The Bitcoin Crypto-Currency Mystery Reopened
fastcompany.com
fastcompany.com
I don't see why; Bitcoin is hardly innovative in cryptographic research (in fact, that's part of its appeal, since it makes it more trustworthy), and I don't see why should a cryptography expert necessarily be interested in new currencies or financial tools.
Nick Szabo disagrees: http://unenumerated.blogspot.com/2011/05/bitcoin-what-took-y...
As someone who has written research papers, and read quite a few by colleagues, this struck me as significant because people really do have neat, unique phrases that they like reusing, especially when explaining concepts in their field.
But yes, it is still circumstantial at best. And the author acknowledges this, because they weren't going to publish this except as a response to a more recent article.
"computationally impractical to reverse"
vs
"computationally impractical to reverse-map"
And even if it was exactly the same, there's still a multiple comparisons problem.
It's a hard sell though because so much of our lives are tied into the currency of the region that we live. How would you pay your rent online? How would your landlord settle their mortgage repayments?
We tend to believe that the fabric of our society is tied to the currency, and "real-world" money, even if in reality it no more exists than virtual money. In fact in the UK there have been a number of Towns who have printed their own money, and visitors come and buy that currency in preference to the National Currency for use in the town's shops bars and restaurants.
> I have long been an advocate for a single internet currency,
> independent of all governments.
The lack of fiscal control was a common complaint some decades ago against the euro forming, and as another comment points out, the loss of monetary control has exacerbated some European countries' fiscal problems.
Adopting an common internet currency intended to replace global currency will likely fail for this reason, and also because of governments' concerns for the tax/revenue implications.
The Euro is an empirical data point in that direction. This illustrative article from 1998 gives another data point: http://www.slate.com/articles/business/the_dismal_science/19...
The more theoretical explanation why governance is necessary is roughly as follows. While our living standards are ultimately only concerned with real wealth, the fact of the matter is that our economy is driven by moving nominal wealth around, i.e. it is driven by flows of money. If we ignore issues of fair distribution for a moment, our real living standards depend very much on how much money flows per time as aggregate demand towards buying things.
But flows of money add to and subtract from the stocks of financial assets of individuals. And since every financial asset you own is somebody else's liability, your ability to accumulate net financial assets is limited by others' willingness to incur net financial liabilities.
Now economists like to theorize that those things balance out nicely in equilibria, where the desire to accumulate net assets and the willingness to incur net liabilities somehow are matched by a market. In practice, however, the paradox of thrift occurs.
This is because (a) the real world does not actually work the way that those particular economic models say it does, and (b) even if the real world did work that way, the conclusions rely on assumptions about how uncorrelated the individuals in the market are. Particularly in times of crisis, the behavior of individuals and firms tends to be highly correlated indeed, and you end up in a kind of Prisoners' Dilemma, where nobody wants to be the first person to incur liabilities, but because of that, the flows of money dry out, and because of that, the real living standard decreases.
A governing body can break this kind of symmetric behavior by unilaterally deciding to incur additional liabilities via spending.
Note that I implicitly assumed in my argument that your goal is to provide for the society's real living standards, and I subordinate economics to that goal. I realize that many "sound money" advocates do not think that way, though I've never really understood why.
I recognize that the governing body can also cause a huge amount of trouble, but limiting that trouble is what democracy is for.
I accept that the general idea is not bad, but it'd need to follow some basic standards in order to be attractive to regular people, you don't have to put your son college fund in a currency with no central authority and no convertibility, you can't expect any currency to always perform well so you need options, in case BitCoin start to lose it's value and there's no way to convert that money into Dollars or Euros you'll be stuck with a lots of worthless bits that won't let you buy not even Lehman Bros. junk bonds.
It's value is down to about $5 from a high of about $30.
The deflation argument is well argued here http://bitcoin.stackexchange.com/questions/66/will-deflation...
"no central authority and no convertibility"
Lack of central authority is seen as a benefit to some.
Also Bitcoin is convertible through numerous exchanges and has an options market https://www.bitcoinica.com/
"in case BitCoin start to lose it's value "
Make your mind up, I though it was deflationary ?
I personally see a good future for Bitcoin, it may turn out to be the first of many crypto currencies. Anyway I've based my startup on it. http://strongcoin.com
You're mixing up the concepts. Inflation makes the currency lose value, not deflation.
(Note: it's not my argument, I'm just trying to explain why they aren't necessarily incompatible)
> It's value is down to about $5
http://bitcoincharts.com/charts/mtgoxUSD#rg1zvztgSzm1g10zm2g...
this is a baseless assertion and essentially the crux of his argument. maybe real cryptographers don't spend any time thinking about bitcoin because it has the same relationship as twitter and real journalism.