaches mainstream popularity and a total market value in the 100-1000s of BILLION USD the fact that an 'unknown' amount is in circulation makes for a very strange variable. All of a sudden my old 1BTC wallet on my crashed laptop hard drive may be worth 100s of days of mining network wide, and even the speculation that a 'previous…

But isn't even knowing some constraints about the money supply better than not knowing anything at all?

For instance, the M3 supply of USD isn't even tracked by central banks (not since 2006).

Re: Bitcoin Is Fundamentally Flawed

#186

Post by richardw » Tue, Apr 09, 2013, 6:17 AM UTC

dragonwriter wrote: post #162

richardw wrote: post #140

Earlier quoted context omitted.

Third use - transfer money easily across borders, for example a migrant worker sending money to family. No red tape, no forex hassles, no worry about future value (unless the value tanks while you're transferring, of course.)

> Third use - transfer money easily across borders, for example a migrant worker sending money to family. No red tape, no forex hassles, no worry about future value (unless the value tanks while you're transferring, of course.) The "no red tape, no forex hassles" are largely because of immaturity in the regulation of "virtual currencies" that exist largely because most states haven't gotten around to addressing them…

The regulations will surely come. However, the ability to hold a private wallet outside of a bank and transfer money to a point anywhere in the world, makes regulations harder to police. Some wallets might be declared and known, others might exist anywhere in the world and be held by anybody. For a law-abiding citizen who trusts their government (the people you don't need to police), all will be (probably) declared. I expect different behaviour from a Russian holding money in a Cypriot bank or someone who pays taxes to a corrupt regime.

Still, if someone is looking to preserve wealth, it would seem smarter to wait and see if and where the price stabilises. Or if governments slam the door shut on the currency.

Re: Bitcoin Is Fundamentally Flawed

#187

Post by L0j1k » Tue, Apr 09, 2013, 6:22 AM UTC

bayesianhorse wrote: post #18

base698 wrote: post #3

This is the classic argument you hear a lot, particuarly from Keynsian economists is: bitcoin is bad because it's deflationary like gold. In the past when we were using gold, like during the Civil War, we couldn't pay soldiers so we went to greenbacks (paper money like today). That allowed the soldiers to get paid so we could continue to fight the war. Gold obviously has a physical practical limit that can be traded…

Actually, given the wealth divide, it's working extremely well. We sometimes underestimate the progress the world has made in the last 100 years. We tend to overlook that we live in the most peaceful times in the history of mankind, and that poverty and hunger in the world is declining steeply. We don't know what a bitcoin economy will look like. Stimulus packages over the decades have been known to work and not to w…

Troll Level: Expert.

Re: Bitcoin Is Fundamentally Flawed

#188

Post by oscilloscope » Tue, Apr 09, 2013, 6:39 AM UTC

pbreit wrote: post #134

oscilloscope wrote: post #116

Earlier quoted context omitted.

Just yesterday I would have rather used Bitcoin instead of a credit card to buy a game on my nephew's PS3 over the Playstation Network. The process of entering my contact details took several minutes. Afterwards, we had no idea how to remove my credit card from the system. Simply checking out with a QR code and sending the Bitcoin from my phone would have been easier and not required any of my personal information. I…

I can enter my credit card details in about 15 seconds (30 on mobile). "Qr code" and "simply" do not belong in the same sentence.

Bitcoin Wallet on Android makes it pretty simple, at least for me.

15 seconds? Including your address and phone number? With a PS3 controller?

Re: Bitcoin Is Fundamentally Flawed

#189

Post by L0j1k » Tue, Apr 09, 2013, 6:58 AM UTC

jerf wrote: post #137

Aloisius wrote: post #83

Earlier quoted context omitted.

Also, not all of us consider Keynesian stimulus to be some wildly successful proved theory; I for one think you merely need to look out the window to see the failures of the theory to match reality. But fortunately, Keynesian is immune to criticism, because no matter how bad things get, Keynesian saved us from it being even worse, thus, no amount of failure can ever disprove the system. Phew! That said, BitCoin isn't…

For better or worse, I treat economics as a science, and judge an economic theory on its ability to make accurate predictions , not retrodictions. My point about "looking out the window" is that while we've been operating on a supposedly Keynesian theory in trying to repair our economy these past six years, it has consipicuously, repeatedly, and grossly failed to correctly predict the results of its own massive inter…

Very well said.

Re: Bitcoin Is Fundamentally Flawed

#190

Post by return0 » Tue, Apr 09, 2013, 7:03 AM UTC

chm wrote: post #85

All I can say is that I've made 6$ on a 50$ investment in two days. That's more than a 10% increase in two days. Problem is, when do I withdraw? This is just a (zero-sum) game, stop taking it so seriously.

Wealth in general is a zero sum game too (a little is being created, but mostly it just changes hands). I would instead say, stop taking all money seriously.