
Bitcoin: The future of money is at stake - neur0mancer
http://www.newscientist.com/article/mg22129551.300-bitcoin-the-future-of-money-is-at-stake.html
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chasing
Ah, Bitcoin. The Esperanto of currency.

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ohashi
If this didn't have the word bitcoin in it, people would have flagged it to
oblivion.

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atmosx
> [...] "Satoshi Nakamoto", its mysterious inventor, may have democratised
> finance – much as open internet protocols have democratised communication.
> [...]

This comparison is so erroneous that it's embarrassing. Too bad it's from
NewScientist, I had much respect for the magazine. Now every time I'll read a
NS article I'll think along the lines: _who knows, they might got this one
wrong too_.

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vog
_> This comparison is so erroneous that it's embarrassing_

Not disagreeing with you, but it would be nice if you could elaborate on that,
rather than just stating that you disagree with the article.

~~~
atmosx
Democracy (orig: Δημοκρατία) it means "the rule of people", in the sense that
_people who are part of this socio-political happening_ are able to take part
in the decision process in direct or indirect ways.

The current system

Today we have the ECB (I'm Greek) and you (I take for granted that most of you
are from the US) the FED. So let's talk about the FED. The U.S. Congress
established three key objectives for monetary policy in the Federal Reserve
Act: Maximum employment, stable prices, and moderate long-term interest rates.

From Wikipedia we can read: _Before the founding of the Federal Reserve
System, the United States underwent several financial crises. A particularly
severe crisis in 1907 led Congress to enact the Federal Reserve Act in 1913.
Today the Federal Reserve System has responsibilities in addition to ensuring
the stability of the financial system._

To simplify it more: You may or may not like the FED but it's main object is
_currency stability_. Every US citizen chooses a candidate of a political
party. This candidate, if elected, goes to congress. The senate and the US
President, both elected by the majority of voters[1], appoint[2] the "chair of
the FED". Now this is a DEMOCRATIZED process, although indirect: You don't get
to vote directly for the chairman of the FED. There are arguments for and
against this process, probably studies on how to make it less prone to
_corruption_ and so forth, but ultimately the voter's choice shapes the
candidates and their odds.

The FED uses inflation or deflation, in order to promote and ensure stability
a central power, controlled by the government and indirectly by the people,
must have the power create new money _on demand_ (thus create inflation) or
deflate the money (thus create deflation) according to what the economy (i.e.
the large amount of the population) needs.

Enter Bitcoin

In bitcoin we have a crypto-currency which offers strong anonymity. There is
no central control, so the currency inflates[4] or deflates according to _the
market_. That's all good and well and may even work for a while, but if a
strong player enters the market then he can make it go up, down and side-ways
as he see fit. So, say you have a player owning as much as 20% of bitcoin. If
he cashes out the price goes down. If he cashes the price flies up and so
forth. By selling at price A+10 and buying double the amounts at price A-10 he
could easily double his amounts by out-playing the market. That's not moral,
but legal. Now, in wall street there are authorities against this sort of
behavior (they don't act as expected of course, but still you have some sort
of control and you have always the government that if decides at some point in
time to become more responsible towards tax-payers it can regulate the
financial market overnight). According to a paper by none other than Adi
Shamir (one of the three founders of the RSA algorithm), 98% of BTC belongs to
2% of portfolios. Hence it's expected from them to act in an _immoral_ self-
serving way in the long run.

So, did Satoshi democratize the financial system? No, not really. He did the
opposite: He create a system which turned the shark totally loose. Of course,
the average programmer who doesn't understand much about economics - and we
have a huge amount here on HN, more than believed for sure - it seems as if
the bitcoin _set 's him free from the bank_ but that's not exactly the true.
The problem with people vs banks are not the extra fees on money transfers:
The problem is people NOT having money to put on the bank. Bitcoin doesn't
make you rich. If you are rich you have just one extra toy. If you don't have
money, there's no way you could buy bitcoin. Mining? Sure, but minings costs
equipment. Only early adopters got an edge and made some money out of the huge
price-spike. But this price-spike does promote, hoarding and opportunistic
behaviors and in no way promotes _democracy_.

So although the bitcoin protocol is a huge step forward, because adjusts the
double spending problem introducing a public ledger, the currency is useful as
it has some attributes which you can't find elsewhere (speed, portability,
etc.), but it's in no way more _democratic_ or _decentralized_ as many bigots
would like to believe.

Sorry the long post and any grammar mistakes, it's late here and I'm kinda
sleepy.

[1] In the US we have small % of population voting. That's an interesting
problem: how to get larger part of the population interested in elections?

[2]
[http://en.wikipedia.org/wiki/Chair_of_the_Federal_Reserve#Ap...](http://en.wikipedia.org/wiki/Chair_of_the_Federal_Reserve#Appointment_process)

[3]
[http://en.wikipedia.org/wiki/Black_Wednesday](http://en.wikipedia.org/wiki/Black_Wednesday)

[4] Bitcoin was not designed to be inflation: It's deflationary on purpose. No
one would had any reason to own bitcoin if they were inflationary since you
can't pay taxes with BTC.

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antonius
_.. "Satoshi Nakamoto", its mysterious inventor, may have democratised finance
– much as open internet protocols have democratised communication._

But what about "turning off" the world wide web so to speak? I'm sure if
governments really believe bitcoin is a threat to their currency, they will do
whatever it takes to essentially shut it down. If it cannot be digitally
traded on the internet, then that value of bitcoin is lost.

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kordless
> they will do whatever it takes to essentially shut it down

Good luck on that.

~~~
1qaz2wsx3edc
The rise of the darknets will be funded in blood & bitcoins. Someone should
write a novel on this, it's juicy!

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dllthomas
Strong parallels to Cryptonomicon.

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arethuza
Wasn't the crypto currency in Cryptonomicon going to be backed by gold?

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dllthomas
Yes. Parallels, certainly not identity.

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beloch
The one thing that bothers me the most about bitcoin is it's similarity to a
ponzi scheme. Get in early, mine the low-hanging fruit, wait for the exchange
rate to spike, and you're set for life! If you were to buy in right this
moment, what would be the benefit?

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oleganza
Many people misunderstand what the Ponzi scheme is. In Ponzi scheme you get a
dividend without selling off your shares. The fraud here is to tell you that
the dividends are taken from real profits while they are paid from extra
recently sold shares. You get both cash and keep your stock.

Bitcoin is like a dividend-free stock or commodity: you have to sell your
share to get some cash. Of course, those who come earlier get easier access to
more shares, but they are exposed to a higher risk. Zuckerberg had 100% of
Facebook initially and was selling it partially to get more cash to keep it
going. When he started anyone could do the same, but not many succeeded. Later
investors were willing to pay higher amounts of money when the value of the
company became more certain in their eyes. But in each case, the owners of
stock had to lose some part of it to enjoy extra cash.

Also, consider this approach: [http://auroracoin.org](http://auroracoin.org)
These guys intend to distribute coins "fairly" to each individual in Iceland.
Sounds like a fair distribution? Well, once some individuals get this weird
coin, they will decide if they want to keep it. And some of them will sell
them to collectors for cheap. This will make the price go down noticeably and
cause more folks to get rid of such coins. So they will end up for very cheap
in the hands of a very few "early adopters". Whether it will start growing
organically from there or not - is another question, but you can see that you
cannot force "equality and fairness" on the market. It will reconfigure itself
according to everyone's personal preferences. And in case of a weird new tech
it will always mean little number of early believers vs. big number of
mainstream doubters.

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asdkl234890
_Bitcoin is like a dividend-free stock or commodity_

Yes, it is an asset. A very easy to trade purely electronic asset. Due to its
easy tradeability it is similar to a currency, but much like stocks, it is not
a currency.

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dschiptsov
"future of money"... Could I respond to a silly meme with another another
meme? "Stupid people, stupid people everywhere".

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fmdud
I find it interesting how HN's opinion of Bitcoin fluctuates as wildly as the
'currency' itself.

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lampooned
Bitcoin is not the future of money.

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blahbl4hblahtoo
No its not.

sigh.

