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EFF no longer accepts donations in Bitcoins (bitcoinmoney.com)
148 points by mike_esspe on June 2, 2011 | hide | past | favorite | 118 comments



I'm torn between liking stories that shine a skeptical light on the bitcoin fad and being appalled at how much coverage bitcoin gets on HN. The "hiring" thread for June was pushed off the front page in less than a day, but we've had, what, 5 bitcoin stories hit the front page in the same time period?

I think it's time for some REPL intervention.


It's so tedious. I would have literally no idea that Bitcoins existed if it weren't for the flood of articles on HN. I don't understand - who are all the people who find this interesting or relevant?


It's at the intersection of a lot of things that people here find interesting. It's potentially a way to make money (some say ponzi scheme), it has a tech component, there's a anti-government component, etc... so I do believe a lot of people here do care about it. I mean I keep reading the damn articles too...


I think the kernel of contributors with a good-faith interest in bitcoin is smaller than you think it is, but either way: if bitcoin is getting multiples of the attention that the hiring thread is, I think most reasonable HN people can agree that it's being overrepresented.

Lawyering over the site guidelines here isn't productive, since nobody (that I've seen) is arguing that bitcoin contravenes them directly.


Do you think the "reasonable HN people" who can agree bitcoin is overrepresented are the same ones giving it all the attention?

I for one find bitcoin far more "intellectually gratifying" than the hiring thread, which, with great respect to our host, has no interest for me.


I wonder what percentage of HN readers are like me and just skim through the RSS feed every day. The top of the front page and the worthless submission make it into my Google Reader, and I read what I find interesting. Which is great, but at the same time I don't participate in upvoting articles. I would guess the more passive users would be more interested in the hiring thread rather than extremely trendy topics like bitcoin. But that's the tradeoff. I mostly consume rather than contribute, and therefore just take what I get.


The hiring thread is really only relevant to people looking for work, whereas the Bitcoin stuff, even if (imo) overhyped, is relevant to everyone. So I wouldn't argue it is overrepresented.


It's the perfect HN politics thread, practically speaking.


It is topical.

There are good, solid reasons to believe that today's monetary and fiscal policy is dangerous and wrong-headed (I say that as a liberal closer to Paul Krugman than Ron Paul but sympathetic to some points made by each).

The trouble is that those seeing the current problems look for pig-in-poke solutions rather than getting a solid understanding of what's happening.

I would strongly recommend a critical reading of Doug Noland's Credit Bubble Bulletin, Paul Krugman's blog and at least a university level text on Money and Banking. Also Charles Mackay's classic Extraordinary Popular Delusions and the Madness of Crowds also merits a look.

Many people have an emotional reaction to money. This emotional reaction is part of what can make something "money-like" but if one wishes to understand what's going on, one needs to get beyond one's immediate reaction.


That's a strange thing to say, because Krugman thinks they aren't 'printing' enough money. He says this repeatedly. (He also thinks there are additional, more radical changes that would be more effective, so he can come off as critical of QE because it's not enough.)


You could simultaneously endorse Bitcoin (as a powerful, stabilizing, liquidity-providing, trade-enabling force in the global economy) and at the same time support heavy-handed expansion of local currencies like the dollar (as a powerful, stabilizing, liquidity-proving, trade-enabling force in the local economy). Maybe the world is better with multiple currencies with different properties.


I think it's good to get opinions from solid economists on the right and the left.

And what I would say about recent US government policy is that it has been bad when measured by either Keynesian OR monetarist yardsticks.

This is essentially because the massive growth of US financial obligations has gone ultimately to bailing out the large financial institutions rather than to any Keynesian job creation scheme. So essentially you have a situation where neither the free market nor government do anything to create jobs.

Krugman can legitimately say the Federal budget deficit as such is not high. What massively inflating is the "other obligations" - Fannie Mae bonds, student loan bonds, etc. Here we have massive "inflationism" (as Doug Noland would term it).

Krugman is a partisan so he's glossed over the unneeded spending of the bailout in later commentary but he did say "The longer we live with zombie banks, the harder it will be to end the economic crisis."

IE, the bank bailout is a massive money-hole where banks have become "zombie" entities that are neither "private" in the sense of being disciplined by the market nor "public" in the sense of having any obligation to the public. The present situation is one where the money that could go to either a stimulus or a tax-cut is shoveled to these "zombies" instead.


I'm not sure that a deficit of 12% of GDP (all of which has been monetized for the last half year) is "not high." If this deficit spending were actually going to financial institutions and disappearing (which is happening with much of the fed's lending of late, but primarily because the few borrowers who are qualified are not enamored with leverage at the moment), you would have a point, but our government is spending that money as it normally would: 58% of federal spending is entitlement programs, 19% is for killing people on the other side of the world, and the remaining 23% is sprinkled among programs that are each too small to be worth mentioning.


"If this deficit spending were actually going to financial institutions and disappearing (which is happening with much of the fed's lending of late, but primarily because the few borrowers who are qualified are not enamored with leverage at the moment), you would have a point..."

The Fed printing money and giving it to the bank adds to effective over-all spending and so effective deficit spending is going to the banks.

You might idly slice the size of the official Federal deficit any way you wish - high by comparison to earlier GDP ratios, low in comparison to the GDP ratios of other countries (Japan has a public debt of ~100% of GDP - funny how they have the world's highest ratio here despite their huge trade surpluses).

But this slicing doesn't mean much with the Fed and Fannie Mae's activity involving massive shoveling of money into the housing and other sectors.

And it should be clear it doesn't matter if this happens "primarily because the few borrowers who are qualified are not enamored with leverage at the moment". Indeed, the whole point is using money to prop up failing sectors makes it more likely that fewer in the private sector will want to borrow for actual productive investment.

I would agree that Krugman's pushing for larger deficit misses the elephant in the living room that is the bailout. But hey, he complained once and that's more than many did.

Like I said, this is neither Keynesianism nor Monetarism as such but a state "captured" by the various industries which suckle off it (especially defense, financial services, education, health care but also others).


You might idly slice the size of the official Federal deficit any way you wish - high by comparison to earlier GDP ratios, low in comparison to the GDP ratios of other countries (Japan has a public debt of ~100% of GDP - funny how they have the world's highest ratio here despite their huge trade surpluses).

I don't think it's fair to compare the public debt of one country to the annual deficit of another. It is akin to saying "It's alright that I put $8000 on my CC last month because Bob down the street owes $70,000." While Bob may be in dire straits, he probably didn't accumulate all that debt in the last 8 months.

Trifles aside, It's refreshing to see someone with a very different perspective from my own who realizes what is going on.


Yes that would be an obvious mistake but I simply mis-typed.

Public debt to Public debt, the US is not notably high on relative to other industrialized nations.

See: http://en.wikipedia.org/wiki/List_of_public_debt


Japanese debt is mostly domestic, unlike most countries who have sold bonds to a lot of different people, largely china.


I'm afraid I just find it a little bizarre that Keynesian economics is considered in some way "left", or partisan. It's really just based on observation, and does not endorse any radical redistribution of wealth - it's designed to encourage growth and minimize recession. Right-wing economics is very real, however, and seems to be based more on a kind of moral outrage against the very notion of taxation than any empirical measure. And it seemed to be working - Clinton and Blair endorsed the very assumptions of this approach - but is looking somewhat tattered now. Has Keynesianism ever been shown to have failed? I've not seen evidence of this.


> Has Keynesianism ever been shown to have failed? I've not seen evidence of this.

What evidence would you accept? How does one falsify Keynesianism? High inflation? A bearish currency? High unemployment?


Yes - high inflation (i.e. too high, not 5%), substantial currency devaluation (not hyperinflation but worse than a mere annoyance), and especially high unemployment - higher than we have now under the market-focused orthodoxy. But it needs to be compared to a useful control. For example, if it's limited to the 1970's, it would be hard to isolate from the impact of the oil crisis. And if it's limited to the US/Britain, you need to explain why the high-spending tiger economies can be discounted.


I don't understand the hate towards bitcoin and bitcoin news stories.

Regardless if this implementation succeeds or not, the idea, the theory, the economics and the politics behind bitcoin are highly interesting.

Bitcoin is perfect hacker news in my view.


Hiring thread. Pushed off front page. By bitcoin stories. Issue here: not complicated.


I'm not looking for a job right now, nor am I soliciting for applicants. How many people here are? If that number is lower than the number of people interested in Bitcoin, then I don't see the problem with the hiring thread falling off the front page quickly.

HN is growing. As much as it might be nice if it strictly followed the interests of the original visitors/contributors, it's not a reasonable expectation.

Meanwhile, I downvoted all posts in this meta-discussion (if you don't like a posting, just flag it and move on -- like the site guidelines tell you to do)... and yet here I am, participating. Sigh.

(For the record, my interest in Bitcoin-related articles has waned, but I could see how it'd still be notable to others.)


The hiring thread was pushed off by all the non-hiring-thread articles on the front page, was it not? Or does the front page selection algorithm do fascinating things which made only the bitcoin stories responsible?

If the thread can't compete, why is the solution penalizing Bitcoin stories?


My perception is that if you did the histogram over thread topics yesterday, bitcoin would show itself to be overrepresented. You can do the legwork on that, you can take my word for it, or you can ask me to take your word for it that I'm wrong; all are fine options.


"Overrepresented" is a judgement call. You think bitcoins are overrepresented, but I think startup stuff is overrepresented. Neither of us is right or wrong.

(Disclaimer: I do not own bitcoins)


I hope I speak for many people when I say that startup stuff can't be overrepresented on The Site Formerly Known As Startup News.


Of course it can be, because as I already pointed out "overrepresented" is in the eye of the beholder. There is no empirical measure of it, its just an opinion.


Recruiters and recruiting threads are a plague wherever hackers congregate. At any given time, hiring is of interest to only a tiny fraction of people (mostly employers, not hackers), but it is of very intense interest to them. Although I sympathize with the job-hunters and job-offerers who are trying to connect, it's hardly a malfunction when their announcements get little attention.


The HN voting system is working. Whether your favorite thread receives enough votes or not is not the issue. People are obviously interested in Bitcoin. I know I am.

I'm not sure if Bitcoin will become a new currency or if something better will come along and blow it out of the water, but I do know that it is highly likely that some crypto currency will be in use in the near future, Bitcoin or not. The reaction central banks and governments have towards Bitcoin will be interesting to watch. I'm going to sit back with a bowl of popcorn and watch the disruption.


Yes, I don't care at all about the hiring thread. So it's not like it's an unequivocable "this should be voted up 1000 times" kind of thing.


Thread you are more interested in pushed off the front page by a majority that is interested in something else. Issue here: nonexistent.


I think Bitcoin is fascinating, even though I believe it won't succeed and is quite possibly a big pyramid scheme.


I think Bitcoin is fascinating

I do too, for the same reason that the tulip mania in the Dutch Golden Age

http://www.businessweek.com/2000/00_17/b3678084.htm

or the South Sea Bubble

http://www.investopedia.com/features/crashes/crashes3.asp

are still fascinating. I've known about those failed investment strategies since childhood, but I still see fully grown human beings falling for strategies that are no more reasonable.


>The demand for investments caused IPOs to sprout out of everything, including companies that promised to reclaim sunshine from vegetables and to build floating mansions to extend Britain's landmass. They all sold like mad.

looks like supposedly "green" technologies like ethanol from corn are back again 300 years later.


It's more like a pump-and-dump than a pyramid scheme, I think.


It's funny, but as a pyramid scheme it kinda sucks. When the pyramid crumbles, everybody's left with a bunch of worthless bitcoins. At least in a ponzie scheme, the people at the top profit. A lot.


But if you've been mining bitcoins since the beginning, you probably have a lot. Now mining is no longer very profitable because more people are in on it; thus, it makes sense for the early adopters to convert their bitcoins to USD at Mt Gox. They make a load of money from the late adopters, and the late adopters are left with loads of worthless bitcoins (because eventually nobody wants them and you can't sell them). Sounds more like an MLM scheme.


Except they aren't selling much, which is why the USD value keeps going up.


This could be part of the scheme, however. This is a late phase of the scheme in which the early adopters are now fully stocked up on bitcoin, and are now hyping it very successfully. Late adopters want in, but the early adopters are not selling, and the miners aren't generating much anymore. Thus, supply is severely limited and the rate skyrockets, up more than 200,000% at this point. There is no telling what heights it will reach, but it's not over yet. At some point, the early adopters will start dumping, thus completing the scheme and leaving the late adopters with absolutely nothing.

I don't believe bitcoin is an evil planned-out scheme like this, but human nature may trigger this bubble effect.


This wouldn't be any different. In the end, by the time it crashes, the winners don't hold any bitcoins (almost by definition)


How exactly might it be "a big pyramid scheme"?


I'm no economist but my layman's understanding is this...

Early adopters have a huge incentive to convince more people to use Bitcoin. If Bitcoin is successful the value of Bitcoins is guaranteed to increase because there's a finite number of them. Because of this, naturally people will hoard their Bitcoins rather than spend them. At some point people will realize the price of Bitcoins was driven up by speculation, and it will collapse.

I'm not saying Bitcoin was intentionally devised as a pyramid scheme, but that's kind of what it looks like it's turning into.


You might be able to call it a speculative (digital) commodity bubble. And there's a possibility for this "commodity" to one day go "poof!" and disappear (gov't regulation, hackers, system failure, etc.) Only time will tell us those things.

But I don't see how you could call it a pyramid scheme.

http://en.wikipedia.org/wiki/Pyramid_scheme


Bitcoin does share some aspects with a pyramid scheme. Bitcoin owners have incentive to recruit into the Bitcoin network. Bitcoins aren't really good for anything until merchants willing to accept Bitcoins also join the system. And the gain of the early adopters does come from what the later joiners bring, in the form of their goods and services that they exchange for Bitcoins.

I guess where Bitcoin diverges from a pyramid is that there's no chain reaction of recruiting. Once a user spends a Bitcoin, it's done; he doesn't stand to continually gain further from what the Bitcoin recipient continues to do or from anyone else the recipient brings into the system.


Just so be clear... How exactly does this differ from any monetary system out there? A currency is not accepted until a major of people approves it. Government or not, "money" is and will always be something that human kind has invented, it does not contains any real value, it just makes it easier to trade goods.


Bitcoin marketers invariably use formal analogies to suggest that Bitcoin isn't a scam. "The early adopters benefit just like in Google, so there can't be anything wrong with that" or "If Bitcoin is a pyramid scheme, then US dollars are as well."

The problem is that these analogies neglect all context and substance. Just because some schemes that benefit early adopters aren't scams doesn't mean that all such schemes aren't scams. Just because not everything called a "currency" isn't dishonest doesn't mean that this one isn't being marketed dishonestly and without regard to the people who will lose money as a result.

What's different between Bitcoin and gold? Bitcoin has very limited history, whereas gold has a much deeper history. Gold doesn't face existential security problems; Bitcoin has faced security compromises (such as an integer overflow in the block chain) even in its short history, and these compromises have had to be corrected using out-of-band mechanisms. The Bitcoin market is tiny, subject to market manipulation, and operates through unregulated and probably illegitimate exchanges. Finally, people buy gold without most people who own it spending a good chunk of their time promoting it dishonestly to others.


Some people called it a scam, I think it could be a bubble, but a pyramid scheme it most definitely is not:

A pyramid scheme is a non-sustainable business model that involves promising participants payment, services or ideals, primarily for enrolling other people into the scheme or training them to take part, rather than supplying any real investment or sale of products or services to the public. Pyramid schemes are a form of fraud. (Wikipedia)


It's not a traditional pyramid scheme, but I see a lot of similarities between that description and the current state of Bitcoin.

promising participants payment, services or ideals

There's an implicit promise that if Bitcoin gains popularity the value of Bitcoins will increase.

primarily for enrolling other people into the scheme or training them to take part

If you take part by purchasing Bitcoin there's a huge incentive to get other people involved in Bitcoin.

rather than supplying any real investment or sale of products or services to the public

There are very few services/products you can actually buy with Bitcoin.


But you could also compare it to investing in an early-stage startup. If the company you invest in gains popularity the value will increase. If you invest in the company there's an incentive to get other investors involved, as the more people wanting in on the action, the higher the valuation will go. And at time of investment, said company isn't actually generating any revenue, it's all just about future expectations.

Hence I would argue that it can be argued that Bitcoin is a bubble (i.e. equivilent to investing in a startup that is sure to fail) but not a pyramid scheme.


OK, let's take those criticisms and re-apply them a bit:

--

It's not a traditional pyramid scheme, but I see a lot of similarities between that description and the current state of buying/selling stocks.

promising participants payment, services or ideals

There's an implicit promise that if a stock gains popularity the value of the stock will increase.

primarily for enrolling other people into the scheme or training them to take part

If you take part by purchasing stocks there's a huge incentive to get other people involved in the stock market.

rather than supplying any real investment or sale of products or services to the public

There are very few services/products you can actually buy with a stock certificate.

--

Bitcoin is a bubble, but not necessarily a scam.


You're making the mistake of thinking of stock as a speculative instrument only. It's a legal claim upon the economic output of an enterprise - the speculative element is secondary to that.

Even if no market exists to resell a stock, if the company is operating it still has fundamental value, whereas something like bitcoin has no value if nobody else is willing to trade you something.

Given that, I don't think your comparison holds. Yes, a speculative market exists in stocks (and generally, anything else of value.) But the value of a stock is not based purely upon the speculative market that might exist around it - at its root, it has an underlying fundamental value that is not driven by market demand.

Similarly, lots of folks speculate in commodities, but at the end of the day, if you can't sell oil or steel, you can use them to produce other things you can sell.


>But the value of a stock is not based purely upon the speculative market that might exist around it - at its root, it has an underlying fundamental value that is not driven by market demand.

Market demand for the instrument, that is, right? :)

I don't know -- I see a difference here, but it looks only nominal.

If I purchase shares in a privately-held small business that hits tough times, my claim on the output of that company can essentially evaporate -- they won't be paying dividends as no profit exists, I might not be able to sell the stock because no market exists for it, and once the company goes belly-up they pay the bank and lenders before shareholders get anything.

I'm sure a difference exists; I'm no serious investor, so it's easy for me to not see it.


People also speculate in currencies.

You can argue that currency is a kind of stock in the "enterprise" of the sovereign printing that currency. But is there a qualitative difference between that and bitcoin?


Currency is not a "kind of stock". It is not a claim of ownership in an asset / entity or a claim on a future cash flow stream.

It is in fact the opposite of a claim on the printing operation of the issuer, given that the more currency is printed, the less valuable the currency you hold becomes.

If nobody will accept a currency, it does not continue to have value, because its value is based upon what someone is willing to trade you for it.


I think it's an idea that appeals to a certain demographic of people who are very passionate about their interests. It actually reminds me of the Ron Paul phenomenon circa 2008. He was an interesting yet largely inconsequential politician... but his supporters were everywhere on the Internet.

It also doesn't hurt that lots of people stand to gain financially from bitcoin hype.


There should be a pithy name for this effect, the tendency of small groups of committed supporters to dominate internet conversations. I am reminded of this "100 Best Novels" list (the reader's choice version, on the right):

http://www.modernlibrary.com/top-100/100-best-novels/

in which the top ten contains four books by Ayn Rand and three by L. Ron Hubbard.


I find the economics dubious, but the technical aspects to be very interesting.

In particular, the use of proof-of-work chains to create an eventually-consistent global view of a distributed database is quite interesting, and I think there's applications outside of currency.


I suspect many articles are submitted and upvoted by early adopters of bitcoin who stand to profit off any increase in the adoption of bitcoin.


Except that most of the articles are critical of bitcoin, making others less likely to adopt it, losing those early adopters possible cash. Then again, the only thing worse than being talked badly about is not being talked about.


Complaining about bitcoin articles on HN is like complaining about Ron Paul articles on Digg.


People who want to buy drugs and weaponry over the Tor network.


I have no evidence for this whatsoever, but my hunch is that there is a significant amount of gaming and astroturfing on HN by people who have a vested interest in more bitcoin coverage.

The current volatility of the bitcoin economy means that every single story on HN increases the value of their bitcoin "investment".


Naw, the voting anti-spam algos on HN are pretty good. I have a slight vested interest, but I don't really want bitcoins to go up any more for a while, I'd rather it stabled out and people started building real apps with them. With the growth rate of the currency as it is, it is hard to justify building a BTC app when I could just contract out at $100/hr and then convert that into bitcoins.


Numerous other trend stories have been manually suppressed by HN's operators this year. The argument that a story is probably valid because HN's "anti-spam algos" didn't catch it probably doesn't hold water.


Well that just means their vote ring detection system needs improving. If there really is 100 people that have a vested interest in Bitcoin all collaborating on IRC or whatever and they are the majority of the ones pumping up the story then this seems trivial to catch.


Yes, it needs improving by attaching a strong negative weight to any story about bitcoin, perhaps until the next HN reboot.


Because tptacek says so? No.

Look at the distributions of the types of people that vote up the story, look at the differences in the average number of upvotes once it hits the front page, look at how many people flag it, but if you need to hard code things that legit users upvote you are basically imposing your view of what is good content over thousands of other people. This isn't a Viagra ad, this is a cryptography based, near-zero transaction fee, distributed, open source, online currency.

No wonder it always hits the front page, any of those five categories could hit the front page.


What is the difference on the internet between 100 "people" and 100 "user accounts"?


(I'm a data guy)

You just throw simple stats at the problem. You look at what a typical distribution of a normal submission looks like (30% of users < 60 days old, 20% of users < 100 karma, etc) and then you negatively weight submissions which breach the pattern by a certain sigma.


Generally, the number of IP addresses involved.


You only see bitcoin stories that float to HN, not stories about bitcoin that got submitted and got only a few votes, at most.

My bitcoin stories sometime got voted up to get to the front page for a brief time but they often drop out the front page fairly quick.


Quite possible, but there's been a number of negative articles on Bitcoin as well, including this one.


I'm not really voting up the bitcoin stories, but I'm reading them, for me it's like watching a car crash in slow motion.

You can't help but sit there enthralled!


I think we shouldn't overlook that Bitcoin has some interesting aspects to it that make this a very different and peculiar kind of car crash.


I don't think we should overlook that bitcoin has a built-in feedback mechanism that acts to keep bitcoin stories on the front page.


As a compromise I'd be willing to accept a moratorium on all bitcoin-related articles up to "Bitcoin Post Mortem", whenever that may be.

I have to admit, however, I can't resist commenting on the bitcoin articles when they show up. It's the classic "Someone is wrong on the internet!" reaction. Maybe those of us who aren't zany bitcoin-boosters need to make a pact to stop commenting on these articles and hopefully once robbed of controversy they'll go away.


Not really. It's the same as any Ponzi scheme. A promise to early adopters that they'll get rich; initial returns seem to prove out the promise; a giant wave of hype drives a steady stream of suckers into the deal; the existence of the hype is sufficient justification for further hyping stories, providing secondary waves of publicity; the creators quietly cash out their positions and retire to small Caribbean islands; eventually others start trying to cash out; this creates a reverse hype wave ("sell your bitcoins now before they are worthless!"); and wooosh, in a week bitcoins will indeed be worthless. If it were a real currency the creator might face jail time but in this case the creator may well get away with it. The creator can plausibly (notice I did not say truthfully) disclaim any knowledge of how the scheme would unfold.

It is interesting from a technical perspective but from a societal/historical point of view, not at all. This same cycle has played out infinite times in human history and will play out infinite times in the future. People always manage to convince themselves that "this time it's different".


so you are predicting the price against the dollar will fall?

it has risen and fallen many times already

a huge crash is inevitable and unavoidable because the market is thinly traded and very psychological at the moment

but when all is said and done, the bitcoin network will still be there, people will still have their bitcoins and will be able to transfer them across the globe is a short amount of time

i don't have a crystal ball, i can't tell you if bitcoin will become a successful currency, but you should realise that what is going on at the moment is a sideshow and doesn't reflect bitcoins true potential

a more constructive comment from you might have proposed a "fairer" system of minting than rewarding early adopters...


risen and fallen? Look at bitcoin to dollar over the last few years. A very worrying graph for anyone still holding bitcoins.


I don't think you exactly understand the definition of a Ponzi scheme. It might well be a bubble. But Ponzi? No.


Not quite ponzi. Somewhere between a Ponzi and a bubble -- economically it's a bubble, practically it's a Ponzi.

Most bubbles start by accident -- this one was carefully engineered.

How do you engineer a bubble? First you invent an asset. But if it's an asset that only you own then nobody will want to believe it's valuable. So you make it possible for the first round of early adopters to get it for free, by "mining. The first adopters talk the second adopters into trying it too (they can still get significant amounts by mining) and... well, you know the story. You also wrap it in some political anti-fiat-currency anti-bank anti-Fed anti-government anti-whatever pro-cryptography political wrapping to make it appealing to a certain constituency. But the key thing is to give out the "asset" for free at first, and to a lesser extent as time goes on, to incentivise early adopters without requiring 'em to actually put their hands in their own pockets. It's quite brilliant, the best memetically-engineered scam since Scientology.

And now I'm really getting tired of discussing bitcoin. I think I'll write a big long blog post in the form of a FAQ, submit it, and never mention bitcoin ever again.


The amount of people who said Bitcoin is a bubble is so great and so constant that I commissioned a comic about Bitcoin Bubble just so I can gain traffic by linking to that comic when somebody made that sort of statement. http://bitcoinweekly.com/articles/comic-reaction-after-drama...

The ROI is fantastic.


Your comic seems to be missing a last panel -- y'know, the one with the punchline. Did you commission it from the writer of Marmaduke?

Is it possible that the number of people saying that bitcoin is a bubble is so high because bitcoin is a bubble? I mean, I'm not sure how anyone could even deny that bitcoin is a bubble -- the best you can hope for is that like gold it's a bubble that never ends. There's only been one of those in human history, though (two if you count silver as well), and it has at least a seven thousand year head start on bitcoin.

Anyway, my response to your comic is this:

http://projectomniscience.blogspot.com/2011/05/aardvarks.htm...


is it possible that the number of people saying that bitcoin is a bubble is so high because bitcoin is a bubble? I mean, I'm not sure how anyone could even deny that bitcoin is a bubble -- the best you can hope for is that like gold it's a bubble that never ends. There's only been one of those in human history, though (two if you count silver as well), and it has at least a seven thousand year head start on bitcoin.

Is bitcoin a bubble? Not from what I seen concerning economic activities and what users report about themselves.

But can bitcoin fail? Yes. Is it 100% likely to fail? I think not. Is it a good idea to put in a few dollars as a hedge? Yes.

That being said, I am in bitcoin for the long haul, whether or not it ultimately fails, and possibly consequently lose all the value in bitcoin.


The people who put a few dollars in as a hedge are the exact people who are going to lose all their money when it collapses.

Well, they'll say, was only a few dollars.

Ultimately though, you've got got to wonder where all those few dollars went.


Your comic seems to be missing a last panel -- y'know, the one with the punchline. Did you commission it from the writer of Marmaduke?

I wrote the strip, or at least the concept. I commissioned it from an artist called Joey Dangerous and pay the guy in bitcoin.


I think you may have missed the point of the comment to which you were replying. What's the humor of the comic, in your view? I can't discern it myself.

It does seem to need a punchline. Perhaps a zoom out to a larger group of people saying "Bitcoin Rally!" sitting on piles of Bitcoins that they're compulsively counting.


Allegedly, the Iraqi Swiss Dinar is another example of a bubble that didn't crash (it ended in an orderly fashion when its holders were bought out).


I prefer this cartoon (by Kal, the Economist's cartoonist. He says this is consistently his best seller): http://shop.kaltoons.com/collections/prints/products/buy-sel... (click for the large version)


Incidentally, I am writing an article about bitcoin being a well-engineered memetic machine and why it helps bitcoin succeed.


The limited inflation and eventual deflation aspects make it more interesting then tradictional alternate currencies. The world is not going to get flooded with an unlimited supply of bitcoins just because there's more demand.

How is gold not a ponzi scheme BTW? Ponzi schemes don't run for 3000 years.


Bitcoins might turn out to be the modern digital equivalent of the Tulip Mania [1], a short span of intense speculation with tulip bulbs in 1636, complete with short selling and outrageous profits to be made, which suddenly collapsed in February 1637.

[1] http://en.wikipedia.org/wiki/Tulip_mania


Bitcoins are a bubble commodity just like anything else that rapidly rises almost entirely because of speculation. In a sense the Bitcoin market is a lot like the current gold market, both are enjoying a massive boom fueled by demand for the product without any commercial reason to back up that demand, and the inevitable result of this is that values will at some point begin to plummet. The difference between Bitcoin and gold though is that even after gold plummets it will still retain highly respectable value, whereas when Bitcoin falls it's entirely possible for it to be completely devalued as a product.


The value of bitcoin is that it can be traded, easily, and can't be easily faked. Gold can't be easily faked, but it can't be traded so easily.

For a bitcoin to be completely worthless rather stretches the imagination. At a minimum they are a sort of geeky collector's item and inherently limited in supply. They also cost next to nothing to store.


Bitcoin, to me, is one of the ten most interesting technologies that I've seen in the last decade - I've been discussing and waiting for a viable crypto currency for over 15 years, and it's finally arrived!

I think for a lot of people, though, Bitcoins are what twitter was to me a year ago. I just didn't get what the big deal was, and couldn't understand why I kept seeing so many topics on the story.


While I don't think Bitcoin will achieve anything of substance (aside from adding to my bank account due to forex trading while the hype is going), I think it's quite interesting in and of itself. That said, I don't think the problem is that there are Bitcoin stories on here, but that the stories on here have been really, really uninteresting. Why aren't we covering real issues, rather than "someone misunderstood how Bitcoin worked and lost $X"?


I agree. What's even worse, in my opinion, is that the discussions end up repeating the same points over and over again. It seems to me to be an analog of the well-known phenomenon of "bike-shedding."


While I think the whole bitcoin thing is profoundly silly, I don’t think the comparison with the hiring thread is fair. Bitcoins provoke discussion between people who think bitcoins are sticking it to The Man and people who think, well, that they’re profoundly silly. On the other hand, if I post “startup XYZ in Boston is hiring”, what is there to say in response? “No, they aren’t”?


I'd support the ban on bitcoins just to stop hearing about it on HN every 5 seconds.


Maybe having it so when you submit a story you can apply to have it "pinned" would make sense for stuff like job postings.

Don't need to demote Bitcoin, or other subjects people want to hear about, just need to promote special features.


I love this comment: "UPDATE: The EFF is still unofficially accepting Bitcoins, but their address has changed to: 16g5mes4kW1gpX9Vp1F5VG7HXqN8ySar9EI've just donated a few BTCs to help them protect the freedom of the Internet - please help them too!" Nice one "Rebecca S. Reagan"!


There's a website that shows you how much money you've received, from whom, and how much you have now? Wow, the public nature of bitcoin had never sunk in until I saw that.

It's like my wallet is open to everyone!


Using Bitcoin the way the EFF is using it (giving out a single address for all transactions) will result in anyone being able to see all funds received. The recommended way, however, is for each transaction to receive its own address. For example, clicking on the EFF's Donate button would then create an address that would be used only for that one donation.

One such innovation that takes advantage of a publicly visible blockchain is an online lottery. With a public transaction log, one can wager and know that the operator isn't cheating by not revealing all wagers. BitLotto, for instance just had a monthly draw. I know exactly how many tickets were bought because each wager appears in the blockchain. I can then know that the winning tickets was chosen fairly because I can replicate the algorithm myself. And I can know that the payment to the winner was made as that will appear in the blockchain as well.

Because nearly all the expenses of running a lottery are absorbed by the bitcoin network, these lotteries can be run profitably even when paying out 99% of the amounts wagered.

In other words, Bitcoin is versatile. When anonymity is desired it can be attained. When a fully auditable transaction register is needed, there are methods to allow that as well.

If instead you want an example of a payment network where your wallet is "open to everyone" see WingCash: http://forum.bitcoin.org/?topic=4232.0


You can create a new Bitcoin address for every single transaction you make if you wish.


Sure, but you have to transfer your money somehow, and it will be easier to track, let alone a huge hassle for you...


Not quite. Your wallet can have an arbitrary number of addresses. You can receive at one address, then send that balance out to a dozen different people using a dozen different sending addresses.


To do that, you still have to perform a transaction to transfer the amount from your recieving address to your sending address.


...no. That's not how it works. Your wallet has a pool of private keys. Addresses are the corresponding public keys. You can send or receive from any address you have the private key for (minor simplification, but doesn't affect my point).

There is no transaction necessary to send money from a completely new address, other than the transaction itself. All of your addresses point to the same wallet.


Each bitcoin is owned by the public key that it was last sent to. You can't send it from a different key - it won't be accepted by the network. The public key continues to own it until a transaction signed by that public key is accepted by the network. Read the whitepaper.


I'm not a big fan of bitcoins, but if there's anything I would want to buy with them, it'd be a donation to the EFF. Somehow, that just seems to fit together in my mind.

I hope they review what they need to and decide to put the donation link back.


"The U.S. Supreme Court’s Citizens United ruling which allows anonymous spending in the campaign finance environment and its impact on elections may be one of the issues triggering this review by the EFF."

Sorry, but what does that have to do with it? The ruling is a 1A issue.


all those who naysay - why not yasay or say nothing at all?

i get a big impression that all(most) would at least agree what we have in place now is more flawed than bitcoin. corruption is but a moral decision away (to those in the right positions). politics are slimy, and rub off on current currency models. violence has strong leverage over societies current credit symbol (crack-head in dark alley - good luck punching your way into my SSH box on the other side of the world. and if you do, ill just make a transaction, rendering my wallet you stole useless).

whats holding you back from going all in? hmm, IF ONLY everyone would put some faith behind a new system, and accept it as the new standard. that system could grow, and overtake the current shady one in place (or at least parallel it). it could become as common as visa, accepted everywhere.

ahhh, but not everyone will adopt this overnight - it will be a long slow road. don't look for the overnight solution. if i told you bitcoin would overtake the worlds currencies in 100 years, would it be worth taking a slight risk now? what have we got to lose? a shitty status quo?

FULL DISCLOSURE honestly, i don't have any bitcoin ...yet. and i say all this by ignoring the fact there seems to be at least a slight whiff of scam afoot... perhaps a few admins with access to a few petaflops are laughing away printing these bits like water... as long as that's not the case, wellll, GO BITCOIN! but even GIVEN that scenario, it would be just as easy (if not easier) for many more people to print counterfeit paper. but at least there is a maximum amount that can be scammed in bitcoin, and then that's that - bitcoin could live on and fulfill its purpose.


It's kind of funny to watch people trying to justify not having bought in earlier, with the logic that it's going to crash. Good old sunk costs fallacy.

Yeah maybe it'll crash one day. Maybe it'll go from $1000 clean down to $100, destroying much of the world economy (i.e. that part that was backed by speculation rather than real stuff to begin with) in the process.


The entire value now is backed by speculation rather than "real stuff." The widely repeated "market capitalization" figure vastly overestimates the actual value given and obtainable for Bitcoins, and the price does not even closely reflect that value. The price is simply the result of what game-theorists call a "beauty-contest" game: it's based on baseless estimates of the value that others will assign to it in the future.

Alone, that's just speculation. Backed by a massive marketing push that doesn't convey the right message to the public, it's functionally indistinguishable from a pyramid scheme.


Two negative parts of BC, 1 - A group of nerdy/freedom-chasing (that's a complement) say no to it without any reason (such as legal advice on it), 2 - Read the first comment of the blog post.


Well that didn't take long.


They're still accepting pinecones, confederate dollars and unicorn horns though, right?




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