
Why I want Bitcoin to die in a fire - jagermo
http://www.antipope.org/charlie/blog-static/2013/12/why-i-want-bitcoin-to-die-in-a.html
======
nkuttler
Sigh.

> For starters, BTC is inherently deflationary.

For starters, tell us why this is inherently bad. This statement also assumes
that the BTC economy will grow forever.

> Bitcoin is designed to be verifiable [...] but pretty much untraceable

What would be bad about this if it were true? Paper bills work just fine, even
though they are pretty much untraceable. By the way, this opinion is pretty
much wrong, bitcoin is very far from being untraceable (IPs, exchanging BTC,
etc.)

> Libertarians love it because it pushes the same buttons as their gold fetish

Ok, article is clearly emotional. How did this end up on the front page?

> Mining BTC has a carbon footprint from hell

[https://en.bitcoin.it/wiki/FAQ#Is_it_not_a_waste_of_energy.3...](https://en.bitcoin.it/wiki/FAQ#Is_it_not_a_waste_of_energy.3F)

> Bitcoin mining software is now being distributed as malware

Surprise. Thieves steal valuable things. This wouldn't happen without BTC,
right?

> Bitcoin's utter lack of regulation permits really hideous markets to emerge,
> in commodities like assassination (and drugs and child pornography).

FINCEN would like a word with you. Also, how does it hurt the USD that it is
used for assassination, drugs and child pornography?

It's ok that people hate bitcoin though, some people just let their emotions
take control.

~~~
JackFr
>> For starters, BTC is inherently deflationary.

> For starters, tell us why this is inherently bad.

Deflation, by providing a risk free return for sitting on currency, leads to a
slowdown in the real economy by reducing both output (reduced consumption) and
productivity (reduced investment).

~~~
dalek_cannes
> Deflation... leads to a slowdown in the real economy

A fundamental, but slightly tangential question: is that a bad thing?

What if modern societies are running too hot and need to cool down?
'Reduction', 'slowdown', 'productivity loss' \-- these _are_ negative in a
purely economic context. But economics is a means to an end, not an end in
itself. The end, I believe, (to borrow an American term) is the 'pursuit of
happiness'. I don't think modern, developed societies are doing very well in
that particular pursuit. It feels as if we're on a treadmill -- try to run
faster and it turns faster, and you need to keep running faster just to stay
on it.

This may not apply to developing societies, who are still grappling with the
lower layers of Marslow's hierarchy like food, health and education, but
doesn't it seem like we have overshot? When we can afford to obsess over the
number of cores or dots per inch on a handheld device, I think we can afford
to slow down a bit. Perhaps a deflationary economy is just what we need.

People shouldn't feel pressured to keep producing despite having ample savings
just to keep up with the wealth erosion caused by inflation. /opinion

Also: if the Bitcoin unit had been redefined so that the maximum number was 21
quadrillion, we might not have this debate. Nothing's changed fundamentally,
but it is a number that for a laymen is a lot closer to infinity than 21
million.

~~~
a_c_s
A growing economy increases standards of living. The fact that a t-shirt costs
$10 now that used to cost $20 10 years ago means that people now have more
options.

Some people will choose to buy 2x as many t-shirts, making them (roughly) 2x
happier. Or some people will buy the same number of t-shirts and have extra
money to do other things they want. And most importantly, some people who
couldn't afford t-shirts now can. But nobody is forced to chase material
goods, they buy what they choose to.

The fact that this process is replicated across virtually all products in the
economy is what lifts people out of poverty. We still have plenty of people
struggling to make ends meet in the USA, something like half of all people
live paycheck-to-paycheck.

The only people who benefit from deflation are those with large amounts of
capital and no debt, which is an incredibly small portion of the population
that isn't struggling under the current system of low inflation.

~~~
darkFunction
We consume too much and we work too hard to fill our lives with vacuous
material goods. Look around you, it's pure madness. It's out of control,
everybody is permanently dissatisfied and we continue to rape the planet to
fill a hole in our lives that can never be filled.

I used to worry about this aspect of bitcoin but now I just think, let it
happen. Maybe a world in which we aren't forced to consume just to keep our
net worth wouldn't be so bad. Maybe we don't need investment in yet another
company selling more useless crap we don't need. Maybe we don't need to work
five days a week to be happy.

> Some people will choose to buy 2x as many t-shirts, making them (roughly) 2x
> happier

More choice has been proven to lead to greater dissatisfaction. Aside from
better healthcare I don't think our modern world makes us any more happy and
fulfilled.

~~~
tg3
It's easy to be nostalgic about past times, but the fact is that quality of
life, by many measures (including but not limited to healthcare) has been
improved.

Intentionally slowing economic growth is a cruel sentence for those less
fortunate than yourself so that you can be "happy".

------
tokenadult
Charlie Stross writes in the article kindly submitted here: "Bitcoin violates
Gresham's law: Stolen electricity will drive out honest mining. (So the
greatest benefits accrue to the most ruthless criminals.)" I try to follow
most of the Bitcoin threads here on HN, but I've missed that argument before.
It makes sense that mining-by-theft will eventually displace mining-by-buying-
hardware, and that is indeed not a behavior to encourage by the incentives of
Bitcoin.

"Moreover, The Gini coefficient of the Bitcoin economy is ghastly, and getting
worse, to an extent that makes a sub-Saharan African kleptocracy look like a
socialist utopia" is an argument that tests people's commitment to neutral
principles. If you don't like badly skewed differences in wealth, I suppose
you wouldn't like badly skewed ownership of Bitcoin. Or do you like that
anyway, as long as you have more Bitcoin than the other guy?

~~~
rayiner
I don't know why so many people are in love with the idea of deflationary
nature of bitcoin.

Consider one important asset in the world that shares the key feature with
Bitcoin that there is a fixed amount of it: land.

If you look out at the world, land possession is not just unequal, but also
exhibits extremely low turnover. In Britain, 0.6% of the population owns 69%
of all the inhabited land in the country, and they come mostly from the same
families that owned the country in 1872 (the last time a major survey of land
ownership was performed):
[http://www.independent.co.uk/voices/commentators/johann-
hari...](http://www.independent.co.uk/voices/commentators/johann-
hari/britains-land-is-still-owned-by-an-aristocratic-elite--but-it-doesnt-
have-to-be-this-way-483131.html).

If you look at say Manhattan, you see the same phenomenon. All the land is
owned by old people and established families. It's a place where kids have to
be much more successful than their parents to be able to afford to buy
property in the same place.

Who can take a look at the deflationary nature of land, and think "gee, I'd
like _everything_ to be like this!"

~~~
beat
Interesting point on deflation... the 2008 economic collapse was marked by a
brief moment of deflation. Just _little_ deflation nearly destroyed the world
economy.

A preference for deflationary models is one of the reasons I don't take
libertarian economics seriously.

~~~
cbr

         Just little deflation nearly destroyed the world economy
    

I don't think you can interpret the causation as going that direction.

~~~
AndrewBissell
> Something else caused the deflation (basically the collapse of CDOs). But
> the deflation caused the damage.

You talk about that deflation as if it just appeared out of thin air, but it
was the market's natural reaction against over 25 years of Fed policy of
papering over asset price corrections with massive credit injections. 1987,
the Latin American debt crisis, LTCM, the tech bubble bust ... every single
time, the Fed's solution to the "problem" of falling asset prices is to bail
out the speculators with easy credit.

It will be much harder for similar credit bubbles to form in Bitcoin in the
absence of a central bank (or even, as far as I can tell, a means of
fractional reserve banking). Of course, we are witnessing periodic non-credit
driven bubbles right now, but I think these will become fewer and far between
_if_ the BTC market becomes more liquid, and particularly if a means of
shorting BTC comes into existence.

~~~
SeanLuke
> Of course, we are witnessing periodic non-credit driven bubbles right now,
> but I think these will become fewer and far between if the BTC market
> becomes more liquid, and particularly if a means of shorting BTC comes into
> existence.

I don't understand this logic at all. BTC is primed for speculation, bubbles,
and deflation, because it has a fixed or slow-growing supply and no automated
procedure for fighting deflation by printing money. In other words, it has no
central bank. There's no way it can prevent deflation and speculative bubbles.
And yet as the BTC population grows, you think that speculation bubbles will
_reduce_? That's a pretty out-there argument.

~~~
AndrewBissell
> ... and no automated procedure for fighting deflation by printing money.

Depending on how you measure it, the share of credit which comprises the USD
money supply dwarfs the amount of actual cash by something like 100:1. The
cause of the deflation in the 2008 crisis was a sharp contraction in the
amount of that credit, and the crisis only ended when that contraction
stopped, not because of the Fed's relatively much less significant cash
injections.

The sorts of sharp, catastrophic deflations that took hold in 2008 (or 1929
for that matter) are always caused by the bursting of a preceding credit
bubble, usually created by central bank policy. I don't see how _that kind_ of
bubble can happen in Bitcoin. So the argument that "Bitcoin is deflationary"
is true as far as it goes, but that doesn't mean that a Bitcoin-based economy
would necessarily look exactly like, say, the Depression-era U.S. They're two
very different kinds of deflation.

In the absence of major inflows & outflows of credit, the addition of
liquidity to a market usually reduces the severity and frequency of big price
swings. The very difficulty of issuing credit in BTC may very well prevent it
from becoming a viable currency, but I think it's also an important brake on
speculation.

~~~
SeanLuke
> The sorts of sharp, catastrophic deflations that took hold in 2008 (or 1929
> for that matter) are always caused by the bursting of a preceding credit
> bubble, usually created by central bank policy. I don't see how that kind of
> bubble can happen in Bitcoin. So the argument that "Bitcoin is deflationary"
> is true as far as it goes, but that doesn't mean that a Bitcoin-based
> economy would necessarily look exactly like, say, the Depression-era U.S.

Bitcoin has _already_ had catastrophic deflations: factors of two in less than
a week and factors of three in less than a month. And equally spectacular
speculative crashes. The reason for this is really very simple: there's no one
at the tiller, printing money to tamp down the speculation.

The kind of deflation I'm talking about -- and I think everyone on HN is
talking about -- is the kind associated with speculation. If Bitcoin can't
discourage speculation, and it appears by design it cannot, it is dead in the
water.

~~~
kalleboo
> The reason for this is really very simple: there's no one at the tiller,
> printing money to tamp down the speculation

So who's printing gold to temp down the speculation in that? Or what makes
gold different so that it doesn't need a "central bank"?

~~~
eli_gottlieb
Gold _isn 't_ different. Bitcoin is actually behaving a whole lot like gold.

But, here's the thing: few people have ever suggested that we actually do our
regular, day-to-day finances in market-value bullion gold. Instead, it's just
considered a good way to back or hedge against _actual, managed currencies_.

Bitcoin stands a chance, IMHO, if people get off their ridiculous Austrian
Economics shtick and start treating it similarly to gold: Bitcoins as hedge
against financial shenanigans in other currencies rather than Bitcoins as a
way of paying your bar tab.

------
Brakenshire
In my opinion, the whole principle of bit-coin is like a manifesto for
financial sovereignty - i.e. it says that money should be above government,
and above democracy. Personally, I do actually want the government to be able
to levy taxes to pay for public services, to be able to trace corrupt
payments, to be able to seize the assets of fraudsters who have convicted
under a fair judicial process, to be able to nudge the value of a currency to
pursue wider macro-economic aims, and so on. Ultimately, living in a society
means being subject to its laws. To accept Bitcoin at face value is to accept
a future where every country operates by default with a financial system like
Switzerland, and I don't believe that the vast majority of the population want
that to happen.

~~~
Nursie
I really rather agree.

I also don't really object to currency manipulation by central banks because
they are a stabilising influence and (in theory) are there to stop the money
supply from becoming a negative economic factor in times of recession etc.

I quite like the article, and I've made many of those arguments myself. I
don't know that bitcoin will fail. It may be that there are enough people to
keep it going indefinitely, people who buy in to the politics, who don't care
about the politics, or don't know about the details. But I'd not be sad to see
it go.

Crypto-currency is really cool. Next time I'd quite like one that isn't
inherently deflationary and doesn't require burning millions of dollars worth
of electricity to keep the system safe from attack. There has to be a more
elegant way. But then I don't give a crap about decentralisation so there are
multiple good schemes IMHO.

~~~
DennisP
Peercoin, for one, has a 1% annual growth rate forever, and is designed to be
more energy-efficient over the long term because it relies partly on "proof-
of-stake" instead of just proof of work. There are a couple other proof-of-
stake currencies too, and some unimplemented ideas like proof-of-burn. Another
interesting currency is Freicoin, which uses proof-of-work but has demurrage.

~~~
Nursie
Proof-of is just a waste. Currency is a means of exchange rather than a store
of value or an actual representation of value. Proving that you've burn't so
much electricity is a fun idea for some stuff (spam prevention is the best one
I've heard) but when it comes to currency, who cares?

All I really care is that someone else values it about the same as I do, so it
can be exchanged freely.

~~~
DennisP
The proof isn't to give coins value, it's to secure the ledger so people can't
double-spend their coins.

------
cs702
The author's complains are a sober reminder that society is not yet ready, and
has not yet evolved all the infrastructure it will need to cope with rising
global Bitcoin adoption.[1] Regardless, if the number of people using Bitcoin
continues to grow, our institutions and infrastructure will have to evolve to
address the problems mentioned by the author.

Among other things, society will need more secure (truly malware-resistant)
personal computing systems, more secure (from snooping) communications
systems, substantially better authentication mechanisms, more secure energy
generation and transmission equipment and facilities, more secure financial
institutions, and more technologically-savvy regulatory and policing
institutions.

Those are all _really good things_.

\--

[1] Compare, for example, how society works with paper cash and gold bars
versus Bitcoin:

* Paper cash or gold in substantial amounts is always stored in private or bank safes, or in high-security underground vaults that most people have only seen in movies. In contrast, Bitcoin private keys are often stored in _general-purpose_ personal computers running a wide variety of applications, managed by people who don't know how to secure a computer.

* Transporting any substantial amount of paper cash or gold is often done via armored trucks operated by highly-trained security personnel. In contrast, Bitcoin private keys are transported via all sorts of highly insecure methods by people who don't know better.

* No sane person holding a substantial amount of cash or gold at home would ever let complete strangers come and go into their house as they please, while giving them keys to all doors, cabinets, drawers, and safes. In contrast, people regularly give complete access to their computers to complete strangers by willingly or unwillingly installing software created by such strangers.

* Our regulatory and policing institutions know how to identify, prosecute, and even prevent illegal gold and cash transactions, successfully keeping them to a tiny percentage of overall economic activity in most advanced economies. In contrast, those same institutions do not yet know how to cope with the use of Bitcoin for illegal activities.

\--

Edits: moved comparison of Bitcoin to gold and cash to footnote; also, made
minor changes to several sentences so they more accurately reflect what I
intended to write in the first place.

~~~
ender7
Great, so as long as we solve six of the major technical hurdles of the day,
we can avoid the societal and technical dangers that BitCoin poses. What a
pleasant ultimatum.

As you pose it, it's now a race between the darker aspects of BitCoin and our
ability as a world society to check off the items on your wishlist. I don't
disagree that those are all good things to have, but I don't see how holding a
gun to everyone's head and demanding short-term solutions to long-term
problems is going to accomplish anything. I don't see a world where we get
there in time.

~~~
VMG
Calm down, nobody holding a gun to anybodys head.

The world wasn't ready for computers, the internet and cryptographically
secure communication either, but we still managed.

For a forum that supposedly loves "disruption" everybody seems to be really
frightened when it actually happens.

~~~
coldtea
>The world wasn't ready for computers, the internet and cryptographically
secure communication either, but we still managed. For a forum that supposedly
loves "disruption" everybody seems to be really frightened when it actually
happens.*

Amen, brother. I've also been preaching cold fusion and perpetual motion
machines like forever, and nobody's listening to me either. They are not ready
for it.

~~~
VMG
What are we talking about right now? Bitcoin-will-never-work or Bitcoin-will-
destroy-the-world?

~~~
coldtea
I was being sarcastic on the whole "people don't understand the inevitability
of Bitcoin" thing...

------
clavalle
Bitcoin in traceable. Much more traceable than something like cash or gold.

It can be taxed. In fact, it lends itself very well to taxation since each
transaction is indelibly recorded. Just because no one's implemented taxation
doesn't mean it can't be done.

If it can be taxed it can be regulated.

It does cut out the banks. That is a strength. The serpentine bank transfer
system that skims transaction fees on a huge number of transactions can be
avoided. This has some obvious benefits (as most things that reduce
transactional friction do -- I mean, most of us on HN are probably in the
friction reducing business in one form or another).

Government does not have to issue it. The jury is still out on whether this is
a net positive or not. I think it is a worthy experiment since government
control of the money supply seems like more of an accident of history than
anything. It /could/ be a fundamental strut in the framework of effective
government but I think that might be overselling it. Bitcoin gives us a
vehicle to test that theory.

In short, Charles Stross is confusing the way things are with the way things
must be and that is a mistake. Most of these problems, if they are truly
problems, are solvable. And, at the very least, their impact will not be
catastrophic so it is worth the risk to see where this experiment leads.

~~~
sharpneli
> Bitcoin in traceable. Much more traceable than something like cash or gold.

This is something that is often forgotten in these discussions. Everything is
public with bitcoins. The only open issue is binding the transactions to an ip
and via that to a person. And considering how widely the internet is monitored
these days that should not pose a problem.

After that analyzing connections between wallets is a similar problem as
analyzing friendships in a massive social network. Transactions form a graph
from wallet to wallet.

If massive drug rings would use Bitcoin instead of cash it would actually be
easier to track them down than it is right now.

In addition bitcoin is trivially forkable. It has only as much value as people
want to give it. It is in essence as imaginary as any fiat currency is.

~~~
runako
>> binding the transactions to an ip and via that to a person

Naive question: since IP's don't map 1:1 to people (proxies, the tendency of
people to use lots of devices in lots of places), how does this work in
practice? Does it really work in practice?

~~~
sharpneli
It doesn't have to work 1:1 all the time for every IP a person may use to make
transactions. Unlike in torrents where one download cannot be tied to another
and you have plausible deniability that you yourself might've not used that,
with bitcoin the history stays.

As an example if you issue transactions from your home and from your place of
work you are immediately nailed (e.g brought to questioning) even if there are
1000 transactions in your walled made behind 7 proxies. Open WiFi argument
doesn't hold water in that case.

And even a single access from a place that maps to someone will taint the
wallet permanently, as an example: Busting a drug ring. Set of wallets are
suspected to be a part of a massive drug and money laundering operation (few
of the wallet addresses are advertised on silk road and are getting a lot of
transactions in, and a bunch of laundering addresses are recognized as a dense
cluster in the graph).Then some not so smart subordinate accidentally uses a
wallet app from his normal cellphone. That will instantly cause the cops to go
after him and investigations will start.

Basically if you have ever used your wallet from places where you can be
recognized the wallet is tainted. You will be investigated if the said wallet
is ever used for anything shady ever.

The key here is that even if a single access does not automatically link it to
you, multiple accesses will. The only way to keep clean is always route every
transaction always trough weird proxies. And hope that everyone you transfer
to/from will do the same. Get a gift from your mom who doesn't do it? That's
it. She may be interrogated and you're bust.

------
diydsp
I, too, am suffering Bitcoin-headline-fatigue, to the point where I was glad
to see machined QR bitcoins b/c I could finally tell people to kindly shove
them where the sun don't shine.

HOWEVER, just b/c I'm exhausted, I don't think Stross' points are valid or
limited to Bitcoin in the least. He might want BC to die in a fire, but BC
isn't doing anything special that cash/gold isn't/can't be doing. Here is an
overview of his points:

> 1\. Mining BtC has a carbon footprint from hell

> 2\. Bitcoin mining software is now being distributed as malware

> 3\. Stolen electricity will drive out honest mining. (So the greatest
> benefits accrue to the most ruthless criminals.)

> 4\. Bitcoin's utter lack of regulation permits really hideous markets to
> emerge, in commodities like assassination (and drugs and child pornography).

>5\. It's also inherently damaging to the fabric of civil society.

------
mindcrime
It's disappointing to see that cstross feels the way he does about certain
things. He's one of my favourite authors, and I just hope that knowing how far
apart we are on some issues doesn't diminish my ability to appreciate his
fiction. At least it's nothing like Orson Scott Card, where my disagreements
with some of his opinions mean that I basically have no longer have any
interest in reading his works at all.

So, Charles Stross hates Bitcoin because he things a market for drugs is
"hideous". _sigh_. I think that a market for drugs is, while not necessarily
desirable, inevitable, and that free individuals should be able to choose what
they do or don't put into their own bodies.

Assassination and child pornography are Bad Things to be sure, but Bitcoin
doesn't cause either and both are going to exist with or without Bitcoin. I
don't get arguing against a mechanism that supports basic free market
exchanges, just because a few bad actors can use it to do bad things. You
can't engineer your way to a perfect world, given human nature.

Tax evasion? Good. Taxation is theft. If I need to employ technological
solutions to protect my money from the government, then so be it.

~~~
djur
With such incisive and reasoned slogans as "taxation is theft", how can it be
that libertarians are so widely considered a target of derision and loathing?

Taxes are your just dues for living in a society. Tax evasion is theft from
the commonwealth.

~~~
mindcrime
With such incisive and reasoned slogans as "Tax evasion is theft from the
commonwealth," how can it be that statists are so widely considered a target
of derision and loathing?

~~~
jljljl
He actually provides a reason for why Tax evasion is theft: Since taxes are
the dues for living in a society which provides public goods such as roads,
infrastructure, education, etc., refusing to pay taxes is stealing the usage
of those goods without paying your dues.

I can see that in his argument, but I don't see an explanation for why taxes
are theft in your argument. Unless somehow you completely avoid usage of
public goods (which no, you don't).

------
weavejester
Usually I agree with Charlie Stross, but I think he's building his case on a
few false assumptions.

To mine bitcoin and make a reasonable profit, you really need dedicated mining
hardware. This means that stolen electricity is not really an issue, as even
very large botnets wouldn't be able to keep up with a few $1000 of custom
hardware.

Similarly, while Bitcoin's future carbon footprint is something to be
concerned about, I think it's too early to draw a line of exponential growth
and conclude the world is doomed. There are a large number of potential
bottlenecks when it comes to computing hardware.

I'd also question how useful Bitcoin is for avoiding taxes, when the exchange
rate is so volatile. There are far safer ways to avoid paying taxes, many of
them legal.

In my view, the most interesting part of Bitcoin is not its value, or its
potential anonymity, but that it's an open protocol for distributing wealth,
in the same way that TCP/IP is an open protocol for distributing data. There
has already been some interesting experiments around micro-payments with
Bitcoin that would never have gotten off the ground without it.

------
gottasayit
TL:DR;

Big government socialist type doesn't like financial decentralization and a
monetary system that can't be strictly controlled. Wants it to die quickly
because ultimately free people might decide that it's worth keeping and using.
News at 11.

~~~
krapp
I seriously doubt Charles Stross is skeptical of bitcoin because he hates and
fears freedom. That kind of hyperbole only serves to feed cynicism about
bitcoin and its community, particularly given the assumption that the article
wasn't even worth a glance for you, because obviously "not liking bitcoin" =
"globalist shill."

~~~
Dirlewanger
If someone's not going to like Bitcoin, at least give better reasons than
crappy strawman ones like, it's being used for illicit markets (what currency
isn't?), it's uses a lot of electricity (what bank doesn't?), criminals
outsource mining to botnets (along with other illicit activities like pushing
spam which existed before Bitcoin mining, your point?)...and then downright
puerile remarks like tickling a gold fetish? Jesus christ. If he's not a
"globalist shill", he definitely has next to no societal context on Bitcoin
and has gotten his information from CNN and the like who equally don't
understand it.

~~~
ubernostrum
My traditional witty summary is to say that Bitcoin is the currency of people
who've read John Locke but not Thomas Hobbes.

------
exelius
I agree with all of his points; I've been making them myself for the past few
months. Bitcoin is bad specifically because it is unregulated.

Regulation of financial markets exists for a reason: the optimal strategy of
individuals and institutions in unregulated financial markets is to lie, cheat
and steal to accumulate as much wealth as possible.

Credit economies rely on a foundation of trust; and while it may seem hard to
trust our financial system, you CAN trust that when you put your money in a
bank, it will be there when you go to get it out (thanks, FDIC!) As much as we
may not like credit, it provides market efficiency on an extraordinary scale.

~~~
sergiosgc
The problem is that today's supposedly heavily regulated markets just aren't.
Markets are regulated for the little guy, but not for the Goldman Sachs of
this world.

The '08 financial crisis as clearly shown that most regulatory hurdles
established in the late XX century have been lifted, and that for big sharks
financial markets are an all you can eat buffet. Worse, we learned nothing.
Everything is as it was. It is a matter of time before the same events unfold
in an even sadder rerun.

~~~
SideburnsOfDoom
> The problem is that today's supposedly heavily regulated markets just aren't

Yes, and Mr Stross is pointing out that Bitcoin may be different, but that
doesn't make it better. In fact he lays out good reasons to believe that it is
worse.

------
carsongross
_BTC is inherently deflationary._

The idea that deflation is necessarily harmful to an economy is a fallacy. See
the Fed itself:

[http://www.minneapolisfed.org/research/sr/sr331.pdf](http://www.minneapolisfed.org/research/sr/sr331.pdf)

 _" Our main ﬁnding is that the only episode in which we ﬁnd evidence of a
link between deﬂation and depression is the Great Depression (1929—34). We ﬁnd
virtually no evidence of such a link in any other period."_

From the post:

 _The current banking industry and late-period capitalism may suck, but
replacing it with Bitcoin would be like swapping out a hangnail for gas
gangrene._

Not proven.

A bitcoin economy would be worse than unlimited bailouts and money printing?
Not even _close_ to proven, or, at this point, particularly plausible.

~~~
walshemj
Tell that to property owners in Japan :-)

~~~
Perceval
Property owners in general should not suffer from deflation more than anyone
else who has purchased any asset.

People who have gone into debt in order to purchase an asset during deflation,
however, will face problems:
[http://fraser.stlouisfed.org/docs/meltzer/fisdeb33.pdf](http://fraser.stlouisfed.org/docs/meltzer/fisdeb33.pdf)

~~~
walshemj
Percival pretty much all property owners use leveraged debt aka a mortgage
unless you happen to be a trust fund kid - it also has a bad knock on effect
on the banks who lent the money.

------
etherael
Wow, this is perhaps the single most ignorant article I have ever read about
bitcoin, ever. There goes my respect for Charles Stross.

Not a single point is actually true.

1) Compare the carbon footprint of bitcoin mining to the carbon footprint of
all the industries it displaces.

2) and 3) are actually the same item, and both wrong because ASIC miners are
absolutely dominating in the mining stakes now and for the foreseeable future,
hacked bitcoin miners are ridiculously minor by comparison with almost zero
returns.

4) There are already markets in drugs, assassination and child pornography.
The currency most frequently used in crime is the USD. Quick, someone stop the
printing presses and we'll bring crime to a screeching halt overnight.

5) If Bitcoin actually does manage to destroy the state, and that's a very big
if, that is by far the absolute best thing that could _ever_ happen in the
entire world without a doubt. And it would imply it happened without bloodshed
and because people chose it as a simply superior option, which if the negative
scaremongering aspects of the disintegration of the state actually started to
manifest, would not happen by definition. So even if you don't take it for
granted the state is a shambling monstrosity that deserves a quick and
merciful death, the very fact that Bitcoin ever gets to the necessary fraction
of the global markets to kill it implies that people accept that and don't
worry about it.

------
girvo
I find people who have a negative opinion on BTC funny. I honestly just do not
care about it, it is an interesting experiment, and one that I'm not going to
trust my money to. More power to ya if you're going to. If it crashes,
alright. If it doesn't, then sweet. Seriously, I'll never understand articles
like these...

Oh, and his point about BTC "creating" drug markets -- are you for real?
Seriously? People have been buying and selling drugs on the internet since...
well, I'd wager since it's inception, but at least for the past decade. BTC
may make it easier, or "safer", but those markets have existed for a very long
time, you just needed to know where to look...

~~~
SideburnsOfDoom
> Oh, and his point about BTC "creating" drug markets -- are you for real?
> Seriously? ... but those markets have existed for a very long time

You're splitting hairs between "creating" and "massively expanding".

How seriously would you take a statement like "Amazon.com is unimportant, they
didn't create a market to buy books and stuff. They may make it easier, or
safer, but those markets have existed for a very long time"

~~~
girvo
Depends. Before Operation WebTryp, the online market for grey-market research
chemicals was, well, huge. Things are still huge, and that entire market has
nothing to do with Bitcoin. There's more to online drugs than the SilkRoad
(and indeed, there was more stuff going on in the dark-web prior to BTC as
well, but yes, not at the same volumes).

And more to the point: who cares -- the real-world market absolutely dwarfs
(by at least an order of magnitude, maybe two) the "online drug trade", so his
fear-mongering there seems short-sighted to me. There are plenty of legit
issues with Bitcoin (some of which the OP even brought up), this one is just
playing to people's fear of drugs.

In my opinion, anyway :)

~~~
Anderkent
> And more to the point: who cares -- the real-world market absolutely dwarfs
> (by at least an order of magnitude, maybe two) the "online drug trade", so
> his fear-mongering there seems short-sighted to me.

The authors concern is that if Bitcoin were to take off become globally
popular, the resulting online market would be much bigger than the existing
real-world markets, because of lower barrier to entry and increased
globalisation.

Take the current state of online drug/murder/cp trade and mutliply by however
many times larger you expect the total bitcoin user population to be in the
future than it is now.

~~~
girvo
Okay, though if that is his point, then he is truly underestimating how large
the real drug market is? I don't know I just feel like buying drugs online
with cryptocurrency is an inherently limited market. The people involved in
the real world drug trade (in large volumes, not your corner dealer here)
steer well clear of technology, for good reason.

Source: once upon a time I was a heroin addict involved in some nasty stuff.

------
baddox
> To editorialize briefly, BitCoin looks like it was designed as a weapon
> intended to damage central banking and money issuing banks, with a
> Libertarian political agenda in mind—to damage states ability to collect tax
> and monitor their citizens financial transactions. Which is fine if you're a
> Libertarian, but I tend to take the stance that Libertarianism is like
> Leninism: a fascinating, internally consistent political theory with some
> good underlying points that, regrettably, makes prescriptions about how to
> run human society that can only work if we replace real messy human beings
> with frictionless spherical humanoids of uniform density (because it relies
> on simplifying assumptions about human behaviour which are unfortunately
> wrong).

Is Stross speaking specifically of a libertarian political party, like the
U.S. Libertarian Party? His capitalization of the word would seem to indicate
that, or that Stross is woefully ignorant of even the most basic fundamentals
of the extremely broad category of political philosophy called
"libertarianism." I tend to think it's the latter, based on his ludicrous
summary of his perception of libertarianism. I am curious what assumptions
about human behavior he thinks are at the heart of libertarianism.

~~~
steveklabnik
Everyone forgets that 'libertarian' originally meant 'anarchist,' generally
'big L' Libertarianism refers to the party, while 'little l' libertarianism
refers to consequentialist or propertarian libertarianism.

------
nathas
This guy doesn't seem to get what bitcoin is or it's purpose. As far as I'm
concerned, bitcoin will just be another alternative currency forever. It will
likely never replace fiat, and that's fine. It's awesome for international
trade, fast transfer, low-fee, and a safe way to store your money (if you're
okay with the value of btc fluctuating wildly; if it ever settles then it will
be "safe").

I disagree with all of his points. His carbon footprint/malware/Gresham's law
points can all be countered with "incentive to mine leaves as the reward goes
down, difficulty goes up, and total remaining coins decreases" which means
less people will mine. For hideous markets and tax evasion, yeah, you can do
both of those with fiat too. It's not a concept exclusive to bitcoins.

~~~
ubernostrum
_It will likely never replace fiat_

Bitcoin is a fiat currency, in several senses of the term. A Bitcoin has no
intrinsic value, it is unbacked and its value is not defined in reference to
any other asset or quantity.

(though arguably it is not a currency at all)

~~~
nathas
It is not a fiat currency.

[https://en.wikipedia.org/wiki/Fiat_money](https://en.wikipedia.org/wiki/Fiat_money)

It is not backed by any government, it is not legal tender, and it is not
state issued.

It has no intrinsic value, you're right about that part.

~~~
ubernostrum
Fiat currency does not _have_ to be issued by a government, and does not have
to be legal tender. And Bitcoin certainly meets one of the "various"
definitions given in the Wikipedia article. There are plenty of other
definitions of the term it meets -- at root, a fiat currency is simply a
currency whose value exists because someone said so, rather than because it's
tied to something else. And... well, Bitcoin has value because people say it
does, not because it's tied to something else.

~~~
redblacktree
It's part of the definition of "Fiat currency." i.e. It's issued by fiat[1].

[1] fi·at

ˈfēət,ˈfēˌät

noun

1\. a formal authorization or proposition; a decree.

------
scythe
>a Libertarian political agenda in mind—to damage states ability to collect
tax and monitor their citizens financial transactions.

It's kind of silly when people twist words like this. Do you support the
existence of the United States government? So you support Guantánamo Bay, Abu
Ghraib, and Contras killing nuns in Nicaragua? That's the basic form of this
argument. It would of course be fair to call Bitcoin crypto-anarchism, or
anarcho-capitalism, or crypto-anarcho-capitalism, if you're a huge fan of
hyphens. To tar all libertarians (it's _never_ capitalized, unless you mean
the party) with this brush is disingenuous; it's a way of arguing against the
reasonable sorts (e.g. Milton Friedman and Gary Johnson) and the next
complaint "but _most_ libertarians _I see_ are [...]" is equally bad: you
_choose_ to look at the crazy types, similar to how Hacker News posts way more
about the NSA and DEA than about the NHTSA and the CDC. How can we possibly
have a reasonable discourse if we devolve so quickly to calling each other
anarchists and fascists and accusing everyone you don't like of supporting
child pornography? Signed, "moderate" libertarian.

------
donquichotte
To me, the greatest revelation in this article was the Gini coefficient of
bitcoin, which, according to the author, " makes a sub-Saharan African
kleptocracy look like a socialist utopia".

[https://bitcointalk.org/index.php?topic=51011.0](https://bitcointalk.org/index.php?topic=51011.0)
EDIT: Plot of the wealth distribution in bitcoin:
[http://postimg.org/image/hzjmgepa3/](http://postimg.org/image/hzjmgepa3/)

~~~
gwern
This pseudo-Gini is meaningless, since addresses!=people. It is perfectly
possible for the pseudo-Gini to increase even as the real Gini decreases:
simply have Bitcoin further democratize and the new users keep their coins in
convenient web wallets! Since web wallet services tend to consolidate their
coins onto a very few addresses for their own convenience.

~~~
FatalLogic
>This pseudo-Gini is meaningless, since addresses!=people.

It is meaningless but not really for that reason. The estimation of Gini
Coefficient that Charlie Stross links was calculated by the Bitcoinica
exchange from their client list.

It's meaningless _because it was calculated in 2011_ , when the number of
Bitcoin owners and users was a tiny fraction of the current figure, and the
network was less than 2 years old and practically unknown to the wider world.

He first cites that out-of-date estimate, and then claims that it is getting
worse, without providing evidence for that claim.

------
epscylonb
Libertarians are annoying, anyone who thinks technology will solve complex
social problems will be dissapointed by bitcoin eventually.

The deflationary nature of bitcoin is it's hardest aspect to defend because
there really hasn't been anything like it in history before. A finite asset
that is easy to transfer over long distances without central interferance
really is unprecedented.

I think you have bought in to the bitcoin fantasy that it will be the only
currency in use. I don't think that will ever happen for a variety of reasons.
If gold and fiat can coexist why not bitcoin too?. Loaning bitcoins seems to
be a crazy proposition, so I suspect inflationary currencies will stick around
just for that reason. Not to mention bitcoin by itself is fairly terrible for
in person transactions, if you add a service on top what is the difference for
the customer between that and a credit card company?. Fiat is useful and
solves problems that bitcoin doesn't.

Regarding mining, I have my own concerns, bitcoin proponents love to describe
mining as “securing the network” and equate it with vaults and security guards
used in banks. This comparison is at least partly flawed, mining prevents
double spends and nothing else. It's certainly true that a centralized ledger
could prevent double spends for tiny fraction of the cost of mining, but
globally who can be trusted by all parties to adminster it?. The comparison
isn't one sided however, it is much cheaper to securely store (and move)
bitcoins than gold for example.

Energy use is tricky, preserving the environment should be a top a priority,
but should we aspire to use less energy?. One question I have often asked but
never got a good answer to, how much of the worlds energy needs to be devoted
to mining to prevent a 51% attack?. If it is north of 30% of the worlds energy
output then right now that would seem a huge waste. But if we had access to
cheaper, cleaner renewable energy, would it still be a problem?.

Malware?, it's just a symptom of larger problem, computer security is
terrible. No one is really sure who to plame, users, applications, operating
systems and hardware makers all come into the firing line. If bitcoin pushes
forward computer security surely that can only be a good thing?.

I'm unconvinced about whether greshams law applies to mining due to the
performance disparity between ASICs and CPU/GPUs, but surely if computer
security improves this problem diminishes?.

------
M4v3R
I was pretty sure that after this current "crash" (3rd already in Bitcoin
history, depending on how you count them) articles like that ("Bitcoin is
doomed", "I want Bitcoin to fail") will surface. And here it is. Nothing new
to see here folks. Same ol' arguments, which were discussed hundreds of times
already.

------
Houshalter
The incentive to create malware, also a significant problem with advertising
and online banking/transactions.

Anyways I think the things the author dislikes about bitcoin is precisely what
makes it so good. It's great that it can subvert government control on a small
scale. It isn't going to stop taxation or anything because there is no way
large corporations and rich individuals can hide that much in bitcoin
transactions without getting caught. But for individuals who just want to buy
something something minor it works perfectly.

Besides it really isn't any different than cash in terms of anonymity. It just
can be done online.

And it isn't going to die anytime soon. Even if the price drops a lot, it can
still be used to make transactions. The bitcoin protocol will keep on working
20 years from now, regardless what happens to the price.

The speculators might suffer, maybe it will make less news. Maybe mainstream
adoption will suffer, so everyday people looking to use it to make
transactions easily online won't be able to. But the people that are using it
to do illegal things that the author fears so much will still be there and
aren't going away.

------
baddox
> Like all currency systems, Bitcoin comes with an implicit political agenda
> attached. Decisions we take about how to manage money, taxation, and the
> economy have consequences: by its consequences you may judge a finance
> system.

The consequences of Bitcoin he lists are arguably bad, sure, but they don't
touch the consequences of nation states that centrally control their financial
and monetary systems.

~~~
Nursie
I know right! Financial stability, stable systems of investment and lending,
managed inflation and currency supply. Some damn terrible consequences there!

~~~
baddox
"Financial stability" in the sense that the government has the final control
on literally everything, from your money to your property to your labor.
"Stable systems of investment and lending" in the sense that large members of
the finance industry operate with impunity (see the big bank bailouts).
"Managed inflation and currency supply" doesn't really mean much without
talking about how _well_ they are managed.

And then you have the real bad consequences: runaway military spending and
mass killing of people from other nations, runaway prison populations for
victimless crimes, massive market interference that stifles innovation and
efficiency, public schools which create the next generation of unquestioning
patriots, etc.

------
neals
Yes, popular one liners make for great headlines. Die in a fire! That doesn't
sound juvinile at all.

These harsh words for something that you don't even HAVE to use or even be a
part of.

There's a group of people with an idea, lots of people with great intentions,
building a technology that you don't have to pay for. This is called Open
source software, you want all of that to die in a fire?

------
belorn
So the article claims that more assassination, drugs and child pornography is
being sold now than before?

Is there any facts supporting such claim? Sold assassination, drugs and child
pornography should exist as crime statistics, proving or disproving the claim.

~~~
gwern
Sanjuro's 'Assassination Market' thus far doesn't have any correlated deaths,
and it's an open question whether it's real rather than a scam. (How could you
ever tell?)

------
codex
The core argument that Bitcoin is deflationary is irrelevant to the fitness of
Bitcoin, at least for online transactions. To me, the chief value of Bitcoin
is that it enables super cheap micro (and macro) transactions online. Goodbye
silly debit and credit card interchange fees! Used in this way, dollars are
held in Bitcoin form for only the tiniest of moments before being converted
back into dollars. Long term fluctuations in exchange rates don't matter.

I look forward to using micro payments for content online. Ad supported
content and the inevitable vending of my personal data is distasteful to me.

~~~
maaku
You do know that the minimum recommended fee is $0.10? (or was, a few days
ago..)

Bitcoin is not designed for micro-transactions.

------
mrfusion
I'd be curious to know if any of the altcoins have tried creating an
inflationary currency? I guess you'd still need some kind of reward for early
adaptors though?

~~~
jessaustin
I don't see the point of the deflation "criticism". Bitcoins are effectively
infinitely divisible, and if deflation raged long and hard enough to get to
the limits of BTC precision, the protocol could simply be modified to add more
precision.

~~~
sergiosgc
It is not a question of precision. It is a question of market dynamics.

For the sake of explanation, imagine a world where Bitcoin is the only
currency. Let's also assume that in this world, Bitcoin gains value at 10% per
year.

Now, you are an entrepreneur setting up your company. You are going for the
grocery retail market, which presents a free cash flow return rate of 8%.

In this scenario, you can't get any investors. Investors are faced with two
options: a) Stuff bitcoins under the mattress and get a return of 10% with
zero risk; or b) Lend bitcoins to you, get a return of at most 8% (or you'll
go broke) and face a non-zero risk that you'll go broke and they lose their
beloved bitcoins.

For comparison, with the current economy, currency loses 2-3% per year, so
investing in your business has an effective return of 10% to 11%, so if the
risk is below this threshold, investment is possible.

~~~
mrfusion
I know that's the cananocial example, but I've always wondered, wouldn't that
10% appriciation be coming from somewhere? Presumably from the growth of the
economy. And if the economy is growing at 10% per year, we probably don't need
your grocery store :-)

Please correct me if I'm missing something, I took macroeconomics in college
but I've forgotten a lot.

------
stcredzero
_Which is fine if you 're a Libertarian, but I tend to take the stance that
Libertarianism is like Leninism: a fascinating, internally consistent
political theory with some good underlying points that, regrettably, makes
prescriptions about how to run human society that can only work if we replace
real messy human beings with frictionless spherical humanoids of uniform
density_

Brilliant prose! Pragmatism always has and always will rule.

------
andyhmltn
There are some really bad points in here. Like this:

Bitcoin's utter lack of regulation permits really hideous markets to emerge,
in commodities like assassination (and drugs and child pornography).

So are you saying I can't pay for drugs with cash?

~~~
philwelch
You can, but cash is cumbersome to manage and dealing in large quantities of
it all the time immediately makes you a suspected drug dealer.

------
rfugger
Most of those arguments apply to _the internet itself_. The author sounds like
a conservative in the 90's upon hearing about the web.

------
chmike
I don't think money, or specifically dollars are any better than bitcoins.
Beside I would like to point out that it's not the currency in it self the
problem, but what we do out of it. Depth grow of dollars is a huge speculation
buble which will blast soon or later. Get ready for it. Criticizing the carbon
footprint of bitcoin is a joke compared to the carbon footprint of depth
dollars.

Regarding the future of bitcoin, my feeling is that it has the value of
tracability which is very attractive for the police states we are evolving to.
So I expect states might continue to tolerate it as long as it doesn't
accelerated the dollar buble blast and present a threat.

Another current problem of bitcoin is that it's value is so much rising by
speculation that it prevents it to start being used as a commercial currency.
Illegal business activity is indeed a problem, but its tracability leaves a
track. I wouldn't assume that it's free play for all illegal business. Assume
hunt dogs are silently following the tracks.

------
Morphling
I get a feeling there is some alternative motive behind the article. The
arguments are some what valid:

Mining uses electricity so it leaves a "carbon footprint", but printing money
and mining gold also leaves a footprint.

Unaware "zombies" are used for mining, which means criminals get them more
reliably, but I don't think this is BtC's fault. People should be aware what
they download to avoid infections.

I haven't heard of the stolen electricity thing, but in hind sight it's
obvious, if you aren't paying for electricity you are minimizing your costs,
but I'm not sure how wild spread this is, but again I don't think it's about
BtC or BtC's fault.

Lack of regulations does NOT permit assassination, sales of illegal drugs or
spreading of child porn anymore than our current currencies, because this shit
has been happening for way longer than BtC has been a thing.

------
KVFinn
While bitcoin supporters tend to hate the idea of inflation, there are others
coins that have inflation built in to encourage spending -- a kind of
progressive version of bitcoin.

Here's a random example of a coin designed around a specific economic
philosophy:

>Unlike Bitcoin, Freicoin has a demurrage fee that ensures its circulation and
bearers of the currency pay this fee automatically. This demurrage fee was
proposed by Silvio Gesell to eliminate the privileged position held by money
compared with capital goods, which is the underlying cause of the boom/bust
business cycle and the entrenchment of the financial elite, and has been
tested several times with positive results.

[http://freico.in/](http://freico.in/)

(no idea if that has merit but it was the one that stuck in my head because it
was so clearly articulated on their homepage)

------
clamprecht
I read the post and wondered if it was prepared, and he waited until the next
"crash" to post it. After all, that's the best time to post anti-bitcoin
posts.

~~~
SideburnsOfDoom
Probably not, IMHO. The author has experience at writing, no reason why he
can't turn out something polished-looking quickly. Especially as he has been
thinking along these lines for a while. Gestating ideas is "preparing" to
write even if the finished pieces is not "pre-prepared".

------
exit
this reads like a movie/music executive complaining about about the open
internet

or maybe bemoaning the discovery of nuclear physics

it's also strange for me to read since stross is one of my favorit
authors/thinkers

~~~
alex-g
But scepticism about libertarian technofetishism has been a bit of a theme in
his writing for... a while now. The Vile Offspring in Accelerando are a
scarcely-veiled example.

~~~
craigyk
yes, and the skepticism is almost certainly deserved. it drives me insane how
naive most libertarians are about how things would actually play out if they
got their way. it's sad but true that there probably isn't a clean, self-
consistent ideology/system that will work in a messy world. but if I had to
pick one, it would be socialism because the only freedom I can imagine being
better than having complete control over my money (Ayn Rand) is not even
having to worry about it (Star Trek).

------
_greim_
I love his meta-criticism of Libertarian and Leninist (and presumably other)
ideologies:

> [It] makes prescriptions about how to run human society that can only work
> if we replace real messy human beings with frictionless spherical humanoids
> of uniform density...

I need to read more of his books.

~~~
webXL
Too bad he doesn't explain why libertarianism only works if we are all uniform
and frictionless. Perhaps because it's nonsense and libertarianism actually
doesn't require that.

It's also too bad emotional rants like this carry such weight. Is the status
quo really that great?

------
bobbygoodlatte
While I don't think Bitcoin is a "weapon intended to damage central banking",
I'm not sure why the author has such an affinity towards central banks.

He claims Bitcoin might destroy social safety nets — but how are central banks
protecting those institutions? The cash that quantitative easing produces goes
right into the hands of banks / investors. Rich people get richer when QE
inflates the stock market to new highs. Working class people get poorer, and
will feel the subsequent crash harder.

If anything, Bitcoin is better for working class people. It means the money
they earn retains value, regardless of whether they invest it in the market.

------
csomar
_Mining BtC has a carbon footprint from hell (as they get more computationally
expensive to generate, electricity consumption soars). This essay has some
questionable numbers, but the underlying principle is sound._

I didn't do the math (not even back of the envelope) but my sense tells me
it'll be less footprint than the current mega banks.

 _Bitcoin mining software is now being distributed as malware because using
someone else 's computer to mine BitCoins is easier than buying a farm of your
own mining hardware._

Piracy, Theft and Crimes are not a new thing. They have been for a very long
time.

 _Bitcoin 's utter lack of regulation permits really hideous markets to
emerge, in commodities like assassination (and drugs and child pornography)._

We don't have that now? I guess regulation is better with Bitcoin because cash
has much _more_ privacy than BTC.

 _It 's also inherently damaging to the fabric of civil society. You think our
wonderful investment bankers aren't paying their fair share of taxes?_

It's like there is no off-shore tax havens right now, and everyone is paying
his share of taxes. Maybe we should give the tax system another look and a
good reform?

Sorry, but I couldn't find any substance in this article. Just the usual
hatred. Here is my actual view on Bitcoin: [http://omarabid.com/why-
cryptographic-currencies-matter/](http://omarabid.com/why-cryptographic-
currencies-matter/)

~~~
nhaehnle
_I didn 't do the math (not even back of the envelope) but my sense tells me
it'll be less footprint than the current mega banks._

True, but Bitcoin also does less than those banks. It's not really an apples-
to-apples comparison.

------
csense
According to this article,

> Bitcoin is pretty much designed for tax evasion.

This assumes that the government needs to know how much money you have / make
in order to tax you. There is an alternative -- to instead tax physical
property (in particular real estate) and/or physical goods moving across
borders.

This alternative has been used for most of human history; the income tax is a
fairly recent thing. (In the US, it is theoretically a "temporary" measure to
pay for World War I.)

------
MattyRad
One of the things I happen to like about Bitcoin is that it will only be as
successful as its adoption rate. I think of this as a literal interpretation
of voting with you wallet. So if Bitcoin, against considerable odds, is
successful (a small possibility, to be sure), Charles Stoss here will be
outvoted, and there is nothing he or the government can do to stop it. And in
that respect, Bitcoin is its own insurance policy.

------
tomrod
I think his correct points highlight why BtC is good, not bad. Untraceability
is incorrect though.

His points expressing worry over stable governance as being totally desirable
is interesting. Why is the current system in play necessarily a good thing?

Deflation seems like a problem until one recognizes alternative currencies
provide the same options and will grow over time. Hence the deflation isn't a
problem unless one only accepts BtC.

------
Tycho
I find the figures about bitcoins carbon footprint to be somewhat dubious.
Anyone verify the calculations?

Interestingly, with Bitcoin you could do the mining with carbon neutral
energy, since the electricity can be consumed where it's generated and the
output is just data to be transmitted.

~~~
Nursie
I'm not sure about his figures, but the idea of a crypto-currency that needs
petaflops of continuous processing power to keep itself safe from attack does
seem ass-backwards in the extreme.

~~~
lectrick
Someone thought of something called "proof of storage" instead of "proof of
work".

Not sure if it would work, though. But the "waste" would be in data storage
instead of power usage.

~~~
Nursie
Proof-of-x seems inelegant to me, it's unnecessary for a currency. It may be
necessary for a decentralised currency like BTC, but it's not part of all
schemes. I don't tend to prefer a currency that requires vast waste of
resources to bootstrap and protect.

As a method of slowing things down (like the various spam-email limiting
proposals) they're great, though.

------
dcc1
Urm Charlie could always issue "Charlie Dollars" backed by bitcoin, nothing
stopping him creating his own inflationary currency.

Just like nothing stopped governments issuing currencies backed by gold (and
later removing the link moving to complete fiat)

All in all the author exhibits all the signs of someone who doesn't understand
bitcoin in his troll attention seeking article.

Bitcoin is not perfect but its a damn interesting new technology/platform that
the world has not seen before.

He was probably busy in the 90s slamming this new emerging technology/platform
called the web

~~~
nicholassmith
You do know who Charles Stross is, right? Influential sci-fi author, early web
user, old school programmer? You may not agree with him, but it's not
trolling, he raises many valid points and he's not the first to do it.

~~~
dcc1
His main point is along the lines of "OMG <insert_bad_actors> can/may use
<technologyXYZ>"

Bitcooin like any tool from the invention of fire to tools like a hammer to
"the web" can be used for good or bad, you think someone who writes sci-fi and
programs would understand this.

~~~
nicholassmith
His point is he's sick of the inherent drum-beating that BitCoin is the salve
to the financial issues present in the gold backed/regulated traditional
economy because it's just as broken, if not potentially more so.

~~~
dcc1
There is a lot of pumping by those who want "bitcoin to go to the moon" for
their own financial gain.

That still does not make bitcoin technology inherently evil.

The distributed ledger and proof of work pioneered by Bitcoin does have
incredible potential to change the way people transfer "value" between
themselves.

The problem is a subset of bitcoin users who want to get rich quick, that does
not make this technology evil or worthy of death. Cash can also be used by all
sorts of criminals for all sorts of shit, if anything its much easier to use
for nefarious purposes than bitcoin. It was anonymity provided by TOR that
gave rise to silk road, pseudo-anonymity provided by bitcoin was just a bonus.

------
sliverstorm
_... This means the the cost of generating new Bitcoins rises over time, so
that the value of Bitcoins rise relative to the available goods and services
in the market_

False. I mean, it _could_ go that way, but if you have a large established
market to anchor the value of BTC, the mining difficulty will adjust to match
(instead of the value of BTC adjusting to match). If it is not profitable to
mine BTC, people will stop mining and the difficulty will drop; the cost of
mining will adjust to the value of BTC.

------
brainburn
|new bitcoins are created by carrying out mathematical operations which become
progressively harder as the bitcoin space is explored

No, no, NO!

Statements like this immediately lessen the writer's credibility.

~~~
tzs
What exactly is wrong with that statement?

~~~
brainburn
The calculations get more or less likely to produce a correct result,
depending on how many calculations are done per second.

In the end, on average, 1 correct result is found every 10 minutes.

------
dpweb
I'm no fan of all th hype, but each link in authors link farm is idiotic.
Blaming bitcoin for child pornography?

What these arm chair economics experts miss is that inflation and deflation
are meaningless in things other than the currency you are getting paid your
wages in. If the purchasing power of the dollar really fell apart, you get
riots in the streets people can't feed their families. Bitcoin crashes it just
another #1 article on hn to scroll through.

------
kitsune_
Surely there must be a kind of duality between inflation and deflation in
context of the total money supply and the individual unit of money that is
deeper than commonly taught?

Couldn't a a fixed-money-supply economy and a flexible-money-supply economy be
unified in a single mathematical and theoretical framework? This must surely
be possible, but in that regard "unit of exchange / money" would have probably
discarded in favor of another thing?

~~~
asgard1024
Try Steve Keen and his work. He modeled both fixed money and flexible money
supply in his dynamical models of finance. You can even download a computer
program "Minsky" and try the models yourself.

Edit: He is also a proponent of "endogenous theory of money", which basically
says that money can be easily created within the system through debt. In
essence, "fiat money" is a fundamental property of monetary systems, and not
something imposed by governments.

------
colanderman
_Deflation and Inflation are two very different things; in particular,
deflation is not the opposite of inflation_

What am I missing? The very first sentences from the articles _he_ linked:

 _In economics, deflation is a decrease in the general price level of goods
and services._

 _In economics, inflation is a persistent increase in the general price level
of goods and services in an economy over a period of time._

How are those _not_ opposites?

~~~
SideburnsOfDoom
> What am I missing? ... How are those not opposites?

Yes, but "We have deflation" is not the opposite of "we have inflation".

It means that the consequences - the effects that they have on societies that
experience them - are not simple opposites.

------
rumcajz
Interestingly, in the long run inflation may be problem with Bitcoin rather
than deflation.

In 30-100 years (the numbers vary according to the source) the world
population will start to shrink. From that point on there will be ever more
money available per living person. Which, of course, mean inflation.

Central banks can counter it by burning money. It's not clear who would do
such beneficial activity with Bitcoins.

------
georgemcbay
I also want Bitcoin to die. For me it isn't about the politics of banking, it
is about the fact that the whole system is designed in a way so as to waste
maximum amounts of energy on doing nothing of real intrinsic value (which he
touches on re: carbon footprint).

~~~
rainforest
The same could be said about diamond mining, or production of goods that serve
only decorative purposes. Video games do the same thing, wasting vast
computing resources on pretty pictures to titillate humans who could be
working. Is HN's carbon footprint justifiable? Does it produce intrinsic
value?

------
cenhyperion
> calculating ever-larger prime numbers, they get further apart

iirc that's not completely true. It may be in practice for bitcoin as a
currency, but I remember reading that there's a limit to the distance between
two primes, no matter how large they become.

~~~
vbuterin
Actually, false. There are no primes between n! + 1 and n! + n + 1 for all n,
so arbitrarily large gaps between consecutive primes do exist.

------
ypcx
I like how the author implicitly assumes that Bitcoin is a replacement for the
current financial system. I wish it was so, but not just for Bitcoin, but the
best set of the crypto-currencies, as determined by competition/user adoption.

------
mpg33
The good thing about bitcoin is that it will succeed or fail based on market
principles.

------
AndrewDucker
I wonder what Bitcoin reward halving will do when it next happens (2016). It
should certainly make it much less worth investing in as much electricity, and
should thus bring down the carbon footprint.

~~~
kahoon
When Charles Stross is talking about "carbon footprint" he ignores the not
even comparable amount of resources that the current world wide banking
infrastructure devours.

~~~
VMG
I like to compare it to gold mining

------
cLeEOGPw
I think we had plenty of these rants about torrents and how they damage
music/film/game industry. I am expecting actually many more of these articles
about bitcoin vs banks in future.

------
thekaleb
Most of his complaints are FUD. He didn't even bring up legitimate concerns
like how big of space you would need to have the entirety of the block chain
in the future.

------
warrenmiller
You can mine on solar energy
[https://bitcointalk.org/index.php?topic=376437.0](https://bitcointalk.org/index.php?topic=376437.0)

------
justzisguyuknow
Why do people keep saying it crashed 50% since yetserday? That number is just
plain wrong. It was NOT trading over $1000 yesterday, that was over a week
ago.

------
krupan
I'm coming across a lot of anti-bitcoin articles today. It alls seems very
similar to the anti-linux FUD from 15 years ago.

------
legohead
bitcoin didn't crash 50%, not even close. it was only 700-740ish yesterday.
and it's already back up past 600. I've been watching it every day.

it has been on a slow decline for a while, with some drastic dips here and
there, but it recovers. still too early to call any kind of crash.

------
Zuider
His main complaint seems to be that bitcoin suits child rapists, and even
worse, libertarians.

------
lurkinggrue
Don't look at me, I hedged my savings into a collection of Beanie Babies and
Tulips.

------
guiomie
As if the current financial system doesn't have a carbon footprint ...

------
melindajb
One only has to to look at the fate of the Linden Dollar (Second Life) to see
what will eventually happen to Bitcoin.

------
lhgaghl
And here I was, having a decent day, and now I'm extremely angry.

Why I want the author to die in a fire:

> Mining BtC has a carbon footprint from hell

This is an insanely dubious ungrounded argument. How do you know fiat doesn't
have a high carbon footprint too? The linked article doesn't even mention
whether this is the case.

> Bitcoin's utter lack of regulation permits really hideous markets to

WHAT the fuck? Who the fuck actually believes this? You fucking sheep.

> Bitcoin mining software is now being distributed as malware

Non-argument, fuck off. This is like saying someone can kill you and take your
money, or even more obvious and ironic, install malware on your computer and
steal money from your fiat bank account, which happens all the time anyway.

------
wowsuchmoney
Why are you still buying worthless bitcoins? Doge is the future of money.

[http://dogecoin.com](http://dogecoin.com)

such coin many profit up 50% today

~~~
FatalLogic
Please stop doing this. It won't be tolerated here, and it will become
difficult to post anything about dogecoin in future if you keep spamming it.
This place is far stricter than Reddit.

------
dlsx
bitcoin, its ogre you loose.

The people have spoken, and DOGE coin is the people coin.

wOOF

~~~
jessaustin
You know some days I actually wonder why hellbanning exists. Not today.

------
dlsx
Blah blah blah doge is up 600% !!!

I just got a girl to show me her boobs for 10K doge. You guys I'm not joking,
hot girls are using doge!!!!!!!!!!!!

What the fuck is going on ?

Ahhhhhh!

------
phaed
I lost all respect for this guy.

------
shadowmint
That little 'flag' link is for articles that get posted that you think are
poor content, badly written, ill informed or troll bait... right?

~~~
tptacek
No. The 'flag' link is for stories that are _inappropriate for the site_. What
you describe is a "downvote" button. Using flags to downvote is abusive. My
understanding is, the mods catch people using the flag button to downvote, the
mods make your flag stop counting.

~~~
Crito
> _" My understanding is, the mods catch people using the flag button to
> downvote, the mods make your flag stop counting"_

The "flag" link disappears entirely, it doesn't just stick around but become a
noop.

~~~
tptacek
How sure are you about that? Obviously the flag link goes away for some
people.

~~~
Crito
Maybe they do both, but I am certain that the flag link disappears for some
people after abuse. I'm not sure what the advantage of doing both would be
(though I assume hellbanned users normally still see a flag link that does
nothing).

~~~
SamReidHughes
I've inferred from some info I've heard that some known abusers keep abusing
the flag feature -- it seems like it would be disabled for them, or disabled
for submissions matching certain keywords.

~~~
Crito
If minor abuse turns the flag link into a NOP, then I don't see any extra
utility in removing the link if they keep it up.

