
Bitcoin is dead. Long live bitcoin. - not_that_noob
http://blog.metatony.com/2013/04/bitcoin-is-dead-long-live-bit-coin/
======
baddox
> One of the properties of a good currency is that over time it’s value must
> slowly creep downward.

Isn't a big part of the thesis behind bitcoin that this mainstream economic
belief is false? After all, mainstream economic theory since at least the
Great Depression would also say that central authorities (generally
governments) should be very hands-on with their control of the money supply,
which is another belief that bitcoin is clearly designed to challenge. I know
very little about economics both mainstream and heterodox, but I think it's
unfair to make this claim without at least mentioning that the designers of
bitcoin are almost certainly aware of the belief and are deliberately
challenging it.

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eridius
> It has all desirable values of gold

No it doesn't. Bitcoin is only valuable as long as it's valuable. Yes, that's
tautological, but it's also true. Bitcoin is only valuable as long as people
are willing to pretend it has value. However, gold has an intrinsic value that
it possesses whether or not people are willing to invest in it, because gold
is useful for more than just investing (for example it's used in jewelry,
dentistry, electronics, etc). If everyone in the world decided tomorrow to
stop investing in gold, you could still sell any gold you had for an amount
based on its utility. But if everyone in the world decided tomorrow to stop
investing in bitcoin, its value would immediately plummet to $0.

~~~
javert
AFAIK, gold's value for non-investment use (i.e., "intrinsic" value) is a
small fraction of its actual price today. I don't have a citation for that,
but investment buddies have told me that. (Maybe someone reading this can give
a citation?)

So, basically, gold has ceased to be priced at all based on intrinsic value,
and entirely based on the projected fact that people will continue to want to
use it as a store of wealth in the future, so therefore, you will be able to
trade your gold for something else valuable. (Which is exactly the projected
fact that is keeping Bitcoin going.)

Arguably, Bitcoin's property of being easily transferred and stored greatly
outweighs the property of gold that there are real-world uses.

 _But if everyone in the world decided tomorrow to stop investing in bitcoin_

If.

At this point, it's pretty clear (to me) that that will _never_ happen, short
of global government intervention. If there is a major dip in Bitcoin price,
investors will buy it back up. Bitcoin has established itself as a useful way
to store and transfer value _for investors_. For everyday transactions, I
think it's in the process of proving itself.

~~~
eridius
Never? It's faaaar too early to make that claim. What if the cryptography is
broken? Or if another crypto-currency comes along that's demonstrably better,
to the point that everyone stops buying bitcoin and starts buying this new
currency instead? These are but two scenarios that would cause bitcoin to lose
its desirability, and therefore its value.

~~~
javert
> Never? It's faaaar too early to make that claim.

It will never be more certain than it is right now. What are you waiting for?

> What if the cryptography is broken?

Sorry, but I trust ECDSA and SHA256. Quantum computers may be a concern
eventually, but I think there are mitigation strategies for that.

> Or if another crypto-currency comes along that's demonstrably better, to the
> point that everyone stops buying bitcoin and starts buying this new currency
> instead?

What if a unicorn flies out of the sky and starts pooping rainbows? There is
no possible crypto-currency that is demonstrably significantly better.

------
stfu
Does anyone have some research links on analysts/opinion leaders and their
hype cycles?

I remember Nouriel Roubini bashing Gold on Twitter like never before all of
the sudden starting about two weeks before the gold "crash". The whole thing
happened without any significant "new" developments taking place (at least
from my laymen perspective). These boom and burst cycles seem a lot like echo-
chamber hyping. I would so love to see some research on how these echo waves
start and succeed/fail.

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infogulch
I couldn't make myself keep reading after this:

"The Federal Reserve, ... increasing the money supply ... by simply creating
money out of thin air ..."

Ok so far...

"... which the Treasury then dutifully prints out as paper notes."

Um, what? Most money in circulation is never printed.

Also, bitcoin is NOT anonymous unless you're extremely careful about how you
get it and how you spend it.

~~~
javert
Sure it is. Get it from someone you don't know for cash at localbitcoins.com
and spend it at a public computer. (To do that safely, you probably need to
use a client like The Armory which would free you from needing to load your
wallet onto a public computer.)

~~~
fyrabanks
Transactions on localbitcoins.com are far from perfectly anonymous. Relatively
anonymous, sure.

~~~
javert
Why do you say that?

I mean, nothing is perfectly anonymous if government agents are already
tracking you and have bugged your home and workplace.

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flootch
ObFuturamaLaughHarder: <http://www.youtube.com/watch?v=FopyRHHlt3M>

Instead of showing me a graph of gold price versus bitcoin price, at a time
when analysts say gold has declined due to a lack of inflation in the world,
as well as the Cyprus crisis, you should show me a graph of total amount of
gold held as a store compared to total amount of bitcoins held as a store as
that would demonstrate people actually switching out of gold for bitcoins.

Until then, I'm going to assume this is either a post of ignorance or perhaps
just HN spam.

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postscapes1
My instinct says the same thing on Bitcoin acting as surrogate for gold in the
near term (Say the next 4-5 years or so). I also think that the way it is
structured could help it fulfill its currency aspirations in the long term by
its ability to be broken apart into tiny little pieces.

Our brains (and economy) are not really used to working in decimals of
something on a day to day basis, but if Bitcoin eventually settles around
1,000 or so you could see people start using it this way.

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t0
You're right. 99% of the bitcoins owned today will never be spent on
purchases. I wonder if this is simply due to ease of use. What can you really
buy with them? If they were accepted everywhere would this be different?

~~~
tonyrjk
The issue I think is that even if it were accepted everywhere, if it's value
was going up, I won't want to spend it. Just by waiting I am guaranteed a
solid rate of return. This is similar to deflation in the broader economy -
people stop spending when they can buy more in the future for the same money.

------
brucefancher
The so-called "hoarding problem" was debunked decades ago:

<http://mises.org/money/2s9.asp>

It's still orthodoxy among academic economists, but there isn't any historical
evidence that it's actually true.

More recently, this article in Forbes explains the issue more succinctly:

[http://www.forbes.com/sites/timothylee/2013/04/11/bitcoin-
do...](http://www.forbes.com/sites/timothylee/2013/04/11/bitcoin-doesnt-have-
a-deflation-problem/)

