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Comment by ratsbane | Hacker News Reader

I don't know if bitcoin is doomed to fail or not but, the thesis of this article isn't credible. There has never been anything like cryptocurrency in the history of the world and this statement may well not apply: "They will fail, because money that is not issued by governments is always doomed to failure. Money is inevitably a tool of the state."

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Agreed. His entire argument boils down to "Money has never worked like bitcoin, so it can't possibly work." It's an absurd line of logic to use as a critique. It's like the RIM guys claiming no one would like iPhones because they don't have physical keyboards, and smartphones "have always had physical keyboards."

The authors also seems to lack backbone and hedges his bets with a final sentence. Something to the effect that bitcoin will continue to do well as long as government is not doing well.

Despite the link-bait title, he doesn't seem to want to make a definitive statement.

Is gold issued by governments?

No, and it failed as a currency.

But did it fail because it was not issued by the gov't? Or due to other factors?

It did not fail as a currency to the point that in most countries you can't legally pay in gold. That should ring a bell. Also lots of countries try to keep as much gold as they can to back their exchange rates.

It's mostly used as a "currency" storage, supposedly protected from inflation (which isn't really true, it gets mined at something like 2,500 tons per year).

I don't think gold failed as a currency, I could pretty much go anywhere in the world with a bar of gold and exchange it for currency to buy whatever I want. It is still a universal currency, although not an everyday currency.

Exchanging gold for currency doesn't make it a currency. Gold is an asset.

If you brought your gold to different people, they might all quote you different amounts, based on how easily the merchant or exchanger could convert the gold into their own currency.

Same goes for anything you actually buy with currency also.

But silver was successfully used as a currency for a long time in history of certain countries.

It 'failed' as a currency (after centuries) because nation-states with central banks found it disadvantageous for their overall economies.

That doesn't mean the currency itself failed, just means it was abandoned by those seeking to implement monetary policy.

It would be like saying P2P networking failed because vendors prefer the iTunes model.

Did it? Or was it Bretton-Woods that failed? If I remember my History, Nixon decoupled the USD from gold to regain the ability to devalue the dollar, as a tool for dealing with the huge debt accrued during the Vietnam war.

It wasn't a gold-currency world, it was a world of gold-backed US dollar. It makes a huge difference. While the advantages of being a reserve currency superceded the disadvantages of not having monetary control, Bretton-Woods stood. Once the tables turned, the US ended the gold backing.

Bretton Woods stood for close to 40yrs. The current system has about the same age and much as Bretton Woods is failing because the US abused its position as reserve currency to wage war financed by debt. History does repeat itself, in slightly different color tones...

>>Did it? Or was it Bretton-Woods that failed? If I remember my History, Nixon decoupled the USD from gold to regain the ability to devalue the dollar, as a tool for dealing with the huge debt accrued during the Vietnam war.

The point is that it failed as a currency as soon as it lost the government's backing.

The gov't has outlawed gold and silver as currency in favor of its fiatbux. If my friend and I like eating Skittles then some bully come slaps us around if we eat them, that isn't failure of us liking Skittles.

No, the government came and said you can't use gold or silver to trade Skittles, because neither material is a convenient medium of exchange (which is unarguably correct).

Fiat money has been around not even 200 years while various commodities used in coins worked fine for much longer. Oh but to you it isn't convenient somehow and this is "unarguably correct", lol whatever, spoken like a true state apologist I guess. Go on believing your own alternate history where the force and fraud of government are pretended away.

You are wrong. It didn't fail. It evolved into a more efficient currency model.

Then why do central banks still hold tons of gold?

yes, most gold-backed currencies were issued by governments and contained a significant fiduciary element (aka, one gold coin was worth more than its weight in gold).

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