Why Bitcoin will fail | Hacker News Reader

Why Bitcoin will fail

apenwarr.ca

30 pointsfredoliveira17 comments

This is the third time this post has popped up today - but interestingly I see that the previous two posts are no longer listed. So where are they going? Both (I am pretty sure) passed the 10 vote point that supposedly makes them secure from people improperly using the "flag" facility. I will watch with interest.

<edit> Turns out the first post of this link today scored 55 up-votes before being disappeared and the second 19 votes before meeting it's fate </edit>

I always find it interesting that one of the first arguments used against a gold standard is that people who argue for it are idiots -- something economists in the US magically discovered when, contrary to previous agreements, we moved off the gold standard in 1968.

The argument for gold (or a fixed peg to a basket of commodities, also suggested by intelligent economists) is not for the commodities themselves, but against a centralized banking authority that cannot be trusted not to spend into a huge deficit and then print money. The fact that the dollar post-Bretton Woods II is the de facto world currency amplifies all of these problems -- meaning that other national banks (e.g. Korea, Japan and China) have to put massive amounts of their money into dollars.

This also means that any devaluation in the dollar will have catastrophic impact on their economies -- basically meaning that many other governments (and, of course, individuals) are subject to the whim of the Fed and Executive Branch of the US Government.

There is no very obvious solution to this given the substantial inertia in the system and the fact that not everyone plays nicely with each other. For example, even if it were certain that an alternative currency like BitCoin were entirely legal, this wouldn't prevent the powers that be finding some excuse to shut it down.

> I always find it interesting that one of the first arguments used against a gold standard is that people who argue for it are idiots -- something economists in the US magically discovered when, contrary to previous agreements, we moved off the gold standard in 1968.

In large part, economists are evaluated based on whether they are listened to by the "correct" people. Those people are looking for arguments to do what they want to do.

Compare Christina and David Romer's work on govt spending and tax cut multipliers http://www.econ.berkeley.edu/~cromer/RomerDraft307.pdf with their recommendations while in the Obama administration.

They're far from the worst - they were just the easiest for me to cite quickly. In fact, I'd argue that they're relatively good because they're so transparent.

I'm not expert, but this is a good read. However, I disagree with his bullet point stating that "Bitcoins are less convenient than paper currency".

For buying a hotdog, yes. For online purchases, I don't know yet. Sending paper currency in a paper envelope isn't so great either, and we all know that Paypal isn't really fair to everyone.

A bitcoiner argued comparison to the gold standard is dumb:

http://www.bitcoinbulletin.com/2011/05/09/the-bitcoin-paymen...

>What was the Gold Standard? It was a system in which one currency was tied directly to a finite resource. There was no choice in how one could pay, payments were made in a vacuum. All transactions had to be made in a currency backed by gold. That meant that any abuse of the Standard could affect the economy negatively and runs on banks were almost inevitable.

This completely misunderstands the point about the gold standard comparisons. The gold standard is based on the fact that the currency issuer has a certain amount of gold, and each unit of that currency can be redeemed for gold.

Bitcoin is based on the fact that there are 21 million bitcoins, period. The currency IS backed up by itself, by the fact that there are only a finite number available to you. That is exactly how the Gold Standard works. Every USD was backed up by gold, the same way each BTC is unique.

As for choice... there isn't any choice when vendors only accept one currency. If they accept multiple currencies, then there is a choice. However, Bitcoin itself does not provide that choice, because you don't have the option to pay a BTC transaction directly in USD.

FAIL #1: If you like bitcoin, then you must think the gold standard was a good idea.

Complete and total straw man if there ever was one.

FAIL #3: The whole technological basis is flawed.

Followed shortly by:

"First of all, I admit, I don't totally understand the bitcoin algorithms and systems. I don't really need to. "

Persuasive. This does rather suggest that we should all get on with doing this:

1. Work out a non-brute force workaround for SHA256

2. Make infinite bitcoins and then buy real money with them

3. $$$$$$$$$$$$$$$$$$

Don't do this. He's suggesting it. I'm not.

Also: "Bitcoin removes government control over the economy, which means there is no control over the economy."

Yes, because there's no government. Must be why it's called info and crypto-anarchism.

"You are attempting to build nuclear weapons in your bedroom."

Maybe "I" am, but I'm doing it with tools downloaded with TOR, so they CAN'T stop me. If they could, child porn, as a horrible but valid example, would be impossible to get, even on TOR.

I'd be more interested in someone trying to make convincing arguments for Bitcoin.

And yet one more article assuming that if bitcoin doesn't totally replace all the world's currency it will be a failure.

I don't think that's what the article assumes at all.

Success for bitcoin as a currency is a question of whether you can buy things with it. It could reasonably be a successful trading currency, or it could go further and become a successful consumer currency.

I'm not convinced that either are likely and i think that keeping in mind criticisms of bitcoins and currency systems is a good idea. This article mentions issues with both.

I really never know what to say to posts that so ineptly and incorrectly support the correct conclusion.

"Wiser men than I have explained in excruciating detail why you're an idiot"

Never call your readers idiots. Which this author has. It just makes you look like a giant dick head. Which this author is.

"If the gold standard worked ... we couldn't have recovered, period, from the recent banking crisis"

Oh look. We've 'recovered'. Good times are here again!

Bitcoin just misses the point. The problem with e-cash viz. keeping it free of gov't interference isn't actually with the transmission from one party to another of the e-currency. I can open a server in Greenland that tracks currency transactions in Uruguay for dope, and vice-versa, in my own encrypted and secure currency. The problem is how does anyone change in my funny money for a currency that they can actually spend somewhere. And Bitcoin doesn't solve that problem; it just complicates it. Btc leaves it up to the coin holder to figure out how to actually extract value from the bits, and assumes a market will develop. But how will a market develop when the inputs and outputs are all regulated by the same gov'ts that BC wants to do an end-run around?

Oh man, this guy is awesome.

I don't really think this satire is very funny. But maybe thats just me.

Honestly I was hoping for some serious arguments.

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