
Bitcoin rises - pg
http://www.aljazeera.com/indepth/opinion/2013/03/2013391325331795.html
======
miles
Out of curiosity: I submitted the exact same link 6 days ago:

<https://news.ycombinator.com/item?id=5369899>

How is it possible for the same link to be submitted in such a short time
again?

Old link:
[http://www.aljazeera.com/indepth/opinion/2013/03/20133913253...](http://www.aljazeera.com/indepth/opinion/2013/03/2013391325331795.html)
New link:
[http://www.aljazeera.com/indepth/opinion/2013/03/20133913253...](http://www.aljazeera.com/indepth/opinion/2013/03/2013391325331795.html)

~~~
pg
The dupe detector only looks at items in memory, which means the most recent
15k plus any that have been viewed recently.

~~~
bjork
I don't want to come off as a troll or anything, but is the technological
mediocrity of this site intentional (e.g. "Unknown or expired link.")?

~~~
tptacek
I don't want to come off as a troll or anything, but how do you expect us to
deal with all the parens in the language you built this site in? It's like,
all parens.

~~~
chacham15
A little bit of humor to brighten your day:
<http://stackoverflow.com/a/235790/516813>

------
DanielBMarkham
In the last couple of months, Bitcoin has passed the phase of "BC is nature's
way of teaching economics to nerds" and entered the phase of "BC is natures's
way of teaching political power to nerds"

Reading through the recent Treasury Department guidance this morning, it
looked to me like the U.S. is initially attacking where hard currency comes in
and leaves the system -- no matter where in the world that takes place (plug:
[http://freedom-or-safety.com/blog/the-other-bitcoin-shoe-
dro...](http://freedom-or-safety.com/blog/the-other-bitcoin-shoe-drops/) )

I imagine they'll leave that decision out there for a while -- months or years
-- before they start heavy enforcement. But enforcement is coming. And reading
through the AJ link, it looks like BC is beginning to integrate quite nicely
into the EU banking system.

So now I have an anonymous virtual currency -- that governments can track the
movement of. Which might require special licensing, permits, and insurance to
broker. Perhaps I'm missing the point here?

We're getting to the point where the big boys step in, and my bet is that it's
not going to be comfortable for the people who started the whole thing. I
expect more "integration" into the traditional banking system, at least until
there's no value-add between cash and BC, and then we've reached our starting
point. BC becomes nothing more than "collecting sharp sticks" in such a
fashion as to be closely monitored by world governments.

~~~
lukasb
Anonymity isn't the only value of Bitcoin. There's also the matter of
exchanging money electronically without paying fees to banks, Visa, or
Mastercard. Regulation might make transacting Bitcoin more expensive but still
leave it cheaper than traditional approaches.

I'm not a fan of Bitcoin personally (too much speculation for me to be
comfortable using it as a medium of exchange, much less a store of value) but
I think people underestimate how badly we're getting screwed by the current
payment oligopoly.

~~~
DanielBMarkham
So then it truly becomes just another collector's item, but one where when you
"cash out" it's all automatically reported?

Why not just trade in something else like gold or coins, where you can buy and
sell without having a state security system looking over your shoulder?

I frankly don't know if I'm a fan or not. I haven't been, but the movement
seems persistent, and I admire that. I also admire the concept of trying to
use technology to free us from ever-more-oppressive governments. However I'm
cautious: BC is "version 1.0". Might take until version 3 or so to get the
bugs worked out.

I just hate seeing a lot of really smart people work hard to end up in the
same spot they started from.

~~~
patrikr
Try sending a gold coin to the other side of the planet in 10 seconds...

~~~
drcode
2 hours for the confirmation on the blockchain to come in.

~~~
w-ll
2 hours? what no, try less than an hour, and you can also send coins that
arn't fully confirmed if you do raw transactions

------
rockyleal
Hey PG, I'm Nicolas Mendoza author of the article. Any comments? Anything you
specially liked about it?

------
rdl
I've always liked the idea behind bitcoin (decentralized cryptocurrency), but
I think ultimately it will serve the role of "specie gold" with something more
useful on top for transactions -- either book-entry accounting at a wallet
provider, or ideally some kind of blinded token system.

Bitcoin has numerous inherent deficiencies as a transaction system. It's also
not a great store of value -- you ultimately want something equivalent to debt
or equity in productive enterprises, rather than a commodity, to hold the
majority of wealth -- that's the whole point of fractional reserve banking or
mutual funds/investment accounts.

It may or may not be an ideal unit of account. Right now, USD is undeniably
the default unit of account, and even bitcoin vendors tend to price in USD
(with the runners up being EUR, JPY, etc.; other fiat nation-state
currencies).

So, some kind of blinded token system where issuers of blinded tokens hold
public amounts of bitcoin, and where the tokens are redeemable upon demand for
bitcoin ("specie") would work a lot better than trying to shoehorn
transactions into bitcoin directly.

~~~
eah13
The interesting thing to me is currency's role in providing certainty. In this
case, about the total amount of something, and whether what you're
encountering is a valid instance of it. Check out some examples and how
Bitcoin compares:

Gold has chemical properties that ensure its finite scarcity (though supplies
can fluctuate) and allow you to identify it as ture gold (through, e.g.
density measurements). Gold-backed paper currency has a scarcity determined by
the trustworthiness of its issuer and a validity linked to the difficulty of
its reproduction. Fiat paper currency has a feature of allowing a fractional
reserve system, which allows a central body to control its scarcity (and
perceptions thereof), with validity again linked to difficulty of
reproduction. Open-source cryptographic currencies have a well-defined
scarcity and easily verifiable validity.

Cryptography provides certainty better than a physical alternative like gold
or paper, but governments traditionally have had control over currency and
don't have control over Bitcoin. I think it's unlikely they'll give this up
without a fight. I'm not sure that the token system you propose really gives
them back that control unless it supports fiat: the arbitrary issuance or
discontinuation of currency. But, the idea of Bitcoin as specie is a great
one. If it is adopted it as such it becomes open to confiscation like FDR did
with gold in 1933, which is an interesting prospect:
<http://en.wikipedia.org/wiki/Executive_Order_6102>

I wonder confiscation is even possible? If it's not this is a seriously
revolutionary tech: property without government.

~~~
rdl
Fiat paper currency and fractional reserve are basically independent concepts.
Fractional reserve is practiced by the banks, and was done under gold-backed
currency just as much as today. A really interesting thing is the period of
"Free Banking"[0] -- in Scotland in the 1700s/1800s where banks were
essentially unregulated; State banks in the US were loosely regulated in much
of the 1800s as well.

All that's required to do fractional reserve is the ability to distinguish
"money on account" from notes. Either issue private notes, or maintain ledgers
of balances.

You could conceivably have a 100% reserved bank (doing bailment of physical
fiat notes -- a $100 note in the vault for every $100 in a savings account
balance) even under fiat currency. Or you could have something with only one
entity allowed to increase the money supply (deposit with the central bank,
but a 100% central bank reserve requirement, but the central bank allowed to
do loans).

[0] <http://en.wikipedia.org/wiki/Free_banking>

~~~
eah13
You're right that I conflated the two above but the relevant feature of each
is that they're a form of money creation. With a fractional reserve, the
amount of money created (through leveraging the reserve) is inversely related
to the size of the reserve. With fiat currency the 'reserve' the government
has is nonexistent, allowing for unlimited money creation. The government or a
bank's ability to engage in money creation are both limited by the certainty
that those using the currency have in its future value. If a bank loses it, we
get a run. If a government loses it, we get hyperinflation.

Thanks for the distinction between the two concepts though. You're exactly
right and gave a great explanation of them. I'll take a look at the free
banking period. It does sound very interesting. Talking about the money and
valuation sometimes it seems like all we have to measure things with is a
rubber ruler, especially when the amount and value of currencies can be
manipulated.

------
martythemaniak
My problem with BTC (and I say this as a supporter) comes from a pg essay -
you make what you measure. The BTC community measures BTC/USD exchange rate so
it ends up optimizing for that, but I can't understand how focusing on that is
a good thing. It already produced one massive crash and we're in the middle of
another one.

The actual number (BTC/USD) is mostly irrelevant, but volatility is quite bad
for people who actually want to perform transactions with BTC. I hope BTC is
able to get over this and continue growing.

~~~
kiba
_It already produced one massive crash and we're in the middle of another
one._

Why do you believe a crash is forthcoming?

 _The actual number (BTC/USD) is mostly irrelevant,_

Why do you believe it is irrelevant? The market capitalization is only 500
million dollars. Can you imagine operating an entire economy with only 500
million dollars? It's a proxy for adoption, although that is muddled by price
speculation and so on.

 _but volatility is quite bad for people who actually want to perform
transactions with BTC. I hope BTC is able to get over this and continue
growing._

The bitcoin economy is very tiny. Google probably makes more money than the
entire bitcoin economy in a year several times over. Of course, it's going to
be volatile. That's because we are growing. It would be a more legit concern
if that the economy is worth 100 billion dollars or a trillion dollars.

~~~
martythemaniak
1\. Because it has jumped 3x in 2 months. Either the bitcoin economy has
exploded over the last 2 months or speculators are feeding the hype machine. I
see no evidence for former, but plenty of the latter.

2\. It is irrelevant because you can use any sub unit down to satoshis to
transact. If you want to use BTC as a currency and perform transactions, the
exchange rate number is irrelevant, because it doesn't matter if a widget
costs 1BTC and the rate is 1 BTC/USD or if the widget costs 1 satoshi and the
rate is 10,000,000 USD/BTC. If you're a currency speculator OTOH, yes the rate
matters immensely. Which goes back to my point - is BTC there to provide an
alternate currency and associated economy, or just an easy way to gamble?

3\. You're using the terms "market capitalization" and "economy"
interchangeably. The economy implies the size of goods and services produced
in the BTC universe - this number is important but seems largely ignored by
the BTC community (in fact, it seems to not exist). Market Cap here means # of
bitcoins multiplied by the USD exchange rate. This number is closely followed
by the BTC community, but is large meaningless. It has spiked 3x in two
months, but what has happened to the BTC economy itself? It seems to have
grown, but can anyone say definitively?

~~~
bdr
1\. Or – third possibility — many people have recently raised their
expectation of the future value of the Bitcoin economy. If you're familiar
with stock trading, this is analogous to having a high P/E ratio.

There is a lot of uncertainty here. Intelligent, rational people disagree
wildly on the future of Bitcoin. There are all kinds of risks: legal,
technical, and competitive.

If the exchange rate crashes, and takes a long time to recover, you'll feel
justified in calling all buyers "speculators feeding the hype machine", when
in actuality many of them were simply wrong, or early.

2\. False dichotomy. Some people are speculating. Others are using it to
exchange value. Inventions don't need teleologies.

Your concern, if I'm understanding you, is that speculators are harming
Bitcoin's potential as an alternative to the current economy. I wouldn't worry
about that. The exchange rate is either going to $0 or $1000+, and the
behavior of the community short-term isn't going to affect that.

Obviously, I'm long Bitcoin. See this blog post from 2011:
<http://andrewbadr.com/log/10/bitcoins-and-why-im-buying/>

~~~
Retric
I just read though your link and I hate to break it to you but bit-coins are
the opposite of antonymous every account and every transaction is public.
Also, from a technical standpoint it's horrible for fast transactions like a
store or vending machine, so either it needs to be fixed, another layer built
over it which makes it no more useful than cash, or some other digital
currency is going to take over.

~~~
zanny
It is designed to be attack resistant. Having to validate transactions across
many nodes in the network, and having to maintain a valid transaction history
amongst the network, makes it really hard to be fraudulent. You can register
as many sources as you want in wallets, and you can give away your wallet.dat,
so in practice wallets are tied even less to people than IPs are.

------
kogir
Halving day was an interesting test that the community passed, which is really
cool.

What I look forward to seeing next is how a malicious, distributed hijacking
of the block chain is handled once it's profitable to attempt.

~~~
nym
It's already profitable... has been for at least a year now.

~~~
kogir
I think you underestimate the volatility of bitcoin. Right now there's not
enough you can do with them in their native form, and converting them to cash
would make make the price crash. I also doubt there's any exchange with enough
funds to actually support such a conversion.

~~~
nym
I don't underestimate the volatility... I watch the price very carefully, and
understand how volatile it is. Bitcoins are converted to USD and back to BTC
every day. If you were to try to sell ALL the bitcoins in one day that would
clear out the order books, and would likely cause a crash and then rally, much
like we saw when there was a bug in the blockchain. The price dropped to $37,
and quickly went back to the original price due to the demand.

The volume of MTGOX-USD is $69M for a 30 day period, which is about $2.3M a
day. Source: <http://bitcoincharts.com/markets/mtgoxUSD.html>

------
bozho
I was surprised the other day when I was testing the bitcoin integration for a
project of mine (here's a how-to: <http://techblog.bozho.net/?p=1114>), that
the price is so high. I bought my bitcoin a couple of months ago at 10 times
lower prices, and it was a pleasant surprise.

~~~
mamcx
Unfortunally for us not in USA, be part in the bitcoin stuff is still harder.
Can't be buy easily at all..

~~~
bozho
I'm outside the US and it was no problem. Wire some money to a bank account,
get the bitcoin.

------
yabbadabbadoo
PG - I'm curious what you think about Bitcoin. Care to share?

~~~
pg
Here's an email I sent someone yesterday about it:

    
    
        I am very intrigued by Bitcoin.  It has all the signs.
        Paradigm shift, hackers love it, yet it's derided as
        a toy.  Just like microcomputers.

~~~
yabbadabbadoo
Any thoughts on the currency vs hoarding issue?

Quick background for those unfamiliar with the issue - Bitcoin was built to be
a currency, to be used to trade for goods and services. However, a significant
portion of BTC is being hoarded and not traded, thus leading some (like Nobel
Prize laureate Paul Krugman) to argue that it's not a currency at all, and any
value is purely speculative. For the record, I don't agree with Krugman's
argument.

~~~
willholloway
My thoughts are that we need a new crypto currency without the deflationary
flaw of bitcoin. The rate of new coins mined should increase as time goes on
in a controlled fashion.

A crypto currency with managed inflation wouldn't make early adopters as
wealthy, but it would be a better medium of exchange.

~~~
ohazi
Yes. Finally, someone levelheaded. Every bitcoin supporter I've ever spoken to
has basically dismissed deflation as a non-issue. It _is_ important, and if
the bitcoin economy grows, the deflationary effects are only going to become
more visible.

~~~
snitko
I have never met a single person who was able to convincingly raise at least a
little bit of suspicion about deflation in me. Why is deflation bad? Because
people stop spending? Can't you see how ludicrous this explanation is?

~~~
notahacker
It's more because people stop _investing_

If the real rate return of investments over _any_ period of time is _on
average_ less than simply hoarding the currency (an inevitable consequence of
a permanently deflationary economy) your economy is screwed up.

~~~
jessaustin
Bitcoin and its users have no duty to any existing "economy", and certainly
don't amount to one themselves. If one's holdings of bitcoin appreciate with
respect to some other commodity, eventually the wealth effect will make
investment and other spending in that second commodity attractive. No one is
in any sense stuck in a "bitcoin economy".

If I'm misunderstanding, please clarify.

~~~
notahacker
Your above points are correct; depreciation in general is a bad thing but for
a "parallel currency" aiming for a particular niche like Bitcoin it's probably
not an issue, especially because holding Bitcoins is definitely not without
risk.

(In the unlikely event that Bitcoins ever became widely popular with
speculators, then governments will tax or restrict domestic purchasers or
exchanges for Bitcoins (they can't and won't be especially efficient at doing
this; the US/EU don't need to be to severely damage the exchange value of a
Bitcoin.).

------
jacoblyles
The coolest thing I've seen with bitcoin is the reddit bitcointip bot:

<http://www.reddit.com/r/bitcointip>

The second coolest thing are twitter tip bots.

It's amazing what you can do with a digital-native currency. Creating accounts
on the fly is as easy as sending an http request to the bitcoind client.

~~~
jacoblyles
I also really like that you don't need login information with sites like
Satoshi Dice and bitbet:

<http://bitbet.us/>

Your sending address is your authentication. So frictionless, so good.

------
tvladeck
This is why deflation matters:

<http://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op>

------
vinayan3
Despite it rising who in the right mind would hold bit-coins besides for
speculation? The exchange rates are so variable. As a very risky investment
great idea but day to day currency? I suppose it isn't a bad way to pay people
abroad and avoid foreign transactions.

~~~
jacoblyles
If you're looking for growth, it's better than the stock market where the deep
pockets have already gotten in early and eaten up all the speculative value in
promising ventures.

------
waterside81
Either a sign of a bubble or a sign of adoption, there's a billboard on the
Lawrence Expy in Santa Clara for a restaurant saying it accepts Bitcoin.

------
Thiz
Bitcoin is here to stay, can't deny that, but I believe e-gold will be the
future e-currency if somebody nails it.

Buy gold shares with your dollars, use it as e-currency, exchange it for
e-goods, merchants sell the shares and get dollars back.

I'd invest money in that venture, and money in that currency.

~~~
simcop2387
That's essentially what gold backed currency used to be. It'd be "easy" to do
that for bitcoin backed currency right now.

~~~
Thiz
Gold backed credit cards are flourishing in europe, that got me thinking about
internet transactions in gold.

------
pnathan
I find it fascinating watching people's reactions to bitcoin. As near as I can
tell from an informal eyeballing, the antipathy to bitcoin is correlated to
how mainstream the person is.

~~~
vy8vWJlco
I don't think I'm mainstream at all (anti-social, anti-copyright, my preferred
political parties can never seem to get elected, ...) but I can't get behind
Bitcoin for a few reasons... The biggest being the pyramid-scheme-like
distribution of coins slanted towards early adopters. I want an un-regulatable
digital currency too, but I can't get excited about trading one financial
plutocracy for another when money is tantamount to voting power. Money is just
an IOU; money doesn't need to be scarce (like gold), just enforceable (legal
tender). If Bitcoin's enforcebility depends on it's exchange with other
currencies that have the power/threat of governments and militaries behind
them, what ground has been gained?

------
wiradikusuma
Is this the right time to buy bitcoin for "investment" purpose? (e.g buy now
and expect +++ return next year)

------
bitgossip
I have heard from people who have heard, that the government of China is
through proxies aggresively buying large amounts of Bitcoins for future
strategic advantage.

I am not sure at all how accurate those reports are, it is probably just
hearsay.

But it makes one think.

~~~
rmc
It's probably easier and cheaper for the Chinese government to just mine them.
They'd control enough computing power.

~~~
bitgossip
I don't think so, the number of miners is giant nowadays.

