
Bitcoin would be a calamity, not an economy - edward
https://www.technologyreview.com/s/610783/bitcoin-would-be-a-calamity-not-an-economy/
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zamalek
> total number of bitcoins is capped at 21 million [...]. This makes Bitcoin
> appealing to many people because something that will never increase in
> supply is more likely to hold its value.

A deeper problem is what happens when the economy grows to more than what
Bitcoin can represent. For example, what happens when a piece of bread is
worth less than 1 satoshi? With a fiat currency, you can simply print more so
that said piece of bread can have its value accurately represented. You can't
do that with Bitcoin.

To make matters worse, if a whole bunch of [flames, edit: money] goes up in
flames more can be printed to replace it. If Bitcoin goes missing[1], it's
gone for good.

Currency was formulated to replace barter (precisely because of indivisibility
problems: you have one cow, but I only have three bread to trade).
Cryptocurrency is not a currency because it specifically aims to reintroduce
problems that currency solves. It could be an alternative solution to the
barter problem if a novel workflow is formulated (such as Ripple carrying
information and not value), but buying stuff with it is unsustainable in the
long run.

[1]: [https://www.independent.co.uk/life-style/gadgets-and-
tech/ne...](https://www.independent.co.uk/life-style/gadgets-and-
tech/news/bitcoin-value-james-howells-newport-landfill-hard-drive-campbell-
simpson-laszlo-hanyecz-a8091371.html)

~~~
abbasaamer
> For example, what happens when a piece of bread is worth less than 1 satoshi

That does not seem to be an imminent danger. The price of Bitcoin would have
to increase literally 1.4 million times for a satoshi to be worth a penny.

> To make matters worse, if a whole bunch of flames goes up in flames more can
> be printed to replace it. If Bitcoin goes missing[1], it's gone for good.

Isn't that the same with paper cash? If by a "whole bunch" you mean enough to
cause a worldwide issue, then there are solutions to that. Maybe not great
solutions, but there are some. Worst case, a hard fork. That's essentially
what led to Ethereum vs Ethereum Classic, isn't it?

~~~
paxys
If you mail a torn banknote to the Treasury they will send you a brand new
one. There is no recourse if a hard drive or electronic wallet containing a
bunch of Bitcoin is destroyed, for example.

You can say "tough luck", sure, but the end result is that the amount of money
circulating in the economy will be decreasing every day.

And how does a fork solve anything? You can't just say, hey throw away all
your existing Bitcoin, we're starting from scratch and using this new one now.

~~~
abbasaamer
> If you mail a torn banknote to the Treasury they will send you a brand new
> one.

Torn, yes. Lost/destroyed, no. I don't think the torn analogy represents the
scenario being discussed.

> And how does a fork solve anything? You can't just say, hey throw away all
> your existing Bitcoin, we're starting from scratch and using this new one
> now.

That's exactly what Ethereum did. The old one was essentially "thrown away"
and became known as Ethereum Classic. A small group of people stuck with the
old one, but it's not the main one we think of when we say "Ethereum" these
days.

~~~
paxys
> Torn, yes. Lost/destroyed, no

They still will, if there is a way to verify it (e.g. stuff in a bank vault).

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kashif
The article doesn't say much other than state the current reality of central
banks shaping a lot of market forces in todays paradigm. I disagree and think
that the Central bank has inserted itself in things that economic forces would
have otherwise managed anyway.

~~~
toss1
The history of massive boom-bust cycles before central banks says otherwise.
These cycles haven't been completely eliminated, but the cycles are much more
moderated than the way they were before fiscal and monetary interventions.

It seems that the best would be for a currency to automatically detect the
conditions needing faster or slower creation and algorithmically adjust (as
they adjust the hash rate), keeping political adjustments out of it.

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ttul
“The problem is that in the event of a crisis, there would also be no way to
add liquidity to the system, since you can’t “print” more bitcoins.”

Arguably, because the rate at which BTC is printed is algorithmically fixed,
it makes no difference that there is a cap of 21 million at some time in the
future. The fixed rate of issuance is a curiosity. Since everyone know that it
exists and how it will play out, this is entirely reflected in the price.

If BTC replaced fiat, then yes, there would be no way for anyone to issue more
BTC to help provide liquidity. In this way, BTC is just like gold, and we know
that backing a currency with gold is a poor idea because it similarly ties the
hands of government.

However, if governments bought massive stocks of BTC, they could release it
when needed to absorb shocks. This would be more like a fiscal stimulus than a
monetary stimulus, but in any case I think the article overlooks it as a
distinct policy tool if BTC hits the really big time.

~~~
solotronics
I think backing all the global currencies with absolutely nothing is a
relatively new experiment and we have yet to see if it works out.

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dumbfounder
It's not going to supplant the fiat of the world's strongest economies for a
long time, but it hopefully will soon for the weakest. For the weakest, the
central bank is often the problem, not the solution.

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nontechdude1
Bitcoin is an economy for illicit things.

It is a store of value for early adopters trying to get people to basically
put money in their pocket.

The only thing people care about is its value against USD. That alone refutes
the possibility of it as a currency. USD is clearly a great currency.

Blockchain has some interesting applications; for example, medical records
being secured, and maybe other applications.

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dpc_pw
This article is soo not worth reading. Nothing new or of any insight there.
The argument about fixed supply is soo old, and argued with million times
already.

Don't worry. Noone is forcing anyone to use Bitcoin. Keep your fiat, enjoy
your inflation and central bank always ready to print more of it. :)

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israelsonbj
Forking creates too many issues for general public adoption.

