

Why Bitcoin will fail - fredoliveira
http://apenwarr.ca/log/?m=201105#08

======
bdfh42
This is the third time this post has popped up today - but interestingly I see
that the previous two posts are no longer listed. So where are they going?
Both (I am pretty sure) passed the 10 vote point that supposedly makes them
secure from people improperly using the "flag" facility. I will watch with
interest.

<edit> Turns out the first post of this link today scored 55 up-votes before
being disappeared and the second 19 votes before meeting it's fate </edit>

------
Jd
I always find it interesting that one of the first arguments used against a
gold standard is that people who argue for it are idiots -- something
economists in the US magically discovered when, contrary to previous
agreements, we moved off the gold standard in 1968.

The argument for gold (or a fixed peg to a basket of commodities, also
suggested by intelligent economists) is not for the commodities themselves,
but against a centralized banking authority that cannot be trusted not to
spend into a huge deficit and then print money. The fact that the dollar post-
Bretton Woods II is the de facto world currency amplifies all of these
problems -- meaning that other national banks (e.g. Korea, Japan and China)
have to put massive amounts of their money into dollars.

This also means that any devaluation in the dollar will have catastrophic
impact on their economies -- basically meaning that many other governments
(and, of course, individuals) are subject to the whim of the Fed and Executive
Branch of the US Government.

There is no very obvious solution to this given the substantial inertia in the
system and the fact that not everyone plays nicely with each other. For
example, even if it were certain that an alternative currency like BitCoin
were entirely legal, this wouldn't prevent the powers that be finding some
excuse to shut it down.

~~~
anamax
> I always find it interesting that one of the first arguments used against a
> gold standard is that people who argue for it are idiots -- something
> economists in the US magically discovered when, contrary to previous
> agreements, we moved off the gold standard in 1968.

In large part, economists are evaluated based on whether they are listened to
by the "correct" people. Those people are looking for arguments to do what
they want to do.

Compare Christina and David Romer's work on govt spending and tax cut
multipliers <http://www.econ.berkeley.edu/~cromer/RomerDraft307.pdf> with
their recommendations while in the Obama administration.

They're far from the worst - they were just the easiest for me to cite
quickly. In fact, I'd argue that they're relatively good because they're so
transparent.

------
gyom
I'm not expert, but this is a good read. However, I disagree with his bullet
point stating that "Bitcoins are less convenient than paper currency".

For buying a hotdog, yes. For online purchases, I don't know yet. Sending
paper currency in a paper envelope isn't so great either, and we all know that
Paypal isn't really fair to everyone.

~~~
kiba
A bitcoiner argued comparison to the gold standard is dumb:

[http://www.bitcoinbulletin.com/2011/05/09/the-bitcoin-
paymen...](http://www.bitcoinbulletin.com/2011/05/09/the-bitcoin-payment-
system-isnt-like-the-gold-standard/)

~~~
cube13
>What was the Gold Standard? It was a system in which one currency was tied
directly to a finite resource. There was no choice in how one could pay,
payments were made in a vacuum. All transactions had to be made in a currency
backed by gold. That meant that any abuse of the Standard could affect the
economy negatively and runs on banks were almost inevitable.

This completely misunderstands the point about the gold standard comparisons.
The gold standard is based on the fact that the currency issuer has a certain
amount of gold, and each unit of that currency can be redeemed for gold.

Bitcoin is based on the fact that there are 21 million bitcoins, period. The
currency IS backed up by itself, by the fact that there are only a finite
number available to you. That is exactly how the Gold Standard works. Every
USD was backed up by gold, the same way each BTC is unique.

As for choice... there isn't any choice when vendors only accept one currency.
If they accept multiple currencies, then there is a choice. However, Bitcoin
itself does not provide that choice, because you don't have the option to pay
a BTC transaction directly in USD.

------
kgo
FAIL #1: If you like bitcoin, then you must think the gold standard was a good
idea.

Complete and total straw man if there ever was one.

FAIL #3: The whole technological basis is flawed.

Followed shortly by:

"First of all, I admit, I don't totally understand the bitcoin algorithms and
systems. I don't really need to. "

------
aj700
Persuasive. This does rather suggest that we should all get on with doing
this:

1\. Work out a non-brute force workaround for SHA256

2\. Make infinite bitcoins and then buy real money with them

3\. $$$$$$$$$$$$$$$$$$

Don't do this. He's suggesting it. I'm not.

Also: "Bitcoin removes government control over the economy, which means there
is _no_ control over the economy."

Yes, because there's no government. Must be why it's called info and crypto-
anarchism.

"You are attempting to build nuclear weapons in your bedroom."

Maybe "I" am, but I'm doing it with tools downloaded with TOR, so they CAN'T
stop me. If they could, child porn, as a horrible but valid example, would be
impossible to get, even on TOR.

------
Semiapies
I'd be more interested in someone trying to make convincing arguments _for_
Bitcoin.

------
pkulak
And yet one more article assuming that if bitcoin doesn't totally replace all
the world's currency it will be a failure.

~~~
knowtheory
I don't think that's what the article assumes at all.

Success for bitcoin as a currency is a question of whether you can buy things
with it. It could reasonably be a successful trading currency, or it could go
further and become a successful consumer currency.

I'm not convinced that either are likely and i think that keeping in mind
criticisms of bitcoins and currency systems is a good idea. This article
mentions issues with both.

------
HedgeMage
I really never know what to say to posts that so ineptly and incorrectly
support the correct conclusion.

------
retrogradeorbit
"Wiser men than I have explained in excruciating detail why you're an idiot"

Never call your readers idiots. Which this author has. It just makes you look
like a giant dick head. Which this author is.

------
retrogradeorbit
"If the gold standard worked ... we couldn't have recovered, period, from the
recent banking crisis"

Oh look. We've 'recovered'. Good times are here again!

------
noduerme
Bitcoin just misses the point. The problem with e-cash viz. keeping it free of
gov't interference isn't actually with the transmission from one party to
another of the e-currency. I can open a server in Greenland that tracks
currency transactions in Uruguay for dope, and vice-versa, in my own encrypted
and secure currency. The problem is how does anyone change in my funny money
for a currency that they can actually spend somewhere. And Bitcoin doesn't
solve that problem; it just complicates it. Btc leaves it up to the coin
holder to figure out how to actually extract value from the bits, and assumes
a market will develop. But how will a market develop when the inputs and
outputs are all regulated by the same gov'ts that BC wants to do an end-run
around?

------
kposehn
Oh man, this guy is awesome.

------
fuzionmonkey
I don't really think this satire is very funny. But maybe thats just me.

Honestly I was hoping for some serious arguments.

