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Comment by brudgers | Hacker News Reader

CryptoCurrency as a replacement for internet karma points and JesusBucks given away at Wednesday night Methodist Youth Fellowship meetings.

When my hairdresser has their own CryptoCurrency how shall I maintain my faith that bitcoin has a value these others don't?

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"If I had before me a fly and an elephant, having never seen more than one such magnitude of either kind; and if the fly were to endeavor to persuade me that he was larger than the elephant, I might by possibility be placed in a difficulty. The apparently little creature might use such arguments about the effect of distance, and might appeal to such laws of sight and hearing as I, if unlearned in those things, might be unable wholly to reject. But if there were a thousand flies, all buzzing, to appearance, about the great creature; and, to a fly, declaring, each one for himself, that he was bigger than the quadruped; and all giving different and frequently contradictory reasons; and each one despising and opposing the reasons of the others—I should feel quite at my ease. I should certainly say, My little friends, the case of each one of you is destroyed by the rest. I intend to show flies in the swarm, with a few larger animals, for reasons to be given."

http://www.gutenberg.org/files/23100/23100-h/23100-h.htm

How on earth did you pull this quote out of thin air?

I have owned the book for quite a while, the quote was originally about science- but it is so harsh it stuck with me.

That's weird, I read that quote like 2 hours ago, and I'm sure it was on HN, but now I can't find it? Where did you see it, so I don't go insane?

> "how shall I maintain my faith that bitcoin has a value these others don't"

If you believe currency value derives from scarcity, you should never have believed bitcoin had any particular value. If you believe value derives from the network of other people who agree to use it for transactions, then scarcity was little more than a marketing bullet-point for the early adopters.

And cryptocoin proponents stumble upon the rationale underlying yet another feature of fiat currency.

Well, they would, if they weren't fiercely denying any fact that might undercut the pitch that got them on board: "fiat currency bad. mathematically-enforced deflation good!"

The main pitch of bitcoin is electronic transactions with no central coordinating system. If bitcoin didn't heavily favor early adopters, no one would have gotten on board.

It's even still technically possible for bitcoin users to agree on a code change that would keep making coins forever (like dogecoin). It would result in a hard fork of the blockchain, but if most clients agreed to it, it would work just fine.

I think they're more against institutionalized violence that is necessary to make these fiat currencies sustainable [1]. If consenting adults want to trade in monopoly money, knock yourself out. Just don't hold me at gunpoint and make me trade in your monopoly money.

1. http://en.wikipedia.org/wiki/Executive_Order_6102

edit - typo, link

You know, one of the things I've learnt from libertarianism is that institutionalised (and therefore restricted) violence is actually necessary to the operation of society. The alternative is unregulated, private violence, possibly by external actors (qv Ukraine)

On the other hand, the executive order power is not very democratic. http://en.wikipedia.org/wiki/Executive_Order_9066 was a much more serious human rights violation. But the gold confiscation order was preapproved by congress: http://en.wikipedia.org/wiki/Emergency_Banking_Act immediately after an election had happened.

Would you agree that the ideal number of gangs to occupy a territory is 1? Because if you had two, they would fight each other, and if you have 0, you might get something worse than the last gang? While I'd disagree, I can't really fault that logic.

I think it's simplistic to call a democratic government a "gang", but even within the analogy, the danger of having zero is that the resulting power vacuum isn't a stable system. Gangs will spontaneously arise as people who have the talent and skill to lead men in organized violence realize that doing so is the rational course of action in a world with no higher power to stop them.

Interestingly, all the Bitcoin heists are great examples of this. What are they other than (digital) violence? I think they clearly demonstrate that when people are unrestrained by some power, that many people will realize it is advantageous to take rather than to transact in mutual ways. Now, I'm willing to entertain the idea that there are solutions to this problem that don't involve centralized power, but I disagree with libertarians who throw around the word "violence" as if it's some creation of government rather than something intrinsic to and widespread within society. It's not something that can be taken off the table with a declaration, but a problem that must be managed through some mechanism.

Of course it's simplistic. A gang is made up of criminals and criminals are defined by the largest occupying gang. Gangs are like government startups if you will. They offer protection and services and represent themselves with flags and other branded accessories to distinguish themselves from competing enterprises. Fortunately in this market customer consent isn't entirely necessary. It's an industry where the market share is determined only by what you can extort or point a gun at. Taking neighboring turf is risky, but highly profitable. The higher ups will send the low ranking gangsters to serve a higher cause such as brotherhood and civility, and ultimately serve bullets to the neighboring gangsters (as identified by their distinguishable uniforms). Sure they may die, but they did it serving a greater cause. Of course, all parallels drawn here are merely coincidental.

What is it called when hank paulson puts the members of congress in a room and tells them to write him a blank check? Somehow, I don't really think 'we the people' are running things, or ever have.

Anyway, this is a great thread on all sides.

No, I'd go with Montesquieu; it's beneficial to have multiple power groups provided that they generally prefer to compete peacefully adnd procedurally. If one group or actor decides to do something unacceptable, they get defeated by the others.

Their "stumbling" upon it is no doubt why they've worked to increase the network of people who use it for transactions from the start.

by definition it is fiat

I guess it's the same as with paintings. Bitcoin is like a Picasso. There are just so many and you have to pay a lot of money to get one.

On the other hand, if you go to the next university and visit the art classes, you'll find enough talented people who'll sell you their own pictures for a lot less.

It's a demand thing.

My neighbour two doors down is a regionally known full time professional painter hustling between teaching and shows and creating works that start at a few thousand dollars and sell at those prices.

But a few years ago the artist's agent brought an offer that was too good to refuse - license some works to a high end retailer for Giclee prints. It provides a real base income that pays the mortgage and the heat and the water bill.

http://www.gicleeprint.net/pricing.asp?servcat=2&medid=11

For those not familiar with the term "Giclee"[1], it's faux-French for "Serious art collectors will pay us more if we use a made up French term instead of inkjet."

[1]http://en.wikipedia.org/wiki/Giclee

That would be pretty much like asking why the dollar as value while the others don't.

For example the Botswana pula is a real currency, but is pretty much useless -for you- because is not the one they use where you live.

Things have value because they have demand. Things have demand because they provide utility. Relative utility determines relative value. And actual price is the ratio of demand:supply. So ask yourself, do any of these altcoins provide some utility bitcoin doesn't? To the extent any do, they will have value to the extent of their marginal utility over bitoin and other altcoins.

Every altcoin is trying to provide some marginal technical improvement over Bitcoin, and hence some marginal value. But Bitcoin's first mover advantage, resulting network effects, and stable/reliable core dev team and non-profit foundation all provide significantly more utility - namely trust - than the marginal technical improvements of most altcoins, hence why most will never approach Bitcoin in value.

Litecoin is one exception, as the first widely trusted altcoin with a few technical improvements over Bitcoin. Ethereum could also be a possible exception to this, if they can make it work. Very ambitious, will probably have growing pains for a few years at least.

It appears to me that much of the exchange value of bitcoin has been driven by speculation upon future rewards. If true, maybe JesusCoin has more merit than it appears at first blush. As Pascal might say, "what have you got to lose?"

http://en.wikipedia.org/wiki/Pascal%27s_Wager

Tangentially:

+ I find the use of "altcoin" to cover all CryptoCurrency that isn't bitcoin an interesting coption of terminology.

+ Non-profit doesn't mean charity. One hypothesis is that bitcoin foundation members had a vested interest in putting off MtGox's collapse for as long as possible. I'm not sure if this is better or worse than the alternative hypothesis that the most knowledgeable minds in the bitcoin industry had no clue that MtGox was insolvent.

+ The technical sophistication of the bitcoin team provided the false halo that created trust of organizations in the bitcoin industry who have to roll their own security - i.e. the cryptographic sophistication of bitcoin does not make a bitcoin exchange secure. None of the "altcoins" solve the problem of stolen coins.

+ Altair was the first mover in the personal computer space.

And Ebay was the first mover in the online auction space. I'm sure we can cherrypick counterexamples all day, but in general the first mover enjoys an advantage those that come after do not.

I think there's two kinds of value. A short term (definitely less than a year, medium of exchange), and long term (saving for retirement). Clearly the long term value is questionable given there is no scarcity; that would seem to be a necessary but not sufficient requirement.

So yes, you hit the nail on the head. I have pointed out the same thing before, that there is an infinite supply of crypto currency.

If you ask me, I'd prefer south sea shares for long term saving. No, just kidding, I'm a tulip bulb guy - those are at least finite.

Tulip bulbs are no better than Milo Minderbender's Egyptian cotton, but if you cover CryptoCurrency with chocolate, you can't even taste the CryptoCurrency.

> there is an infinite supply of crypto currency. > I'm a tulip bulb guy - those are at least finite.

Surely this is exactly back to front? Tulip bulbs are part of a reproducing organism and hence theoretically infinite, whereas Bitcoin and most other cryptocurrencies have a maximum number of coins that can be mined. Sure, there's an infinite supply of cryptocurrencies but that isn't the same at all. There's also an infinite supply of printed bits of paper, modulo trees and ink, but that doesn't mean the dollar is worthless.

The same reason that the US Dollar (a piece of paper) is worth over 10x more than a South African ZAR (also a piece of paper)

Simple. Hash power.

Something that means absolutely nothing to the lay person, which any successful currency must be approachable by to attain success.

"The heat being emitted by this funny looking computer in a milk crate is a key trust indicator for you." Now go back to liking photos of people holding things to their head pretending they are talking to the President about the Ukraine situation.

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