Bitcoin and positive vs. normative economics • Hacker News Board

Re: Bitcoin and positive vs. normative economics

#361

Post by hendzen » Sun, Dec 29, 2013, 3:07 AM UTC

pjbrunet wrote: post #296

RoboTeddy wrote: post #269

Earlier quoted context omitted.

Whoever who convinces 50+% of the miners to adopt their version of the software wins. The core developers can commit code and make releases that do whatever they want, but if they e.g. tried to pay all transaction fees to themselves, miners wouldn't install the new version and someone would fork the project. How much control does any open source developer have over the projects they work on? Linus seems to have prett…

How many of the miners know how to evaluate updates? Most of these miners I read about, they bought some expensive hardware and just plugged it in. Is there some evaluation period before updates go live? Also, what if a seemingly innocuous change has unforeseen consequences? Nothing like Bitcoin has ever existed.

Pool operators are usually quite savvy. Most miners will just do whatever their pool decides on.

Re: Bitcoin and positive vs. normative economics

#362

Post by dnautics » Sun, Dec 29, 2013, 3:07 AM UTC

ubernostrum wrote: post #325

dnautics wrote: post #320

Earlier quoted context omitted.

Thus, we can just as easily argue that slavery is correlated with economic growth. Or that disregard for the intellectual-property laws of other countries is associated with growth (see the US in the 19th century, China in the 20th and early 21st) I am sympathetic to both claims, given that it's possible that economic growth in the modern era is only made possible by massive credit expansion (voluntary, fractional sl…

The bimetallic argument was basically a fight between those who already were wealthy and wished to preserve their position, and those who were not yet wealthy but wanted to improve their position. Backers of a gold-only standard (mostly in the eastern US) wanted it because their fortunes were already amassed, and denominated in gold or gold-backed currency, and they did not want this diluted by the influx of silver f…

The question that is whether the assertion that diluting the value of gold by introducing to serve as a second currency actually did improve the lot of the less wealthy. Historical evidence suggests that a fiat devaluation hurts the poor (well ultimately it hurts the rich when the poor overturn the wealthy in revolution). Moreover, the architects of this policy failed to see in-retrospect-obvious problems like arbitrage destabilization of bimetallism as the gold-silver exchange rate was, effectively fixed by law. Suffice it to say my confidence in their ability to be correct about the complex net social effects is low, given they missed this crucial, first-order economics problem.

Re: Bitcoin and positive vs. normative economics

#363

Post by SectioAurea » Sun, Dec 29, 2013, 3:09 AM UTC

aaren wrote: post #274

DrJokepu wrote: post #265

Earlier quoted context omitted.

Voting is a solved problem. I’m not saying that the idea of using bitcoin technology to solve problems beside monetary systems is a bad idea (in fact, I think it’s a very interesting concept), but really, democracies around the world already have established and efficient voting systems that work well enough.

https://en.wikipedia.org/wiki/Bush_v._Gore (Admittedly over a decade old now) I think the point is that our current voting systems require a measure of trust, where a blockchain based system could be trustless.

This is the key point where the public blockchain seems to be of use for voting: transparency, which we have zero of in current machine systems.

Re: Bitcoin and positive vs. normative economics

#364

Post by nickbauman » Sun, Dec 29, 2013, 3:11 AM UTC

greyman wrote: post #181

paul wrote: post #159

I'm most bullish on bitcoin when I read articles such as this one, and most skeptical when I read the thoughts of the bitcoin believers. It's truly the most interesting technological development in years, if only because it reveals how little anyone really understands money or economics. Here's another interesting (though imperfect) way of thinking about bitcoin: it's a decentralized corporation, where bitcoins are o…

I am not a libertarian and do not have a political agenda, but it is imaginable that certain parts of the government could be replaced with the structure like this one. I don't know how the transition could happen, but at the end, the mining in the network will be done by citizens, bitcoins will be named "bitvotes", and every citizen will mine those bitvotes, or they could be distributed fairy (one bitvote to each ci…

Ah, then everyone will be bitvoting for the candidate that will get them the widest-screen TV possible.

Re: Bitcoin and positive vs. normative economics

#365

Post by gweinberg » Sun, Dec 29, 2013, 3:14 AM UTC

haberman wrote: post #231

mortenjorck wrote: post #31

Krugman is to Bitcoin as Ebert was to video games. The central failure of Krugman's understanding of cryptocurrencies is in the value of mining. It's not simply throwing energy away into solving useless math problems; it's spending energy to create infrastructure. That infrastructure is the part that does have intrinsic value, that can be used for something else in the same way gold can be made into useful things. Lo…

> It's not simply throwing energy away into solving useless math problems; it's spending energy to create infrastructure. But it is also an arms race of energy spent. And the more valuable BTC becomes, the more energy a rational agent will use to mine it. Unlike mining gold, BTC mining does not have a fixed cost.

Gold mining doesn't have a fixed cost either. Different locations have different costs per gram of mining and refining gold, and whether it is worthwhile or not to mine in a given location depends on the price of gold.

Re: Bitcoin and positive vs. normative economics

#366

Post by hendzen » Sun, Dec 29, 2013, 3:16 AM UTC

ansible wrote: post #135

mortenjorck wrote: post #31

Krugman is to Bitcoin as Ebert was to video games. The central failure of Krugman's understanding of cryptocurrencies is in the value of mining. It's not simply throwing energy away into solving useless math problems; it's spending energy to create infrastructure. That infrastructure is the part that does have intrinsic value, that can be used for something else in the same way gold can be made into useful things. Lo…

It's not simply throwing energy away into solving useless math problems; it's spending energy to create infrastructure. I don't see how it is not the case that mining Bitcoins is throwing away energy. If someone had made a crypto currency based on, say, protein folding [1], I could get behind that. We could just create a crypto currency where we just hand out 100 units to every person. That certainly wouldn't require…

Feel free to design your own cryptocurrency that does that. Nobody's forcing you to use Bitcoin.

Re: Bitcoin and positive vs. normative economics

#367

Post by gweinberg » Sun, Dec 29, 2013, 3:19 AM UTC

dimitar wrote: post #103

I think most commentators here missed the point of the article. Bitcoin is evil not because it fails at x, because the interest in it propagates bad (Krugman POV) economics. Krugman/Stross assume this type of economics is the 'Austrian school'/Goldbug economics.

Most likely Krugman didn't choose the title.

Re: Bitcoin and positive vs. normative economics

#368

Post by jhonovich » Sun, Dec 29, 2013, 3:28 AM UTC

paul wrote: post #159

I'm most bullish on bitcoin when I read articles such as this one, and most skeptical when I read the thoughts of the bitcoin believers. It's truly the most interesting technological development in years, if only because it reveals how little anyone really understands money or economics. Here's another interesting (though imperfect) way of thinking about bitcoin: it's a decentralized corporation, where bitcoins are o…

"I'm most bullish on bitcoin when I read articles such as this one .... it reveals how little anyone really understands money or economics."

That is an incredibly arrogant statement, considering the article is from a Nobel prize winning economist and you did nothing to refute or undermine his actual points or references.

Re: Bitcoin and positive vs. normative economics

#369

Post by lamontcg » Sun, Dec 29, 2013, 3:44 AM UTC

gnaritas wrote: post #240

eropple wrote: post #224

Earlier quoted context omitted.

And Bitcoin speculators are pricing in the frictional impact of changing to another arbitrary, fragmentary currency "when we need it"...where, exactly?

Who's better positioned to move to the next better currency than Bitcoin than Bitcoin speculators? And it won't be changing, there can, are, and will likely continue to be multiple working crypto currencies each attracting a following from those who believe in its core principles. As long as they're easily exchanged for the others as they are now, they can all win and one will just be considered the reserve currency…

"Gold bugs will always like Bitcoin"...

Is that like "Real Estate only goes up?" Remember that one from circa 2005?

This problem really does lead to crypto currencies having no floor like Krugman points out. At some point everyone decides what the next hot crypto currency is, and suddenly Bitcoin turns into Friendster and there's a rush for the exits and the price collapses.

It really does seem like cryptocurrency fanboys have bought into a form of "this time its different" because... crypto. And they're ignoring the fact that it is a currency with zero to backstop, and its clearly dependent upon fashion and popularity, since there's a growing marketplace now of competing cryptocurrencies.

This thread has been very useful to convince me that bitcoin is a classic bubble. I have no idea when it'll pop, but it appears almost certain that it will.

Re: Bitcoin and positive vs. normative economics

#370

Post by SectioAurea » Sun, Dec 29, 2013, 3:47 AM UTC

steveklabnik wrote: post #198

paul wrote: post #159

I'm most bullish on bitcoin when I read articles such as this one, and most skeptical when I read the thoughts of the bitcoin believers. It's truly the most interesting technological development in years, if only because it reveals how little anyone really understands money or economics. Here's another interesting (though imperfect) way of thinking about bitcoin: it's a decentralized corporation, where bitcoins are o…

Searching for "distributed autonomous corporation" will find you all sorts of half-interesting, half-totally ridiculous garbage information on this topic. It's really fascinating.

It's all in the brainstorming stages. Distributed Autonomous Government is also theoretically possible, offering voluntary participation, transparent workings and direct democracy.