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Comment by vijayboyapati | Hacker News Reader

This reminds me of the great article by Mencius Moldbug on monetary restandardization: http://unqualified-reservations.blogspot.com/2011/04/on-mone...

"If Bitcoin becomes the new global monetary system, one bitcoin purchased today (for 90 cents, last time I checked) will make you a very wealthy individual. You are essentially buying Manhattan for a quarter. There are only 21 million bitcoins (including those not yet minted). (In my design, this was a far more elegant 2^64, with quantities in exponential notation. Just sayin'.) Mapped to $100 trillion of global money, to pull a random number out of the air, you become a millionaire. Wow!"

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My guess is that it's more likely to be another cryptocurrency that becomes the standard. Once the right people figure out how to be the main beneficiaries. Also, I'm not sure that a depreciating currency is good for society as a whole, since it encourages hoarding, rather than investment.

Did you mean Bitcoin is appreciating because it's deflationary?

FWIW bitcoin is still inflationary (in terms of money supply increase)-- and quite a lot more than traditional currency; although the rate of increase halved at the start of the year.

I believe this question is hotly debated among economists. I think deflation is probably fine: In the end, money isn't any good if you don't spend it, so hoarding has a natural limit.

>>In the end, money isn't any good if you don't spend it

The money that you hoard, invest and which grows itself is the best kind of investment.

I know of a few people who saved through their life to buy real estate and rent it out. The next generations have practically slept through their lives without ever working and yet continued to live like millionaires.

Read "The Paradox of Savings" by F.A Hayek for a different view.

My guess is that it's more likely to be another cryptocurrency that becomes the standard.

Out of curiosity, what are the existing or potential differences between cryptocurrencies? What does the competitive landscape look like?

"great article"

Interesting way to describe a one dimensional get rich quick scheme.

1. Buy some Bitcoins.

2. ???

3. You own Manhattan!

That seems to be a common theme with bitcoin eccentrics.

1. Replace currencies with bitcoins.

2. ???

3. All financial and economic problems are solved!

Well you have to consider that:

* CBs are monetizing enormously; and if they stop the stock market crashes; they are also promising inflation;

* the Libor conspiracy might bring down one TBTF in London

* Bankia and Santander are under stress and might fail

* There's a full-blown currency war going on with competitive devaluations

* People are placing billions of dollars betting that the Japanese bonds & yen will collapse

* there are reasons Germany is repatriating their gold

I could go on, but bitcoin is oblivious to all that; in some ways it is less risky than the int'l banking system.

Finally, just as an example, the Fed is printing $800,000 new usds per each new bitcoin created. I'm not saying that bitcoin is going to be that valuable, of course, but if you look at the numbers involved you might as well consider putting some savings completely out of an interconnected banking system that is the contrary of the internet: it needs all nodes to be up and running to survive.

1. Buy some Bitcoins.

2. Wait till Bitcoins are in demand, continue till demand reaches epic levels. Since supply is short, more people are read to pay big dollars to buy same number of bit coins. Continuing this cycle.

3. You own Manhattan.

But the article says some between 2 and 3 say ....

2a. Drug dealers, mafia, war lords, terrorists and such a likes will flock this market.

2b. Since its decentralized they will reap the benefits of anonymity.

2c. Government gets pissed due to the fact anonymity gives the criminals all the immunity they need. There fore they can't be sanctioned/tracked etc.

2d. Government moves to shut down all Bitcoin exchanges.

We never go to 3. And therefore we never get to own Manhattan.

Doesn't $100 trillion exceeds the value of the sum of all currency in the world?

Yes, probably the world money supply is smaller than this. Nonetheless, but the point is still valid.

Not by too much. M2, which I think is the relevant money supply in the US, is $8 or $9 trillion.

http://money.howstuffworks.com/how-much-money-is-in-the-worl...

If I remember, the US is about 1/5 of the world economy. And some random graphs suggest the world money supply is roughly $60 trillion.

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