What Is Cryptocurrency: Everything You Need to Know

>"given the rarity of bitcoin, why wouldn't people value it?" Because rarity in and of itself doesn't confer value. Or every altcoin would be valuable.

>Our economy is built on confidence. Yes, but not only that. Use of fiat currency is made legally compulsory.

Maybe Bitcoin-demanding ransomware plays a useful role in the BTC economy, as it gives people a negative/fear-based reason to obtain BTC.

There are basically disadvantages. "Goldbugs" sprung up after governments realised that prosperous first-world economies need monetary management if they're to stay prosperous.

Recovery from the Great Depression correlates closely to how quickly a country left the gold standard.

It's a standard mode of pseudoscience to vociferously advocate a discarded idea. This applies to economics as much as science.

In the Bitcoin 0.1 release notes, Satoshi Nakamoto said:

> The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.

Bitcoin failed at every one of Nakamoto’s aspirations here. The price is ridiculously volatile and has had multiple bubbles; the unregulated exchanges, with no central bank backing, front-run their customers, paint the tape to manipulate the price, and are hacked or just steal their users’ funds; and transaction fees and the unreliability of transactions make micropayments completely unfeasible. Because all of this is based in crank ideas that don’t work in practice.

> 3. Is having an upper bound on Bitcoin, to be reached sometime in the next 25 years, a "good idea"? Will this be 2040's equivalent of "640KB should be enough for anyone"?

In my understanding this is a major design flaw which might break the currency in the future. (Please correct me if I'm wrong.)

Having a limited amount of currency improved early adoption akin to a gold rush because you could obtain a large amount of currency (relatively speaking) for a comparatively low amount of work. This worked very well in my opinion.

To my understanding you need active miners to keep the currency alive. (Is this really true?) But the returns for those miners vanish with time. This makes the monetary investment in the miners go down and a single group could take over and manipulate the whole system by majority vote. (Is this also true?)

In my opinion a currencies value should vanish with time because currency is not something that really holds value as physical investments do. Fiat currency as we now have in the "real world" now reflects the monetized value of contracts expressed in that currency. A currency like bitcoin should be used mostly to settle transactions and not to store vast amounts of wealth. Therefore a steady inflation with a rate like e.g. 10% p.a. would be good to thwart money hoarding and ensure a steady supply of new currency.

With an inflation of 10%, each year 10% of the stored value gets taken away and redistributed to the miners. This means that it's wise to not store too much value in that currency but to quickly and efficiently use it for transactions such that the total sum of transactions us much much higher than the stored value.

The current implementation of bitcoin does not reflect this idea at all and I'm very convinced that it cannot play a huge economical role due to its design. In its niche, however, it currently works very well. I see it as a good design study for future cryptocurrencies which can be adopted at a larger scale.

Well, it's anonymous enough after mixing 2-3 times through Tor, using different mixing services, in small amounts, among Electrum wallets, each in its own Whonix instance. And I can anonymously lease servers, VPS and VPNs. So yes, it works just fine :)