Bitcoin - Sound Currency or Ponzi Mania?

[BaalChatzaf]

I believe it to be a sound, real digital money. There are lots of naysayers who either don't understand economics or who don't understand the technology. I think I understand both quite well being interested in economics and in computers for quite some time. And perhaps I'm young enough to not recoil at the idea.

It has all the characteristics of money.

1. Scarcity

If you read the white paper, you will understand, you cannot simply create a Bitcoin, it requires the input of CPU time and electricity to solve a hash problem to create a proof of work. This cannot be faked. The only way to do it is with CPU time and electricity.

2. Divisbility

Some have said it's bad that Bitcoin can be divided so much, but so can gold, that's the whole point. You can divide gold down to weight of one atom, technically speaking.

3. Portability

You can carry it on your phone, on your computer, or wherever. It's instantly wire-able. It is in fact better in this regard than traditional money gold and silver.

4. Objective

What I mean here is that it costs money to produce it. It costs people hardware and electricity. These inputs are objective, they cannot be faked. It will always cost money to produce bitcoin. They cannot be created ex-nihilo. They have to sell for more than they cost to produce or people will not produce them anymore.

There is no ponzi scheme involved. Early adopters got rich because the initial bitcoins were worth next to nothing, and mining them initially was much easier.

They are in fact more objective than paper fiat money which only costs the paper and ink required to print them, and which can be produced in any amount by simply putting more zeros on the end of number printed on their face. No such thing is possible for bitcoin.

Finally, no one controls them, and no one ever can. There is no central power here. That's the way money should be. There are not even any middle men.

BItcoin is superior money. I predict governments around the world will either ban them, or make Bitcoin accepting business pay exorbitant taxes on profits.

The real innovation here is the block chain technology which can be implemented in many ways. There are several alternative competing coins. This is exactly how it should be.

On the other hand, you still have to pay taxes in and receive payments in your national currency by law and threat of penalty. Still, I predict crypto-currencies will rise as people start to see the benefits and the markets mature with much less volatility.

Some will say it's not physical. Yes it is. A hard drive is physical, and the information stored on it is physically stored, it's just not often thought of in that way. I personally favour a Gold standard, but that won't happen. And making a private Gold backed currency gets you in jail. I see no problem with something like Bitcoin though. There is room for innovation even in the age old realm of money. Gold itself is backed by...? Why is gold the thing that you want backing your currency? Because it takes money to produce, it is scarce, you cannot fake it, it's objective, it's fungible and uniform, compact, and portable. Boom. All the qualities of bitcoin. The only thing gold has over bitcoin is that there is a market for it as Jewelry, as a non-monetary use, and there exists a long historical president for its use as money. I do not believe that to be fundamental though.

Disclaimer: I do not own any Bitcoin.

If something is computer based, sure as sunrise it can be hacked. Count on it.

Ba'al Chatzaf

[Brant Gaede]

Hacking a system is not the same as accessing data.

Bitcoin is only an IOU in fiat currencies such as the dollar. So are Treasury bills which also have an interest coupon. Bitcoins have no interest coupon for they are not backed by any taxing power or even the power of an issuing government to print more of its fiat currency to pay off its debts. Bitcoins are a competitive threat to all sovereign countries with their own currencies so they will all do what they can to utterly destroy them.

--Brant

[Marc]

I loved that book!

I'm in Canada too eh.

Donde estas ?

[Marc]

Hacking a system is not the same as accessing data.

Bitcoin is only an IOU in fiat currencies such as the dollar. So are Treasury bills which also have an interest coupon. Bitcoins have no interest coupon for they are not backed by any taxing power or even the power of an issuing government to print more of its fiat currency to pay off its debts. Bitcoins are a competitive threat to all sovereign countries with their own currencies so they will all do what they can to utterly destroy them.

--Brant

Could not agree more

[Nerian]

I recently went through all the biggest altcoins. I found Quark to be the best alternative based on technical points. Currently they are only $0.0115 per Quark.

[Jules Troy]

I loved that book!

I'm in Canada too eh.

Donde estas ?

[Jules Troy]

Alberta, usually out in the bush outside of Edmonton taking wildlife photos in my spare time.(mostly birds)

[Marc]

Alberta, usually out in the bush outside of Edmonton taking wildlife photos in my spare time.(mostly birds)

Nice !!!

[Selene]

Andreas Antonopoulos, a Freeman contributor explains that:

Open-source technologies such as bitcoin are a combination of open-source software, common technology standards, and a participatory decentralized network. These layers create a three-tiered commons where innovation contributed by users adds to the common platform, which makes it better for everyone.

But for the last few hundred years, we have generally thought of goods as best belonging to the private domain. Consider that, in economic terms, the “tragedy of the commons” is a market-failure scenario where a shared public good is overexploited. In this scenario, each user has an incentive to maximize his or her own use until the good is depleted.

The example used to illustrate this economic theory is a grassland (a “village commons” in British English) that is unregulated and overgrazed by cattle until it deteriorates to a muddy field. The tragedy of the commons occurs when individual self-interest combined with a large economic externality (the cost to the commons) create a market failure for all.

He concludes that:

The underlying festival-of-the-commons effect created by open-source software, shared protocols, and P2P networks feeds into the value of the overlaid shared currency. While this effect may be obscured in the early stages of adoption by speculation and high volatility, in the long run, it may create a virtuous cycle of adoption and value that become a true festival of the commons.

The festival is now open. Who will join it?

http://fee.org/freeman/detail/bitcoin-technology-a-festival-of-the-commons?utm_source=Foundation+for+Economic+Education+Current+Contacts&utm_campaign=1778d01059-In_Brief_2_18_2015&utm_medium=email&utm_term=0_77ef1bd48e-1778d01059-13801008

[Selene]

Bitcoin Crime Wave Breaks Out in NYC

NYC firefighter kidnapped, robbed and stabbed by crypto thieves

Bitcoin, the technology that’s meant to revolutionize the way we think of money, is simultaneously revolutionizing the way we get mugged.

A New York City firefighter named Dwayne Richards was recently held up, stabbed and robbed by thieves who were after his bitcoin, the Observer has learned. From what we’ve discovered, Mr. Richards—who is a firefighter in lower Manhattan—was mugged and left bleeding after meeting the robbers under the pretense of exchanging bitcoin for cash in Williamsburg, Brooklyn. He’s alive, well, and refusing comment.

Refusing comment? Why? His stupidity? Or, is he involved in buying, or, selling something "illegal."

Who did he meet in Williamsburg Brooklyn? That is a very "interesting" "neighborhood."

A...

http://observer.com/2015/02/bitcoin-crime-wave-breaks-out-in-nyc/#ixzz3SJDQ0Zkt