On Bitcoin

http://ericsbasementoffice.com/2011/05/on-bitcoin/

by ecounysis • 15 years ago

3 3 15 years ago

abulafia• 15 years ago

Since bitcoins are inherently deflationary, it's hard to argue that they make a poor investment vehicle. However, it's the inherent long-term lack of liquidity that dooms this usage. To be viable in scale, a cash-replacement like bitcoins needs to be highly liquid, but there are two effective choke points to this specific hidden economy. The first is that conventional retail businesses (as opposed to individuals) must accept the currency _in_scale_, and there are a number of reasons this won't happen, including the trackablity of bitcoin usage over the network (and inevitable IRS issues). The second is that paypal, banks, etc, will shut down conversion sites, as paypal is already beginning to do, and that will severely diminish the usefulness of the system.

ecounysis• 15 years ago

This does not matter if an economy develops which values bitcoins for the goods and services they can be used to obtain. Currency is by its very definition "liquid"

adrianwaj• 15 years ago

Bitcoins are inherently nothing. Either the hoarder injects them into active circulation or a financial institution holding them will lend them out (assuming such institutions will exist, and if they don't exist, there'll be pressure for them to exist, either from present institutions or newly created ones.) Don't underestimate banks' desire to accumulate whatever liquid assets they can get their hands on. Goldman Sachs will realize this if no one else does.

In any case, scarcity+marketplace has its own checks and balances.

On Bitcoin

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