Bitcoin ‘Ought to Be Outlawed,’ Nobel Prize Winner Stiglitz Says | Hacker News Reader

Bitcoin ‘Ought to Be Outlawed,’ Nobel Prize Winner Stiglitz Says

bloomberg.com

140 pointsjacquesm362 comments

Bitcoin seems like it's custom designed to create bubbles, rather than be a useful currency. It is limited to 21 million units, which means that it cannot support a growing Bitcoin-based economy without rapidly appreciating in value versus other currencies, and depreciating the price of assets.

One of the core purposes of currency is to provide a relatively stable store of value as a medium of exchange. Rapid inflation or deflation is very undesirable. Currency is not supposed to be a get-rich-quick scheme. It's the oil of commerce. But, bizarrely, it's fundamentally architected into Bitcoin that it will fail at that, preferring instead to promote a rush to scarcity that grabs headlines but provides little utility as currency.

Having said that, a cryptocurrency that does its job -- that is, has the features of an actual currency, such as being a stable store of value, by expanding the money supply in proportion to the amount of economic activity it supports -- seems like a very valuable concept. Do any of them do that? I looked at Ethereum, and its design doesn't seem better in this respect.

People make these arguments like fiat currencies never crash.

People also think Bitcoin is complicated, while their understanding of fiat currency is shockingly inaccurate.

Exactly

Fiat currencies usually crash due to different reasons though

Yeah like losing wars and falling prey to despotic leadership. Which bitcoin is much less susceptible to.

And when they do, they fail at their job as a currency, because in that instance they are a poor store of value.

But no major world currency in the last thirty years has fluctuated like Bitcoin has in the last thirty days. Not the yen, the euro, the yuan, the dollar. For lesser currencies that have, it's wreaked havoc on their respective economies, proving that these kinds of fluctuations are undesirable.

Crypto currency is a great idea. Getting rid of central control is fantastic, because a rogue central bank is a real risk to a stable currency. But why cripple it with a design that can't succeed as a stable store of value because of its relatively fixed supply? I get that we don't want someone pulling the levers, but couldn't it algorithmically expand in relation to economic activity, such as transaction volume?

I just hear a lot of people who seem to be speaking their book instead of addressing real weaknesses that, to me, seem unnecessary to the intrinsic value of a cryptocurrency.

You are incorrect in the belief, that currencies of developed world do not fluctuate.

Pound sterling: http://www.macrotrends.net/2549/pound-dollar-exchange-rate-h...

Swiss franc: http://www.macrotrends.net/2558/us-dollar-swiss-franc-exchan...

Euro: http://www.macrotrends.net/2548/euro-dollar-exchange-rate-hi...

Yuan is much worse, though it doesn't matter that much due to capital control: http://www.macrotrends.net/2575/us-dollar-yuan-exchange-rate...

I don't recall the GP saying currencies don't fluctuate. But there's a few orders of magnitude difference in the rate at which they fluctuate.

If we compare only fluctuation down, then except for the first bitcoin bubble, they are actually the same magnitude difference: around 2x

https://static4.businessinsider.com/image/5a09d3f635876e0101...

Though fiat currencies fluctuate less frequent so far.

Incidentally, US dollar is the most well managed currency and that is why Americans do not understand the value of bitcoin.

"The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts." -Satoshi Nakamoto

That brings up another issue, but what about the original issue that GP brought up? If bitcoin continues to fluctuate wildly in value then it isn’t a great currency.

“Identity thieves drain our accounts”

Isn’t that a US-centric issue? Was it shown that satoshi is from the US?

Isn't it a central bank-centric issue?

It has nothing to do with a central bank and identity theft can be solved easily. The first thing that needs to happen is your credit profile is in a default frozen state. The second is that identity theft is treated properly as bank fraud. Poof, identity theft is nearly eradicated overnight.

In other countries, the government provides a reasonable authenticator for personal identity; the banking system is not so easily fooled.

It's not an essential property of central banking that banks will give you the money in an account, or courts will enforce a debt against someone, simply because you know some basic demographic information about the victim.

I think this is a useful point, but the lived experience of a lot of us is that you can sleep relatively soundly at night knowing that your salary is negotiated and paid in U.S. Dollars or Euros or other currencies that are backed by stable governments.

About ten years ago I had a friend who had been convinced by blogs that we were on the path to hyperinflation. He started buying gold and silver like crazy. Back then you could read a lot of smart-sounding people who would tell you all about how the inflation apocalypse was imminent (Fed balance sheets, stimulus, etc.) I almost bought into it too, but I didn't really have any money to sink into gold and silver. Really glad in hindsight.

I think Satoshi, who ever he was or is, was a brilliant engineer and cryptographer but his skepticism of fractional reserve banking and his general distrust of the financial system makes me believe that he only really dabbled in macroeconomics and banking.

We should all be really, really glad that previous innovators did believe in fractional reserve banking, credit markets, and fiat currency. If you like modern life, I mean.

> We should all be really, really glad that previous innovators did believe in fractional reserve banking, credit markets, and fiat currency. If you like modern life, I mean.

Was there no innovation during the free banking period of 1860-1920? I seem to recall at least one ground-breaking invention that happened during then.

The US economy expanded from subsistence farming in 1800 to superpower in 1914 conclusively shows that fiat money is not a requirement for that.

What fiat money is good for is so the government can spend whatever it wants to without needing to tax it or balance its books. Fiat money makes financing of wars possible, for example.

The notion that fiat money makes for stable financial markets is obviously false, although it is persistent.

The US economy expanded from subsistence farming to superpower mostly because of high quality coal and oil reserves, an excellent river transport network, and excellent topsoil. Ideas about monetary policy don't figure. Might as well wonder about the monetary policies of the Mongols.

The rivers weren't remotely good enough, which is why the Erie Canal was dug. For the first 70 years, commerce east to west had to go around the horn of S. America, and the economy still boomed.

The explosion of the railroad system solved those problems, but that was around 1870.

Massive oil, gas and coal reserves are hardly unique to America. Oil, for example, has made Saudi Arabia very wealthy, but not an economic powerhouse.

The canals and rails are the expected endogenous result of a unified european or east asian people blessed with such land, after being formed by a thousand years of scarcity and warfare. It's not a monetary policy or tax thing.

These people just don't get that civilization is energy flows and culture, not laissez-faire economic policies.

Why didn't it happen in S. America, Central America, Africa, etc.? The only consistent pattern distinguishing prosperity from poverty is free markets.

Anyhow, my point was fiat money was not a necessary condition for such prosperity.

Yea, I understand the historical stability and trust. But why not hedge against the off-chance fiat currency goes belly up? We have the ability to do so now with crypto. In my opinion, any prudent investor would use it to their advantage. It’s not all or nothing, it’s a hedge.

There were always options to hedge against that eventuality. E.g. property, stocks, Krugerrands. Sure, your could add Bitcoin to that list but all in all I'd rather have a nice home that I've paid down than I'd own a pile of volatile cryptocurrency. YMMV.

It's designed to appreciate in value / create depreciating asset prices. The fundamental issue is that people dislike depreciating asset prices. If people can adapt to depreciating asset prices bitcoin will work well as a store of value.

I see intrinsic issues as an in person medium of exchange due to transaction times.

every consider that -coin and -currency were misnomers?

these are skeumorphs to a relatable asset class because cryptographic hash units are not relatable.

the whitepaper says peer to peer electronic cash system that allows payments to occur without an intermediary, it does that, it also attracts other people to use it because of its properties, that was the point and now you are adding way to much into the misnomers to rationalize your lack of participation.

Each bitcoin can be subdivided by 100,000,000 units (satoshis).

> Bitcoin seems like it's custom designed to create bubbles, rather than be a useful currency.

It's the other way around. It is designed to expose bubbles.

I think it would be difficult to make an automated currency that does that. However, the overall cryptocurrency ecosystem is similar to the competing privately-issued currencies advocated by Hayek, who thought they would make a stable monetary system without any need for central control.

Not too difficult. You make a currency that is pegged to either a basket of commodities, a basket of currencies, both, our even just gold.

When the price of the basket goes above the original price (inflation) you reduce the mining reward (or in worse cases remove some of the coin from circulation in various ways). When the price of the basket falls (deflation) you increase the mining reward increasing supply.

You would need a trusted oracle, but that is no different than any other smart contract.

You missed the entire point of Bitcoin - allowing individuals to transact securely across distances without the need for a third party. The blockchain (the entire network) secures the transactions.

They won’t want to though, so long as the value continues to skyrocket.

I'm critical of BTC but I think this is true. It is a technological breakthrough in this regard. I'm not entirely sure that the transaction costs are so low that most people would prefer to do it via BTC and not through a third party, however, especially if remittance services start competing by using similar technology in their backends.

There are specific instances where people do not have remittance services available to them -- getting money across some borders, completing illegal transactions, etc. For BTC to be a mainstream money transfer method, however, it will need to be obviously better than just doing it the old way -- paying a 3rd party to clear the transaction.

It's an elegant technological breakthrough in search of a killer app, I think, and that killer app can't just be illegal or extralegal transactions. If that's all it ends up being, governments are going to crack down even more than they already have.

> especially if remittance services start competing by using similar technology in their backends

It's not a technology problem. Transfers could be instantaneous and nearly free without a blockchain. The reason they are not is because of several reasons. Fraud prevention is one. Another is that the cash being held during the transfer is used for investments.

Bitcoin makes this faster because there is no middle man or regulations slowing it down, not for technical reasons.

I agree, blockchain is revolutionary because of what you said. But if we only use it for transactions, not as a store, then we have to switch it in/out of traditional fiat currencies at each end, which seems inefficient, rather than both storing it in blockchain and transacting in it.

I hope we eventually have a blockchain that could serve both purposes.

the blockchain depends on a third party running it

That's like saying a house party requires friends to run it.

> It is limited to 21 million units

A "unit" consists of 100,000,000 "satoshis", just as 21 million "dollars" consists of 2,100,000,000 pennies. It's just an arbitrary unit of denomination. I guess the difference is there would only ever be 2.1 quadrillion "satoshis", instead of basically an infinite number of "pennies".

This criticism is not meant to say that each BTC will become practically too expensive to buy; we all understand that there are granular subdivisions. It's meant to say that a fixed money supply means that as usage of a currency expands, demand for the currency will increase, and supply cannot match. If the value of BTC continues to rise, you'll never want to buy anything with it -- why not wait 10 minutes for the price to drop? In the same sense, you'd never want to sell anything for bitcoin. You'd need to update the price several times a day! It's not very useful as a currency. This is a fundamental flaw with BTC, because there's absolutely nothing anyone can do to fix it, it's hardcoded.

If we're all being honest with ourselves, people are buying BTC now because they expect the price to go up -- not because they expect to use it as a currency in the future. I don't think we know it's a bubble. No one can really know that. I think we do know that it's being used only for speculation at the moment, which makes it a commodity, not a currency.

Bitcoin is still useful for settlement. It's not so useful for pricing things.

No its not. Of BTC is constantly in flux you would never want to write or buy bonds in it. You wouldn't know what you are getting paid back in. Strongly related, if you settle in btc the currency risk (that the fx rate would change) is too great.

That's the fundamental thing people are missing I think. Menu costs are a thing.

> If the value of BTC continues to rise, you'll never want to buy anything with it -- why not wait 10 minutes for the price to drop?

That seems to be latest meme for attacking bitcoin. You know what makes new want to spend my bitcoin? I have a bitcoin debit card, and i like beer. Not a beer in 10 minutes either. So i buy it. The only difference is that the money in my wallet isn't being debased while I'm not buying beer with it. So beer just keeps getting cheaper.

> not a beer in 10 minutes

the transaction would likely take much longer than 10 minutes - unless you paid a transaction fee worth many times the cost of the beer :)

Or i just use my bitcoin debit card?

oh so it is off-chain then? haven't really seen a product like that. Must be the same as leaving your coins in an exchange and converting to fiat when you spend?

> so it is off-chain then?

Yup.

> Must be the same as leaving your coins in an exchange and converting to fiat when you spend?

Yep. I just transfer bitcoin there when I need it. These days though, I just put the cash I want for the next couple of weeks from a paycheck onto it. I actually have to move bitcoin off the exchange, because it has increased so greatly over the past few months. My beer money is increasing in value faster than I spend it.

Exchanges like Coinbase or Gemini are a less liquid example of this.

Not if it’s transacted over a secondary market or exchange. People don’t understand this.

For example, if you transact BTC directly over the network, yea it’ll be expensive. Like 5-8%. But if I transact through an exchange, it’s more like .25-.5%. And it’s instantaneous. They’re a clearinghouse that batches transactions periodically.

Seems there’s a lot of misunderstanding about money in general, including crypto. I for one am glad awareness is raising. As I truly believe money/finance/capital is an extreme, if not the greatest, form of control.

If you store your coins in an exchange you don't have control over them. People don't understand this.

Edit: And 5-8% transaction rates are absolutely insane for a payment system.

Fair. I agree, assuming control in the strictest sense. The lower transaction costs in an exchange compensates for less control.

It's not a percentage, you pay the same fee whether you're sending 20 cents or 20 million, you're paying for the space your transaction takes up on the block.

It's actually not even that, the miners just choose the transactions that pay the highest fees each time they create a block, to maximize their revenue, so you can choose whatever fee you're willing to pay and it might or might not be included depending on what other people are willing to pay.

What? Yes, but there is no reason you can't present the percentage after the transaction is complete.

Also you don't usually buy beer for 20 million, hence the rates will be in the mentioned ballpark.

But why mention the percentage? Just say the absolute value itself. $x per transaction.

So to solve bitcoin's problems they reinvent the current centralised banking system?

«If the value of BTC continues to rise, you'll never want to buy anything with it»

That's a fallacy that keeps being repeated by those who never thought this logic through. I spend bitcoins. I have been spending them for 7 years. Because the thing is no one knows for sure that Bitcoin will keep rising, or even maintain its value. Therefore spending bitcoins today is actually logically the less risky option.

In fact I can show that your argument doesn't hold in another way: if you think the value will keep rising, you should be putting all your life savings into Bitcoin at this very moment... And I know you are not doing it, because you don't know if Bitcoin will keep rising.

You can modify the code to increase the decimal point. It is hard coded to 8 decimal points right now but there is nothing preventing a consensus agreement from increasing it to 1,000,000 or more decimal places.

I don't know why critics like you always have this perspective that it must be an "all or nothing" situation, that Bitcoin must either be designed so that the entire economy can function based on Bitcoin only, or that Bitcoin must not exist at all.

«cannot support a growing Bitcoin-based economy»

Bitcoin doesn't need to support a growing economy. Our economy is fiat-based therefore Bitcoin can do just fine, serving its purpose as a parallel currency to the economy. Its purpose is to provide censorship-resistance, to allow people to escape inflation, to solve merchant fraud with irreversible payments, etc.

But why arbitrarily limit its potential in this way?

If we could run the economy on blockchain, why not?

Like you say, blockchain as a concept has many desirable traits that make it superior to a fiat currency. But if Bitcoin in particular were designed in a way that allowed it to avoid rapid fluctuation, I could see it slowly rising in use, until after many years it's powering a lot of commerce instead of the US dollar. As it is, it's going to reach a ceiling of usefulness that a differently architected blockchain wouldn't have.

There are more than 1000 cryptocurrencies. One of them must have the properties you're looking for.

Not a single one of them has the ability to scale. At least nothing close to production ready.

You have the PoS folks, IOTA's got an interesting strategy and some other paradigms but for now its still conjecture. Decentralized distributed technologies will likely always be slower than centralized monoliths.

Its on the 2018 roadmap for pretty much every (non-ICO-pump-and-dump) coin.

Just because 1000 of something exists doesn't mean they have every property among them.

Really? 1000+? That's crazy.

There is a great irony in the fact that cryptocurrencies are designed to be finite in size to ensure their value, yet the number of potential cryptocurrencies in the world is pretty much infinite.

It’s never going to be useful if it doesn’t get adopted/get traction. The raise has attracted a LOT of people. We’re at a point where even my grand mother is starting to hear/read about it in the news. We’re at a point where my parents are thinking of investing in bitcoin.

At some point. When this hype and unstability will have allowed for tools and bridges to be built, it will be not be welcome anymore.

I think you are saying that the publicity of Bitcoin will have created awareness of blockchain concepts, and from the ashes of Bitcoin will rise a blockchain that could be a good currency, and that new blockchain couldn't get awareness without BC's headline-grabbing hype that clears the way.

That makes sense. Maybe BC is just the sacrificial starter we needed to ultimately result in adoption of a blockchain that works better. And some people will make a lot of money from BC, some people will lose a lot, and in the end we'll get something better.

I'm not saying that this will happen for a different blockchain since the tools are mainly buing built for bitcoin.

If we could run the economy on blockchain, why not?

One potential obstruction to this is probably the speed of transaction confirmation. I believe it takes about an hour for a transaction to be confirmed. If we equate that to a current fiat currency based transaction confirmation which takes just a fraction of a second, we are way off. I may be wrong in this comparison. What I do understand is that, you can't have the blockchain and also the speed of a fiat currency based transaction confirmation. What I don't understand is - Is this confirmation so crucial. I see blockchain as more amenable to existing workflows that takes eons to complete, such as an approval in an organization.

Digital currency isn't competing with credit card networks, it's competing with ACH.

ACH transfers take days; wire transfers take minutes to hours and cost tens of dollars. There's ever possibility of running a digital currency that can clear transactions on the order of minutes with minimal cost. Bitcoin isn't well suited to that, partially because it hasn't been managed well.

A credit card would still pre-authorize against a balance at an institution, but it would settle between the customer and merchant bank on the same schedule (when the merchant cleared their transactions for the week) or faster (eg, on the order of minutes). That makes credit cards considerably closer to cash (fast) than what they are now, like checks (slow).

And for people who wanted it to settle immediately or treat it like cash, they could make a direct transfer, and have it clear on the order of minutes. (Not great for coffee, but something like buying a car.)

Digital currencies can be those things, they're just not.

And for people who wanted it to settle immediately or treat it like cash, they could make a direct transfer, , and have it clear on the order of minutes.

Can you please elaborate on this a bit more. What is direct transfer and how is it different from bitcoin /ethereum payments. From what I understand, they are the same.

That was connecting on to the previous paragraph, and contrasting with pre-authorization through a payment network -- I meant a direct transfer of currency from customer to merchant, instead of using a financial institution as an intermediary to vouch for you having money.

I agree with SomeStupidPoint that at the current speeds it blows away both ACH and wire transfers if you need the transfer to happen pretty quickly but don't want to pay usurious fees.

Every major blockchain is trying to shard or find other solutions to increase scalability of confirmations. Most coins have it on the 2018 roadmap to deliver lots of these improvements which will bring the transaction times way down. If some coins stay slow, then others will be used instead for situations where you need to compete with the speed of a wire transfer.

Aren't the bitcoin transaction fees actually higher than what you would get with banks? I don't know how it works in the US, but I can do free almost-instant transfers inside Germany with no problems at all, including for online transactions (like Amazon).

For transfers under 500$ (roughly) the fees from a proper bank transfer will be more expensive.

SEPA has basically no fee and is usually next day, with SEPA SCT Inst it'll soon be 15 seconds (and no more than 20 seconds) with the same fees, after which bitcoin can't compete on that anymore.

You can transact using Ethereum in a couple of seconds. Multiple block confirmations are important to be sure you are in the longest chain. With big amount transactions you should wait for multiple blocks, being 6 enough to be extremely sure.

Limiting makes sense to me. Just like you cannot mine infinite gold on this planet, you are not allowed to mine infinite amounts of bitcoin or else it would lose value. Will gold be as values as what it is now if it available in abundance.

> If we could run the economy on blockchain, why not?

Because we can't. Given that there are trade imbalances between countries (and assuming we want the economy to actually continue to run, as opposed to transfer all the wealth in the world to first one country, then one person, and then stop alltogether)

That means trade imbalances must be forgiven. Our current system does that through credit creation and crashes (bankruptcies). Bitcoin simply ignores the problem. Therefore bitcoin economic model is designed to transfer all the wealth to the rich and stop.

As opposed to the current model where newly printed money is given straight to the rich (banks)? I don't see how Bitcoin is in any way worse than that.

You can build an irreversible payment system that uses less energy and requires a much smaller transaction fee on a plain old transactional database. For everything you listed, there are better options.

No, you cannot build a system like that without foregoing decentralization.

Who said we need decentralization? Adding that requirement drastically increases costs without providing any practical gain. Card networks provide near instant payment processing with very low fees. Need irreversible payments? Simply use the same architecture without implementing chargebacks.

how exactly do you build a centralized system that is irreversible?

Just don't implement chargebacks. Done. What made you think reversible payments are easier than irreversible?

What if a new CEO comes in and decrees that they add chargebacks?

Take your money before anybody asks for their money back. As a merchant, you will have signed a contract with the payment processor agreeing to certain terms, and they cannot change those terms unilaterally. That scenario is as useless as imagining the main mining groups deciding to roll back to an earlier block.

Mining groups can't roll back an earlier block.

They can if they control a majority of mining resources. They simply start mining new blocks from an earlier block. This happens all the time when there is a race. The loser has to discard their block and start mining off the winner.

The only thing that is stopping this is the miners' incentives, which is the exact same thing that stops contract violations.

Mining isn't exactly that centralized and even if it were they'd only really be able to roll back the most recent block. That's nothing like general chargebacks, as it would be one-off thing and only be in effect for 10 minutes, and is heavily disincentivized as it would destroy the reputation of the miner.

The difference with legal contract enforced systems is they aren't. No one is going to build a system that restricts it's owner legally, and furthermore legal rules are leaky abstractions that have workarounds and spotty enforcement.

You nailed it! I wish others can understand this. Most importantly, media needs to understand this concept as they seem to be spreading a lot of fear as well as fomo around Bitcoin.

> solve merchant fraud with irreversible payments

Irreversible payments will help merchants, not solve merchant fraud. If anything they will cut down on consumer fraud but they actually enable merchant fraud.

It solves the kind of fraud where a customer receives irretrievable goods or services in exchange for a bounced check or credit from a stolen credit card.

Yeah that would be consumer fraud against merchants. No?

But what about the fraud where a merchant screw over the customer? That will easily affect more people.

Yes. Bitcoin certainly shifts the risk from the receiver of money to the payer of money.

Which is in my opinion dangerous, the payer of the money is your average consumer who are regularly falling for spam mail from nigerian royalty.

I count six times you used the word "currency". Yes, some people thought it would be that, but it isn't. It's Bitcoin. "Digital gold" isn't a perfect description, but it's close. Thus, you're flogging a straw horse.

It is not limited to 21M "units", and it never was. It's arbitrarily divisible into whatever units you like. Again, since it is not a national currency, it doesn't matter. It isn't "deflation" when the price of gold goes up.

I guess some people can't let go of the idea that Bitcoin is "supposed" to be like a dollar-denominated debit card.

> I count six times you used the word "currency". Yes, some people thought it would be that, but it isn't. It's Bitcoin.

Presumably "some people" includes its creators, given that "coin" is in the name. If that isn't meant to evoke currency, that's quite an oversight.

> It is not limited to 21M "units", and it never was. It's arbitrarily divisible into whatever units you like.

This response doesn't seem to address the parent's related point: that bitcoin as implemented seems to have inflation and deflation built in.

> Again, since it is not a national currency, it doesn't matter. It isn't "deflation" when the price of gold goes up.

It's certainly the giant problem it would be if it were a national currency, but that doesn't mean it doesn't matter. Speculation in anything can have consequences that are undesirable, and for that reason, it's often regulated.

I've been wrong about the use cases of half a dozen things I've created. Satoshi was a programmer, not a pope. I doubt that people using the word "deflation" in this context understand what deflation is. Deflation in currency follows from the economy going bad, not the other way around. This is why we don't call gold and real estate appreciation "deflation".

Standard monetary deflation happens exactly when the growth of the economy outpaces the growth of the money supply. Things become cheaper, money will be worth more.

When money was made from gold you got deflation every time the economy expanded. Deflation only recently became a sign of economic contraction.

Satoshi was a visionary, not just a programmer. It takes a whole lot more to come up with a brilliant idea such as Bitcoin.

The idea of a distributed electronic currency predated bitcoin. What Satoshi did was solve a couple of remaining problems with the predecessors. Thinking of him as a "visionary" is a mistake.

Vision without execution is simply hallucination. I will always see Satoshi as a visionary. Too bad we dont know him as a person.

That is arguably one of Satoshi's biggest victories.

By removing himself from the picture Bitcoin stands alone, controlled by the masses - which is exactly how it ought be. If instead Al Gore created Bitcoin, it will be intrinsically tied with his name as some sort of central person which is contrary to the entire idea. The reason I think this is particularly important is because decentralization is generally going to be seen as intuitively impossible to laymen.

And the possibility of a person is always greater than the reality. Fischer is still the greatest chess champion to ever live in the minds of many, even though he only played in one world championship - and against a champion who was on his way out in any case. Him disappearing after a meteoric rise paradoxically cemented his legacy. Satoshi is a much more meaningful creator than John Doe could ever be.

Well put!

If it's not a currency it's simply a pump and dump scheme looking for a greater fool. The problem is when it's peak value is reached there is only risk without upside. So, eventually this creates a death spiral as nobody wants to buy in and everyone wants to get out.

Sure, I will buy a novilty bitcoin when it's once again worth a penny. But, novelty does not create enduring value.

Well there is a cap on how much will exist so with even a small amount of additional demand for it each year it should continue to go up in value. Thats not to say the value can't go up so much that it would take approximately forever to get back there once it crashed.

I am not sure why you think the demand should increase year over year. Also, at some point people are not going to run full nodes and it just dies.

The current peak in bitcoin also looks exactly like an exponential blow off peak as people invest entirely on the expectation of future price rises. The way people are talking about it and the behavior of the price on the chart looks exactly like NASDAQ pre-2000. I'd almost suggest shorting it, but "markets can remain irrational longer than you can remain solvent". Since there's nothing tangable at all about BTC (it's not like its a corporate stock with an actual cashflow and capital behind it) I don't see where the floor is. And since BTC mining is starting to use s noticeable fraction of the world's power consumption at some point the music is going to stop and all the miners will head for the exits because the marginal profit isn't there.

I'm not sure I agree with Stiglitz that it should be outlawed since I'm uncomfortable with protecting people from their own stupidity, but I understand the analysis he's doing to conclude that.

Bitcoin. I mean, it's in the name.

I think you'll excuse us as thinking that the original intent was to make, I dunno, coins, like a currency.

Yes, it may have evolved past that now, but the intent and the use of bitcoins up until maybe 13 months ago was that bitcoin was a currency. Now it's millennial gold or something. What will it be in another 13 months? Who knows.

The internet was designed to route around damaged caused by nuclear war.

Cryptocommodity? Cryptoasset?

Actually it is limited to units. You can still divide a Bitcoin into satoshis, and these satoshis are limited in their printing. He used 21 million units of Bitcoin, but since you want to get technical, it's actually 21,000,000,000,000,000 satoshi. I don't know what possible source gave you the idea that divisibility == unlimited, but sadly, it's wrong.

Also, please take your "digital gold" meme and use it on r/Bitcoin. Not only does Bitcoin's price contain the speculative valuation of a million people who call it a currency (regardless of your particular vision) but that vision also has a million flaws. It's rather funny, when someone points out its flaws as "digital gold" then the Bitcoin troglodites come out and call it a currency. When you point out its flaws as a currency, they correct you that it is, in fact, digital gold. When in fact, it's just a technology medium for transmitting value without the economic mechanisms to be a currency, nor the historical/economic/political/social mechanisms to be a 'digital gold'.

Well said.

I've moved to altcoins for sending money, the transaction fees of bitcoin finally pushed me to another one.

I wish I'd buy a little extra to speculate myself, but I'm pretty impatient so I'd better not.

> I don't know what possible source gave you the idea that divisibility == unlimited, but sadly, it's wrong.

It would require a hard fork, but it is technically possible to increase the divisibility of the base satoshi unit. And it should be an uncontroversial change if needed, since it will not require any redistribution of money.

With that said, it doesn't seem likely that the value of a bitcoin will increase in the near future to the point where we will actually need more than 21 quadrillion units of precision.

What are there flaws in the Bitcoin as digital gold analogy? I don't follow r/Bitcoin and would appreciate a summary.

From my limited level of understanding, it seems that the only differences are that you know that Bitcoin has no inherent value at all (gold has some since it can be used to make jewelery and gold-plated audio connectors, among other things) and you know exactly how much Bitcoin can ever be mined.

It's marketing.

Instead of explaining what Bitcoin actually is you compare it to something very simple that everybody knows and derive "digital gold" ...

Gold is also marketing. No one is going yaya over other, similarly rare elements [1]. Tantalum is significantly less common then gold, for example, and doesn't tarnish! And yet gold is 320x more expensive than tantalum [2] [3]!

[1] https://en.wikipedia.org/wiki/Abundance_of_the_chemical_elem...

[2] https://www.metalary.com/tantalum-price/ [3] https://www.bullionbypost.co.uk/gold-price/today/kilograms/u...

There are several attempts at stable cryptocurrencies like MakerDAO and BitUSD, but because the price never changes they get no press coverage.

Thanks. I'll check those out.

Bitcoins won't run out until 2140, that is far enough into the future that most people won't ever think about it.

What seems to be the case though is that the decimal is placed at the wrong part of the number. Perhaps what we know of as a micro bitcoin should actually be what is called a bitcoin. The problem is that people see whole things which makes bitcoins seem unaffordable.

~80% of the 21 million already exist, and ~95% will exist by 2025, barring some cataclysmic event. So it's a bit misleading to just say that it "won't run out until 2140".

The fact that a fixed number exists does not limit its utility, as arbitrarily more bitcoins can be created using fractional reserve banking techniques.

There has been a wave of minor cryptos in 2012-2013 experimenting alternative economic models such as long tail emission, stable inflation, unlimited issue tied to difficilty, demurrage, etc. Most perished during the last major market crash and the only old school alts that survived are Dogecoin (2% fixed inflation p.a.) and Litecoin (almost 1:1 copy of bitcoin).

Let me ask you this... Where does the value in the USD come from? Why does the world accept the USD as a globally accepted standard? What migjt cause that sentiment to change? Where is the value in usd???

A combination of belief and the threat of violence.

> expanding the money supply in proportion to the amount of economic activity ...

If that's what you want, then Bitcoin is not for you. You should be satisfied with dollars, yen and euros.

Others have different priorities where an open-source, global, fungible, non-government, fixed-supply commodity is a better fit.

Live and let live, to each his own. We're happy to coexist.

> priorities where ... deflationary commodity... is a better fit

Um, like what? Why would you want a deflationary currency?

Because its value goes up.

Well sure, tulip price rise too if you can convince people to buy them. It's a pretty undesirable property for a currency though, unless you never plan to sell anything to anyone who uses a different currency.

I guess what I'm getting at is that it is deflationary as a currency which is bad. As an investment vehicle or value store it seems to be unmoored from any fundamental value.

Which screws over any business that has a time lag between buying parts and selling the final product. If the value of money goes up as the product is manufactured, you have to reduce the price. If money deflates ~faster than your profit margin, profitable business is impossible.

[1] after expenses and other minutia

You can hedge to fix that problem, if you are so inclined.

Hedging might fix small amounts of temporary deflation, but it isn't going to fix the fundamental problem of not being able to recoup the initial investment in materials.

The only way to fix this would be to require payment before manufacturing the goods so there isn't a time lag.

A currency is a "medium of exchange," i.e. you can use it to buy and sell stuff. If your "currency" might buy 20% more stuff tomorrow (like Bitcoin, sometimes), you won't use it to buy that stuff today. Instead, you will hoard it and use something with a more stable value to buy stuff.

Maybe not "buying stuff" unless you truly need it would be a boon to the environment. Endless growth is for cancer, not the economy.

Agreed, but I kinda like buying food and shelter, and it's much easier to do so with dollars or euros than with barter goods or magic digital beans.

Yes, that is the standard econ. argument. I'm not completely certain that I buy it, though. Yes, people may wait to buy things. But ultimately people still want to consume stuff. If they time shift that consumption, who cares? What good is wealth un-utilized?

Let's say you own a pile of X. If the value of X only fluctuates a few percent per year, like a major currency, you will freely trade your X for stuff, because you can always get more or less the same amount of stuff in the future. But if the value of X is changing 10% or more per year (or per day), you will either exchange as little X as possible if it's going up, or dump it all if it's going down.

That's only true if you have the expectation that that volatility will settle in the future, though.

Deflation increases the value of currency... and debts that are denominated in that currency. Highly regressive systems that would accelerate the increasing wealth gap probably sounds appealing if you're on the privileged side of the gap.

I'd agree with this if it didn't dump carbon into the atmosphere at a staggering rate. Investors should buy carbon offsets with their newfound wealth so they're not externalizing that cost. [toned down]

I hope you don't drive a car. If you do, you're dumping carbon into my atmosphere! You should buy an electric car and only run it on solar electricity so you're not pushing that carbon on the rest of us.

I don't understand why you've gotten downvoted. Your analogy is fair in my opinion. I made the same analogy to video games and porn, both which use inordinate amounts of electricity.

If we respond this way[1] to every argument, no issue will ever get resolved. I don't disagree with you regarding electric vehicles, but it doesn't address the issue that bitcoin is an environmental catastrophe in the making[2].

[1] https://en.wikipedia.org/wiki/Whataboutism [2] http://www.newsbtc.com/2017/11/29/bitcoin-mining-causes-incr...

Bitcoin mining is inefficient compared to what? You have to see that mining bitcoin is getting more efficient by day, while hiring a bank clerk can only reach a certain level of efficiency.

In that sense bitcoin might be a better choice vs. hiring bank clerks.

The fact that you and your family exist is already pushing tons of carbon into my atmosphere. What do you propose?

I believe you're looking for Monero.

Ethereum does have a long-term plan which aims (IIRC) at a low inflation rate of around a percent or less. Plus the PoS is in development which would greatly reduce energy waste.

>Having said that, a cryptocurrency that does its job... seems like a very valuable concept. Do any of them do that?

Why? What particular problems does it address that other currencies do not, and what would ultimately ensure its value or price stability?

Commodity currencies have value because they have non-currency uses. Gold is useful in electronics, manufacturing, biotech, and jewelry, and so on.

Fiat currencies are backed by tax authority, and control over territory... or in other words violence. We know fiat currencies are valuable because people have to use them to pay taxes, to use natural resources, etc.

Remind me why we should use a currency that someone merely imagines into existence. At least if I hand you an IOU scrawled on a piece of paper, I'm promising you something, and anyone who would find that valuable would be placing a bet on my trustworthiness, as dubious as it may seem to some. But bitcoin doesn't even offer that.

> It is limited to 21 million units, which means that it cannot support a growing Bitcoin-based economy without rapidly appreciating in value versus other currencies, and depreciating the price of assets.

Gold is like that too, you can't dig a lot more gold even if the global economy suddenly explodes. Yet gold is a reasonable way to store my assets. Why do you think of BTC anything different?

I don't really see how "it doesn't serve any socially useful function" yields the statement "it should be outlawed." The former applies to many, many things that are still legal. Disappointing to hear such weak reasoning from someone who is lauded as one of the greatest minds of our time. I can't watch the video, so perhaps that particular statement lacks some context.

But isn't that level of ideological punditry what Stiglitz's is today all about?

Ideological punditry doesn't serve a useful purpose, so it should be outlawed.

Is he like the Ann Coulter of Economics/Finance? Genuine question.

I don't even hold it against him. He probably just realized that he can have a much more entertaining life (more speeches, more books sold, etc) by being more provocative and telling the New Yorker readers how wholesome their views are. I would myself certainly prefer that over a life spend between teaching Undergrads another decade the same models and fumble with statistics long enough to write another paper that explains the world.

what does it mean to be "the ann coulter of economics"? do you mean having a propensity to make inflammatory comments?

(wikipedia claims he supports the british Labour Party, so i'd wager their politics are quite different.)

I wouldn't go that far, though it's sort of a flawed analogy for comparison.

Economics generally is a field where lots of people hold on to their prior beliefs, and those beliefs are difficult to change, even in the face of new evidence and data. Even though most economists agree with each other about the basic sort of stuff that you learn in undergraduate classes, there's lots of disagreement when it comes to broader, value-judgement type questions. There's also a lot of disagreement about what data means that is difficult to resolve with more studies, and studies are hard because we can't do double-blind control trials of macroeconomic policy.

So, it's not necessarily unusual for economists to express crackpot-sounding opinions on matters of public interest without actually being crackpots within their field. Stiglitz has some weird ideas (I seem to remember he suggested the government should pay people to dig ditches and fill them back in to get out of the recession), and they may even be wrong (I myself don't really agree with him), but he's not a guy who just says stuff out of nowhere to provoke people like Ann Coulter.

His argument seems willfully ignorant, at best.

When Stieglitz said:

  it doesn't serve any socially useful function

he was saying that in relation to:

  bitcoin is successful only because of its potential
  for circumvention, lack of oversight

So what he's really saying is that circumvention and lack of oversight are not socially useful functions. I'm no fan of bitcoin and I'm a huge Stieglitz fan but I'm going to disagree with him there. Privacy (lack of oversight) is a socially useful function. However, bitcoin only gives the appearance of privacy while giving the reality of lack of oversight.

Please don’t use codeblocks for quotes. Can’t read them on mobile.

They scroll on mobile devices... just swipe your finger.

Which is difficult, and in no way preferable to having them already word-wrapped.

> who is lauded as one of the greatest minds of our time.

Says who, really? A lot of Economics Nobel Prize Winners have been chosen because of their "compatibility" with modern politics, not for the merit of their work.

The economics prize wasn't even one of the orginal prizes that Nobel created. It was almost definitely invented to justify Western political ideology. I believe the other prizes largely serve a similar purpose these days too, just think of that Obama peace prize.

Please explain to me how the 2017 Nobel Prize for "developing cryo-electron microscopy for the high-resolution structure determination of biomolecules in solution" is meant to "justify Western political ideology." Or maybe the one for "decisive contributions to the LIGO detector and the observation of gravitational waves is easier." Or maybe "their discoveries of molecular mechanisms controlling the circadian rhythm."

Hard sciences are not without politicisation either. Just look at this wiki entry:

https://en.wikipedia.org/wiki/Nobel_Prize_controversies#Phys...

There's definitely a trend of scientists from e.g. Russia claiming to have been the originators of ideas that others got prizes for.

Academia in general tends to be very Western-centric and so these kinds of issues - and all the other problems with Western cultural hegemony (patriarchy, racism etc.) - are pervasive in all facets of it.

Right, because non-western society has no racism or patriarchy. It's all just enlightenment and peace in the east.

While you certainly have a point, I never suggested that this wasn't the case. Just that these problems are not absent from certain institutions which many of us perceive as being "objective".

Did you even read the comment you are responding to? It was about the Nobel in _economics_

Yes, I read the comment. It said:

> I believe the other prizes largely serve a similar purpose these days too, just think of that Obama peace prize.

It was referring to the other Nobel prizes explicitly in that statement, and it was to that point that I was retorting.

Well the reference was pretty clearly made to mention non-scientific prizes, since he gave as an example the Peace Nobel Prize.

It's unfortunate that Stiglitz made such a lazy proclamation. First of all, BTC can be used with sufficient anonymity as to frustrate any meaningful enforcement mechanisms. But if we stipulate the notion of a successful prohibition of BTC, what about all the other cryptocurrencies out there? Should we ban them, too? If so, it seems to me that we'd have to ban most of technologies that underpin the modern internet.

Stiglitz is in favour the government printing money as a solution to many economic problems. What he must be concerned about is that if bitcoin is the medium of exchange, that lever no longer exists. Monteary inflation controlled by public servants or politicians is no longer a thing in management of an economy.

I'm making no comment about whether he's right, or whether bitcoin is good, bad or indifferent. This is what needs to be considered about Stiglitz's position and it's worth discussing, with him as well as other economists.

A very good point. A decentralized "free" currency provides many advantages but it does offer to threaten the levers of monetary policy. Some of which (in theory anyway) keep things stable.

Not to mention Stiglitz stands to lose quite a bit of status if Bitcoin supersedes the US dollar as a world reserve currency.

No, instead no one controls inflation and you return to the boom and bust of pre-fiat currency

https://media.ycharts.com/charts/2dd4f9a7b087a1eb6f763d81a97...

Which, of course, is a very difficult environment to conduct stable business in.

All this is by the by, of course. The chance bitcoin supplants USD is approaching zero.

Some of the smartest people I know work on Wall St. and when the topic comes up of cryptocurrencies the conversation turns to outright borderline anger and instant dismissal. They simply don't believe it can have any useful value as a store of value or be used for exchanging goods or services.

I have seen this reaction twice before. First, I see it when we talk about politics. People on the other side just can't believe it when facts are presented that refute their belief.

The second, is when the internet came about. Talking to people in different industries about how it could be used to revolutionize video, news, and just about everything often resulted in a reaction of dismissal.

Wall St. is a deeply ingrained industry and Bitcoin, Ethereum, etc are already sucking a big chunk of transactions from NYSE and everyone on Wall St looses. So it is a natural reaction to dismiss it.

> They simply don't believe it can have any useful value as a store of value or be used for exchanging goods or services.

I found it very useful for buying cyproterone acetate online as it's not available in my country.

Also there's stuff that's not even illegal, like kink, but for which credit card companies refuse to allow related transactions because of respectability politics or too much fraud.

I’m not so sure. With no evidence, I buy into the conspiracy theory that Wall St. is deep into crypto. It’s a new breed of fish, and these are people who live and breathe intricate, counterintuitive financial systems. I’d be shocked if they hadn’t identified some alpha in crypto and were exploiting it.

Alpha? so far is buy and hold is pretty good.

For most people yes, but I surmise that it’s easy to manipulate up and down and therefore predict as well for maximum gain.

Those at the forefront were already into cryptocurrencies back in 2013. Read Nuclear Phynance forums.

Actually, big banks are interested in blockchain technology, because having a distributed ledger of stock ownership would help cut out exchanges and brokers, and facilitate international trade.

The broker divisions of big banks are probably afraid of it, or dismissive, but trade execution and asset management divisions are investing in the concept.

My (probably unpopular) bet: blockchain will revolutionize much of finance, but Bitcoin specifically will crash and eventually be ignored.

Separating bitcoin from blockchain is separating it from its incentive structure, which is the very thing that makes it a disruptive invention. It's almost like they're trying to unmake the invention.

Nothing wrong with using the blockchain without paying billions to the people who bought Bitcoin early.

None of that belief has anything to do with bitcoin and nakamoto consensus.

Indeed. Big banks using blockchain technology as a distributed ledger of stock ownership might have nothing to do with bitcoin.

Blockchain without the distributed consensus structure and independent incentivized miners is just an inefficient redundant database.

"My (probably unpopular) bet: blockchain will revolutionize much of finance, but Bitcoin specifically will crash and eventually be ignored."

I'm with you. Just because it's clear a new technology will change everything (the internet, blockchain), it's not clear which individual players will win the race (Myspace, Altavista, Friendster).

Could blockchain be used to replace/side step aging mainframes written in COBOL? I'm not expert in the legacy systems or in blockchain but my understanding is that the reason transactions in traditional systems take so long to complete is that the COBOL mainframes are still set up to do batch processing. I wonder if using a (regulated) blockchain to record and process transactions could work to replace or enhance the legacy systems to process transactions in more realtime.

what I find kind of amusing about this is that the thing that creates the value of other wall st properties is the supply and the demand, not the usefulness or otherwise. in that the usefulness of the properties is just one of the elements that drives demand, but not a necessary one..

I mean, come on.. 400 million for a painting?!

in a sense, bitcoin is a much purer market. you would think wall st types, of anyone, would understand this better.

Charles Stross recently said it should be outlawed based on the environmental impact of Proof Of Work. http://www.antipope.org/charlie/blog-static/2017/11/unforsee...

We should ban video games and porn too then. The amount of electricity going into powering all the consoles and computers around then world toward a useless endeavour is immense.

Video games and porn are so precious, though! I wouldn't call them a useless endeavour.

I'm being facetious to make a point.

Reading through the comments it looks like you’re discovering the truth in Poe’s Law [0] which roughly translates to sarcasm inevitably backfires in large persistent distributed contexts like HN or other forums.

[0] https://en.wikipedia.org/wiki/Poe%27s_law

I don't play games, but give me something that replaces porn in utility and I'll agree with you.

I think you're saying, "give me something that I value as much as porn and I'll agree with you"

Bitcoin's utility is about as subjective as porn's utility.

Don't know why this is downvoted; utility and value are subjective under basically every modern economic theory there is aside from Marxist ones.

Please explain how video games and porn don't serve a useful purpose. I'm thinking it's possible that porn contributes to a lower birth rate, which would more than offset the amount of power consumed to produce and transmit pornography.

https://www.psychologytoday.com/blog/all-about-sex/200904/do...

I don't actually think they should be banned. I'm making a facetious analogy to prove a point. Bitcoin is at least as useful as video games and porn.

Ugh, sorry. In the Age of the Great Orange One, it's almost impossible to tell joking from earnestness.

How is Bitcoin even remotely as useful as video games or porn? It's 99% speculation and 1% buying drugs online.

Tell all the Chinese that successfully expatriated money how useless Bitcoin is.

Just curious: who's taking the other side of those trades (BTC for yuan) and what are they doing with all the yuan?

Bitcoin has the culture of hodling* so I doubt how much of the pre-existing coins go into the market. So mostly the local currency (yuan/etc) would go to cover the mining costs and salaries of employees and owners. Don't know the impact of closing down of exchanges in China some time back.

* - holding but culturally called hodling, perhaps some Grame of Thrones reference(?)...Satoshi did not move their coins and that carries on. So far it has been very resilient. Exchanges hacked and it carried on. But fear remains of some black swan events e.g. Suddenly Satoshi coins on the market etc.

So you have an argument for porn being useful (not that I disagree), but you can't find a single reason for why cryptocurrencies would be useful? Or even Bitcoin alone?

Bitcoin could adopt a proof of stake system if the core devs and users thought there's no other way for Bitcoin to survive. The Bitcoin ecosystem seems to be very conservative and they only make big changes when they are under high outside pressure.

If Proof of Work was banned, Bitcoin would still be here tomorrow, is what I'm saying. Perhaps it's a good idea to ban PoW, but it will not have any significant (long-term) effect on Bitcoin's adoption.

The difference is that they are optimizing for efficiency. They are trying to maximise uselessness while also minimising environmental impact. Bitcoin maximises uselessness while also maximising environmental impact.

If you had a fusion reactor bitcoin would consume all of it's energy output.

If we're going to pass a law for that reason, we should pass a meaningful price on carbon. Then all the bitcoin miners using fossil-based electricity will go out of business.

It's true that it's actually the differential in power prices that leads to its rapid expansion. The underlying tech will raise or lower difficulty based upon market incentives. So forcing mining onto renewable sources of energy by putting a price on carbon would benefit everyone.

Except the poor

Make it a fee-and-dividend program and the poor would come out ahead.

Laws have been passed for that, and we should keep passing them, but it hasn't had the effect you posit on bitcoin mining.

We do not have a high, global carbon price. If it's not global, the miners will just relocate to areas that don't have it.

But a ban on bitcoin would just relocate miners to places without the ban so I think it's a fair comparison.

By that argument, having children should be outlawed based on the environmental impact.

You are joking, but some people are seriously proposing that.

http://www.independent.co.uk/environment/children-carbon-foo...

Oh I know. But what these things all share is that the government shouldn't be in the business of regulating freedom. Governments shouldn't be in the business of telling you what you can do, they should be in the business of asking you what's important to you.

Freedom is hard. Actually requiring probable cause before being subjected to the justice system used to be a thing. Then the US government started stealing peoples money without ever even charging them with a crime. So now we have crypto. So the government can't do it anymore. "But but but what if they are committing a crime!" they say. Prove it i say. You know. Rule of law. That's what democracies are supposed to be about aren't they?

And that attack on freedom now has crypto as a response. The thing that it is counter-intuitive about crypto, is that the solution to electronic anonymous and censorship resistant money, turned out being record everything forever. When someone can flick a switch and take everything from you, you don't have freedom. When you can access the ledger from anyone, prove that it it is valid, and be able to send your money to anyone, for whatever purpose, you do.

This technology has been developed as a direct response to the insidious and anti-democratic implementation of AML/KYC laws on a global scale over the past 30 years. The extrapolation of these laws, given a long enough timeline, is slavery. Not figurative slavery, actual slavery.

Bitcoin is the technical response to that problem.

Issues of energy and thermodynamics are pretty darn important:

https://dothemath.ucsd.edu/2012/04/economist-meets-physicist...

I'm frequently annoyed by people who think the unsustainability of exponential growth is somehow specific to Bitcoin, and not the entire global financial system.

Global finance consumes a lot of energy and resources, and encourages businesses to harvest natural resources and find externalities to continue a compounding growth rate. It is mathematically impossible for this to continue unabated on a planet with a fixed amount of resources. Eventually, something will have to give. Hopefully markets will find a graceful solution, but the transition will probably be ugly.

Well, that's pretty much the point of the article, so I'm glad you agree.

Bitcoin, of course, actually introduces additional problems, which is why it sometimes gets particular attention.

Proof of stake will fix that though.

If a workable version is ever created. I don't think it's a solved problem at this point.

can we also outlaw dollars since basically a huge chunk of them go to bombing third world countries?

Aviation causes a hundred times more greenhouse gas emissions then Bitcoin.[1] (And imagine how large you could make that look if you used "more then x countries" rhethoric.)

[1] https://medium.com/@cryptarchist/how-much-greenhouse-gas-emi...

so in other words... bitcoin produces as much emissions as 1% of every single flight on earth

that's still pretty insane.

yeah, sound money is not nearly 1% as important as getting from one place to another a little faster.

I've said this before on HN, but let me reiterate it here: Bitcoin is very easily compared to BitTorrent. Everyone's falling all over themselves, much like people did in the early 2000s. People thought that BitTorrent was going to "change the world" -- and sure, it helped catalyze the inevitable media distribution revolution of the past decade (Netflix, Hulu, Amazon, iTunes, Spotify), but where is BitTorrent now? That's right: it's mostly used to download stuff illegally.

Similarly, BTC and ETH provide no immediate value when compared to fiat currencies. Their main functional (that is, non-philosophical) upside, like TOR, for example, is to do illegal shit. Sure, there are various incidental benefits (like privacy), but this is a misdirection: businesses have been able to hide fiat currencies in off-shore accounts for decades.

the good news is that when network neutrality ends, we'll go back do downloading and storing our data instead of renting it from service providers.

Is that good news? I don't really want to buy more hard drives and worry about backup plans.

You will store your files on the blockchain! /s

Filecoin or whatever Bram Cohen's project is called, is very interesting. Bitcoin and other blockchains store all data on every node which can be wasteful, but for file storing just having 1/100th or 1/1000th of the nodes would be amazing coverage.

I haven't looked into Filecoin, but (in general) the topology of the block-chain is terrible for file storage (off the top of my head: the block-chain itself ends up being massive and the blocks end up being of variable-size).

being a packrat has a cost associated with it.

One of the big pros of BitTorrent is that it allows you to download huge files over an extended period of time on a slow connection. Back in the day when torrents were starting to take over things like Limwire/Kazaa, this was a big deal. This was also in the days before video hosting (i.e. YouTube and, frankly, PornHub) and cloud storage were a mainstream thing.

Also, due to peering, torrents tended to allow you to max your connection compared to shady direct-download websites which required premium membership (e.g. Rapidshare).

BitTorrent is still a viable solution for big files and slow connections. Some scientific datasets are available via torrent for this reason.

Media distribution has certainly helped kill off torrents (I say kill off, they're still widely used, damped perhaps?), but another part of it is faster connection speeds, no bandwidth caps in many places and the availability of cheap file hosting (e.g. via Mega).

I don't think I disagree with you; my point was twofold:

1. The pros of BTC and BT aren't that impressive. BTC is more of a currency side-grade, not an iteration.

2. Both BTC and BT are primarily used for illegal stuff. This doesn't help their cause.

> I say kill off, they're still widely used, damped perhaps?

I would say "delegitemized".

Media companies have worked hard to convince the general public that data can be "owned", and that "piracy" is literal "theft", meaning that pirated content creates some loss they can claim as damages, thereby filling the fifth part of the legal definition for fraud.

The media oligopoly wants to provide encrypted data (DRM), which isn't static (changing keys), and therefore won't scale on bittorrent.

> but another part of it is faster connection speeds, no bandwidth caps in many places and the availability of cheap file hosting (e.g. via Mega).

That is certainly a major part of it. That, and the association bittorrent has with piracy are why most people don't think to use bittorrent to distribute static content.

> it helped catalyze the inevitable media distribution revolution of the past decade

Just because the tightly entangled media oligopoly chooses to ignore its usefulness does not make it worthless.

Bittorrent is extremely useful, dependable, scalable, and usable.

Bittorrent can be used in any situation where static data is distributed to many peers. It's the static part that doesn't mix well with DRM, and therefore gets ignored by media distributors who are convinced they are obligated to "protect" data from its fundamental ability to be copied.

Economics as a discipline is fraught with normalcy bias. Macroeconomics assumes a government. Taxes are assumed. Deficits are a given. Central banks, fiat legal tender, and fractional reserve banking -- none of these existed 150 years ago, yet they are as foundational to modern economics as mass is to physics.

That's why bitcoin is such a disruptive invention. It solves what was previously the unsolvable Byzantine Generals Problem. Before that invention, a cryptographically secure decentralized store of value was not possible. Now it is. That's why it is such a disruption.

I found this [1] a more compelling argument, probably not from the future but pretty much nailed the 2017 valuation 4 years ago.

[1] https://www.reddit.com/r/Bitcoin/comments/1lfobc/i_am_a_time...

The ignorance displayed by very smart people with regards to cryptocurrencies is fascinating.

Any truly transformative technology is very polarizing.

The printing press and cars (horseless carriages) were followed by people who HATED these things when they were first introduced into society.

However, it does not follow that every very polarizing technology is truly transformative.

Can you outline those ignorances in some sort of testable way? Or is this just a long way of saying “I disagree”?

The ignorance stems from some sort of belief structure that allows one to believe that it would even be possible to outlaw bitcoin. Either bitcoin is valuable, or it is not. If it is, one should question why it is, and more importantly, why it is more valuable to people than the alternative. But rather than admit the problems of the alternative, he suggests something that is completely impractical (and downright sinister) because he would prefer not to discuss the reasons for its value in the first place.

So to state your hypothesis as a testable bet, your claim is that a government could not outlaw the possession, sale or purchase of Bitcoin. His claim is they could. If any government does this you’re the ignorant one? And if they try and fail he is?

No. We have historical precedent :

https://en.wikipedia.org/wiki/Executive_Order_6102

The only thing it did was increase the value of gold. And our world is far far far more able to circumvent any order like this, as any wealthy person storing their money in panama will tell you.

Bitcoin is the reckoning for that belief. Rather than discuss the reason for the failure of their fiat system, which is what they're discussing right now, they want to restrict your freedom of exchanging the fruits of your labor for tokens in a system outside of their control.

Freedom isn't about you asking the the government what you can do. Freedom is about the government asking your permission to govern in the interests of their constituents. If they can't convince you to use their token, they should start working now to come to a resolution that respects the rights of the people who choose not to buy their token for anything other than taxes.

A counter argument https://en.m.wikipedia.org/wiki/Confederate_States_dollar

That isn't really a counter to any argument I'm making. If anything, it supports my argument. The government that supported that fiat ceased to exist, therefore the fiat ceased to exist. Sounds like a pretty good example of the dangers of fiat, and the advantages of a decentralized store of wealth.

Owning a particular currency was made illegal by a government. That government enforced that policy by force of arms. That currency ceased to exist. Ergo it is not ignorant to claim that s government can eliminate a currency & quite the opposite it’s ignorant to say its impossible.

Making it illegal didn't make people not have it, just like the gold executive order, so that hasn't proven your case. Making the government cease to exist and therefore ceasing to be redeemable only proves my case.

They could eliminate it because it had a central point of control. There are over two hundred other countries and a black market that can't be stopped even if the US outlaws Bitcoin.

What it also did was transfer a lot of gold from private individuals and corporations to the government.

Yes. I expect at some point the wealth stored of bitcoin on exchanges will be too great a temptation for some governments. All the more reason to ensure you don't store your bitcoin on an exchange.

It's funny, what the US did there isn't all that different from what the various Sovbloc countries did when they forced people to exchange their 'hard' currencies to the local currency at some ridiculously low exchange rate.

I think the testable bet is "If the US government outlawed possession of Bitcoin, the black market value of Bitcoin within the US would fall to $0"

Yeah. Just like drugs.

That’s an exceptional bet. Would you suggest that someone who took the ‘yes’ side of that bet was ignorant simply for being on that side?

Maybe, I'd at least say they have limited knowledge of the history of prohibitions

See I view it on the other side. Someone who has studied currencies that weren’t backed by nation states (or worse were actively worked against) would pretty easily find reason to take that bet.

His entire position is that currencies are the domain of nation states. It’s a reasoned position, based on his long distinguished career.

Oh I get it. He doesn't understand how bitcoin works, and why would he? It is a very complex subject. Bitcoin is something very new, and all it took to make it work was the genius solution to the Byzantine Generals Problem unsolvability proof. Without that solution, decentralized crypto-currencies don't work. It is pure genius.

An obvious form of ignorance is saying "bitcoin has no value", (maybe with the "intrinsic" word thrown in there), despite the manifest fact of a market price, and of a huge run up. Value is like beauty, in the eye of the beholder, and dismissing bitcoin, or CounterStrike skins, or World of Warcraft assets as valueless is ignorant.

They can't see the simple "repetition becomes truth" driver of bitcoin price, as in the longer the price is not zero, and the longer people talk between themselfs about the bitcoin price, the more real the idea that bitcoin has value becomes. This is how money is born, by a shared belief.

He specifically says that Bitcoins value derives from perception.

He further says that it’s value is largely derived from its “potential for circumvention”.

The idea that random dude on the internet can call a Nobel Laureate & one of the most cited economists in history “ignorant” about these issues is hilarious.

I think Stiglitz is coming from the position that ALL 'circumvention' is a societal harm. He is working from a position which supports Federal govt first, and individuals second.

Confiscating money from child pornographers is a pretty clear moral good.

Civil asset forfeiture, the confiscating the cash a poor single-mom is taking to buy the car because "it could be drug money" is a pretty clear moral evil to me.

Which one of those happens more often? I'd guess the later is 100-1000x more frequent.

Bitcoin is not moral, it offers circumvention to all, for better or worse.

Sure but his position isn’t “ignorant”. Quite the contrary he’s one of the worlds experts on it.

Disagree all you want. But ignorance isn’t the issue.

Yeah, 'myopic' or 'out of touch' would probably have been more accurate adjectives.

What are "myopic" and "out of touch" but euphemisms for ignorance.

Intrinsic value has a seperate definition to market price. A bubble is, after all, characterised by a divergence between the two.

The rule seems to be "If tied to the banking industry in any way then cryptocurrency ignorance."

The assumption "very smart people" is the reason for the fascinating disparity. IMHO a better assumption would be "well trained, well established, well rehearsed, highly skilled". Tesla was "very smart people", these are not.

...if they could just provide novel or sophisticated arguments, rather than angry & seemingly frustrated opinions - I might feel they were "smart"

Decentralisation is going to change damn near everything. Yes, it's the printing press, electricity, the plane, the transistor, the internet.

Governments should make it illegal because governments need to have control over the money supply.

We need taxation. We need monetary policy. The Bitcoin obsessives think these are bad things. No. They are very important and good things.

I'd rather not be fighting my fellow humans because they've been claimed by a different empire - either violently through the funding of outright war or nonviolently through economic wage slavery. Governments are unable to resist the siren song of the inflationary treadmill, as the alternative is to fall behind the others. Uniformly diminishing their ability to conscript (militarily or economically) is one actual step towards world peace.

(disclaimer: I'm not personally bullish on bitcoin itself)

Inflation can be properly managed by responsible central banks. It's not really a problem.

Also "wage slavery" is perpetuated by private companies not governments, so not sure how you aim to eliminate that by killing governments.

> Inflation can be properly managed by responsible central banks. It's not really a problem.

But it isn't, so it is.

> "wage slavery"

Wage slavery is perpetuated by debasing the unit in which you are paid. That's inflation. I don't want to eliminate governments. I want governments to stick to the role of governing, not punishing people because they want to save to better themselves.

People need to work not because of inflation, but because they get a fixed amount of money and spend most of it on things they want.

Not only that, but wages largely track inflation so your argument fails.

> Not only that, but wages largely track inflation so your argument fails.

They might track 'inflation'. They don't track prices.

Wage over 20 years 2x. House price over 20 years 10x.

>> House price over 20 years 10x.

Mortgage payment over 20 years 2x. House prices vary inversely with interest rates. When you go to get a loan the bank figures out how much cash flow you've got and assumes some percentage will go to paying the loan back. They start from that monthly payment and figure out how much you can borrow at the current interest rate (this is where lower interest rates mean borrow more money for the same monthly payment) then you run off to but a house and everyone (seller, agent, appraiser, everyone) has an incentive to get you to spend as much as you possibly can. So ultimately you're 30 years of payments will be based on your income. How much of that money goes to the bank vs the seller depends on interest rates. Low rates mean higher prices and more money to the seller. High rates mean lower prices and more money to the lender.

This all stems from people living paycheck to paycheck too, so the affordability of things has nothing to do with price and everything to do with size of payments.

> Mortgage payment over 20 years 2x

Completely and utterly false.

http://www.slate.com/articles/business/the_united_states_of_...

Furthermore that attitude makes me physically sick. You are a debt slave providing the fruits of your labor to the banking industry, all priced at the maximum value that can be extracted for the longest period. All because inflation punishes savers.

I stand by my statement. Payments have not gone up nearly as much as housing prices and it's due to the lower interest rates - which have mostly fallen over the last 40 years. The attitude makes me sick too. I never said it's MY attitude, just how the world works for enough people to drive the trend. I live more responsibly.

The problem is that you cannot save everything the same way you can save money or gold.

Food you consume has to be produced. We can't just produce a lot of food in one year and then store the excess for 100 years until you finally want to consume it. The food is gone. Your deflationary currency is worthless if you can't buy anything with it.

Spot where inflation started to be managed by the central bank:

https://media.ycharts.com/charts/2dd4f9a7b087a1eb6f763d81a97...

Spot the part where hedonic quality adjustments started being made to the CPI.

More importantly, in your graph, spot where they removed house pricing from the CPI.

https://www.bls.gov/cpi/quality-adjustment/home.htm

HINT: 1983.

> We need taxation. We need monetary policy.

Yes to one, no to two. Monetary inflation allows governments to tax you by stealth. They then manipulate the inflation statistics (hedonic regression anyone?) to make it seem that inflation is lower than it is, so that your purchasing power is debased faster than the statistics. That's why house prices have exploded for 40 years, and just about anything you buy costs more by some orders of magnitude than what it should given CPI.

Bitcoin is the reckoning for that system. The government will be forced to accept that people will not hold their token except to pay taxes. When it is not possible to know the worth of someone, which is already painfully obvious for the very wealthy, the only taxable system will be on the use of goods and services in their respective governanace area.

moreover monetary inflation absolutely kills poor people and enables rich people to do things like leveraged investments, and drives the middle class into investing in corporations to stay afloat for retirement (essentially a subsidy for the wealthy).

I think bitcoin will finally separate the good debt from the bad debt. It is my personal belief ( as in i don't know of any formal theory ) that debt should only be incurred for the use of building a productive asset. In a deflationary currency, this encourages businesses to ensure that productivity increases will have greater returns than savings. Instead, our financial system has encouraged the acquisition of debt for fixed assets. The only thing this has done is bid up the price of those fixed debts with debt, and handed over the money for supporting that system to banks and their owners. In order to stimulate growth in such a system, the only way that you can function is to tax savings. That's what inflation is. What it forces people to do is to invest in increasingly risky assets, because of the loss of their purchasing power. Hence bubble after bubble after bubble. Crisis after crisis after crisis.

Bitcoin will eventually stabilize to an ever appreciating value asset. But what it will allow you to do is save for a house. If you have a business proposal that encourages people to pay you for a good or service, people will invest their savings in it and take on that risk. Banks will instead move back to providing capital to businesses, using savings from people that are willing to invest. Businesses will again focus on productivity increases, because that's how you get access to capital.

I also don't think it is going to be resisted quite as much as people think it will be. People still need to pay their taxes, and that is not going to stop. The main thing it is going to do is prick the bubble of consumer debt, and remove the banking middle-men from that space. That alone is a multi-trillion dollar industry, let alone the annuities that banks own and graft from, from those assets. Removing these people (i.e. banking debt suppliers) from positions of power, by strangling their access to capital, is a justification for bitcoin in its own right. Imagine a world in which banks didn't control governments.

That's the way it is supposed to work i think. It is pure genius.

> Monetary inflation allows governments to tax you by stealth.

It's even worth since rich people can easily exempt from it by allocating their wealth into inflation-proof assets while working class have to take a full exposure of it.

Your argument fails even with traditional currencies.

It's legal to own Euros in US (or the other way around), even if the US government can't control the Euro money supply, or people exchanging USD for Euros (yes, they have some levers, but it's not control)

Somewhat off-topic but I like how lowly Nassim Taleb tends to think about Nobel laureates.

“[Bitcoin] doesn’t serve any socially useful function.” If that's what Stiglitz said word by word than he clearly lacks the ability to consider non-American perspectives.

In bubble times like this everybody talks about it, that's what's annoying me most. Everybody is eager to predict the bubble bursting. But few people put their money where there mouth is or just be honorable enough to give more precise predictions and later speak up if they predicted badly. They'd just quietly ignore they said something.

(Which is why I'm personally interested in predictions markets where you could challenge anyone to take a bet on a quantifiable outcome. But it seems they're not ready yet and probably won't be next year either...)

He's probably correct, in our current system it should be outlawed.

However our current system isn't going to be fit for purpose for much longer. I'm hoping decentralised currencies leads to more decentralisation elsewhere, right up to the idea that it facilitates direct democracy.

this might be what your thinking of.

https://voteflux.org

Yeah, although I was thinking of this a lot before Flux came about.

Should everything that "doesn’t serve any socially useful function" be outlawed? That seems like incredibly shallow thinking that would include numerous activities. I know the Nobel doesn't mean much these days, but come on. If this guy is the smartest mind in economics today, we're fucked.

1. Stiglitz is effectively calling for perpetuating the surveillance state - one with no privacy, no strong encryption. How else can you ultimately stop cryptocurrencies?

2. Does Joseph Stiglitz have a right to exist, even though his social utility is low? After all, he is quite old, has already done the work recognized in his Nobel prize and is unlikely to be of further use to society. Utilitarians will undoubtedly disagree with me here, but I assert that each of us has the right to trade communicate freely with one another, and to write and maintain whatever programs we wish to.

Have efforts been made to produce a cryptocurrency that is compatible with monetary policy? Such that supply can increase or decrease either on command or naturally?

Would be easy to implement, but hard to manage (what if govt loses privkey for printing money?) and build trust (what if next congress decides to stop this currency).

#1 could be solved by having a scheduled key rollover system, anchored robustly by the central bank (eg public display of key fingerprint at headquarters).

#2 doesn't sound any different from other fiat currencies or bonds issued by nation states. It's in the issuer's ecnoomic self-interest to preserve their credibility.

>Such that supply can increase or decrease either on command

who would use it? you might as well have tether (or the government backed equivalent)

>or naturally

and what metric do you use determine the "optimal" supply? and how do you prevent that metric from being gamed?

The “naturally” part is interesting...we manipulate money supply partly to hit target inflation rate. Would there be a way to use the ongoing transactions on a blockchain itself to calculate an inflation metric, and then naturally increase or decrease the money supply to keep it around 2-3% or whatever?

That's exactly what I've been thinking. Of course the inflation target would be arbitrary, but once agreed upon and baked into the blockchain logic it could maintain itself based on some parameter or set of parameters

The average life expectancy for a fiat currency is 27 years.

He’s right it should be. (From his perspective as a govt stooge.) And it will be. Whether that can stop it is the question.

Government can still extract money from your bitcoin wallet. It works like this:

1. Ask if you have bitcoin and how much. If you lie you go to jail for perjury.

2. Ask you for N bitcoin. If you resist you go to jail.

The entire technical advantage relies on you effectively lying to your government. Not a good plan.

In the US, it's not usually the government that is the problem. It is the banks (or PayPal).

Ever had your PayPal account frozen for an unknown or arbitrary reason? It happens and it is scary and frustrating.

PayPal only does that because if it didn't it would end up being regulated like every other bank. In Europe this is already the case.

When you give a bank your money you become an unsecured creditor to the bank.

It really isnt your money at that point. Talk to the folks in Cyprus who had 10% taken off the top

> When you give a bank your money you become an unsecured creditor to the bank.

In quite a few places there are central bank guarantees against bank failures. Usually with some kind of cap, 100K or thereabouts.

As a follow up here check the solvency of the FDIC... .250k per account and the highest number of accounts it insured that it can cover was 1.5% according to what I can find

The other 98.5% are out of luck... great guarantee

Still beats a 3rd party that yields immediately to lawful orders.

It would be easier just to collect bitcoin through a goods and services or value added tax at the counter. It's what is going to be required anyway. It will be the only way to effectively collect taxes when you remove banks.

"1. Ask if you have bitcoin and how much."

Why would I have to answer that question?

But how will they find out I lie?

except hiding 256 bits is easier than hiding pallets of $100 bills, or tons of gold bars.

>The entire technical advantage relies on you effectively lying to your government

isn't that a prerequisite of any method?

Not to mention, 0. Ask businesses (who don't have an incentive to lie on your behalf) how many Bitcoins they gave you. If you tell them fewer Bitcoins than the businesses reported giving you, you go to jail.

I mean, that's basically how the IRS works now for cash dollars.

Cryptocurrencies are P2P so they can't be truly stopped, just like P2P piracy couldn't be stopped.

Centralized exchanges are about as big of a weakness as centralized public torrent sites are, but even that could be changed if the need for decentralized exchanges truly arises. Right now, decentralized exchanges have a big chicken and egg problem (you need sellers to buy, and viceversa). But if the top 10 cryptocurrency exchanges were shut down, the chicken and egg problem would disappear.

Just stop calling it cryptocurrency already. Call it cryptocommodity and everything about it starts making sense.

The guy is scared of a currency not controlled by governments. He should get used to it instead of freaking out.

This guy seems to think you can possibly outlaw Bitcoin. That is funny.

But cryptocurrencies do serve a socially useful function: the ability to send money without a transaction fee from a third party.

Without a transaction fee? It currently costs ~$5/transaction.

https://bitcoinfees.info/

It's incredible how often I see people who are "sure Bitcoin is going to be worth millions", or otherwise singing it's praises, also claiming there are "no fees".

It seems very few Bitcoin holders have ever even attempted to utilize Bitcoin. Despite holding a decent amount myself, I think things are going to get very messy when reality sets in and the market runs out of greater fools.

> from a third party.

Miners aren't a third party?

Where exactly did you think those fees went?

Miners aren't a party to the actual transaction, because they are not a part of the cryptographic proof. They are akin to your electricty provider, your internet provider, your computer parts provider, your OS software provider, etc etc.

It seems like you've already made up your mind that I'm wrong, so we'll leave it there.

If you're not wrong, please explain to me what miners are - if not a third party that receives fees.

> from a third party.

I do appreciate the reply but please try to appreciate that my comment was not just about the cost of the transaction, but to whom the cost is going.

Where do you think those fees are going? How do miners not qualify as a third party?

> Nobel Prize Winner

Why is it necessary to appeal to authority when making such claims? Because he has nothing else to back up what he is talking about?

Because IRL such appeal to authority holds weight with the public. Whether it should or not is another thing but when a Nobel Prize Winner says something about his field people tend to pay more attention than when the corner hot dog salesman says the same thing.

Ponzi schemes are illegal and so long as bitcoin remains a vehicle entirely for speculation, it's sorta-kinda-almost a ponzi scheme.

Quite a few ICOs and altcoins certainly were created with the intent of such a scheme and should definitely be considered illegal.

In reality, intent matters, and since bitcoin was not created with the intent of creating a pyramid, it seems likely it should be legal, at least by that particular possible illegality.

Your assertion that bitcoin is "a vehicle entirely for speculation" is false. It provides convenient methods for transferring and storing value. Even if it were merely a vehicle for speculation, that is not the criterion for being a Ponzi scheme. Is gold a Ponzi scheme? ICOs are a different matter, but they shouldn't be lumped in with bitcoin any more than a little league baseball team should be lumped in with the New England Patriots.

I’ve been asking this a lot lately. What is the canonical indicator, other than price, that a Bitcoin bull would point to, that shows it has increased utility this year?

It has become an increasingly valuable store of value. That's the thing about bitcoin. It is actually money. The thing you're acquiring is money, and the thing you use it for is money. It is 'money' the asset that is being acquired, and its deflationary nature makes it a more valuable 'money' asset to hold than an inflationary one. So its increased utility is the system of 'money' the asset storage itself.

Can I spend it in more places? For more things?

I have a bitcoin debit card. I can spend it anywhere I can spend $. The only difference is, the money in my wallet increases in value while it waits there for me to spend it, instead of decreasing in value like $.

And that is a new thing this year? You weren’t able to do this last year?

They've been available for over a year. I started doing this earlier in the year. Couldn't be happier.

Just so you know, I don't see visa / mastercard going anywhere. Until you can use bitcoin using the same paywave tech that credit cards use, the over-the-counter use case of bitcoin will not be realized. The alternative is just too easy. But with a bitcoin debit card, you get the best of both worlds. My money isn't being debased while it sits in my wallet, and I have the freedom to use it when I want.

I think it will be several years before the layer-2 tech of bitcoin like lightning allows that type of functionality. The existing system is just too effective. I think it is more likely that lightning will be bootstrapped through organic growth like paying your local dealer than it will be by paying for your groceries.

I don’t follow these things closely but remembered debit cards issued as early as 2014. Is the increased utility from more options or ease in opening?

The increased utility is not having the value of the money in my wallet being debased.

That’s just the price argument rephrased. If the price tanks tomorrow this utility is removed.

> if

If aliens invaded tomorrow this utility is removed. It doesn't take away from its utility right now though, does it? Bitcoin would have to drop 85% of its value to have only doubled in value this year. So what you're doing is using an argument of 'hypothetically it might not have utility' where I'm pointing out where it does, in fact, have utility. Right now. And it has grown in utility. Right now.

You could have saved a long thread by simply saying you didn’t think there was another indicator other than price...

Bitcoin is money. I'm not sure what you think we're talking about.

Financial markets always price the future utility, not the present one.

A bitcoin bull could point out to bitcoin futures on professional financial exchanges as an increased utility, as in now professional money managers can trade bitcoin in a professional way.

That is an excellent example of an indicator. Do any of those exist currently?

There are firm promises of them becoming available really soon now (TM).

http://www.cmegroup.com/media-room/press-releases/2017/10/31...

https://www.bloomberg.com/news/articles/2017-11-29/nasdaq-is...

Number of user accounts on Coinbase.

https://www.cnbc.com/2017/11/27/bitcoin-exchange-coinbase-ha...

This is another great indicator. The skeptic would suggest it’s just a derivative of the price, but I think the simple fact that Bitcoin is exposed to more people indicates it has more utility so I’m good with this indicator.

Aside from price, it's a (very rough) measure of the number of people who would be willing to accept Bitcoin as a form of payment. The 'utility' of Bitcoin is you can pay for things with it, so the number of people who will let you pay for things with it is a reasonable-but-somewhat-lacking way to value the 'fundamentals.'

gold is actually used to do things, outside of jewelry its used in various industrial applications (for example, the computer you are using right now). so there is a floor to the value of gold, because its a real commodity. there is no floor to a digital currency with little real world adoption/use.

No, it provides very slow and inconvenient methods for transferring and storing value. Literally its only redeeming quality is that you can use it to pay for drugs on the dark web.

You see no value in sending $1,000,000 across the world in 10 minutes for less that $4? No value in date-stamping documents on the Blockchain, and proving asset ownership? No value in locking your wealth cryptographically among several keys, shared by your family or business partners?

The guy is obviously clueless. Obviously. He claims that bitcoin’s value is derived from expectation of “future growth” implying that it’s not the case with literally any other investment in any other instrument be it a currency, a common stock, a commodity or a bond.

An “economist” that didn’t grasp the trivial notion that “inherent value” is a myth? Nobel prize my ass.

https://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect

Well isn’t that convenient

That link was directed at you...

Reply on news.ycombinator.com