Bitcoin and positive vs. normative economics • Hacker News Board

Re: Bitcoin and positive vs. normative economics

#91

Post by asciimo » Sat, Dec 28, 2013, 8:38 PM UTC

seiji wrote: post #47

hendzen wrote: post #35

Earlier quoted context omitted.

Actually, for your first point, you have to compare the carbon footprint of bitcoin to the carbon footprint of the alternative. What is the carbon footprint of all the different transaction processing systems run by Mastercard, Visa, Amex, etc? What about if you add in the cost of the massive mainframes that handle ACH transfers? The cost of printing millions of archaic paper checks? I'm not saying bitcoin replaces a…

The other systems aren't based around grinding CPUs at 100% power utilization for days/weeks/months doing worthless busy work. Unless your power comes from a zero-carbon-footprint renewable resource, it's pretty ugly.

The Bitcoin network doesn't require CEOs to burn jet fuel to visit their associates for catered meals; it doesn't require metal to be pressed into little discs, or trees to be pressed into little rectangles, and then distributed via combustion engine; it doesn't require receipts to be printed, duplicated, stored, and finally destroyed; it doesn't require millions of humans to commute to HVAC supported cubes to keep the system running.

Re: Bitcoin and positive vs. normative economics

#92

Post by natrius » Sat, Dec 28, 2013, 8:38 PM UTC

mapgrep wrote: post #70

natrius wrote: post #51

Earlier quoted context omitted.

We weren't in imminent danger of hyperinflation. I think mass adoption of Bitcoin will cause hyperinflation. If every merchant you patronize today accepted Bitcoin, would you rather have Bitcoin in your bank account or dollars? I'd rather have Bitcoin. They're easier to transfer, they can't be counterfeited, and their supply can't be manipulated. If every merchant accepts Bitcoin and every consumer agrees with my log…

Bitcoin went up more than tenfold in less than six months. Then if fell by more than half in less than one month. So I strongly disagree that most people would want to use that for their checking account, paycheck, etc. I am also baffled by "they're easier to transfer" than dollars. Yes you can email BTC. But I can literally hand you dollars. No smartphone needed! And large amounts are trivially easier - I squiggle s…

You can hand me dollar bills, but how many dollar bills do you have? I just counted. I have $36 in bills in my possession. I should to go to the ATM today to get more in case I run out. Eventually, Bitcoin will be similar in that most of our wealth won't be stored in the actual currency, but in bank deposits. I could withdraw actual currency from a Bitcoin bank with the tap of a button and have it on my phone in 10 minutes. Getting dollars requires going to a physical place to get physical bills.

Transferring large amounts of dollars takes days. Transferring Bitcoin takes 10 minutes or so.

Re: Bitcoin and positive vs. normative economics

#93

Post by ubernostrum » Sat, Dec 28, 2013, 8:39 PM UTC

natrius wrote: post #83

ubernostrum wrote: post #36

Earlier quoted context omitted.

In a crisis significant and widespread enough to crash the dollar or any other government-backed currency you'd like to pick on, it seems likely that there would also be significant disruption to electrical and communication networks, which does not suggest BitCoin is a great thing to hold for that situation. (a similar point is often raised against gold, in that a post-economic-apocalypse world would not immediately…

I'm not talking about a hypothetical doomsday scenario. Bitcoin is the crisis. The idea that holding Bitcoin is a better idea than holding dollars is spreading. The more it spreads, the higher the value of Bitcoin will be, and the lower the value of the dollar will be. Eventually, we will hit a tipping point. That's the crisis. That's the hyperinflation.

And aside from wishful thinking, what evidence do you have to back your hypothesis?

Re: Bitcoin and positive vs. normative economics

#94

Post by JumpCrisscross » Sat, Dec 28, 2013, 8:39 PM UTC

I love rule-based central banking. It injects predictability and stability into a monetary system and has had fantastic results in the developing world. Cryptocurrencies allow for rule-based monetary systems without the risk of a central bank failing to adhere to its rules prescription. A world of competing crypto currencies would be fascinating - various rule systems being adopted and phased out as (a) critical flaws are discovered, (b) more competitive rules are introduced, or (c) the global economy's needs and hence optimal rules system change.

The downside of discretionless rules-based central banking is it makes learning, and thus evolving, very expensive, requiring a rerooting of the currency and thus monetary system. This is why developed countries do better with discretionary central banks - their economies are too complicated for any known rules systems to work reliably and their central banks trusted enough not to be stupid.

I love the future Bitcoin portends - a world of competing and overlapping rules-based and discretionary monetary systems. I am fairly confident, however, that Bitcoin is not competitive for that world. Still, it's a great introduction and has its social value as a stepping stone.

Re: Bitcoin and positive vs. normative economics

#95

Post by MarkPNeyer » Sat, Dec 28, 2013, 8:39 PM UTC

username223 wrote: post #60

smokeyj wrote: post #44

Earlier quoted context omitted.

> but money laundering and large-scale scamming are actual threats. Yes, banks launder drug money for cartels. Without the state, who would slap their wrists?

I guess you're trying to be snarky or clever here, but I don't get your point. Maybe you can walk over to your local BofA branch, slap someone's wrist, and feel good about yourself?

HSBC knowingly laundered billions for violent drug cartels, and were fined a mere 5 weeks of revenue. None of the executives involved in this went to jail.

Meanwhile, people's lives are ruined for selling or even possessing small amounts of harmless drugs.

http://www.bloomberg.com/news/2013-07-02/hsbc-judge-approves...

Re: Bitcoin and positive vs. normative economics

#96

Post by yummyfajitas » Sat, Dec 28, 2013, 8:40 PM UTC

atmosx wrote: post #45

Aqueous wrote: post #21

I'm a liberal, a Keynesian, but my interest in BitCoin is completely non-ideological. And I resent being painted with an ideological brush by Krugman because I can see the elegance in BitCoin, and I can see the possibility that one day, in spite of my ideological beliefs that unregulated markets are susceptible to bubbles and destructive volatility, BitCoin or something like it might still be able to function as a st…

You seem pretty accustomed to economics. Can you explain how exactly or why would anyone buy any items (that's what currencies are for after all) using a deflationary currency? Then again, it's not a design a flaw - as I once thought - it's a clear choice: Why would anyone would want to own a non-deflationary asset? :-) So actually, in my view, BTC as a currency is already failed. No one will be eager to buy online (…

Can you explain how exactly or why would anyone buy any items (that's what currencies are for after all) using a deflationary currency?

Why would anyone ever cash out of any position with a positive rate of return?

By this logic everyone should stop consuming and put all their money into SPY, or similar market tracking indices. Yet they don't.

Re: Bitcoin and positive vs. normative economics

#97

Post by natrius » Sat, Dec 28, 2013, 8:40 PM UTC

maxerickson wrote: post #85

natrius wrote: post #51

Earlier quoted context omitted.

We weren't in imminent danger of hyperinflation. I think mass adoption of Bitcoin will cause hyperinflation. If every merchant you patronize today accepted Bitcoin, would you rather have Bitcoin in your bank account or dollars? I'd rather have Bitcoin. They're easier to transfer, they can't be counterfeited, and their supply can't be manipulated. If every merchant accepts Bitcoin and every consumer agrees with my log…

The bitcoin supply can't be trivially manipulated. It's still vulnerable to computational attacks (no matter how impractical they may be) and miner collusion.

Agreed, but I think both the computational attacks and miner collusion are on a similar level of difficulty as printing passable counterfeit dollars.

Re: Bitcoin and positive vs. normative economics

#98

Post by username223 » Sat, Dec 28, 2013, 8:40 PM UTC

wcummings wrote: post #40

ubernostrum wrote: post #30

Earlier quoted context omitted.

He poses a question: To be successful, money must be both a medium of exchange and a reasonably stable store of value. And it remains completely unclear why BitCoin should be a stable store of value. And then says he hasn't been able to get an answer to this question, that the BitCoin enthusiasts he's talked to have mostly avoided trying to answer the question, and that he has reason to suspect that BitCoin gets prom…

The answer I've heard is that Bitcoin has utility as a payment network somewhat independent of its usefulness as a value store. This is most of how Bitcoin is used currently (save speculation)

"(save speculation)"? That's a huge save.

Re: Bitcoin and positive vs. normative economics

#99

Post by gruseom » Sat, Dec 28, 2013, 8:40 PM UTC

rdl wrote: post #16

ubernostrum wrote: post #8

Earlier quoted context omitted.

How about taking seriously someone who is, you know, well-known (to the point of receiving a Nobel Prize for his work) for being good at this economics stuff? If a Nobel-winning physicist was writing about physics, you wouldn't dismiss it because the physicist's politics don't agree with yours. Ditto Nobel-winning chemist writing about chemistry, etc.; why should economics be different? Also, his point about BitCoin…

Krugman is more like Chomsky -- he did some academic work (including a good textbook in microecon), but then left that to do politics, almost entirely disconnected from his academic record. The Econ "Nobel" is a little more rationally awarded than the Nobel Peace Prize, but neither is the same as Physics/Chem/Medicine. I think it's fine to judge Krugman's political arguments on political merits; there isn't "nobel-ca…

Chomsky certainly never left academic work for politics. He has divided his time evenly between the two for many decades.

Re: Bitcoin and positive vs. normative economics

#100

Post by rch » Sat, Dec 28, 2013, 8:40 PM UTC

seiji wrote: post #38

dbla wrote: post #17

Earlier quoted context omitted.

This may be the end result, but it seems to me like the more direct (but not necessarily simple) solution to this problem is to close up those loopholes for the rich. The government does need to collect taxes after all, and if nobody is paying then we've created another problem.

If r/bitcoin could speak, it would collectively say: "All tax is theft. It is our job to stop being stolen from. All money belongs to me for the benefit of myself. I am all that matters in society."

I think some people look at it as form of nonviolent protest, and I'm glad they've found a peaceful option. In fact, I also appreciate that more of society is becoming engaged in a discussion that used to be strictly the purview of economists. Ever try starting a conversation at a pub about how to imbue a new reserve currency with value? Unless you happen upon someone from the IMF, you'd probably be out of luck.