
What Is Bitcoin For? - hudon
https://medium.com/@hudon/the-blockchain-of-mises-and-nash-772f56c6baac
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XR0CSWV3h3kZWg
In terms of monetary policy it's pretty clear that you don't just want it to
be predictable. One function of money is to be able to reference a stable
amount of value in a contact (i.e. how much a person is paid). Just because a
monetary policy is predictable doesn't mean it is stable, if the price changes
more rapidly than prices are set or contacts are made it can't be used for
that. Currently bitcoin is useless for setting prices. The only places where
prices are determined in bitcoin are places that are extremely inefficient
(i.e. ransomware).

A fixed inflation rate of 50% each year is very predictable, but useless for
money.

~~~
tananaev
I believe to be stable Bitcoin market cap should go much higher than it is
now. It needs to be at the point where it's hard for someone even with a lot
of money to manipulate it. It should be at the level where governments are
afraid to seriously tamper with it because it can cause global recession.

My long term bet is that it will get there at some point. It might be in 5
years, 10 years or more, but we will get there. We are in a bubble now, but
that's just market/human nature and I don't see any way to avoid it. This
bubble will pop. There might be more bubbles to come, but what doesn't kill it
makes it stronger.

~~~
amenghra
> This bubble will pop. There might be more bubbles to come, but what doesn't
> kill it makes it stronger.

Some bubbles pop and never recover. E.g. the tulip market isn’t a “strong”
market today.

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cdiddy2
Its hard to see the value of bitcoin from the point of view of a decently well
off westerner which most of us are here. We have access to currencies that are
relatively stable even with inflation and access to banking which allows us to
store our money securely and gives us access to investments around the world.
We can also swap money for other currencies, with some fees, but its still
doable.

Now imagine you dont have access to a bank, you only get paid in cash and your
currency is constantly inflating and you have no investment options to
counteract that inflation. If someone is supporting you that lives somewhere
else they have to pay fees on top of and takes days for the transfer to
arrive.

Then you have bitcoin which can accessed with a simple smartphone and can be
sent anywhere in the world for a few dollars and takes around an hour. And you
aren't constantly losing money holding onto it since its not constantly
inflating. This is why people pay 100% premiums for bitcoins in countries
whose currencies go to crap and why its hard for us to see why this is useful
when we hold USD and Euros

~~~
0bsidian
I can definitely see the utility in a censorship-resistant digital medium to
store wealth. To me, this latter use case has a lot of potential to serve the
unbanked (as well as the banked).

Some use cases I can think off the top of my head:

(1) You are from Syria and need to flee war and escape into Europe – however
bank transfers into Europe are almost impossible if you are a common Syrian.
Bitcoin allows you to take your wealth with you, in your brain, as you escape
across the border, by just memorising your twelve word private key.

(2) You are from Venezuela or Zimbabwe – The government has issued capital
controls and is devaluing currency by the day. You transfer your wealth into
Bitcoin in order to offset capital erosion due to hyper-inflation. When the
situation stabilises, you transfer your Bitcoin back into fiat.

(3) You are Saudi billionaire Al-Waleed bin Talal. The government freezes all
your assets in a political coup. If you have a portion of your wealth in
Bitcoin, you could protect them from government expropriation and anonymously
transfer them to associates or family members abroad.

(4) You are whistleblower Julian Assance and have been cut off from the
financial system as a way to censor your speech. Bitcoin allows you to have an
unbreakable digital "Swiss bank account" that the authorities are not able to
reach.

This reminds me of Peter Thiel's recent words about Bitcoin: "it's like a
reserve form of money, it's like gold, and it's just a store of value. You
don't need to use it to make payments."

Reference

[1]: [https://www.cnbc.com/video/2017/10/26/peter-thiel-says-
peopl...](https://www.cnbc.com/video/2017/10/26/peter-thiel-says-people-are-
underestimating-bitcoin.html)

~~~
candiodari
In other words:

(1) tax evasion + capital controls evasion

(2) tax evasion

(3) tax evasion

(4) justice system evasion

I mean I get that the laws bitcoin evades quotes here are "unjust". They are
still the law, however. Some states have unjust laws, and middle eastern
muslim states, well the democracies there make dictatorships elsewhere look
good ...

Mostly you're complaining that the moral system popular in the US doesn't just
apply everywhere. Fact is it doesn't, and imposing it (which is what bitcoin
does), is considered not moral.

If you want to allow this, why bother complaining about a 10% tax rate for the
ultra rich ? Or highly illegal drug (e.g. GHB, and other rape drugs) ? You
can't have one without the other, and ...

~~~
0bsidian
>I mean I get that the laws bitcoin evades quotes here are "unjust". They are
still the law, however.

That fact that injustice is the law does not make it moral (e.g. Nazi
Germany).

Feel free to continue siding with the dictator, I will be cheering the people
trying to fight what's "unjust" (as you admit).

~~~
candiodari
I just wanted to point out that you essentially want a way to avoid laws you
consider unjust.

The price, of course, is that the 1% pay 10% less tax.

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Havoc
Right now it's used exclusively for FOMO pushing up the price in a speculative
manner.

The handful of actual non-investment transactions are nowhere near enough to
support a 100bn valuation.

And that's why I'm not in BTC...looks like a bubble, smells like a bubble and
I'm sure it quacks too.

~~~
XR0CSWV3h3kZWg
Or you could say it is in price discovery.

How much value do people want to tx in a censorship resistant, non-percentage
charging transfer system?

How many tx currently cost more than they would if bitcoin was widely
accepted?

How many people want to buy gold but don't want to have third party trust with
an organization that holds gold or have to hold it themselves.

If bitcoin exists it's price discovery period then the use cases above give it
value.

~~~
rhino369
Why would someone be afraid of a Gold ETF that you can buy with a free e-trade
account but invest money in online monopoly money?

~~~
XR0CSWV3h3kZWg
You have third party risk. Right now for most developed countries third party
risk has never been lower, but it's still there.

A recent example was the bank of cyprus in 2013.

If a third party controls your assets then those assets are under greater
risk.

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solotronics
"Risk #2: Our governments could shut it down" this is the part that keeps me
up at night.

~~~
koonsolo
They still have better control over Bitcoin transactions than say Monero (from
a fraud point of view). So maybe if it comes to that, they will keep Bitcoin
but not cryptos with higher privacy.

~~~
cableshaft
Agreed. They've already built tools to track people through Bitcoin, why would
they try to shut it down? Especially when a lot of people still assume
bitcoin's 100% anonymous and use it for criminal activity, making them easy to
catch?

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cliveb
Posit bitcoin paper was a genius move by Satoshi Nakamoto to get so many of us
focused on rethinking computer security fundamentals.

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bdod6
Many of these articles seem to gloss over the fact that bitcoin is the
currency of choice for darknet-type transactions.

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uncoder0
It was. Monero and ZCash are taking that role now.

~~~
XR0CSWV3h3kZWg
Are there any places that publish data about what cryptocurrencies darknet
markets are using? I'm interested in the overall trends, but not enough to do
my own research.

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nvk
We earn in Bitcoin and pay many suppliers in Bitcoin. The appreciation between
earn and spend is quite nice.

~~~
XR0CSWV3h3kZWg
Bitcoin won't always appreciate. Best case scenario is that it is currently in
price discovery and after price discovery ends (no more insane run ups or
crashes) that it should vary in a similar way to gold. Be careful to not over
expose yourself to that variation.

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tzakrajs
The naive proposition that governments will accept Bitcoin's feature of
regulatory arbitrage makes this article difficult to take seriously.

The federal government will have the capability to unmask those involved in
the arbitrage.

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pilom
I feel like the author missed the biggest problem. There is a huge dis-
incentive to use bitcoin as a medium of exchange because it is inherently
_deflationary_. If I know bitcoins will continue to increase in value because
math, why on earth would I ever exchange them for something that doesn't?

~~~
andrewla
> "inherently deflationary"

I keep hearing this, and it doesn't get any more intelligible. Saying that
bitcoin is inherently deflationary is as absurd as saying that the price of
bitcoin can only go up, because those two statements are _exactly the same_.

Bitcoin, in the steady state, will go up or down as demand requires and as
credit markets adjust to account for the future value of money.

~~~
bennyg
I think what the poster is trying to say is this:

Bitcoin has a finite supply. If demand remains at its current rate, inherently
the value will also continue going up.

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andrewla
That’s a big “if” to hang “inherently” on. Bitcoin has no credit market yet;
until that exists we don’t really have “money” in the sense that a Keynesian
or monetarist would use. Once it does, if it does, then demand for specie will
coincide with demand for credit, which will be priced independently but whose
pricing data will feed into valuations of the underlying. At that point all
bets are off - demand is not a simple thing when we talk about demand for
money right now as opposed to demand right now for money in a year. The supply
of credit is unconstrained except by the risk preferences of creditors,
especially in the absence of a substitute for a risk-free rate of return.

