Online Cash Bitcoin could Challenge Governments, Banks • Hacker News Board

Re: Online Cash Bitcoin could Challenge Governments, Banks

#191

Post by narcissus » Sun, Apr 17, 2011, 11:00 AM UTC

joe_the_user wrote: post #173

indrax wrote: post #167

Earlier quoted context omitted.

With a Truecrypt partition you could show them your insignificant bitcoin wallet, and only go back to your regular bitcoin wallet after they leave. True this would currently require a lot more security consciousness than most people have, but conceivably all the necessary features could be built into a bitcoin client.

Actually, Bitcoin transactions are public - it's inherent in the scheme that verifies the transactions. Thus determining a person's net worth should be extremely easy. This fact might make bit coin less appealing than cash for many things where anonymity is important. (Also, Whether having public transactions would be enough to make the transaction "work" would be a different question - what happens when you don't de…

I think a lot of that problem disappears when you start using separate receive addresses with each transaction. Yes, that can become a bit of a pain, but it's more than doable.

From what I remember, the default of the GUI, at least, is to generate you a new receive address as soon as you receive something on your current address. That should remove a lot of the problems of tracking net worth.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#192

Post by cabalamat » Sun, Apr 17, 2011, 11:03 AM UTC

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…

> Inflation punishes the lower classes disproportionately for the same reasons. It is the primary driver of income inequality in the world.

If that was true, then economies that use gold and silver as currency, and where there isn't a large supply of new money, there wouldn't be much income inequality. But there was plenty of income inequality in ancient Rome, and in most ancient despotisms. So I suspect your hypothesis is wrong.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#193

Post by euccastro » Sun, Apr 17, 2011, 12:55 PM UTC

Groxx wrote: post #145

ZitchDog wrote: post #122

Earlier quoted context omitted.

It will still be bad for the adoption of Bitcoin as a trading currency. If I have a Bitcoin that is worth $1 today but will almost certainly be worth more than that in a month, what is my incentive to give you the Bitcoin? Wouldn't it be smarter for me to just give you $1 directly via PayPal? As it stands the only reason to use Bitcoin currently is for shady deals, novelty, and speculation. I find it laughable that B…

> Wouldn't it be smarter for me to just give you $1 directly via PayPal? Which you would get by... selling some amount of bitcoins to an exchanger. And the person you give $1 to would turn around and buy the same amount from another exchanger, less overall fees both ways. It amounts to the same thing, unless you view bitcoins as a dead-end worthless location to put money in, because you never use them. Which is irrat…

No, I would get USD/EUR by the same means I was getting them before Bitcoin existed.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#194

Post by gaius » Sun, Apr 17, 2011, 12:59 PM UTC

burgerbrain wrote: post #158

gaius wrote: post #140

Earlier quoted context omitted.

I can already do free transfers to anyone's bank account: it's called BACS, every UK bank account supports sending and receiving BACS transfers, the vast majority through a web interface. Takes 3 days, but who cares?

"Takes 3 days, but who cares?" Who wouldn't care? At 3 days, you might as well just mail around cash.

You can do it faster if you're willing to pay a fee, whether that's to Paypal, or to do a CHAPS transfer. If the point is avoiding paying to move cash around, it's already perfectly do-able.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#195

Post by rmc » Sun, Apr 17, 2011, 1:57 PM UTC

joelthelion wrote: post #102

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…

Confidence comes gradually. When bitcoins started, confidence was extremely low. Thus the whole bitcoin economy was worth maybe $1000. Now confidence has grown significantly, and the whole bitcoin economy is worth approximately 5 million dollars. I wouldn't bet my life savings on it yet, but I find that already pretty good for something that has less than five years, and isn't backed by anything.

Or its just a bubble

Re: Online Cash Bitcoin could Challenge Governments, Banks

#196

Post by ZitchDog » Sun, Apr 17, 2011, 3:00 PM UTC

danenania wrote: post #156

ZitchDog wrote: post #97

Earlier quoted context omitted.

I fundamentally disagree. The purpose of currency is to facilitate efficient trade. It is dangerous when currency is seen as an appreciating asset (deflation) as this will encourage hoarding (speculation) and discourage spending and investing.

These are well-worn fallacies. First, falling prices do not cause hoarding--demand for goods will increase if anything. Mild deflation is actually the sign of a healthy economy, competition, and technological innovation. Just look at the consumer electronics industry. Why do people buy iPads when they know a cheaper and better one will come along in the next couple years? According to your theory, wouldn't they just…

> According to your theory, wouldn't they just sit on their money?

No, because they gain utility from the use of their iPad for the next couple years which they deem to be greater than the dollar value the iPad has lost due to depreciation. Furthermore, if their cash was earning interest they would have less incentive to buy iPads because the utility of 2 years' iPad use would have to outweigh both the depreciated value of the iPad as well as the appreciated value of their currency, which would lead to fewer iPads sold.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#197

Post by rick888 » Sun, Apr 17, 2011, 3:11 PM UTC

prodigal_erik wrote: post #181

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 atta…

I'm still not convinced. Currency has gone through many corrections because of counterfeiting and I feel pretty confident that most people won't be able to counterfeit money (especially with the new designs). Bitcoins also do not have the backing of the government (and it never will, unless the government is issuing them, which would defeat the purpose). A security flaw in any of the peers could potentially mean lots of stolen money/devaluing.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#198

Post by nerfhammer » Sun, Apr 17, 2011, 3:40 PM UTC

vrotaru wrote: post #188

nerfhammer wrote: post #183

Earlier quoted context omitted.

1929-1933 was the steepest deflation in US history.

No, the 1920-21 was.

If you're counting peak annual rate rather than total deflation then part of 1920-1921 was worse than 1929-1933, but if we're talking about momentary deflation then neither was the worst deflation in US history.

see http://en.wikipedia.org/wiki/File:US_Historical_Inflation_An...

Re: Online Cash Bitcoin could Challenge Governments, Banks

#199

Post by nerfhammer » Sun, Apr 17, 2011, 5:17 PM UTC

danenania wrote: post #184

nerfhammer wrote: post #182

Earlier quoted context omitted.

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 r…

Your contention is that "one of the few" refutes "almost invariably" but is compatible with "not that rare"

Re: Online Cash Bitcoin could Challenge Governments, Banks

#200

Post by nradov » Sun, Apr 17, 2011, 6:03 PM UTC

phillmv wrote: post #85

StavrosK wrote: post #56

Earlier quoted context omitted.

That's not inflation, though, that's just a price change...

Yesterday, I could get 1kg of sugar for $1. Today, I can only get 0.75kg of sugar for $1. My dollar is worth less (can be exchanged for less goods) than it was before - I'm pretty sure that's inflation.

The word "inflation" has several different meanings. You're talking about consumer price inflation. There is also monetary inflation, which is the supply of money plus debt (marked to market). Those are really completely different things with only a very loose relationship.