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Comment by vladd | Hacker News Reader

People keep confusing the software and the currency.

An open source distributed software system is available for free and is able to offer privacy, cross-border protection and prevention of asset seizure. But these characteristics are properties of the code and its forks, not of a specific coin or Bitcoin in particular.

What offers Bitcoin value is the level of marketing that makes people pour money and graphic cards in this specific implementation of the code. It doesn't have any scarcity - the code is forkable, there aren't any laws making it mandatory to use it for commerce/taxes, nor any laws that prohibit alternative coins from appearing. In fact, many other coin systems do exist, with the same advantages:

- http://solidcoin.info/

- https://en.bitcoin.it/wiki/Namecoin

- http://litecoin.org/

- http://bitcoin.stackexchange.com/questions/1895/what-bitcoin...

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I think the whole world will benefit from there being a single, standardized and widely recognized Bitcoin rather than a bunch of balkanized forks.

Bitcoin is what everyone knows and it's what has a shot at success. If the choices get muddied, I don't think anyone benefits.

I am personally amazed at how much the author of bitcoin got right, he is clearly a genius.

However, bitcoin is not perfect, interestingly, it seems as though bitcoin's creator did not predict the rise of mining pools. They could eventually exert the same amount of influence over the bitcoin economy as banks do today with government backed money.

There are other technical issues which could relatively easily be fixed in the code but would require a "hardfork", a change in the protocol meaning that either all nodes upgrade to the new protocol, or a new blockchain is started.

https://en.bitcoin.it/wiki/Hardfork_Wishlist

Wow, the whole point of bitcoin is freedom. You're essentially arguing that this freedom is cool and all, but we'd all be better off if with less of it.

A certain ideal or principle of freedom is what interests you about Bitcoin. Author of grandparent might have different reasons for his interest in Bitcoin. So, the contradiction or double standard you see is not really there.

Did you down-vote my comment because you don't agree with me?

>What offers Bitcoin value is the level of marketing that makes people pour money and graphic cards in this specific implementation of the code.

More specifically, people trust Gavin Andreeson and the BTC core team more than any of the people behind the other forks. Gavin & co. have a pretty good record of commitment to transparency, openness, and doing the right thing for the community.

Some of the other forks, like SolidCoin for example, were done with some sketchiness (holding large pools of initially mined coins in reserve).

Each passing month so far only solidifies Bitcoin's lead in that crucial aspect of a virtual currency.

Ultimately, the value of a currency is derived from its supply relative to its demand, the same as any other commodity. Governments can artificially stimulate demand by making it legal tender and only accepting taxes in it, or by managing the supply via gold/silver-backing or central bank monetary policies, etc.

Same with BTC, and the drivers of that demand will vary over time and as economic conditions change.

Yes but so what? You can't apply the same software to fiat currencies for international settlement. The attractiveness of Bitcoin is precisely the power of open source software and asymmetric cryptography. Bitcoin has value because it's one of the only few currencies with fixed protocols and definite "game rules". These are exactly the pre-requisites for a currency to be fundamentally "open-sourced".

> Bitcoin has value because it's one of the only few currencies with fixed protocols and definite "game rules".

Yes, like I've said, the power of Bitcoin is solely in its marketing.

The power of any currency is solely in its marketing.

Wrong. Pretty much all currencies are imposed by law. See http://en.wikipedia.org/wiki/Legal_tender

The 'value' of the currency ultimately comes from people's opinion in it, and whether or not it is legal tender is just one influence on that opinion. You might be forced to accept payment in a currency but that doesn't mean you value the currency much. Eg the Zimbabwe dollar.

it's not so much "accept payment in" as "pay taxes in"

I can accept bitcoin, e-gold, marks, cattle, whatever I want as payment... no problem, until tax day rolls around.

At that point, I need to figure the value, in dollars, of the two sheep that bob gave me for helping him scale his wool broker website, and then I need to figure the value of the rusted out nissan I gave joe for the 128GiB ram that I used in the project, and from that figure the profit I made. I then need to pay taxes, in US dollars, on that profit.

So, it's not so much that I'm forced to accept payment in dollars as that accepting payment in anything else is a huge pain in the ass for my accountant.

(I am forced to pay my taxes in dollars, of course, but to me that seems pretty reasonable. All businesses choose what currencies they accept payment in. The fact that it's harder to avoid doing business with the government than with other businesses doesn't really change that.)

That only works inside a country. If everyone else refused to accept some country's currency they'd be screwed anyway, "legal tender" or not.

You are required to pay US taxes in USD which creates a huge and steady demand.

Bitcoin is backed by the businesses built around it.

Bitcoin is not backed by anything at all, which is part of what makes it such a fascinating experiment, and part of why it is so successful at challenging peoples' assumptions about what money really is.

You can talk about what economics and money really are for years of your life on forums and never get anywhere.

It's only by actually doing something like bitcoin that you can actually make a difference.

It's a bit like Jon Blow writing Braid to make his point about the immorality of the game industry.

Nope. If that was the case it wouldnt be worth much at all, considering the lack of business built around bitcoin. I think the value comes from the trust that people place in it and the huge hype that it got during the bubble.

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