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Comment by gojomo | Hacker News Reader

I agree Bitcoin's approachability and incentive structure were crucial. The interesting question now: is Bitcoin sui generis (like say TCP/IP, and further cemented in place by network effects) or the harbinger of many similar systems (like say Napster/Gnutella)?

A lot of people were deterred from trying things in this sphere because of a (flawed) conventional wisdom that there was no room for success — that various academic attacks would be fatal, and social/institutional barriers too strong. But now that Bitcoin shows that an ugly "Minimum Viable Cryptocurrency" with the right balances/incentives can take off, we're already seeing lots of new interest and experiments.

I strongly expect some of these will discover new workable tradeoffs, in some cases even better than Bitcoin's brilliant+lucky mix, that will then either coexist with Bitcoin in overlapping domains, or feed into the evolution of 'Bitcoin Prime'. Lots more fun ahead.

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Bitcoin works because it's actually a sneaky way of teaching the world Hayekian monetary theory without all those extremely long translated German sentences with multiple subordinate clauses. Ever read "The Denationalization of Money"(http://mises.org/document/3970)?

I would suggest rather John Law's 1705 essay "Money and trade considered: with a proposal for supplying the nation with money". Interestingly enough Graeber's history of debt overlooks this crucial step, namely the establishment of fiat currency of which there are different forms.

Agreed, social engineering was key. Just this morning I was explaining (in Mandarin, in a Thai taxi, mind you!) that the best and worst feature of Bitcoin was mining as a solution for the initial distribution problem.

Is this exactly what, in hindsight, crypto-currencies probably needed to get started? IMHO, Yes.

Is this a good feature going forward? IMHO, No.

Does it matter anymore? IMHO, No ... as there will be loads of alternatives and Bitcoin and related ecosystems have cracked open a wedge of reality that can never again be shut.

In short: MVP crypto-currency of its era? Maybe. Very good fit for the era? History says yes. Very good fit for the future? IMHO, probably not... but also, not going away soon. Whatever one's views on Bitcoin, it's hard to challenge its credentials as a damn good hack that changed the world. I'll be proud to tell my grandchildren that back when it all started I (ab)used my admin powers to undelete Bitcoin's Wikipedia page, despite the shit-storm that caused! ;) Hahah.

If the legal issues are not a big deal, one big competitor will be a low fee, price stable, zero coin like system underwritten by a commercial entity.

Commercial backing will be more interesting to many consumers than the network of miners.

Definitely, or a consortium of backers.

I could also see USGov offering a FedCoin (guaranteed redemption for USD) or TBillCoin (instantly tradable, divisible, interest-bearing USGov debt as currency).

They might even be able to cook up something that's more anonymous than Bitcoin (ZeroCoin-like) most of the time, but deanonymizable sfter some 'CoinCourt' due process legal proceedings. (Think ClipperChip/key-escrow, but for cryptocurrency.)

> USGov offering a FedCoin

i highly doubt this will ever occur - the Fed Reserve (or more correctly, the current cohort of "elite" bankers who control the Fed Resesrve) will either fight bitcoin if it threatens the dominance of the US dollar as the world currency, or the public will drag it kicking and screaming to adopt it (without much success i'd presume).

Control of currency is of utmost importance to those who are in power - and i mean really in power, not those who are voted into power like the POTUS.

First of all, the US dollar is not "the world currency." You need not go further than Vancouver to find places where USD is not widely used as currency. While USD is a very strong currency, it is by no means the only currency in widespread use.

It is equally false to try to separate money from law. Currencies have their value because of the law -- because of tax laws, and debt laws, and tort laws, and all the other laws that result in people being legally obliged to make certain payments. Control of currency is important to governments in the same way that control of speed is important to someone driving a car. The control is inherent and the issue is really about not completely screwing things up.

The US dollar IS the world currency if you round up from about 65%: http://en.wikipedia.org/wiki/File:Reserve_currencies.svg

Financial institutions buy dollars and sell the others when there is the slightest panic. Chinese buy Argentinean wine with US dollars. The USD holds a unique title, an exorbitant privilege.

Furthermore, money operates outside of the law very often -- even dollars -- just look at criminal activities, both low-brow and complicated, e.g. off-shore accounts.

> Currencies have their value because of the law

Fiat currencies have value because their issuing institution has a local monopoly on violence. Your phrasing is much more palatable.

> Control of currency is important to governments in the same way that control of speed is important to someone driving a car.

Citizens are cars to be carefully driven by central bankers? How delightful!

> The control is inherent and the issue is really about not completely screwing things up.

The average age of fiat currency is about 27 years old. I don't understand where your warm tingling sensation is coming from.

"Fiat currencies have value because their issuing institution has a local monopoly on violence. Your phrasing is much more palatable."

It does not have to be violence, you know. It can be non-violent -- like a general agreement by everyone that they will abide by the rulings of courts, even when those rulings work against their personal interests. Most debt disputes are resolved peacefully, even when people are watching their cars being towed away and even when they need to leave their homes. Even here in the USA, where the police are soldiers and more people are in prison than anywhere else, the majority of legal disputes are resolved peacefully and the majority of people at least try to follow the law.

It is also false to claim that non-fiat currencies are not subject to this. A currency backed by, say, gold, is still a currency whose value arises because of the law -- a law that connects the paper money to gold in some way, and that requires some form of mandatory payments in that currency. If the US government decided to return to the gold standard, gold would be currency again -- whereas right now it is nearly impossible to trade gold for anything, even on the black market.

So yes, the government does and will always have tremendous power over currency. Currency and law are inseparable except on the smallest scales.

Fiat currencies have their value because people agreed on that they have value. Bitcoin is more of a fiat currency than it is anything else. I.e. it has no value but for the consensus of people saying it has value and is not directly redeemable for anything that does value. Unlike, cows, iron,copper,gold, or promissory notes for them, which are the usual non fiat currencies.

The fact that it doesn't depend on violence ought to tell you to stop blindly parroting every single libertarian catch phrase you hear. They are not all true.

Fiat currency typically means money declared by a government to be legal tender. You can argue the value of bitcoin is arbitrary, but that doesn't make it a fiat currency. Way to slam dunk a straw man.

The only currency that can surpass the US dollar is gold. The US dollar is the de facto world currency, because the world's oil is mostly traded using US dollars. The US Gov't enforces this, by using strong arm tactics, or resort to millitary intervention - case in point, Iraq.

More likely VisaCoin and MasterCoin.

We provide this.

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