
Bitcoin makes journalists say stupid things - cs702
https://self-evident.org/?p=993
======
zeteo
I'm sorry, but I don't see the incentives here. We have on the one hand a
number of professional economics writers (e.g. Krugman) who are skeptical or
dismissive of Bitcoin. On the other hand, we have a number of bloggers who
already own Bitcoins and have a direct financial interest in their
appreciation. I think it's pretty clear which side the hacks are on. Arguments
such as "this is obviously not Tulip Mania because Bitcoin is not a tulip"
only confirm it. (By the way, Tulip Mania involved some pretty sophisticated
financial instruments - futures, options, insurance etc. Those 17th century
Dutch who invented the stock exchange were actually pretty good at breaking a
tulip into a million pieces and selling it repeatedly without its changing
location.)

~~~
CWilliams1013
Paul Krugman was also skeptical and dismissive of the Internet:

> The growth of the Internet will slow drastically, as the flaw in "Metcalfe's
> law" -- which states that the number of potential connections in a network
> is proportional to the square of the number of participants -- becomes
> apparent: most people have nothing to say to each other! By 2005 or so, it
> will become clear that the Internet's impact on the economy has been no
> greater than the fax machine's.

> As the rate of technological change in computing slows, the number of jobs
> for IT specialists will decelerate, then actually turn down; ten years from
> now, the phrase information economy will sound silly.

~~~
eridius
I think it's safe to assume that Krugman is a lot more trustworthy when
talking about something that's actually within his realm of expertise; namely,
economics.

~~~
cinquemb
economics boil down to human behavior.

what does it say about a person who is dismissive about the way technology can
affect/influence human behavior?

what makes him an expert? is it because he panders to what is the status quo
(the ever-present monopoly of sorts)? is it because he engages in thoughtful
exploration of ideas and notions with a larger community and helps bring about
great discussion? is it because he has a degree? is it because he has done
something notable for humanity?

------
pico303
I was researching Bitcoins for use in a project I'm working on, so I've been
slogging through this and other articles lately with great dismay.

The biggest problem right now with these kinds of articles (this one included)
is that while yes, they are dramatic, they are technology-focused. We're not
getting a lot of economists writing on Bitcoin. Paul Krugman has written a bit
that I think is spot on.

Every article I read seems to compare Bitcoin to other currencies and say it's
the same because those currencies are made up too. This is a patently false
statement, and why we need more economists involved. Real-world currencies are
valued on the GDP and credit-worthiness of the nations that issue the
currency. Bitcoin lacks this fundamental property. As it stands, Bitcoin is
more like gold or the old tulip craze: it's based on the desire of those
involved to have it.

As Paul Krugman indicates, Bitcoin is actually a pretty bad currency. It's
difficult to convert to, few places accept it as currency, and worst there's
rampant speculation on the fictitious value of the currency. Take the exciting
tech out of the picture, and you've got a currency that is about as
interesting and useful as the Zimbabwean dollar.

For example, one author writes about how he purchase 92% of a single Bitcoin
for $130. One site I found that accepts Bitcoin will send you a free t-shirt
if you spend more than 1.5 Bitcoin. So if you spend over $200, they'll send
you a $10 t-shirt. What an incentive. And I'm not sure how the site deals with
the wildly fluctuating value of the currency.

I know banks and governments don't always manage money well, but there is
something to be said for the regulation and support we do get from traditional
currencies. If the USD fluctuated like Bitcoin, the US economy would probably
collapse.

Needless to say I've decided to just go with plain credit card transactions in
our project, and stay away from this volatility and uncertainty.

~~~
temphn

      We're not getting a lot of economists writing on Bitcoin.
    

What's the track record of economists vs. computer scientists over the past
ten years (or twenty, or fifty)? You don't have liberal sorting algorithms and
conservative ones, but you do have liberal and conservative economic theories.
This indicates that economics, especially macroeconomics, is more like opinion
journalism than science. We need empirical tests. Bitcoin provides one.

Postscript:

Computer science has delivered the goods in a way that economics just hasn't,
as even Krugman admits[1]:

    
    
      ...the widely accepted proposition that events like those 
      of the 1930s could never happen again. But even pessimists 
      like me, even those who realized that the age of bank runs 
      and liquidity traps was not yet over, failed to realize how 
      bad a crisis was waiting to happen... 
    
      What you can criticize economists for – and indeed, what I 
      sometimes berate myself for – is failing even to see that 
      something like this crisis was a fairly likely event.
    

Why weren't they able to see this was a likely event? Well, rewind a bit and
witness Bernanke writing in 2004 about the "Great Moderation" [2], the
ostensible "decline in macroeconomic volatility":

    
    
      My view is that improvements in monetary policy, though 
      certainly not the only factor, have probably been an 
      important source of the Great Moderation. In particular, I 
      am not convinced that the decline in macroeconomic 
      volatility of the past two decades was primarily the result 
      of good luck, as some have argued, though I am sure good 
      luck had its part to play as well.
    

In other words, Bernanke thought the (nonexistent) Great Moderation was the
result of improvements in monetary policy. Thereby approving of the monetary
policy that inflated the housing bubble, while blithely unaware of the
catastrophe that was to unfold. Conclusion: economists aren't so good at
predicting economic events or structuring economic systems. Ben thought the
system he'd helped build wouldn't fall down. It did. Time for some new ideas,
from people who actually do build systems that don't fall down: computer
scientists.

[1] [http://krugman.blogs.nytimes.com/2012/03/05/economics-in-
the...](http://krugman.blogs.nytimes.com/2012/03/05/economics-in-the-crisis)

[2]
[http://www.federalreserve.gov/boarddocs/speeches/2004/200402...](http://www.federalreserve.gov/boarddocs/speeches/2004/20040220/)

~~~
pavpanchekha
This is nonsense. "Time for some new ideas, from people who actually grow
complex organic systems: animal trainers." "Time for some new ideas, from
people who actually keep large masses of people happy: sex workers." "Time for
some new ideas, from people who actually clean up others' problems: garbage
men." What your argument is missing is that even if top economists aren't
great at economics, they might still be better at it than computer scientists.
Maybe top economists are bad at economics because _economics is hard_. Not
because only idiots do economics.

~~~
temphn
Computer scientists have proven themselves capable of going into completely
unrelated areas (advertising, video, audio, hotels, taxis, airplanes, and most
notably payments) and completely disrupting the status quo of the "experts".

And those experts were at least operating profitable legacy businesses, so had
_some_ empirical proof of their claims (to wit: their products worked, even if
not as well as the Valley's).

Now, lo and behold, we have a direct test of open source software vs.
Krugmanesque proclamations. Krugman is simply not qualified to evaluate
Bitcoin. You think he knows SHA-256 from a hole in the ground? He'll say it
won't work just like legacy payment providers thought Paypal wouldn't work.
And then he'll start advocating that it be prosecuted once it does threaten
him, and then he will lose.

~~~
haberman
You are exhibiting a selective memory that only remembers the successes.
Investors in the late 90s pumped money into "computer scientists" only to find
that just because something is being done on the Internet doesn't make it
automatically profitable. You look at Bitcoin and think it is so obviously
Amazon.com, but it could just as easily be Pets.com.

------
qwertzlcoatl
I think Bitcoin itself isn't making the media say stupid things. I think the
media says stupid things _all the time_ , it just happens that a lot of us,
who knew Bitcoin from the beginnings and already have a fair share of
knowledge on this subject, can see more clearly how inherently flawed a lot of
the information is.

This sudden uprise of awareness and the news coverage that came with it,
surely made me even more skeptical about mainstream media, as no one is to be
trusted. Financial Times, Bloomberg and all the big ones that have such a
tremendous amount of weight behind them, are in the end inseparable from
blogspam, as they have the same sensationalistic tendencies and didn't do
their homework, at all. It's not easy to digest the phenomena Bitcoin, but at
least have the decency towards your followers of not commenting on it until
you have established at least a semi-understanding of the matter.

~~~
alexwright
This has always worried me about news/media. When ever they cover anything I
have the slightest background in, they get something, or everything, about it
glaringly and completely wrong. So what else are the getting wrong the rest of
the time? My guess has to be everything I suppose.

~~~
mrweasel
I believe that John C. Dvorak made the same argument on the No Agenda podcast
a few weeks back. It has really made me rethink how news is reported. We
simply have no way of knowing if what is being reported and explained is
correct.

Even in the rare cases where true expects a interviewed we rarely get a
completely objective opinion. This, I believe, is either because the
journalist are trying to steer the conversation into a direction he or she
understands or because it make for more "exciting" news.

It's truly sad that the media believes that it should dumb down content, or
make it more "easily available" at the cost of the truth and correctness. I
don't think the average media consumers are so dumb that it's necessary and if
they are presenting the with incorrect information surely can't be helping the
issue.

------
JumpCrisscross
Bitcoin is at the brackish between macroeconomics and cryptography.
Macroeconomics, despite every reporter professing to understand it to a T, is
immensely complicated, in both its theoretical and empirical aspects.
Cryptography is similarly esoteric (and subject to popular Dunning-Krueger
effects) within the tech community.

Thus, we see a lot of tech journalists busy making a trash job of nineteenth-
century economics while FT Alphaville finds its analyst who made easy work of
dynamically-tranches credit products stumped by cryptography 101. It will take
time for the theoreticians on either side to get a handle of things, and a
good deal of hot air will be expended in the process.

I can't say I'm not excited about this - it's a grassroots experimental
verification of a lot of economic theory. But if people are ploughing savings
they cannot afford to lose into the currency out of anger against the present
economic situation, ideology, or a mis-understanding of economics, that is a
problem, and it is irresponsible not to at least try and give fair warning.

------
trotsky
The interesting thing about the bitcoin community is that they've discovered
that nearly everyone else besides themselves and F. A. Hayek is stupid.

~~~
harryh
Can't decide at all if you're being sarcastic or not. Well played sir!

------
Sambdala
Moreso even than being wrong about a lot of things, I've been continuously
amazed at how polarized coverage on Bitcoin is.

It's very rarely been approached, by journalists, as "here's an interesting
technology. It's a little kooky, but it's getting more popular. I wonder if
anything interesting is here?".

Instead, you get either intense fandom or intense vitriol.

~~~
ChuckMcM
I suspect that is a function of pandering to their audience. There is an
active readership that wants to believe Bitcoin is an escalation in the "drug
war", there is a readership that wants to believe that Bitcoin can remove the
influence of financial institutions on government. Articles that pander to
their targeted readers get a lot of 'shares' and what ever counts as upvotes
for them. This in turn is used by the author to represent their own "value" to
the agency where they are providing the page views.

I thought the priceonomics coverage was quite good, but I tend to look at it
through an economics lens rather than a particular idealism.

------
clarkmoody
It's all about incentives: online bloggers and mainstream media types have an
incentive to get a story out to keep people coming back to their websites / TV
stations. They have no incentive to tell the truth, since no one holds the
media responsible.

In crisis situations, the media reports whatever rumor is floating in the air
at the time, just to fill the airwaves. Regarding the Bitcoin exchange rate
surge since the beginning of the year, the media conflates it with "concerns"
over the Cyprus situation, just to make news. Regarding markets in general,
the financial media loves to say that the Dow moved down on "worries" over
this or that, when in reality the price action usually has nothing to do with
that imaginary concern.

Since Bitcoin is difficult to understand for most, it's asking WAY too much of
the media to report on it correctly. How often have you seen quotes from
"experts" over their concerns that Bitcoin will get "hacked" and become
worthless? How often do they refer to "shares" of Bitcoin?

Have you ever seen a mainstream article about Bitcoin network strength
increases / decreases?

------
Perceval
The bitcoin should be renamed the Dunning-Krugerrand.

~~~
spenrose
You sir have won the Internet. Well played.

~~~
slinkyavenger
Not so fast, that term was coined in a SomethingAwful thread about bitcoins.

------
brown9-2
_So there you have it: The government is the people, and to oppose mega-banks
is to oppose democracy itself. Pretty sure I read that in the Federalist
Papers._

1\. Is "the government is the people" meant to be a criticism?

2\. Interesting that in the quote from Felix Salmon that this is criticizing,
Salmon never mentions _mega-banks_ or that the size of the bank is related to
their civic responsibility. It's the author of this piece who is inserting a
bias against "mega-banks", and assuming that anyone who is pro- the existence
of banks in democratic society is also pro-mega-bank.

------
aneth4
One thing you learn about the press as you have a few experiences as an
"insider": they almost never get it right.

Reporters rarely have the time, intelligence, and information to research and
write an accurate report on every subject. There is no Bitcoin correspondant
for Bloomberg, just an overworked, underpaid English major.

------
jack_trades
So financial journalists have no idea how these things are made, used, or what
place they have within transactions, economies, etc. and you expect masses of
people to eventually feel comfortable with the stuff?

The fear that is engendered by a non-tangible, value-containing set of bytes
of data on a computer in the age of hacker doom-dom is quite likely the extent
of what you need to know about its foreseeable viability and should put the
current "value rollercoaster" into perspective.

How does the layman NOT lump the early adopters/hype pumpers in with the same
crowd vandalizing paypal and credit card companies? So these kids created a
currency to reject the system and they think this is the future?

It's like watching some unruly teenagers with a very large potato gun mounted
to their friend's back and saying... "This is the future of the postal
service. Buy stamps while they're cheap."

It's the emperor's new clothes. That's not a currency. It's barely a digital
promise to anonymous posters on 4chan. As long as there isn't anybody with a
strong incentive to pull the plug, this thing will continue to eat up every
online "watering hole." It's great for silk road, but spare us the hype
machine. The only people with incentive are adopters.

They shut that zeek's reqards down in NC and now everyone is hopping on the
p2p currency train. Start your own business! Invest in the peoples' coin!

------
tptacek
Does it make economics professors say stupid things, too? Because the first
Felix Salmon callout in this post, the one followed by "blah blah blah", also
happened to be Tyler Cowan's "best sentences I read all week".

I guess we can debate whether Tyler Cowan is paid to think --- or, as Moldbug
puts it, even _allowed_ to think --- and so on/forth in No True Scotsman style
until we've narrowed the conversation to "hackers" who think exactly like we
do.

------
tlrobinson
Here are a few recent articles I found to be relatively accurate and fair
(several of which have already appeared on HN):

[http://blog.priceonomics.com/post/47135650437/are-
bitcoins-t...](http://blog.priceonomics.com/post/47135650437/are-bitcoins-the-
future)

<https://medium.com/money-banking/2b5ef79482cb>

<https://mises.org/daily/6399/The-Moneyness-of-Bitcoins>

[http://www.forbes.com/sites/timothylee/2013/04/03/four-
reaso...](http://www.forbes.com/sites/timothylee/2013/04/03/four-reason-you-
shouldnt-buy-bitcoins/)

[http://jpkoning.blogspot.com/2013/04/bitcoins-plunge-
protect...](http://jpkoning.blogspot.com/2013/04/bitcoins-plunge-protection-
team.html?spref=tw&m=1)

~~~
alwillis
This BusinessWeek article is also good:
[http://www.businessweek.com/articles/2013-03-28/bitcoin-
may-...](http://www.businessweek.com/articles/2013-03-28/bitcoin-may-be-the-
global-economys-last-safe-haven)

------
slinkyavenger
I didn't know horribly-written opinion pieces like this could make it to the
top of HN.

~~~
brown9-2
We seem to be in a midst of a bitcoin article bubble.

~~~
danielweber
If you could seize 51% of the computer power of HN readers we could make them
disappear.

------
ontheinternets
I think this has been posted on every bitcoin discussion so far:

[http://www.econlib.org/library/Enc/CompetingMoneySupplies.ht...](http://www.econlib.org/library/Enc/CompetingMoneySupplies.html)

[http://www.econtalk.org/archives/2011/04/andresen_on_bit.htm...](http://www.econtalk.org/archives/2011/04/andresen_on_bit.html)

so here it is again

------
ruswick
This is true of any remotely complex process or occurrence. The proletariat is
dumb, and the news media that caters to them feels compelled to dumb their
work down so that it can be read by the most technically-naive person. As a
result, the threshold for what constitutes adequate reporting is lowered.

99% of people don't give even a remote shit about Bitcoin, nor are they likely
to ever purchase any; and, if they do, they will never pay even a perfunctory
thought to the cryptographic and economic implications. Because of this,
writers have little incentive to pour effort into considering and/or
researching the actual nature of Bitcoin.

If they can get away publishing ill-though out arguments and include outright
falsehoods in their writing, why would writers opt to incur more work by
attempting to write a thoughtful, correct piece?

If the market will tollerate lazy writing, laziness is what the market will
get...

~~~
jeremyjh
It isn't just mainstream journalists though. Frankly, I can't remember another
topic on HN about which so many low-quality tech blog articles were promoted
to the front page.

------
andylei
tldr: some things that people have said about Bitcoin are innacurate,
therefore "financial journalists are way over their heads here, their
“sources” are useless, and you will learn less than nothing by reading them"

------
aj700
"could not be stolen through any amount of force". If bitcoins are practically
unstealable/unconfiscatable then that'd be neat, but they aren't. They are
stolen in vast quantities all the time by malware. If the government wants
your bitcoins badly enough it can run a tank into your house, use force to
compel you to tell them your password, torture you etc. You're not screwing
the state over, you're giving it an incentive to take a hostile interest in
you. Did anyone download the clients anonymously? Not many did. They will
know.

