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Comment by doczoidberg | Hacker News Reader

Bitcoin maybe is the future of money because:

- it's inflation safe

- no corrupt bankers or politicians can manipulate it (easily)

- there are no men in the middle (edit: or only for a short time. Of course you should not save your bitcoins in a marketplace for a long time frame)

- it's cheap for all sorts of transactions

- it doesn't know borders (in democratic nations)

When the next bigger inflation of Euro or Dollar will arrive bitcoin exchange rate will skyrocket. Though that only means you should invest in it maybe it will also become money with exchange character in future.

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As a American consumer, Bitcoin doesn't have any value to me. In addition to the volatility, difficulty of actually spending it, and its vastly higher risk as a store of value (theft, "beta" implementation), the US Dollar is already a cross-border virtual currency.

The increased transaction costs in current cards is transparent, and I get 1.5-5% cash back as a result of those fees. Anonymity is almost never a concern of mine, and if it is, there are simpler ways of moving dollars around, as either cash or one time debit cards.

Inflation is not an unalloyed evil, and as clumsy as Fed manipulations might be, I just don't feel that a free market deflationary Bitcoin wouldn't have as many (but different) downsides.

I can definitely see the value to countries unstable or hyper inflated currencies, but Bitcoin requires a substantial first world infrastructure undergirding it.

And from my emotional perspective, I resent that the inventors will pocket millions from being at the top of the pyramid.

Do you really think that the Feds "manipulations" have been clumsy? They've managed to consistently hit about 1% inflation in a strongly deflationary environment. They've done an outstanding job in that respect.

They're aiming for 2%, not 1%. That said, it's still impressive that they've managed to avoid deflation.

I was trying to be generous to the anti-Fed types--personally, however broken and corrupt the Federal Reserve systems are (again, being generous to the Zeitgeist), things are pretty good. Occasionally you get cheap money bubbles that are a direct result of Reserve Bank decisions, but on balance, IMO, it's an overwhelmingly positive system.

You can use it to play poker. US players have been shut out of poker sites since Black Friday in 2011 and with bitcoin you can withdraw from the site daily to reduce your exposure if it goes bust a la Full Tilt.

Also, you get 3% cashback on anything on Amazon by buying with bitcoin through gyft. That's better than any credit card I've seen even if it costs you 1% to buy the btc.

It seems that the main situations where bitcoin is a preferable form of payment is when the transfer of funds would break the law. This is the main reason it has any value at all.

I've been playing poker online over the past year. I did a transfer from my US bank. It is a bit slower to withdraw, takes about 2 weeks for a check.

I get 5% cash back from my credit card when buying on amazon. And any points I earn can be used via amazon without an extra step. And I get fraud protection vs losing a gift card.

> And from my emotional perspective, I resent that the inventors will pocket millions from being at the top of the pyramid.

So you have no real argument, you just can't handle that early investors in anything do better than late comers. It's not a pyramid, it's a technology, and you're simply being emotional and irrational.

Except none of those things are true. Bitcoin is just a tinfoil hat combined with a prepper mentality, or libertarian wishful thinking.

The first 3 things you list can happen to bitcoin since bitcoin is just another currency.

The idea that it's intrinsically cheaper doesn't hold water compared to any other currency. Just because some transactions cost money on existing currencies doesn't preclude the exact same thing happening to bitcoin. Again, just another currency.

The idea that it's somehow free of national regulation is patently false. The currency may be "virtual" but so are all other currencies, I can send you money without mailing you paper. But the point is that the holders of the currency exist in the real world, not as entities in cyberspace, and those bitcoin holders and dealers can be regulated just like other currencies, unless they want to go to jail.

Of course it's only another currency but as stated it differentiates from current currencies with some advantages. The effort to regulate it is very expensive. Of course everything is possible but you have always to ask for it's costs. I don't say that bitcoin is the future of money but it can be. There is no need for men in the middle in the connected internet world.

I don't know about the rest of this list, but how could there be inflation? There are a finite number of bitcoins that will ever exist.

Inflation just means that the value of a currency goes down.

There are many reasons why the value of a currency might go down. Printing too much money (increasing the supply) is one of them, but it is not the only possibility. Decreasing the demand is just as effective.

Imagine that someone just found a critical flaw in the algorithms used by bitcoin. Everyone wants to sell and move to dogecoin a.s.a.p. But nobody wants to buy those bitcoins anymore! Bang, that's inflation right there.

As long as there are alternatives to bitcoin, the fact that the total number of bitcoins is limited cannot prevent inflation from happening.

To regulate and tax, you must first know someone has bitcoins. Furthermore, you must know how much they have or have an opportunity to effectively find that out. Now, with a bank account it's not a problem: all IRS or some other three letter agency has to do is call a bank. Who are they gonna call with Bitcoin? Bitcoin CEO? How does an IRS agent know I made 50 and not 25 bitcoins? How can the government impose capital controls on my money and prevent me from buying stuff in Iran or some other country to which sanctions are applied?

It's not a wet dream. It's reality. You can't control Bitcoin. You can only control people and even that is not done very effectively in the real world, as proved by numerous criminals, tax evaders and expats. Bitcoin makes doing stuff government doesn't like easier. That is all you have to know.

The moment you buy anything with those bitcoins, it's obvious. You think the IRS wouldn't know you have a car if you never told them? A piece of land? Worst case scenario, they hire more people to go out into the field and audit people.

Basically, you can only ever keep bitcoins without the IRS knowing about it if you never spend those bitcoins. When you spend them, the IRS will eventually know about it.

The moment I buy anything within the country. Or something that requires my ID. But what about things like breakfast? Or a taxi ride? The IRS cannot track cash with which you buy small things, nor will it be able to track bitcoins. I mean, theoretically it can be possible, but the effort it would have to put into that kind of surveillance is not worth the profit it would receive.

Besides, who talks about spending? If I made money and want to hoard them, I still have to pay IRS the next year? Well, not so with Bitcoin. IRS may as well starve to death waiting for me to spend them.

A currency you can't spend is... well, not great. Regardless, I'd take a bet that the IRS can wait for you to spend your bitcoin/be discovered and prosecuted for tax fraud.

Sure, small things will probably be too much effort to tax. They'll just tax the shopkeeper instead of you, though, and set up really nasty fines for incorrect bookkeeping. Same as most things. Trying to avoid taxation entirely would involve a complete lifestyle change for everybody; somehow, everybody would have to be small-scale producers and buy things from other small-scale producers, while we're now used to the ease of buying things all from one place.

I'm not entirely certain such a lifestyle change is a good thing, as it ends up with me and many others like me (as a minority which still suffers a lot of societal harm even in a very liberal country) losing a huge amount of legal protections against those who seek to harm me or segregate me. What happens the next time everyone decides some minority is the root cause of all their problems?

And if you don't want to spend, don't spend. I think most people will end up spending before the IRS disappears, though. What's the point of having money if you're doing nothing with it? Money isn't an end goal for most.

> Trying to avoid taxation entirely would involve a complete lifestyle change for everybody; somehow, everybody would have to be small-scale producers and buy things from other small-scale producers, while we're now used to the ease of buying things all from one place.

Not necessarily. If there was no IRS and taxes, everything would be almost the same, except cheaper.

And who do you suppose the IRS gets their biggest share of revenue from anyway? It's not the rich. It's the middle class. The rich can already afford expensive schemes for tax evasion. Now the middle class will also be able to hide some of their savings from the IRS.

And again, "not spending" is not necessarily a bad thing. In fact, with a deflationary currency, it's a good thing, since it incentivizes thoughtful investment in things that are truly important. The point of having money and not spending it is a very important point: you have security for you and your family, you also have an opportunity to wait until something truly great comes up in which you can invest the money. With Bitcoin, you also don't have to fear inflation.

> What happens the next time everyone decides some minority is the root cause of all their problems?

Next time this happens, government uses your own money it collected from you in the form of taxes to satisfy the irrational attitude of those who hate this or that minority. People on their own hating blacks, or gay or mexicans cannot do much, but government provides them with instruments of oppression and the beauty of it is that those instruments are paid for by all the people, not just those with this irrational attitude. Market competition will simply eradicate those companies who discriminate against minorities, because their competitors would hire minorities for slightly less and provide cheaper products. Government has nothing to do with protecting the minorities. In fact, historically, it was government laws that prevented minorities from succeeding. I highly recommend Thomas Sowell books on that subject where he provides examples from all over the world on the subject of minorities.

> If there was no IRS and taxes, everything would be almost the same, except cheaper.

There would be no courts for those who cannot afford to pay for them. That's one major difference. There would be no police, fire agencies, etc etc, for those who cannot afford to pay for them. There would be less in the way of a social safety net for those who fall from their job.

And as I say, in order to avoid the IRS, or any other organisation which might seek to tax you, you'd have to plan out the social infrastructure so that there are no big targets to attack and demand money from. Otherwise, it's very easy for a new IRS to pop up.

> People on their own hating blacks, or gay or mexicans cannot do much

So it is outright impossible for groups of people to gather to cause serious violent harm towards members of a minority, leading to loss of life with no potential legal recourse (unless you're rich enough to pay for it)? Is this what you are saying?

> There would be no courts for those who cannot afford to pay for them. That's one major difference. There would be no police, fire agencies, etc etc,

I highy recommend you watch this video, it's an illustrated talk by David D. Friedman, explaining how police, courts and other things would exist and work in a world without government: https://www.youtube.com/watch?v=jTYkdEU_B4o All of those things are just services. And the poor would be able to afford them too, just like the poor can afford cars, shoes and computers.

> So it is outright impossible for groups of people to gather to cause serious violent harm towards members of a minority, leading to loss of life with no potential legal recourse? Is this what you are saying?

It's possible, but they'd be paying for violence out of their own pocket. How many people, do you suppose, would oppose gay marriage or, say, pot if they were presented with a bill for outlawing it? My guess most of them would prefer to keep the money and make their peace with it. But because the cost of outlawing certain things is paid by all the taxpayers, they essentially pay for what they believe is right out of everyone else's pockets.

> And the poor would be able to afford them too, just like the poor can afford cars, shoes and computers.

Most countries have a benefits system which allows the poor a minimum level of quality of life. Additionally, cars, shoes, and computers, are all available second-hand for much reduced prices, because of consumerism. That is how they can afford these things. Are you suggesting that the poor should only be allowed to access lesser court systems than the rich?

Why don't you look up fire services in the past - if you did not have the money, which some did not, they would let your house burn to the ground. Why don't you look up medicine today - in the countries where the Government does not provide free-at-point-of-use healthcare, the poor regularly die of very treatable diseases. Your theory that everybody will be able to afford what they need does not work out.

> It's possible, but they'd be paying for violence out of their own pocket.

We have a history of this happening. It still happens in many countries which have weak or compliant court systems, India for example. I'd suggest you look into how things work out in the real world.

> I'd suggest you look into how things work out in the real world.

In the real world the rich already have access to "better courts" because they can afford to hire top lawyers.

My argument is that it's not going to be necessarily perfect, but simply better and more fair to the poor if government wasn't a monopoly on police and courts.

Of course the rich would get better everything. They always will. The point is to improve the lot of ordinary people, not to hurt the rich. If you intend to help the poor by robbing (taxing) the rich, you're trying to do good by doing harm - that's not moral.

> In the real world the rich already have access to "better courts" because they can afford to hire top lawyers.

And the solution to that is not to encode those inequalities into the fabric and rules of how a society works. It's to try and solve the issue as best as we possibly can.

The solution is to encourage everyone to become richer, not equalize people. If you argue that rich people should not get better treatment in court, then why not argue for the rich people to buy the same cars as everyone else, the same houses, the same clothes and same everything else. You see, what you're arguing is selective communism. I for one have no problem with the fact that rich people get better protection from the police, provided they made their money honestly.

If you truly wanted equality, you'd be arguing for lesser or no government intervention into the economy, so that people could easily and freely start businesses without the need to acquire licences and red tape. In the words of Milton Friedman:

"If you want to know where the masses are worse off, worst off, it’s exactly in the kinds of societies that depart from that [free market]. So that the record of history is absolutely crystal clear, that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by the free-enterprise system."

Some things are necessities for a stable, non-violent civilisation where everybody can live in relative peace. Cars are not included in that. Shelter is, but only a minimum level of shelter is necessary, and anything above that is discretionary spending, which I have no real problem with so long as it doesn't negatively affect others.

Thank you for your statement that you literally could not care less about how people with less money than you are treated.

I've been in a country where the vast majority of businesses never touch Government red tape. They don't pay taxes, the Government doesn't know they exist. Anyone who owns property could easily start up such a business. It still has massive poverty issues. I've lived there for years. I never want to go back. It would be unsafe for me to go back; due to a medical condition that I have, it is very likely that I would be discriminated against, and very possibly raped, with no recourse. And it'd be worse for a native.

Please stop trying to tie Bitcoin to your radical political worldview, you're hurting the adoption of Bitcoin for the reasonable folks among us.

Well, why do you suppose Satoshi created Bitcoin? Because he wanted everyone to keep paying taxes and governments keep printing fiat? Or is it because he was a fan central banking and couldn't wait until Bitcoin is heavily regulated and centrally controlled? You call yourself reasonable, but you didn't even care to learn a bit about why Bitcoin came to be so popular and why it was invented in the first place.

> Well, why do you suppose Satoshi created Bitcoin?

Not relevant, it's not his now, it belongs to the public and his intentions are no more relevant than anyone else's.

> You call yourself reasonable, but you didn't even care to learn a bit about why Bitcoin came to be so popular and why it was invented in the first place.

I know all about it, so please keep your silly baseless presumptions to yourself.

I'm sorry, but the problem is that due to Bitcoin's inherent properties you cannot completely detach it from political and economic agendas. Its deflationary nature, its pseudonymity, it's decentralization - how do you detach it from the free markets ideology and libertarian ideals? I just don't understand it.

I honestly believe you guys are for a big surprise. Go ahead and use Bitcoin, I'm all for it. But don't expect everyone else to keep paying taxes and obey regulations. It's just not going to happen. In fact, the reverse will happen, with more people not willing to participate in government scam.

If you truly believe society cannot survive and prosper without government, then the only logical step I see is for you to stop using Bitcoin or even lobby to ban it. If you don't, I'm personally fine with it, but you might regret it.

> I just don't understand it.

That's right, you don't. Why, because you assume it must succeed as a currency to succeed and that's simply not true. It can succeed as a payment network and store of wealth while failing as a currency and be wildly successful still. The political ideologies you're attaching to it don't matter.

> But don't expect everyone else to keep paying taxes and obey regulations. It's just not going to happen.

Yes it will, the tax system already relies on voluntary reporting and people still declare and pay their taxes simply because it's illegal to not do so. Everyone isn't like you; they don't want to not pay their taxes and risk getting caught committing tax fraud.

> with more people not willing to participate in government scam

Once again, those are your political ideals and they are not shared by the vast majority of society. You are in the minority, we don't all see government as a scam.

> If you truly believe society cannot survive and prosper without government, then the only logical step I see is for you to stop using Bitcoin or even lobby to ban it.

Then you have very limited logical abilities and very small thinking.

1) Yes it will, the tax system already relies on voluntary reporting

2) they don't want to not pay their taxes and risk getting caught

Talking about logical abilities. Taxes are voluntarily paid because people don't want to be caught and end up in jail? You can't call something voluntary if it requires threats for people to sign up.

Did I say taxes were voluntary...NO, please learn to read.

Good lord you're a nitpicker. You said "tax reporting" was voluntary. Fine. What happens if you don't report and IRS finds out? Are people scared of not reporting? Tax reporting IS NOT voluntary.

Tax reporting is voluntary, you are taxed on the income you report and people don't report income all the time because it'd be impractical for the IRS to care; for example no one reports income gained from having a yard sale and no one's afraid of that getting them in trouble because it's a petty amount of money.

Just because you're scared of the consequences of getting caught lying doesn't mean lying isn't a voluntary option. Voluntary doesn't mean free of consequences. You are free to voluntarily lie about your income to the IRS, you are not free from the consequences of doing so should you get caught in a big lie.

Tax reporting is voluntary. Taxes are not. I'm not nitpicking, I'm stating facts clearly.

You tried to make the point that people won't report their Bitcoin income to the IRS; you are wrong, people aren't going to suddenly all start committing tax fraud just because you would. Most people will stay within the law and report any significant income because that's what people do. Most people aren't political radicals looking to bring down the system and they don't care about your ideals. You are not representative of most people; you are a dissident.

Calling me a radical and a dissident is not arguing. I can call you a statist and an accomplice to murder because your taxes finance wars that kill innocent people all over the world. But that won't matter.

What matters is that taxes are theft because in order to take that money away you have to threaten people with fines and jail. If you couldn't fine or put people in jail, my guess is that most would stop paying taxes. If you can't prove logically that taxes aren't theft, then, of course, it's okay to call people names and not argue like an adult, because that is all you're left with.

I didn't call you anything, I described you factually, and you'd hardly deny it. Nor do I need to prove taxes aren't theft, that's simply your unfounded assertion because you incorrectly assume only 2 parties are involved in trading your labor for wages. I am a statist, as is the majority of the population in this democracy if you haven't noticed, and we're in charge. If you think being accurately described is "calling you names" then you're a child, go away.

>who talks about spending?

Spending is the purpose of money. It's a means of transaction. It isn't an asset, and there is no need to hoard it. How is that productive?

>IRS may as well starve to death waiting for me to spend them.

Well, if everyone thinks like that, that's a terrible monetary system. If I want to trade my car for Bitcoin, where do they come from? I have to keep bidding them up until I find someone to sell them to me? The advantage of cash is that it's abundant.

Hoarding is productive because if you're incentivized to hoard (as with Bitcoin) that means you will only most likely invest in projects you truly want to invest for some reasons: either because people really need the product you are going to produce and will pay money, making this whole enterprise profitable or because you always wanted to be an innovator and do something amazing. However, since you no longer have to spend simply because you fear inflation will eat your money, this means you're not going to invest in useless projects of digging holes or buying useless luxury things for yourself. Deflationary currency incentivizes healthier lifestyle free of consumerism.

Spending is not good and isn't the point of currency. The point of currency is to allow people to BOTH do transactions and save. I guarantee you that if the US removed all regulations on currencies, Bitcoin would take over in a couple of years as a national currency, making it obvious that USD is forced upon us.

>that means you will only most likely invest in projects you truly want to invest for some reasons

So, precisely how it works with cash.

>The point of currency is to allow people to BOTH do transactions and save.

I'm not sure you understand what "saving" is. Considering that you likely work in an industry that relies on putting other people's capital to work, you would think that you'd appreciate a monetary system that incentivises such activity. I do.

>However, since you no longer have to spend simply because you fear inflation will eat your money

I don't fear this. Whatsoever. Because I don't stuff my money in a mattress for decades.

Since the Fed introduced the inflation mandate in the 70s, inflation has been low. I don't care if a candy bar is $1 now, instead of $0.10. I'm far wealthier and can purchase far more candy bars. The absolute value of a dollar is irrelevant to me.

>I guarantee you that if the US removed all regulations on currencies, Bitcoin would take over in a couple of years as a national currency

Utterly delusional. 99.9% of the population has no problem whatsoever with the USD, myself included. Outside of paying taxes, US citizens can use whatever they want in exchange. Are people stopping you from using Euros or blueberry scones right now? Please tell me the regulations preventing such activity.

We have many big economic problems to solve. Money isn't one of them.

>it's inflation safe

It isn't inflation "safe"; there's no inflation. And that isn't necessarily good. The money supply needs to grow as the demand for money grows (yes, the demand for money changes over time and circumstance).

>no corrupt bankers or politicians can manipulate it (easily)

They sure will, as will corrupt vendors, hackers, salesmen, etc. Corruption is a human trait, not confined to "bankers or politicians".

> It isn't inflation "safe"; there's no inflation. And that isn't necessarily good. The money supply needs to grow as the demand for money grows (yes, the demand for money changes over time and circumstance).

Let's just say it's completely transparent in it's inflation. That is an objective advantage. You can argue that the inflation model is bad, but it is at least completely deterministic.

>> They sure will, as will corrupt vendors, hackers, salesmen, etc. Corruption is a human trait, not confined to "bankers or politicians".

> They sure will, as will corrupt vendors, hackers, salesmen, etc. Corruption is a human trait, not confined to "bankers or politicians".

Crypto-currency can at least remove one piece in the chain of corruption that was often exploited before. Just like cryptographic communication does not prevent against all attacks, it does prevent against some.

its, not it's.

> It isn't inflation "safe"; there's no inflation.

Not actually true until all coins are mined in like 100 years; for now it's undergoing quite predictable inflation and will be for quite a while.

> The money supply needs to grow as the demand for money grows (yes, the demand for money changes over time and circumstance).

Divisibility solves the liquidity problem, the only real issue is deflation and there's other ways that could be stabilized as money supply manipulation is certainly off the table in this case.

Bitcoin only supports 7 transactions a second as I understand it. Surely that instantly kills any idea it could be the future of money?

This is a temporary technical issue.

https://en.bitcoin.it/wiki/Scalability

Good way to stop high frequency trading then.

Or simply stop adaptation on a larger scale.

No, by transactions, they mean transactions on the block chain. That is, only 7 people in the entire world can buy things with Bitcoin every second.

HFT markets would use off-chain transactions, like all current Bitcoin exchange markets, so wouldn't be affected by this in the slightest.

You have no idea what you're talking about. Trading on the blockchain is insane and no one is really attempting to do it.

Doesn't bitcoin require you to download the whole blockchain before you can use it? What happens when new transactions are created faster than you can download them?

No, this is completely wrong.

Ah, ok. My bad. How does it work then?

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