Bitcoin: The Cyberpunk Cryptocurrency
slideshare.net
slideshare.net
There are two main goals of "money". To facilitate exchange, and to store value.
Bitcoin is moderately good at the first one and atrocious at the second one. It is not designed to be a stable store of value. It is designed to _appreciate_ in value, but this encourages intense speculation that results in wild, sickening swings in the exchange rate. It's at best a goofy but terrible idea, and at worst has all the red flags of an outright pyramid scheme.
If you want to read Rothbard and convince yourself that "currency debasement" caused the fall of the Roman empire, that modern monetary policy is going to lead to a Zimbabwean dystopia, and that you can solve all of these problems by dropping us into the hard-money currency policies of the 1800s [that, for the record, didn't actually work all that well], go right ahead. There are subreddits for this sort of thing.
But if you're going to stand here and imply that Bitcoin is a superior store of value to the US dollar, well I cannot abide that sort of nonsense, sir. Not one bit.
- It's not a pyramid scheme. It is designed to work just like other currencies do. The idea that Bitcoin is some kind of scam comes from ignorance on the topic of mediums of exchange. This talk was my attempt at showing how all currencies work, so that you can compare Bitcoin to all other currencies, and see that similarity.
- You are correct that it is not designed to be a stable store of value. Gold shares a similar problem. Price stability is probably not going to be one of Bitcoin's strong suits, for sure. It's primary role might be simply as a highly liquid store of value that cannot easily be controlled by a central authority, which is still incredibly profound.
- A lot of things caused the fall of the Roman empire. I don't see devaluation of Roman currency as -the- reason, but I do see it was major component. It's pretty hard to run a stable empire when economic exchange breaks down.
- Regarding Rothbard: I am not an Austrian (school of economics). I like a lot of their older macroeconomic works, but I think that the school has (in the last 30ish years) been hijacked by hard-core libertarians to justify things that I would never agree with. There are some things that markets seem to do a worse job at than governments, and as a citizen with access to clean drinking water, I am perfectly comfortable with that compromise.
- I think the "jury is still out" as to whether it will be a better store of value to the US Dollar. But the store of value of the USD is simply that our government exists, and is stable. And I don't know if you've paid attention to the recent ineptitude (like the fiscal cliff), but it's not a strong vote of confidence. That's the question: Do you believe more in your government, or in a predictable, documented software algorithm? Either could fail. We'll find out which fails first.
This I think the fundamental problem with the Bitcoin movement in a nutshell. Once you get past the grandiose claims, the fact that Bitcoin is inadequate as a store of value reduces it to an instantaneous transfer means only. But think through the implications of that. Its volatility makes it inappropriate for any transactions which are not instantaneous. Your rent will not be denominated in Bitcoin. Neither will your salary. No loans will be denominated in Bitcoin. Equity arrangements for companies, purchasing contracts, your savings accounts, none will use Bitcoin due to the volatility. So the Bitcoin economy is still dependent on traditional currencies, which means all of these purported benefits of avoiding currency debasement and the like simply don't exist!
Bitcoin will be more more stable than fiat currency on a long enough time line. In 100 years the US dollar won't be around, but bitcoin will be. Even if it's just us from /r/bitcoin.
Finally, fiat currency is a terrible store of value, unless you like loosing it. A quick glance at USD purchasing power will show what I mean.
Two claims, no justification.
I'll leave the bitcoin issue to the side, since while I don't believe bitcoin itself will be around in a century, I have no trouble with the idea that /some/ crypto-currency will. Claiming the US dollar won't be around is kind of weak, though. It's too easy and too popular to predict doomsday, with little to no evidence, for these sorts of claims to be taken seriously.
Pardon my spelling, I'm mobile.
| Just look up the typical lifespan of fiat currency
"Any counter-proof that Satoshi Nakamoto did not design a ponzi scheme on purpose?"
Cached copy (original was deleted):
http://webcache.googleusercontent.com/search?q=cache:XJ8SqHg...
More discussion here:
https://bitcointalk.org/index.php?topic=158111.msg1673645#ms...
It's pretty hard to run a stable empire when economic exchange breaks down. Currency's break down as society breaks down not the other way around because currency's value is propped up by the need to pay taxes or loans in that currency. Country's that try to spend more than they take in in taxes or loans devalue there currency other than that there surprisingly stable.
Do you believe more in your government The US government is increadably well run when compared to just about every government throughout history. While it's politically useful to suggest otherwise there is a reason per capita GDP is so high and our well run government is a large part of that. Now that's not to knock bitcoins but your comparing it to something with a 99.99+% chance of being around next year and that's a tough act to follow when a single bug could kill bitcoin in a few seconds. Granted the odds are much worse 20 years out, but you get time to move currency around in most failure modes, were again bitcoins can hit zero with Zero warning or just lose 90% of it's value with a mid sized sell off.
Do you have anything to back that claim up? I have quite a few friends who go on rants about government inefficiency and would be nice to have some hard data.
I always just resort to asking: what's a more laissez faire country that you'd actually want to live in? is their approach scalable and sustainable?
The US is often in the top 20 for metrics like CORRUPTION PERCEPTIONS INDEX 2012 http://cpi.transparency.org/cpi2012/results/ and historically corruption was even more of an issue. Just think back to things like the Magna Carta http://en.wikipedia.org/wiki/Magna_Carta. Rome, was considered the height of civilization in there day and yet corruption was rampant and rulers would have people killed on a whim etc. Not to mention extremes like the Inca civilization practiced mass ritual human sacrifice.
Even our somewhat tarnished free speech is worlds better than most areas.
Not to mention having the #1 most powerful military of all time. People look down on the space program as we have not landed on the moon in a while, but we still send more probes than anyone else. Ditto for infrastructure, there is little point to replacing infrastructure early so while Japan spends more on infrastructure that's not a good sign.
PS: I think people really have the mindset that we should be #1 in all things forgetting that there are almost 200 other countries out there.
Uh, no. The U.S. placed 17th out of 50 countries in the developed world. As the other 145 countries in the world weren't part of the study, there's no saying where the US would have placed if the whole world were studied. Among the studied countries, the US wasn't in the 90th percentile, or even the top third.
As to the non industrialized countries yes we beat zimbabwe etc. Often studies only compare industrialized nations as doing otherwise is a waste of time.
You seem to be implying that clean drinking water is something that governments can do a better job at than markets. Was that your intention, and if so, do you have evidence to support the claim?
I don't believe that any government of a significantly sized economy will ever accept taxes in bitcoin.
I wrote about why here http://www.reddit.com/r/Bitcoin/comments/195k4o/the_case_for....
The short version is that the mining aspect of bitcoin is just too big of liability for reasonable people to accept due to the energy requirements.
I'm bearish on bitcoin and bullish on crypto currencies, if a low energy crypto currency comes along, possibly based on proof of stake rather than proof of work, then it will be unstoppable.
No shit.
And no, most Bitcoins mined in 2009 and early 2010 haven't moved and probably never will.
It's very different than IP ranges (which is regulated by continent, you have ARIN, APNIC, LACNIC, etc.) or domains (although it's truth that a guy could buy a desirable domain earlier, like photos.com, photo.com or photography.com), in wither case domains and ranges are not designed to be a mean of exchange.
The fact that most until the early 2010 did not moved means nothing to my question, it can be that a owner of a large block sold some, and they waited and then sold some more until he cash out.
That study by Adi Shamir did not claim that by using statistics he could determine that there are not many owners with more than 10,000 Bitcoins? What if a guy in this situation keeps selling or has sold a substantial percentage of what he have? (I do not know how Mt. Gox or whatever works, so I just apply how I know stock exchange works).
To summarize I do not understand your point, your tone appeared confrontational and answering simply a question I did not asked.
EDIT: I see that some guys wrote on the other thread that someone yesterday sold 5,000 bitcoins, although I believe it was a speculative move, could it not be some early adopter cashing out? This is what my question was, in a general setting, asking.
who started the pyramid scheme with gold? Just because it's the current one should we make it the only and agree to live under it? and the dollar pyramid scheme? does that one feels good as well?
the current model will not lead to a zimbabwean dystopia, as long as the banks do not want to.
atrocious at storing value? what do you use for that? dollar? gold? traded company shares? please do say more how bitcoin is worse than those.
also, just like this post only bashes yours, your lacks any argument or reasoning as well besides the bashing. ;)
bottom line is, every and any large economic agreement is there for one reason. it's convenient for a lot of people and profitable for a group with decision power. This is just any other kind of revolution. One group moving out of the control of another group. and as with any revolution it will succeed if the rest is out of the convenience threshold.
with decent widespread implementation, i think bitcoin is a better way for ME. if it's better for you, no clue. but i will try to convince you that it is for the above reasons.
There are 3 main goals of money:
- medium of exchange (for trade)
- unit of account (fungibility, divisibility)
- store of value (saving with an expectation that it will be useful later)
Right now Bitcoin only really satisfies the second. There is a growing set of companies and people accepting bitcoins as payment, but it is still very nascent and you can't do much in your ordinary life with it in the US. And the extreme volatility really calls into question the last.
https://www.youtube.com/watch?v=0UKC7iaBKvs#t=830s is a very interesting discussion about issues like trust which underpin currencies.
I agree that we're in a potential bubble, but bitcoin was never ever a pyramid scheme. Bitcoin is a fully transparent cryptocurrency system and investors were never promised anything.
Bitcoin doesn't have to be intrinsically "superior" to USD for rational agents to use it as a store of value. It simply has to hedge current assets against a non identical set of risks.
The cool thing about bitcoin is that it doesn't matter if you abide by it or not. It doesn't matter what some politicians decide. It doesn't matter who wins the arguments. It doesn't matter who has the guns.
All that matters is the bits. As long as information can be exchanged, then bitcoin will stand, and people will use it as both money and a store of value.
It is actually happening, and there is nothing your arguments can do to stop it.
Right now, the value of bitcoin is in the increase of price in bitcoin. I assume that's what you mean by "happening". That doesn't mean anything. Store owners, starting with online store owners, have to at least start accepting the currency, which they have shown no signs of doing. So again what, exactly, is "happening"?
Actually, that is happening. Namecheap now accepts bitcoins.
Try telling the IRS that. Then see what happens if the Bitcoin exchanges go away. Bitcoin's survival is completely dependent on your ability to trade Bitcoin units for fiat currencies.
"All that matters is the bits"
No, what matters is the security properties. Usually, digital cash systems try to meet a security property of the form, "No attacker working in polynomial time in the parameters of the system can double-spend the currency." Bitcoin does not meet that property; all an attacker needs to do is work as hard as all the honest parties in the system combined to have a guaranteed success in double spending. Usually we call cryptosystems where the attacker's work scale linearly with the parameters of the system "worthless" or "snake oil."
"It is actually happening, and there is nothing your arguments can do to stop it."
Unless someone bothers to attack the system. I can think of a few organizations that have the necessary resources and expertise, and who would probably be motivated if Bitcoin came anywhere near "mainstream:"
It opens with a story about how currency came from barter, but barter is a way of exchanging goods with outsiders, which is not the main way of trading in a functioning society. Money didn't arise as a way of making barter systems practical, it arose as a way of memorializing debt obligations that eventually got securitized into something you could exchange for stuff directly.
The parts about how the USD works and the suggestion that Demurrage would do anything at all to fix the deflation issue are also particularly weak.
It also doesn't do any favors to Bitcoin by suggesting Freicoin alongside it; It's possible to imagine a world where the advantages of Bitcoin economics outweigh the disadvantages, but Freicoin is outright kookery.
I took a huge topic and reduced it to bite sized pieces, and likely did make a few mistakes in the process. And for those mistakes, I want to apologize, and would love some feedback so I can improve this discussion in the future.
But I think it's important to distinguish factual errors from economic opinions. Economics IMHO, like psychology, is fundamentally a behavioral science (there are a lot of people that even disagree on this topic!), so it can be hard to model it. That's one of the reasons why economists (like psychologists) can differ so radically in their views.
But feel free to disagree with my opinions of course! Vigorous debate is very important to understanding what's going on here, and I'm very comfortable with changing my mind. My goal is to get people to start thinking about the ideas of economic exchange, so that they can have a framework to truly understand what Bitcoin is trying to accomplish. If you demystify how every other currency in the world works, then you can compare them to how Bitcoin works, and make up your own mind if Bitcoin is a crazy idea, or the real thing.
The part that gets weird is when people describe the USD through the lens of the Bitcoin story, which is really common in the Bitcoin and Gold communities but I don't think actually helps people understand the USD and how it works. If people are going to make an informed decision, they should be looking at Bitcoin through the lens of the claims of Bitcoin Economics, and USD through the lens of Fed Economics, and decide which if any are credible.
Sorry if the tone in the grandparent post came across as a little harsh, I know it's always easier to criticize than to create something yourself.
Q1. We can differentiate between fiat currencies by looking at the qualities of the issuing authority, and thus determine that it's better to have savings in Swiss Francs rather than Zimbabwean Dollars. With Bitcoin, Litecoin and other forks, how do we differentiate apart from popularity of the network?
Q2. I've heard the argument that Bitcoin is valuable because there is scarcity in the system, a limit to the number of coins, thus it is similar to gold. However, if tomorrow somebody discovered vast amounts of pink gold, with exactly the same chemical and physical properties as gold, except for the colour, it's likely the price of gold would fall. As Bitcoin is facing this exact scenario via forking, what are the potential consequences, and does it even matter?
[1] http://litecoin.org (changed the hashing algorithm from SHA256 to Scrypt)
As for Freicoin, it might be silly, but it just puts the Bernanke-ist inflation into the protocol and makes its purpose explicit: namely to break up long-term holdings of wealth, force spending, and discourage saving. The part that isn't silly about it is that said destruction of long-term wealth is distributed rather than centralized, and the wealth redistribution essentially provides increased transaction fees and thereby a reason for more people to validate transactions.
Bernanke-nomics or "monetary policy" constitutes the redistribution of wealth via inflation from the people to the banks. Hard to say that's crazier than Freicoin.
That money exists to serve as an improved barter good, rather than barter being a degenerate form of trade that exists mostly in the rare cases when credit is impractical.
That quantity fixation or durability are particularly important properties of money.
That gold is particularly important, versus anything else that is pretty and value-dense.
That the only forms of money are commodity-backed and pure fiat.
That the USD switched from the first camp to the other in 1971.
Describing the USD without reference to the Federal Reserve at all.
The assumption that the debasement of coins over a 300 year period had any harmful effects other than making the coins less pretty 1700 years later.
That +200% wage and price inflation over 130 years is any kind of serious problem.
That hyperinflation and regular inflation are the same thing except in degree.
That Bitcoin limiting supply controls inflation.
That the problems with deflation are somehow non-obvious or not happening observably in Bitcoin right now.
That flat-rate Demurrage fixes Bitcoin inflation.
That money exists to serve as an improved barter good,
rather than barter being a degenerate form of trade that
exists mostly in the rare cases when credit is
impractical.
That quantity fixation or durability are
particularly important properties of money.
That gold is particularly important, versus
anything else that is pretty and value-dense.
That the only forms of money are commodity-backed and pure
fiat.
That the USD switched from the first camp to the other in
1971.
Describing the USD without reference to the Federal
Reserve at all.
The assumption that the debasement of coins over a 300
year period had any harmful effects other than making the
coins less pretty 1700 years later.
That +200% wage and price inflation over 130 years is any
kind of serious problem.
That hyperinflation and regular inflation are the same
thing except in degree.
That Bitcoin limiting supply controls inflation.
That the problems with deflation are somehow non-obvious
or not happening observably in Bitcoin right now.
That flat-rate Demurrage fixes Bitcoin inflation.
In short, I think most of the points you raise are not "common errors" but rather (at best) disagreements of opinion. Would appreciate any elaboration on the points of seeming factual disagreement.
It's not controversial -- it's wholly wrong. Credit did not come after money, credit came before money. The IOU was the first form of credit and became the first form of money.
http://www.nakedcapitalism.com/2011/08/what-is-debt-%E2%80%9...
So really, rather than the standard story – first there’s
barter, then money, then finally credit comes out of that
– if anything its precisely the other way around.
I really just want the people in favor of infinite debt and bailouts to hold their own currency and transact amongst themselves, while we do the converse. I don't want to be part of a group of people who think of debt as more fundamental than production, and/or who favor (and historically stress) vaguer gift/debt economies over more quantifiable barter/money economies.
What are you trying to say that I'm missing?
http://money.cnn.com/2010/12/01/news/economy/fed_reserve_dat...
The Federal Reserve made $9 trillion in overnight loans
to major banks and Wall Street firms during the financial
crisis, according to newly revealed data released
Wednesday. ...
The amount of cash being pumped out to the financial
giants was not previously disclosed. All the loans were
backed by collateral and all were paid back with a very
low interest rate to the Fed -- an annual rate of between
0.5% to 3.5%. ...
Sen. Bernie Sanders, the Vermont independent who had
authored the provision of the financial reform law that
required Wednesday's disclosure, called the data that was
released incredible and jaw-dropping.
"The $700 billion Wall Street bailout turned out to be
pocket change compared to trillions and trillions of
dollars in near zero interest loans and other financial
arrangements that the Federal Reserve doled out to every
major financial institution," Sanders said.1. The Fed/govt does not simply deposit money "in the accounts of banks." Under TARP and quantitative easing, the Treasury purchased securities or shares from the banks. Under quantitative easing, the Fed purchased Treasury securities and mortgage-backed securities from the banks. Yes, the Fed printed the money to buy those securities, but it't not like they just printed the money and gave the banks free money.
2. Overnight loans are almost irrelevant to your point because they're overnight. They have to be paid back within 24 hours. The $9 trillion dollar figure sounds impressive but that's just the value of all the overnight loans added up. If you make $8.2 billion in loans every day for 3 years (with the 8.2 billion paid back the next day and then another 8.2 billion loaned out again), you get $9 trillion.
Yes, the Fed printed the money to buy those securities,
but it's not like they just printed the money and gave
the banks free money.
Overnight loans are almost irrelevant to your point
because they're overnight.
Inflation has the important role of decreasing the value of debt, which is something demurrage does not provide. Neither does a constant rate of 'inflation' via demurrage allow any kind of countercyclical policy.
"[inflationary monetary policy] constitutes the redistribution of wealth via inflation from the people to the banks"
Do you have any evidence for that claim?
I did not dismiss deflation as an economic risk, it certainly could be. But I'm saying that deflation is toxic to our current economic structure, simply because we are inflation biased, and so everything is designed with that in mind. Switching from an inflationary economy to a deflationary one would certainly be devastating.. but in the long run, once the correction had happened, what would it be like? That's a question we actually don't have a lot of evidence on.
My thoughts on this came right out of this book: http://www.amazon.com/Deflation-Current-Historical-Perspecti...
I think that the salient issue with Bitcoin is that it is going to deflationary at a set time and while people may hoard it, its divisibility 1/(10^8) should allow it to be used for exchange for a very long time.
I'm eager to see what happens. As far as I know, this is an unprecedented experiment in absolute scarcity psychology. Real Estate is still being developed, gold and other precious metals can be mined, but past a point, Bitcoin won't be. Imagine the economies around irreplaceable fine art along with divisibility. My suspicion is that Bitcoin has been given sociological imprinteur as a store of value, and it is hard for that to be erased entirely. In curious whether later virtual currencies can compete in a way which devalues Bitcoin.
In terms of true free market currencies what you usually found were tally sticks and cheques; debt based money with no gold backing. But these currencies had personal history to them and would only be honored within webs of social trust. The issuing name on the cheque and the chain of endorsements were considered when accepting payment.
For just one example of how this presentation is
misleading, gold has never really been selected by free
markets as a currency.
On these occasions and more people would use gold as a currency if they weren't prevented by law (= men with guns) from doing so; this is the opposite of the claim that "gold has never really been selected by free markets".
imperial governments with big war machines minted gold
and silver coins, paid soldiers and military contractors
with them, and then required the coins back from the
general population in payment of taxes. This fostered
markets to service the war machine.
That is not accurate. People were hoarding gold at the time, which was harming the economy. Gold currency was taken out of circulation by the government and replaced by a currency less prone to hoarding. Hoarding stopped because people were given money that was not worth hoarding -- which is a good thing for the economy.
"today physical gold has been bought by millions of people as a hedge against the world financial crisis"
Which is not a currency, any more than a building, a field, or a gun is currency.
"On these occasions and more people would use gold as a currency if they weren't prevented by law"
Nobody in this century is prevented from using gold as a currency, just like nobody is prevented from using Bitcoin as a currency. The only difference is that gold is not legal tender. People tend to gravitate towards legal tender as a currency, probably because people live in a society governed by laws and need to legally repay their debts (taxes and others).
The problem, of course, is that it only works when you have a small number of trustable people (I'll leave Dunbar's number out of this, pick your favorite). When you get into the realm of billions of people, it's a system that just doesn't work. And there's plenty of romanticism out there from people that would love to go back to such a system. But -that- to me is ideologically driven economics. I'm not saying that Bitcoin is morally superior, or that gold is better than paper money, I'm trying to relay the verdict that large numbers of decentralized people have arrived at. Which could be a worse system in many ways.
But I'm not so sure, for the reasons you bring up. I do agree with you that governments capture these systems and control them. And the principal reason for this has been to wage war. War is so closely attached to control and devaluation of money, that you can almost predict monetary instability based on it, as these governments use it as a form of taxation. We've had quite a few currency devaluations in our own history, beginning with the colonies during the Revolutionary War (printing money to pay the soldiers, that they would take home and discover was essentially worthless).
This is where Bitcoin becomes interesting: It becomes a form of gold that is so liquid, that it is arguable if a government could even take control of it. You certainly can't stop someone from going through customs at the airport with it (or are we going to require a scan of all computers before leaving the country now?). If Bitcoin prevents/disrupts governments from amassing war chests, I see that as a potentially very positive development. Time will tell, as with all things.
David Graeber, on that quote:
"The endlessly cited Apple quote was not supposed to be about Apple. Actually it was about a whole of series of other tiny start-ups created by people who’d dropped out of IBM, Apple, and similar behemoths. (Of them it’s perfectly true.) The passage got horribly garbled at some point into something incoherent, I still can’t completely figure out how, was patched back together by the copyeditor into something that made logical sense but was obviously factually wrong. I should have caught it at the proofreading stage but I didn’t. I did catch it when the book first came out, tried to get the publisher to take it out, and have been continually trying since July. All to no avail. I have absolutely no idea why a book can go through eight editions and it’s impossible to pull out a couple lines of obviously incorrect text but they just keep telling me, no, I have to wait until July. Allow me to reassure the reader: You have absolutely no idea how frustrating this is, especially as the stupid line has been held out, reproduced, sent around in every conceivable way to suggest that nothing else in the book is likely to be factually accurate To which all I can reply is: well, notice how this is the only quote in the book that happens with. That one sentence gets repeated a thousand times. No other one does. That’s because it’s the only sentence flagrantly wrong like that. In fact, I’ve communicated with, or read reviews by, scholars of Greece, Mesopotamia, and Islam, Medievalists, Africanists, historians of Buddhism, and a wide variety of economists, etc, etc, and none have noticed any glaring errors—in fact, the most frequent reaction is that it’s remarkable that someone who is not an area specialist actually more or less gets it right (remember, these are scholars often loathe to admit even their own colleagues in the field get it more or less right.) The book is pretty meticulously researched and has stood up to scholarly review. The problem is I haven’t been able to get the one idiotic garbled sentence out despite my utmost endeavors. But it will be. They promise. Soon."
And while you're at it, go easy on the "downvote = agree disagreement" habit.
For context: Graeber got into a spat with some dude at the Mises Institute, which kicked up a hornets nest of people who never read the book to go nuclear on it, posting nasty reviews on Amazon etc.
SilasX, have you read the book? If not, why are you commenting on it?
Do you want to tackle the problem of why the "temple units" happened to be silver?
Also, even if my post was genuinely deserving of a downvote, I hope you recognize that you should leave that job to someone else, as you have too much invested in this topic to be objective (as does anyone replying in a similar position).
Bitcoin is a currency, which through a number of exchanges, can be exchanged for money. Because it is not legal tender for any economy, its economic value is entirely controlled by currency exchange. That will always makes it less stable than currencies that are backed by an economic entity (a nation-state, or perhaps at some point a multi-national corporation).
This is important to consider because currencies that are backed by an economic entity are only as strong as that entity is with respect to the global economy. That is why the Italian Lire tended to hyper-inflate but the Euro does not. The difference is that the Eurozone economy is stronger than the Italian economy by itself is.
I can whole heartedly recommend that people interested in Bitcoin visit the British Museum's display of the history of currency, and to invest in understanding the reasoning that economists go through in order to make the statements they make. I can recommend this course by Dr. Taylor [1] from The Great Courses catlog, I originally checked it out from the library to listen to on my commute but bought my own copy when they went on sale.
[1] http://www.thegreatcourses.com/tgc/courses/course_detail.asp... -- "Economics, 3rd Edition" by Tim Taylor.
Its accounting of the origin of money is totally devoid of historical fact or perspective. That can't be stated strongly enough: people who are interested in empirical findings instead of ideology have looked into the origin of money. This has been an area of research for at least a century, and there's not a bit of evidence that money developed as the slideshow claims.
There is a lot of both current and historical evidence to suggest that currencies can form in a decentralized manner. The fact that there was a long-standing decentralized gold standard in China is highly documented and written about. We can debate about the earliest origins, but that is not my intention. What we arrived at is the system I am describing, which is not a system that is chosen by a government or an ideology, but the one that is chosen organically by freely thinking individuals. There is a nature and a pattern to it, and I am trying to understand and describe that.
Quick thought experiment for you: if Bitcoin exchanges were to disappear overnight, what would happen to Bitcoin?
It hasn't yet. Bitcoin is still in the barely anyone knows about it experimental stage; it hasn't come close to being successful yet.
Only as a way to illustrate that using cryptographic primitives like hashes and digital signatures does not make a system secure. If Bitcoin were a security system, the effort required to successfully double-spend the currency would be exponential in the effort required to use Bitcoin; as things are, the required effort scales linearly with the number of parties. Bitcoin may utilize secure cryptosystems, but as a cryptosystem Bitcoin is not secure under any accepted notion of "security."
Want to buy a gift for your wife? Send BTC to a coin mixer or a new eWallet, then pull it out to a newly created separate, anonymous, address. Use that address to purchase.
Use the reverse process for receiving money, if you want to keep your main account private.
New addresses can be created on the fly, so it isn't much different of a privacy nightmare than current card transactions.
You mean money launderer?
For the Bitcoin-related parts of this presentation, jump to slide #66 (or #62 if you don't know the history of Bitcoin, but then why are you on HN).
Why historical examples of hyperinflation are relevant to the gradual devaluation of the US dollar is never explained. That seems like a grave flaw in the argument.
Even if Bitcoin is viable as a non-inflationary currency outside the control of central banks and nation-states (which I don't think is proven), there's still the question of whether either of those qualities are desirable.
The USD stayed long-term stable before 1913. It lost 98% of its value since then. Say what you want about short-term economic shocks in the 19th century or the 98% statistic being a deliberately biased framing of exponential decay, but the idea that the USD has not seen hyperinflation "since" the Federal Reserve is highly misleading.
> Why historical examples of hyperinflation are relevant to the gradual devaluation of the US dollar is never explained.
"Why historical examples of people not wearing seatbelts dying in car accidents are relevant to my choice of not wearing a seatbelt is never explained." Same argument.
Also, saying "this hasn't happened yet so it won't" is a highly specious argument to make. Events that are worse than anything that ever happened before them are actually quite common in history - namely, the 1918 Spanish Flu outbreak, World War I, World War II, the Great Depression, Chernobyl, etc. Given the general trend of an increasingly complex, and hence fragile, society over the past ten thousand years, disasters of increasing and unprecedented scale are the rational thing to expect.
> "Bitcoin: The Cyberpunk Cryptocurrency. Here's why it will replace gold."
EDIT : title updated , thanks , it really sounded stupid.