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Bitcoin vs. Ben Bernanke

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Re: Bitcoin vs. Ben Bernanke

#81

Post by moe »

StavrosK wrote: post #79
Andrew_Quentin wrote: post #78

Earlier quoted context omitted.

Well, the government could make undeclared cash illegal.

It might even work, if they had a way to track all your cash. Unfortunately, unlike with Bitcoin, they don't. This is pretty much what I said in my original comment? I don't understand all the apologism, it's pretty clear that governments can exert an unprecedented amount of control on money with Bitcoin (all your transactions are public), and no amount of burying our heads in the sand will change that.

I don't understand all the apologism

I would recommend to familiarize yourself with how bitcoin works on a technical level before mowing down more strawmen.

Also: Do you really think all countries of the world will agree on one central 'bitcoin address registry'? Contrary to popular belief the internet does not end at Virginia beach...

Re: Bitcoin vs. Ben Bernanke

#82

Post by eric_bullington »

Retric wrote: post #27
eric_bullington wrote: post #21

Earlier quoted context omitted.

I actually think it's a mediocre medium of exchange, due to the fact that transactions are not immediate, but rather can take as long as an hour or more for a reasonable level of confidence in the integrity of a transaction. There are competing cryptocurrencies being developed now that are much better media of exchange since transactions are both secure and immediate. I think Bitcoin's real promise is as a store of v…

Your assuming it makes it that far, I still think Bitcoins will be dead within 50 years and a far more useful cripto currency will take it's place.

Perhaps, but historically, once a currency gains a foothold it is usually extremely durable.

I think it's far more likely that a successful new cryptocurrency will integrate Bitcoin into its design, thereby increasing the utility of both currencies (this is what Ripple is aiming toward, for example).

But this is uncharted territory, so who knows?

Re: Bitcoin vs. Ben Bernanke

#83

Post by sethrin »

Symmetry wrote: post #13

Decent enough article, but whenever talking about Bitcoins I find it helpful to separate the various roles that money performs. That is, Bitcoin is an awesome medium of exchange, a risky store of value, and a horrible medium of account. Just use it for what it's good for and everything's fine. http://en.wikipedia.org/wiki/Medium_of_exchange http://en.wikipedia.org/wiki/Store_of_value http://en.wikipedia.org/wiki/Unit…

Bitcoin is to a first approximation not used as a unit of account, and that I feel is its biggest failure as a currency. Roman coinage, and subsequently Carolingian livres, were used as a unit of account centuries after they stopped existing as actual coinage.

The day that Bitcoin arrives as a market force, is the day that prices are denominated in it without the implicit reference to the USD.

Re: Bitcoin vs. Ben Bernanke

#84

Post by mikhailfranco »

saalweachter wrote: post #47
scrollbar wrote: post #20

Earlier quoted context omitted.

Regarding your point about the lending vs borrowing: The use of the word "encouraged" makes sense to me. If people are "encouraged" to lend vs borrow, that means they will have more desire to lend vs borrow. This has an important effect on the supply vs. demand equation. Supply of loans, ie. people willing to borrow, goes down and the demand, ie. people willing to pay money now for interest later, goes up, causing pr…

A deflationary currency doesn't encourage people to lend , it encourages them to save . If currency is deflating at a low, constant rate (say, 2-3%, comparable to the normal rate of inflation), then the interest rate -- in real terms -- must be strictly higher than this. A 0% loan with 2% deflation the equivalent of a 2% real interest rate. But no one will ever lend money in this situation. You take on risk, but have…

Inflation also triggers higher taxes, because you pay on nominal amounts not real amounts. So 2% inflation plus 2% real interest rate, you pay income tax on total 4% rate, not 2%. Same with capital gains, you buy and hold something that keeps its real value, and you end up paying capital gains when you sell it, because inflation has pushed the price up.

Re: Bitcoin vs. Ben Bernanke

#85

Post by mikhailfranco »

thebmax wrote: post #45
parasubvert wrote: post #24

Earlier quoted context omitted.

Have you atudied economics? The OP reads like someone who has and is utterly incredulous at the statements being made by Bitcoin's proponents. In fairness, the gentleman interviewed in this article insisted it was all an experiment. But the WSJ editorial board has a long time habit of being very non-mainstream and almost Austrian with its economic views, so this interview was likely intended to play into a political…

I really don't get why people who call themselves 'mainstream' economists can't see or choose not to acknowledge the issues the Austrians bring up. It strikes me as quite odd. Not everything the Austrian school preaches is correct, but they do have some valid points that I would expect most smart people to understand. To bring up just a few big ones: Printing money and low interest rate policy of the Fed influences m…

Related to (1), there is the moral hazard of bailing out the extreme risk takers and profligate borrowers, but punishing the careful savers. It just encourages future financial gambling (Greenspan/Bernanke put) and Too Big To Fail mentality.

There is also the loss of true interest rate signals for making investment decisions, and consequent mal-investment caused by 'desperately seeking yield'. Economies progress by creative destruction, not protecting sunk costs in old industries and pandering to vested interests. Just look at Apple - biggest corporate cash pile in history, biggest bond issue in history - something is seriously wrong with interest rate signals (over and above the repatriation issue).

The problem of the boom was over-borrowing to consume. The solution for the recession is saving to invest i.e. create lending for building of productive capacity. Printing money to lend to consumers to buy imports does not make the economy any better, especially when you don't give it to the consumers with tax reductions (or wage increases from the corporate cash pile), but give it to the banks and let them inflate financial assets instead - that doesn't even achieve the dumb thing you were trying to do in the first place!

Re: Bitcoin vs. Ben Bernanke

#86

Post by Andrew_Quentin »

StavrosK wrote: post #79
Andrew_Quentin wrote: post #78

Earlier quoted context omitted.

Well, the government could make undeclared cash illegal.

It might even work, if they had a way to track all your cash. Unfortunately, unlike with Bitcoin, they don't. This is pretty much what I said in my original comment? I don't understand all the apologism, it's pretty clear that governments can exert an unprecedented amount of control on money with Bitcoin (all your transactions are public), and no amount of burying our heads in the sand will change that.

But, they don't have a way to track your bitcoins. They can see how much is in each address, but they do not know whose address it is, etc.

You said the government would need to make all wallets that are not registered with some central authority illegal. That would be the same as you paying someone in cash if cash was made illegal. You would be doing something illegal in both situations. However, what is the government going to do about it if they do not know who you are?

Not to mention that making cash illegal would be a highly political issue and quite unpopular due to concerns with privacy, etc. The same would apply if the government wished to request some centrally controlled management of people's bitcoin account.

Re: Bitcoin vs. Ben Bernanke

#87

Post by StavrosK »

Andrew_Quentin wrote: post #86
StavrosK wrote: post #79

Earlier quoted context omitted.

It might even work, if they had a way to track all your cash. Unfortunately, unlike with Bitcoin, they don't. This is pretty much what I said in my original comment? I don't understand all the apologism, it's pretty clear that governments can exert an unprecedented amount of control on money with Bitcoin (all your transactions are public), and no amount of burying our heads in the sand will change that.

But, they don't have a way to track your bitcoins. They can see how much is in each address, but they do not know whose address it is, etc. You said the government would need to make all wallets that are not registered with some central authority illegal. That would be the same as you paying someone in cash if cash was made illegal. You would be doing something illegal in both situations. However, what is the governm…

Sure, but in the bitcoin case, you'd require both parties' wallets to be unregistered. It would require a legal and an illegal network of wallets (since the government can't track the illegal ones), but whenever a transaction was made where one of the two parties was an illegal wallet, the legal party would be on the hook for it (as it would be transacting with an illegal wallet).

Re: Bitcoin vs. Ben Bernanke

#88

Post by Retric »

eric_bullington wrote: post #82
Retric wrote: post #27

Earlier quoted context omitted.

Your assuming it makes it that far, I still think Bitcoins will be dead within 50 years and a far more useful cripto currency will take it's place.

Perhaps, but historically, once a currency gains a foothold it is usually extremely durable. I think it's far more likely that a successful new cryptocurrency will integrate Bitcoin into its design, thereby increasing the utility of both currencies (this is what Ripple is aiming toward, for example). But this is uncharted territory, so who knows?

Lot's of currency's have died in my lifetime, consider just what the introduction of the euro did. But also a lot of things like game near currency's like bitcoin have also gone the way of the dodo. Limiting things to just national currency's and going back say 500 years you find well over 90% of all currency's that existed back then or where introduced in the meantime have died.

Re: Bitcoin vs. Ben Bernanke

#89

Post by em70 »

nijk wrote: post #41
em70 wrote: post #36

I have yet to see it being pointed out that none of the encryption in use for these cryptocurrencies will necessarily remain extremely hard to break for long. A good question is: what if bitcoin or something alike does effectively gain traction and one day a math breakthrough (or a computational tech one) make the crypto weak? How much wealth will be destroyed then? Who would you turn to for help? Our system is not p…

Stealing is wealth transfer, not wealth destruction. And it wouldn't be anonymous, so it could be investigated and relatiated. The same argument applies to bank robberies.

The destruction would be by the lack of trust. Since there is nothing but supply and demand considerations keeping bitcoin's value high, guess what would happen if demand were to vanish

Re: Bitcoin vs. Ben Bernanke

#90

Post by em70 »

nijk wrote: post #41
em70 wrote: post #36

I have yet to see it being pointed out that none of the encryption in use for these cryptocurrencies will necessarily remain extremely hard to break for long. A good question is: what if bitcoin or something alike does effectively gain traction and one day a math breakthrough (or a computational tech one) make the crypto weak? How much wealth will be destroyed then? Who would you turn to for help? Our system is not p…

Stealing is wealth transfer, not wealth destruction. And it wouldn't be anonymous, so it could be investigated and relatiated. The same argument applies to bank robberies.

The destruction would be by the lack of trust. Since there is nothing but supply and demand considerations keeping bitcoin's value high, guess what would happen if demand were to vanish
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