The Quora post that killed Bitcoins. Please discuss if his arguments are valid. • Hacker News Board

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#301

Post by anonymoushn » Fri, Jun 03, 2011, 6:31 AM UTC

antiscam wrote: post #300

Vivtek wrote: post #75

It's a pyramid scheme, just dressed up in high-tech, vaguely libertarian clothing. That's why sensible governments (not the "bank lobby") are starting to ban it - it's inherently a bad idea (unless you're an early adopter - just like any pyramid scheme). Bitcoins are no different from tulip bulbs.

Yes, exactly. The Bitcoin marketers do something that's increasingly transparent: they (intentionally?) confuse the hypothetical with the real. A system based on the Bitcoin technology could theoretically be something more than a scam. But the right response to that is "so what?" because in practice, the present system is exactly a scam. It's exactly, as you say, the same as tulip bulbs. There's a simple reason for t…

(it recently cost me $3 to transfer $1000 internal to the Bitcoin system as an experiment)

If you were to instead use a credit card or a wire transfer, someone (not necessarily you) would almost certainly be charged between 5 and 15 times as much for the transaction.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#302

Post by rprasad » Fri, Jun 03, 2011, 6:39 AM UTC

mcantelon wrote: post #136

achompas wrote: post #129

Earlier quoted context omitted.

Looked at in another way, think of Bitcoin as something more like MMORPG loot. If people are willing to spend vast amounts of "real money" on items for their WoW character, spending that money on Bitcoins instead makes it seem like a sane investment rather than just flushing it away. What is the intrinsic value of Bitcoins, then? That people are willing to spend money on Bitcoins? As an investment vehicle these are t…

>Bitcoins have no intrinsic value. Part of the value is in their utility as an anonymous currency: try taxing the guy that's paid in Bitcoins. Another part is the integrity of the currency: the currency is backed by math, rather than men, and not subject to hyperinflation resulting from corruption (i.e. the US Fed can create money out of thin air, but there is no authority that can create Bitcoins out of thin air: th…

The taxation of non-cash income has been a settled issue for decades (in the US).

They would tax Bitcoin receipts the same way they tax service-for-service or service-for-property exchanges. The government will calculate the fair market value of the services/property received at $X dollars (based on facts and circumstances such as the amount exchanged in similar cash-based transactions), deem the taxpayer to have received $X in income, and impose a tax of $Y on that deemed income.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#303

Post by antiscam » Fri, Jun 03, 2011, 6:39 AM UTC

anonymoushn wrote: post #301

antiscam wrote: post #300

Earlier quoted context omitted.

Yes, exactly. The Bitcoin marketers do something that's increasingly transparent: they (intentionally?) confuse the hypothetical with the real. A system based on the Bitcoin technology could theoretically be something more than a scam. But the right response to that is "so what?" because in practice, the present system is exactly a scam. It's exactly, as you say, the same as tulip bulbs. There's a simple reason for t…

(it recently cost me $3 to transfer $1000 internal to the Bitcoin system as an experiment) If you were to instead use a credit card or a wire transfer, someone (not necessarily you) would almost certainly be charged between 5 and 15 times as much for the transaction.

And with a check or an American-style ACH payment (or British-style BACS payment), nothing at all. And both ACH and BACS provide many more services and essentially no practical downsides compared to Bitcoin. (Most people go through life never needing to make a payment anonymously.)

The thing is, people on the Bitcoin forums talk as if they have no idea how to set up a decent bank account. It's not hard. I do a substantial amount of banking and can't remember the last time I paid a bank fee. (Obviously you're correct that merchants do pay credit-card fees and thus that some of the prices I pay are affected by merchant fees, but I get services for that too.)

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#304

Post by cturner » Fri, Jun 03, 2011, 6:44 AM UTC

dclowd9901 wrote: post #210

cturner wrote: post #49

Trollish headline. One fair non-structural criticism, a weak, temporary criticism and two things billed as criticisms that aren't. 1) Early adopters. I couldn't find a point here. I think he's saying that it's unfair that some people get in early. But in the current system, it's unfair that government (through tax law and control of force) mandates that you use a form of money that doesn't function well as a store of…

Your other points I can't comment on, but the deflation argument is absolute bunk in terms of small, non-durable goods (groceries, electronics, etc), but when it comes to houses and other big purchases (cars, etc.), it absolutely will affect purchasing. You can already see evidence of this now. Houses are at the lowest point in prices that they have been in decades, but people still aren't buying, and they won't unti…

There's lots of factors why people might not be buying houses that have nothing to do with inflation: (1) it's not rational to buy a house when your abillity to meet payments looks undercertain; (2) it's harder to get loans; (3) there's been lots of media about people getting burnt; (4) we've exited the house-buying-mania bubble; (5) related t ofirst point butdifferent, you have much better labour flexibility by renting which is important in hard times.

    You can already see evidence of this now. Houses are at
    the lowest point in prices that they have been in
    decades, but people still aren't buying, and they won't
    until there's some indication that they won't ever be
    this cheap.

"been in decades" - this would be true of Buffalo and Detroit, but certainly not of San francisco, New York, London, Perth, Sydney, Toronto, Calgary or other places I have an idea about.

I think first world property prices are still ridiculous.

It's madness to push people to leverage up in order to get into property just so they can store value. I'm not a hedge fund. I don't want to be compelled to behave like one to look after my savings. Now that the music has stopped, people are wising up that housing is not even reliable as a store of value irrespective of their sacrifices.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#305

Post by TerraHertz » Fri, Jun 03, 2011, 7:10 AM UTC

johnny22 wrote: post #261

TerraHertz wrote: post #171

I've only recently begun paying attention to Bitcoin, and am still evaluating. Have yet to read the technical details, for instance. So I have nothing to say on the validity of the technology. However I can offer some comments from a political perspective. I find the timing of Bitcoin's appearance rather interesting. Here we are, entering into a whole mess of interconnected monetary crises - * Crisis of confidence in…

you ruined your whole argument with this "* Crisis of legitimacy of the US Federal Reserve Bank. Which is neither federal, or a reserve, or really even a bank. It's actually a cartel of private bankers; many would say a criminal cartel. *" This ruins everything else you said. You're not telling us anything new, or necessarily true (depending on how you twist the definition of cartel)

Only ruins it for you. And only because you apparently don't know much about the FED. Here's some reading material.

http://everist.org/archives/links/!_FED_US_Federal_Reserve_l...

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#306

Post by _arturh » Fri, Jun 03, 2011, 7:10 AM UTC

rprasad wrote: post #302

mcantelon wrote: post #136

Earlier quoted context omitted.

>Bitcoins have no intrinsic value. Part of the value is in their utility as an anonymous currency: try taxing the guy that's paid in Bitcoins. Another part is the integrity of the currency: the currency is backed by math, rather than men, and not subject to hyperinflation resulting from corruption (i.e. the US Fed can create money out of thin air, but there is no authority that can create Bitcoins out of thin air: th…

The taxation of non-cash income has been a settled issue for decades (in the US). They would tax Bitcoin receipts the same way they tax service-for-service or service-for-property exchanges. The government will calculate the fair market value of the services/property received at $X dollars (based on facts and circumstances such as the amount exchanged in similar cash-based transactions), deem the taxpayer to have rec…

You forgot the part where the gov doesn't know how much Bitcoin you received.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#307

Post by TerraHertz » Fri, Jun 03, 2011, 7:26 AM UTC

glenra wrote: post #244

TerraHertz wrote: post #171

I've only recently begun paying attention to Bitcoin, and am still evaluating. Have yet to read the technical details, for instance. So I have nothing to say on the validity of the technology. However I can offer some comments from a political perspective. I find the timing of Bitcoin's appearance rather interesting. Here we are, entering into a whole mess of interconnected monetary crises - * Crisis of confidence in…

> Less than one Bitcoin per person? There is no necessary relationship between the number of people using the currency and the number of units available, given that units are divisible. But if it makes you happy, define one "New Bitcoin" as 1/1000th of an original Bitcoin. Now there's enough to go around, and you can get 20 for free from the faucet! See also: Rai stones. http://en.wikipedia.org/wiki/Rai_stones > TSA,…

Yeah, I've since found out about the 'divisible' aspect. Don't understand it yet. In particular, how different people can own fragments of one cryptographic unit, without there being any central coordination point.

As for storing in the cloud, uh, no thanks. Recent cloud upset providing an entirely expected illustration of the 'nothing can possiblie go wrong!' principle. Not to mention the mooted Internet Kill Switch being also a Cloud Switch. Power failures, major disasters... involving the Cloud is just making Bitcoin even more fragile.

I'm glad you mentioned backups. Because I forgot that. The issue being how many people actually do have adequate backup. I know mine is far too weak, and I wouldn't like to have my financial assets depend on it.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#308

Post by mobileman » Fri, Jun 03, 2011, 7:29 AM UTC

_arturh wrote: post #306

rprasad wrote: post #302

Earlier quoted context omitted.

The taxation of non-cash income has been a settled issue for decades (in the US). They would tax Bitcoin receipts the same way they tax service-for-service or service-for-property exchanges. The government will calculate the fair market value of the services/property received at $X dollars (based on facts and circumstances such as the amount exchanged in similar cash-based transactions), deem the taxpayer to have rec…

You forgot the part where the gov doesn't know how much Bitcoin you received.

Until you convert to a currency that enables you to drink alcohol..

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#309

Post by mobileman » Fri, Jun 03, 2011, 7:31 AM UTC

nkassis wrote: post #163

achompas wrote: post #154

Earlier quoted context omitted.

Whatever the mechanism, fiat currencies are subject to inflation through the pressure of an ever-increasing money supply. As they should be, given that populations increase. Anyway, even if Bitcoins go underground, they'd have to be priced such that they'd be cheaper than other money laundering channels. Due to their finite supply, though, money laundering through Bitcoins will get very expensive. So their utility re…

I think this is a very important thing that people don't understand. Static money supply in a world where as you point it out population increases means deflation. And increasing popluation is only one example of the need for inflation. We create wealth all the time, people in other countries are buying their first car etc... the more goods are purchases and sold the more money you need. At least that's what I unders…

Bitcoins are divisible, so everyone's share gets smaller

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#310

Post by georgemcbay » Fri, Jun 03, 2011, 7:39 AM UTC

mcantelon wrote: post #136

achompas wrote: post #129

Earlier quoted context omitted.

Looked at in another way, think of Bitcoin as something more like MMORPG loot. If people are willing to spend vast amounts of "real money" on items for their WoW character, spending that money on Bitcoins instead makes it seem like a sane investment rather than just flushing it away. What is the intrinsic value of Bitcoins, then? That people are willing to spend money on Bitcoins? As an investment vehicle these are t…

>Bitcoins have no intrinsic value. Part of the value is in their utility as an anonymous currency: try taxing the guy that's paid in Bitcoins. Another part is the integrity of the currency: the currency is backed by math, rather than men, and not subject to hyperinflation resulting from corruption (i.e. the US Fed can create money out of thin air, but there is no authority that can create Bitcoins out of thin air: th…

"try taxing the guy that's paid in Bitcoins"

...try hiring the guy who is willing to be paid in Bitcoins.