Bitcoin rises

http://www.aljazeera.com/indepth/opinion/2013/03/2013391325331795.html

by pg • 13 years ago

227 257 13 years ago

kogir2• 13 years ago

Halving day was an interesting test that the community passed, which is really cool.

What I look forward to seeing next is how a malicious, distributed hijacking of the block chain is handled once it's profitable to attempt.

nym6• 13 years ago

It's already profitable... has been for at least a year now.

kogir2• 13 years ago

I think you underestimate the volatility of bitcoin. Right now there's not enough you can do with them in their native form, and converting them to cash would make make the price crash. I also doubt there's any exchange with enough funds to actually support such a conversion.

tlrobinson5• 13 years ago

One of the neat things about mining is if you have enough hashing power to execute a 51% attack, you also have enough hashing power to mine a shitton of Bitcoin (50% * 6 blocks/hour * 24 hours * 25 BTC/block * 57 $/BTC = $100,000 per day), which might be more profitable (51% attacks only allow you to double spend what you have, not steal arbitrary Bitcoin), and is certainly far easier and less risky.

I'd be more concerned about governments or corporations who want to sabotage Bitcoin, or bugs in the software like we saw last week with the blockchain fork.

Right now it would only take a couple million dollars worth of ASICs to overwhelm the current hash rate. That should change as more ASIC manufacturers start shipping.

rmc4• 13 years ago

It's kinda scary that important things like this are so up in the air and could have broken massively.

yabbadabbadoo2• 13 years ago

PG - I'm curious what you think about Bitcoin. Care to share?

nym6• 13 years ago

PG invested in Coinbase (YC)

http://howdoyoubuybitcoins.com/from/coinbase/

I would love to know how many bitcoins PG personally holds:

http://www.quora.com/Paul-Graham/How-many-bitcoins-does-PG-o...

pg4• 13 years ago

None. But I'm very conservative.

pg4• 13 years ago

Here's an email I sent someone yesterday about it:

    I am very intrigued by Bitcoin.  It has all the signs.
    Paradigm shift, hackers love it, yet it's derided as
    a toy.  Just like microcomputers.

yabbadabbadoo2• 13 years ago

Any thoughts on the currency vs hoarding issue?

Quick background for those unfamiliar with the issue - Bitcoin was built to be a currency, to be used to trade for goods and services. However, a significant portion of BTC is being hoarded and not traded, thus leading some (like Nobel Prize laureate Paul Krugman) to argue that it's not a currency at all, and any value is purely speculative. For the record, I don't agree with Krugman's argument.

yxhuvud3• 13 years ago

Personally I deride it because solves the wrong problem. I just don't see how it can be an efficient long term medium of exchange with the built in deflation. As far as I see it, the hype around bitcoin is built around the broken idea that the main purpose of money is as a store of value. But it is not - the main purposes are to act as medium of exchanges and as the unit of account.

I'm a lot more intrigued by Ripple I feel they try to solve the correct problem, though there are some issues left. The most glaring one being that it lacks a unit of account of it's own but instead pickyback on a different unit of account. It is also a harder to explain, especially to people that believe in hard money since it is basicly a stripped down fiat system.

lordgilman• 13 years ago

Bitcoin's got a few things right - open API, solid crypto. I can understand how you see these things within Bitcoin and view it as a paradigm shift. However, they're not competitive advantages: anyone can pick them up. If Bitcoin really takes off the old finance hands can tack these on and they'll have everything that made Bitcoin great plus their network effect.

n.b. I consider Bitcoin's decentralization to be flawed (it'll only decrease over time) and thus it doesn't count as a feature.

noagendamarket• 13 years ago

Bitcoin is backed by privacy and the fear that banks are going to start "doing a cyprus" with your savings.

bozho2• 13 years ago

I was surprised the other day when I was testing the bitcoin integration for a project of mine (here's a how-to: http://techblog.bozho.net/?p=1114), that the price is so high. I bought my bitcoin a couple of months ago at 10 times lower prices, and it was a pleasant surprise.

mamcx• 13 years ago

Unfortunally for us not in USA, be part in the bitcoin stuff is still harder. Can't be buy easily at all..

bozho2• 13 years ago

I'm outside the US and it was no problem. Wire some money to a bank account, get the bitcoin.

miles• 13 years ago

Out of curiosity: I submitted the exact same link 6 days ago:

https://news.ycombinator.com/item?id=5369899

How is it possible for the same link to be submitted in such a short time again?

Old link: http://www.aljazeera.com/indepth/opinion/2013/03/20133913253... New link: http://www.aljazeera.com/indepth/opinion/2013/03/20133913253...

niggler• 13 years ago

Because it was PG that submitted the new link :)

Xcelerate• 13 years ago

The person who submits the article affects its votes? That's weird. (Even if it is the founder).

SODaniel• 13 years ago

Because every time BTC jump 20% the same article will be 'interesting again' due to the large number of Bitcoin owners that frequent HN.

CAPITALISM!!

pg4• 13 years ago

The dupe detector only looks at items in memory, which means the most recent 15k plus any that have been viewed recently.

bjork• 13 years ago

I don't want to come off as a troll or anything, but is the technological mediocrity of this site intentional (e.g. "Unknown or expired link.")?

lazugod• 13 years ago

Are there people who wait for such circumstances to repost?

martythemaniak2• 13 years ago

My problem with BTC (and I say this as a supporter) comes from a pg essay - you make what you measure. The BTC community measures BTC/USD exchange rate so it ends up optimizing for that, but I can't understand how focusing on that is a good thing. It already produced one massive crash and we're in the middle of another one.

The actual number (BTC/USD) is mostly irrelevant, but volatility is quite bad for people who actually want to perform transactions with BTC. I hope BTC is able to get over this and continue growing.

kiba2• 13 years ago

It already produced one massive crash and we're in the middle of another one.

Why do you believe a crash is forthcoming?

The actual number (BTC/USD) is mostly irrelevant,

Why do you believe it is irrelevant? The market capitalization is only 500 million dollars. Can you imagine operating an entire economy with only 500 million dollars? It's a proxy for adoption, although that is muddled by price speculation and so on.

but volatility is quite bad for people who actually want to perform transactions with BTC. I hope BTC is able to get over this and continue growing.

The bitcoin economy is very tiny. Google probably makes more money than the entire bitcoin economy in a year several times over. Of course, it's going to be volatile. That's because we are growing. It would be a more legit concern if that the economy is worth 100 billion dollars or a trillion dollars.

martythemaniak2• 13 years ago

1. Because it has jumped 3x in 2 months. Either the bitcoin economy has exploded over the last 2 months or speculators are feeding the hype machine. I see no evidence for former, but plenty of the latter.

2. It is irrelevant because you can use any sub unit down to satoshis to transact. If you want to use BTC as a currency and perform transactions, the exchange rate number is irrelevant, because it doesn't matter if a widget costs 1BTC and the rate is 1 BTC/USD or if the widget costs 1 satoshi and the rate is 10,000,000 USD/BTC. If you're a currency speculator OTOH, yes the rate matters immensely. Which goes back to my point - is BTC there to provide an alternate currency and associated economy, or just an easy way to gamble?

3. You're using the terms "market capitalization" and "economy" interchangeably. The economy implies the size of goods and services produced in the BTC universe - this number is important but seems largely ignored by the BTC community (in fact, it seems to not exist). Market Cap here means # of bitcoins multiplied by the USD exchange rate. This number is closely followed by the BTC community, but is large meaningless. It has spiked 3x in two months, but what has happened to the BTC economy itself? It seems to have grown, but can anyone say definitively?

bingobangobongo• 13 years ago

> The market capitalization is only 500 million dollars.

Emphasis mine. That seems crazy high. How many million dollars would you pay for all of the existing bit coins?

nym6• 13 years ago

> we're in the middle of another one.

Can you back that up somehow? It seems like we're in a rally based on the price.

btbuildem2• 13 years ago

That's what bubbles often look like before they pop..

wmf4• 13 years ago

Arguably Bitcoin may have never been adopted at all if not for the enrichment of early adopters. As much as I dislike bubbles there is a real benefit to creating them.

drivebyacct2• 13 years ago

How does a currency market "optimize" for an exchange rate? What does that even mean?

jerguismi• 13 years ago

> The BTC community measures BTC/USD exchange rate so it ends up optimizing for that

First, I wouldn't call bitcoin user base community. It is like saying the dollar user community.

Secondly, it is definitely not true that everyone in the bitcoin userbase focuses on the exchange rate. There are lots of people with different and varying goals.

kiba2• 13 years ago

First, I wouldn't call bitcoin user base community. It is like saying the dollar user community.

Bitcoin users meetups, non-profit organizations dedicated to supporting bitcoin, bitcoin related community, miner consenus and voting, are not evidence of a "bitcoin userbase community"?

illuminate• 13 years ago

"First, I wouldn't call bitcoin user base community. It is like saying the dollar user community."

The dollar is not modeled to meet a specific philosphy or technical implementation nor does it have the same degree of novelty. There most certainly is an enthusiast community for Bitcoin.

nawitus2• 13 years ago

If you're "certain" that there will be a bitcoin crash, you can make money by shorting. Why don't you put your money where your mouth is?

betterunix10• 13 years ago

Out of curiosity: how does one short Bitcoin?

jacoblyles18• 13 years ago

It's unrealistic to expect that a thing could grow from a project on a hobbyist's computer to a major international currency without some volatility along the way.

wmf4• 13 years ago

I think Bitcoin could have been designed to be less volatile (by making the mining reward based on some closed loop), but that change would also likely enrich early adopters less which might have caused Bitcoin to never take off.

vinayan3• 13 years ago

Despite it rising who in the right mind would hold bit-coins besides for speculation? The exchange rates are so variable. As a very risky investment great idea but day to day currency? I suppose it isn't a bad way to pay people abroad and avoid foreign transactions.

jacoblyles18• 13 years ago

If you're looking for growth, it's better than the stock market where the deep pockets have already gotten in early and eaten up all the speculative value in promising ventures.

Thiz3• 13 years ago

Bitcoin is here to stay, can't deny that, but I believe e-gold will be the future e-currency if somebody nails it.

Buy gold shares with your dollars, use it as e-currency, exchange it for e-goods, merchants sell the shares and get dollars back.

I'd invest money in that venture, and money in that currency.

simcop2387• 13 years ago

That's essentially what gold backed currency used to be. It'd be "easy" to do that for bitcoin backed currency right now.

Thiz3• 13 years ago

Gold backed credit cards are flourishing in europe, that got me thinking about internet transactions in gold.

muyuu• 13 years ago

The problem with that is... who backs it? it's a radically different concept, not comparable to Bitcoin.

vbuterin3• 13 years ago

http://ripple.com

It's a cryptocurrency system that lets you store ANY currency that someone, somewhere is willing to support through it. So far it's just USD, AUD, EUR, CHF, BTC and a few others, but gold and silver are definitely going to appear soon.

mcantelon• 13 years ago

The problem with e-gold is it's hard to verify that the gold exists. This isn't an issue with physical gold or BTC.

wintersFright• 13 years ago

Sounds like a few steps faster than the inevitable death of a gold standard: Gold coins, then bank storage, then gold lending, then gold certificate use, then lending of certificates, then certificates are declared paper money, then overprinted, then gold backing removed…

jacoblyles18• 13 years ago

Sounds like an interesting idea... http://en.wikipedia.org/wiki/E-gold

eof• 13 years ago

there was literally a company called e-gold, which was sucessful until they were shutdown.

http://en.wikipedia.org/wiki/E-gold#Crime_and_fraud

inevitably, if a competing currency pisses off the governemnt, it will be shutdown if it is centralized. it isn't really possible to do decentralized gold-backed currency (except perhaps, ripple may solve this).

Thiz3• 13 years ago

Found this interesting link about digital gold currency

http://www.dgcmagazine.com/voucher-safe-a-next-generation-di...

rockyleal• 13 years ago

Hey PG, I'm Nicolas Mendoza author of the article. Any comments? Anything you specially liked about it?

rdl7• 13 years ago

I've always liked the idea behind bitcoin (decentralized cryptocurrency), but I think ultimately it will serve the role of "specie gold" with something more useful on top for transactions -- either book-entry accounting at a wallet provider, or ideally some kind of blinded token system.

Bitcoin has numerous inherent deficiencies as a transaction system. It's also not a great store of value -- you ultimately want something equivalent to debt or equity in productive enterprises, rather than a commodity, to hold the majority of wealth -- that's the whole point of fractional reserve banking or mutual funds/investment accounts.

It may or may not be an ideal unit of account. Right now, USD is undeniably the default unit of account, and even bitcoin vendors tend to price in USD (with the runners up being EUR, JPY, etc.; other fiat nation-state currencies).

So, some kind of blinded token system where issuers of blinded tokens hold public amounts of bitcoin, and where the tokens are redeemable upon demand for bitcoin ("specie") would work a lot better than trying to shoehorn transactions into bitcoin directly.

febeling• 13 years ago

I think ultimately it will serve the role of "specie gold"

I agree with this. (I don't understand the blinded token idea.)

I think it is quite easy to imagine that banking services are build on top of BTC. These would be account receivables against banks, much like current accounts and CDs in USD or EUR work today.

The transaction features of bitcoin are amazing, in my opinion, if you compare them with gold bullion. Granted it can take up to hours for a payment to become fully confirmed, but this is the cryptographic specie being transfered from one individual party to the other. It is a lot more direct on this account than even a fast bank transfer, because in that you still only have a receivable against your bank, much like equivalent ones in todays credit system denominating in USD, etc.

Plus you have the safety that no-one can inflate much value out of the currency, because it is specie-based. At least not for a very long time.

(Unless the "closing of the bitcoin window" trick is pulled again. "Closing of the gold window" was the language the was used euphemistically, when redeemability of USD into gold was ended in 1973.)

If you wanted instant transactions, that is just as easy as today, with a lot more pressure on banks to make transfers real-time, because one main business model would be to beat transaction speed. And that has an upper bound of max. a few hours in plain BTC.

rdl7• 13 years ago

Blinded tokens are basically a form of public key operation where an issuer of currency (mint or issuer) signs a unique "coin" (random string) essentially through a sealed envelope with carbon paper. The end user can remove the envelope and the coin then isn't linkable by the issuer of currency to the original signing transaction, except that he can check that the signature is valid. So there's real, cryptographic anonymity.

The system has a central entity issuing the currency initially AND reissuing it on every change of ownership (to make sure your trading counterparty didn't keep a copy). But, this can be a purely automatic action, and there are technical ways to keep it operational even if there is serious effort put into shutting it down (it doesn't have to be an identifiable business entity, it could be a bot which sees coins posted to a pool somewhere, operates on them, and returns them; or goes over a tor hidden service, or whatever.

The advantage is you have real anonymity on each transaction and you can issue arbitrary currencies (e.g. I could do an rdl-issued-USD currency, which is $10k in tokens issued against a pile of $100 bills I have proven I control on camera, and where there are multiple independent audits to prove I still have the $10k. Or a corporate/personal debt or equity currency, like offering 1% of a startup...you can do arbitrary instruments, just like paper; all this does is make it easy to exchange shares of those agreements.)

eah132• 13 years ago

The interesting thing to me is currency's role in providing certainty. In this case, about the total amount of something, and whether what you're encountering is a valid instance of it. Check out some examples and how Bitcoin compares:

Gold has chemical properties that ensure its finite scarcity (though supplies can fluctuate) and allow you to identify it as ture gold (through, e.g. density measurements). Gold-backed paper currency has a scarcity determined by the trustworthiness of its issuer and a validity linked to the difficulty of its reproduction. Fiat paper currency has a feature of allowing a fractional reserve system, which allows a central body to control its scarcity (and perceptions thereof), with validity again linked to difficulty of reproduction. Open-source cryptographic currencies have a well-defined scarcity and easily verifiable validity.

Cryptography provides certainty better than a physical alternative like gold or paper, but governments traditionally have had control over currency and don't have control over Bitcoin. I think it's unlikely they'll give this up without a fight. I'm not sure that the token system you propose really gives them back that control unless it supports fiat: the arbitrary issuance or discontinuation of currency. But, the idea of Bitcoin as specie is a great one. If it is adopted it as such it becomes open to confiscation like FDR did with gold in 1933, which is an interesting prospect: http://en.wikipedia.org/wiki/Executive_Order_6102

I wonder confiscation is even possible? If it's not this is a seriously revolutionary tech: property without government.

rdl7• 13 years ago

Fiat paper currency and fractional reserve are basically independent concepts. Fractional reserve is practiced by the banks, and was done under gold-backed currency just as much as today. A really interesting thing is the period of "Free Banking"[0] -- in Scotland in the 1700s/1800s where banks were essentially unregulated; State banks in the US were loosely regulated in much of the 1800s as well.

All that's required to do fractional reserve is the ability to distinguish "money on account" from notes. Either issue private notes, or maintain ledgers of balances.

You could conceivably have a 100% reserved bank (doing bailment of physical fiat notes -- a $100 note in the vault for every $100 in a savings account balance) even under fiat currency. Or you could have something with only one entity allowed to increase the money supply (deposit with the central bank, but a 100% central bank reserve requirement, but the central bank allowed to do loans).

[0] http://en.wikipedia.org/wiki/Free_banking

Frozenlock• 13 years ago

It goes even beyond that. It could be the first time in history where wealth can't be taken by force.

eric_bullington2• 13 years ago

I totally agree with your first statement, that a more useful virtual currency will spring up on top of Bitcoin for immediate transactions (I actually have a good idea of what it will be). Yet I totally disagree with your second premise. I think Bitcoin is a fine store of wealth. Fractional reserve banking and a debt-based economy is what many of us are trying to get away from. And I can definitely see Bitcoin as a long-term store of wealth and an easy way to make deposits into other, more convenient virtual currencies that are springing up.

rdl7• 13 years ago

Bitcoin is no better than gold as a store of wealth, and it's widely understood in economics that "cash under a mattress" or "bank deposits not loaned out" are unproductive. It's reasonable for a very conservative individual to hold a lot of unproductive assets like that, but if everyone did for all of their assets, the economy would collapse, or at least be far smaller.

gigq2• 13 years ago

The current method for handling immediate transactions is a Green Address (https://en.bitcoin.it/wiki/Green_address). Basically using a third party that both people trust for sending coins so if you as a seller receive coins from this address you know they weren't double spent and can accept the coins right away.

jvm3• 13 years ago

There is a really cool project called Ripple that's designed to do exactly what you suggest: build a P2P transaction system where Bitcoin or USD or whatever you want is the "specie gold." It's basically a distributed banking system which IMO is an awesome concept. I don't know if this is going to take off but I hope something like it does.

http://ripple.com/

(I have an account and about $5 USD in XRP but no other involvement)

rdl7• 13 years ago

There are a lot of technical reasons I dislike Ripple and would prefer to just have a bunch of separate "mint operators" (technical organizations who run servers) and "currency issuers" (financial entities) and "exchanges" (which do instant currency conversion and publish exchange ratios), all using a common protocol, but not one based on consensus across multiple parties for each entity, but fully independent entities implementing their own governance and controls.

rdl-USD-001 is a "brand", and if it has weak security or weak financial backing, it trades at a huge discount vs. jvm-USD-001. There's no need for either to be "the official USD". You might create "hn USD" which is an index fund of hn particiant-issued USD obligations. There's no reason for everyone to use the same currencies for store of value, and with exchanges, you can convert to a common currency for transfers. I'd probably choose to display all my prices and account for my personal wealth in units close to USD, but someone else might pick EUR or BTC. Separating the 3 roles of money is the key element here.

Ripple essentially tries to be a multi-currency bitcoin. It also has no anonymity.

rmc4• 13 years ago

Many in the bitcoin industry /community think that fractial reserve banking was a bad idea, and there would have never been the recent banking trouble if all the USD could be converted into gold (just ignore the banking problem when there was a gold based currency and ignore other countries that had banking problems).

rdl7• 13 years ago

There's potentially an argument for a currency itself to not have investment/fractional reserve features, but there is really no viable argument against investment assets existing independent of the currency at all (but denominated in that currency, potentially).

Also no sound financial argument for anyone (except those with short term needs or exceptional risk aversion) to store the majority of his wealth in a non-appreciating asset (like currency, even fiat USD) vs. income-bearing assets.

jacoblyles18• 13 years ago

The coolest thing I've seen with bitcoin is the reddit bitcointip bot:

http://www.reddit.com/r/bitcointip

The second coolest thing are twitter tip bots.

It's amazing what you can do with a digital-native currency. Creating accounts on the fly is as easy as sending an http request to the bitcoind client.

jacoblyles18• 13 years ago

I also really like that you don't need login information with sites like Satoshi Dice and bitbet:

http://bitbet.us/

Your sending address is your authentication. So frictionless, so good.

waterside81• 13 years ago

Either a sign of a bubble or a sign of adoption, there's a billboard on the Lawrence Expy in Santa Clara for a restaurant saying it accepts Bitcoin.

pnathan• 13 years ago

I find it fascinating watching people's reactions to bitcoin. As near as I can tell from an informal eyeballing, the antipathy to bitcoin is correlated to how mainstream the person is.

vy8vWJlco• 13 years ago

I don't think I'm mainstream at all (anti-social, anti-copyright, my preferred political parties can never seem to get elected, ...) but I can't get behind Bitcoin for a few reasons... The biggest being the pyramid-scheme-like distribution of coins slanted towards early adopters. I want an un-regulatable digital currency too, but I can't get excited about trading one financial plutocracy for another when money is tantamount to voting power. Money is just an IOU; money doesn't need to be scarce (like gold), just enforceable (legal tender). If Bitcoin's enforcebility depends on it's exchange with other currencies that have the power/threat of governments and militaries behind them, what ground has been gained?

bitgossip3• 13 years ago

I have heard from people who have heard, that the government of China is through proxies aggresively buying large amounts of Bitcoins for future strategic advantage.

I am not sure at all how accurate those reports are, it is probably just hearsay.

But it makes one think.

rmc4• 13 years ago

It's probably easier and cheaper for the Chinese government to just mine them. They'd control enough computing power.

bitgossip3• 13 years ago

I don't think so, the number of miners is giant nowadays.

DanielBMarkham2• 13 years ago

In the last couple of months, Bitcoin has passed the phase of "BC is nature's way of teaching economics to nerds" and entered the phase of "BC is natures's way of teaching political power to nerds"

Reading through the recent Treasury Department guidance this morning, it looked to me like the U.S. is initially attacking where hard currency comes in and leaves the system -- no matter where in the world that takes place (plug: http://freedom-or-safety.com/blog/the-other-bitcoin-shoe-dro... )

I imagine they'll leave that decision out there for a while -- months or years -- before they start heavy enforcement. But enforcement is coming. And reading through the AJ link, it looks like BC is beginning to integrate quite nicely into the EU banking system.

So now I have an anonymous virtual currency -- that governments can track the movement of. Which might require special licensing, permits, and insurance to broker. Perhaps I'm missing the point here?

We're getting to the point where the big boys step in, and my bet is that it's not going to be comfortable for the people who started the whole thing. I expect more "integration" into the traditional banking system, at least until there's no value-add between cash and BC, and then we've reached our starting point. BC becomes nothing more than "collecting sharp sticks" in such a fashion as to be closely monitored by world governments.

lukasb• 13 years ago

Anonymity isn't the only value of Bitcoin. There's also the matter of exchanging money electronically without paying fees to banks, Visa, or Mastercard. Regulation might make transacting Bitcoin more expensive but still leave it cheaper than traditional approaches.

I'm not a fan of Bitcoin personally (too much speculation for me to be comfortable using it as a medium of exchange, much less a store of value) but I think people underestimate how badly we're getting screwed by the current payment oligopoly.

jacoblyles18• 13 years ago

This is exactly why I don't like the transaction fee model of funding mining in the long-term, and would prefer a coin with a slowly-growing uncapped money supply.

DanielBMarkham2• 13 years ago

So then it truly becomes just another collector's item, but one where when you "cash out" it's all automatically reported?

Why not just trade in something else like gold or coins, where you can buy and sell without having a state security system looking over your shoulder?

I frankly don't know if I'm a fan or not. I haven't been, but the movement seems persistent, and I admire that. I also admire the concept of trying to use technology to free us from ever-more-oppressive governments. However I'm cautious: BC is "version 1.0". Might take until version 3 or so to get the bugs worked out.

I just hate seeing a lot of really smart people work hard to end up in the same spot they started from.

rmc4• 13 years ago

There's also the matter of exchanging money electronically without paying fees to banks

Instead you'll have to pay fees to miners as transactions fees. This is the medium to long term stated goal of bitcoin.

danenania• 13 years ago

That would still be progress, and the fact that bitcoin's value is dictated by democratic fiat rather than governmental fiat is still very powerful and a major differentiator. It is more similar to gold than cash in that respect.

anologwintermut• 13 years ago

Bitcoin is not anonymous. All the transactions take place between cryptographic pseudonyms (the ECDSA keys used to sign transactions). Just how much information you can infer from the resulting anonymous social graph is unclear, but it's probably a fair amount.

mhartl3• 13 years ago

I think the main value of Bitcoin is that it's a perfectly hard currency, not that's it's anonymous (or not). Monetary dilution is alarmingly easy with today's fiat currencies, and replacing them with Bitcoin would fix that basic flaw. (Disclosure: I currently hold Bitcoins.)

seldo• 13 years ago

I think one of the core assumptions underlying people who adopt Bitcoin is "Inflation is bad". I'm no economist, but I don't think this is always the case. Currencies being able to rise and fall relative to each other allows governments to stimulate the domestic economy by increasing the value of exports, or cool down an overheating economy by doing the reverse.

Meanwhile, there are some other basic features of the currency which seem undesirable to me. In particular, the built-in (and ever-increasing) scarcity of coins means that the value of the currency will always, continuously, rise. That seems great, except that an economy built entirely on Bitcoins would therefore have an economic disincentive to investment -- if you can make 5% return by just sitting on your coins, why would you invest in a new business and create jobs and risk getting less than that?

Bitcoins do seem pretty attractive on an individual level, but at the macro scale they worry me, and I'd love to hear somebody with an economics background chime in on these points.

nunb• 13 years ago

>In the last couple of months, Bitcoin has passed the phase of "BC is nature's way of teaching economics to nerds"

>and entered the phase of "BC is natures's way of teaching political power to nerds"

That is one of the best quotes I've read on bitcoin.

The western world is waking up to distrusting their governments. In a low-tech way, most 3rd world countries have been there for decades. Squirreling away savings is a behavior enforced upon citizens with acquisitive governments (hello Cyprus!).

The world is changing, and bitcoin is there to help.

gasull• 13 years ago

> "BC is nature's way of teaching economics to nerds"

The acronym for Bitcoin is BTC.

tvladeck• 13 years ago

This is why deflation matters:

http://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op

wiradikusuma• 13 years ago

Is this the right time to buy bitcoin for "investment" purpose? (e.g buy now and expect +++ return next year)

Bitcoin rises

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