

Bitcoin will prosper until governments or banks decide to crush it - iProject
http://gigaom.com/2013/07/13/bitcoin-will-prosper-until-governments-or-banks-decide-to-crush-it-overnight/

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nullc
I'm trying to think of some <Foo> that doesn't work in the pattern of "<Foo>
will prosper until governments or banks decide to crush it".

Excepting the trivial cases of things that won't prosper regardless, I'm not
coming up with anything. :)

Some of the assumptions in the article seem pretty weak to me: E.g. "Anonymity
threatens control" uh, cash is a lot more anonymous than Bitcoin. The
structure of cash's anonymity limitations are somewhat different than
Bitcoin's but it's hard to argue that Bitcoin is too different on that point.
... and it's not just cash, any other valuable commodity is fairly anonymous,
and easily argued as more so than Bitcoin— yet, as far as I am aware, there is
no great effort afoot to outlaw coal.

~~~
Retric
It's effectively illegal to transport large amounts of cash in the US. As in
cops will confiscate it and you have no recourse unless the "preponderance of
the evedence" suggests it has no link to any crime.

~~~
malandrew
Exactly. This is my favorite abuse of this power:

[http://en.wikipedia.org/wiki/United_States_v._$124,700_in_U....](http://en.wikipedia.org/wiki/United_States_v._$124,700_in_U.S._Currency)

~~~
mpyne
Wow, that looks like a title you'd see on /r/nottheonion

~~~
malandrew
The dissenting opinion is a worth a read.

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nhaehnle
_It is immune to the inflation that plagues all fiat currencies_

Funny thing is, most actual economists would say that the inflexibility of
Bitcoin is a _disadvantage_.

Discussions of Bitcoin are dominated by people for whom certain rules about
money (such as: "it must be a forever fixed amount") are basically articles of
faith. Outside of this comparatively small population, people primarily care
about other things, such as good economic growth, full employment, social
equity in the sense of equality, and all sorts of things.

Having a forever fixed supply of money tends to be detrimental for those
things.

~~~
Lerc
I know the arguments that say inflation is required to encourage people to
usefully apply their money, but I haven't seen enough to convince me that this
is true.

Part of the difficulty I have with accepting the "inflation is good" argument
is that I can see how economic policies result in inflation and it strikes me
as a survival trait amongst economists to declare a consequence of their
advice as a positive event.

Bitcoin may be an interesting test of that hypothesis.

It wouldn't be the first time that the consensus of an entire field was wrong
prior to a significant counterexample appearing.

~~~
nhaehnle
It's not so much that inflation is good (though it does tend to be as long as
it's, say, single digit), it's that a fixed money supply is really, really
bad.

Unfortunately, the type of people for whom a fixed money supply is an article
of faith don't even see the distinction. They basically argue as if the
definition of inflation were an increase in the money supply, which just
doesn't make sense.

If you want to get an idea for why a fixed money supply is bad, a good
exercise is to look at the actual money supply data on a daily basis. You'll
see that it fluctuates quite strongly in certain rhythms, especially weekly
and monthly. This is clearly related to thinks like paydays, and it reflects
the fact that flexible finance allows the economy to function more
efficiently. With a fixed money supply, this would not be possible.

Another, perhaps even stronger, point is that the monetarist experiment of the
1970s and 80s failed badly, in the following sense. The attempt to control the
money supply by central banks resulted in wildly fluctuating short-term
interest rates, which made it very difficult for the real economy to plan
properly, leading to inefficiencies. As a result, central banks gave up
targeting the money supply as a policy variable; they now target the interest
rate as a policy variable, and allow the money supply to grow and shrink as
needed to hit the interest rate target.

So, in this sense, Bitcoin is simply not needed as a test of a hypothesis,
because _the test has already happened_!

It is only the (sometimes genuine, sometimes willful) ignorance of a small
group of quasi-religiously motivated people that makes it look as if a test
were still needed.

In a way, this is a fight between two systems: A decentralized, market-based
systems, where money is created and destroyed decentrally, mostly by financial
institutions on the one side; and on the other side, a system where the money
supply is controlled by a central entity (either the central bank or, in
Bitcoin's case, the Bitcoin developers).

It really shouldn't be surprising that centralized decision-making can be much
worse.

------
somejan
_Every currency created since the advent of money 2,700 years ago has fit
nicely into one of two classifications: Either it was a representative money
system, deriving its worth from a link to some physical store of value like
gold, silver or gemstones; or it was fiat [...]_

And then the author suddenly stops and ignores the next obvious question:
where do gold, silver and gemstones get their value from? The simple answer is
because people like to have them and their supply is more or less fixed (which
causes people to believe they won't suddenly lose their value). The exact same
thing applies to bitcoins: bitcoin is the store of value.

The US already tried once to make a certain type of currency it couldn't
control illegal: in 1933 it forbid anyone to own gold. That didn't make gold
worthless any more than it will make bitcoins worthless. The only thing I
believe that could do that to bitcoin is if it is replaced by another digital
currency.

------
csomar
My humble perspective: Nothing matters as long as profitability and
opportunity exist. Bitcoin will continue its growth as long as it's profitable
to operate a miner, a business, an exchange and as long as there is an
opportunity to run something. People will go where the money is.

My other humble take: High-rises and businesses are built by continuous and
large flow of money (wealth) into a system. Bitcoin business will continue to
grow and solidify (have better security, legal status, branding...) as the
money keeps flowing to the system.

------
gojomo
The 'crush' scenario presented here -- governments using their fiat currency
power to alternately buy and dump Bitcoins, creating a boom-bust cycle that
scares other people away -- doesn't seem very smart or likely to succeed.

Speculators would recognize it and attempt to profit by front-running the
government operations (increasing the cost to the government, and dampening
the volatility).

Bitcoin service providers could offer volatility-protection (instant
conversion to other currencies), as some do already.

Governments could lose money on each manipulated boom-bust cycle, and at the
bottom of each cycle, Bitcoin would still be alive and ready for new uses.

Far more likely, in my mind, is an attempt to coopt Bitcoin. Officially
approve it, with reporting/identity conditions that don't encumber legal use
but ensure tax collection. Or, launch a Bitcoin-like competitor backed by
government redemption guarantees (T-Bills, TIPS, etc). So, above-ground
businesses can get most of the crypto-currency benefits without the rough
edges created by its most anti-State qualities.

~~~
dragontamer
The problem with BTC is how long it takes to confirm a transaction. Paper-
based transaction is instant, you hand bills over and you're done. Credit
cards are the same.

BTCs take 4 or 5 block-chains before they're "confirmed", and you don't really
know if your customer has "double-spent you" until the confirmation occurs.
This makes BTC unacceptable to the vast majority of typical transactions.

Its fine for say... online shopping, because 30 minutes of confirmation time
isn't that big of a deal. However, waiting 30, 40, or 50 minutes for
confirmations is not the best way to buy coffee in the morning.

~~~
csomar
It's probably instant for the 99%. I don't think people are willing to handle
the security and technical aspect of Bitcoin. They'll hand these details to a
service like Coinbase, which will have merchant APIs and accept transactions
instantly.

~~~
dragontamer
[http://blog.coinbase.com/post/43285532179/unconfirmed-
transa...](http://blog.coinbase.com/post/43285532179/unconfirmed-transactions)

 _In this case we fell far short of that goal (some transactions were delayed
for a number of days), and for that I am truly sorry_

Uhhh... you were saying? If you fail to understand the technical aspects of
the technology you're building a business on, be ready for it to bite you in
the ass in obscure ways.

Any implementation of Bitcoin will have "leaky abstractions".

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dragontamer
Bitcoin is not anonymous, why do people keep harping this falsehood? At best,
Bitcoin is pseudononymous. But every single transaction is forever kept in the
Bitcoin Ledger, for the rest of time (or at least... till the end of BTC's
existence).

~~~
gojomo
Yes. And even at "the end of BTC's existence", archival copies of the
blockchain will persist.

And, some subsequent attempts at an improved cryptocurrency are likely to try
to include the past blockchain balances as an initial endowment (or balances
as of a certain checkpoint).

Doing so would help lay claim to being Bitcoin's rightful heir, and attract
the immediate financial interest of people who've already proven their
interest in cryptocurrencies.

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felipelalli
It is much easier for governments and banks invest in negative media like this
poor and spiteful article. A massive negative media do some tickle, but
Bitcoin always back stronger.

------
chx
It is not prospering by any stretch of imagination, what are you talking
about?

~~~
i_am_dead
It has a ten digit market cap, how is that not prospering?

