Hacker Newsnew | comments | show | ask | jobs | submitlogin
How Dogecoin changed my perspective on cryptocurrency (steveklabnik.com)
224 points by steveklabnik 434 days ago | comments



I was in the early days of Dogecoin and it was fun BECAUSE it was worthless. Give out 10k on a lark for a funny picture, etc.

Now that's it's being seen a real story of value, rather than a tool to send a bit of karma around... it's kinda losing the fun. Serious investor/speculator people are buying and selling, arbitrage between exchanges, absolutely massive GPU farms that out mine anything regular person could get.

I guess that's what an efficient market does. Reminds me of the auction house in Diablo 3 where the developers finally realized that an efficient market drained all the fun out of playing the game.

I still have a bunch so one part of me hopes it goes up in real value but the other part of me hopes it stays worthless so it can continue to be used the way it was at the start.

-----


Well we could always make a new worthless currency. And set it so it intentionally inflates infinitely so that this can't happen. Zimbabwe-coin maybe.

-----


Dogecoin actually will inflate indefinitely by 5% a year. Mining will never stop.

-----


Really? Wikipedia claims there's a finite limit.

-----


>Well we could always make a new worthless currency. And set it so it intentionally inflates infinitely so that this can't happen. Zimbabwe-coin maybe.

Yeah that might work. If you could somehow decay the value of held currency to encourage spending directly that would be even better though I can't imagine it being feasible.

-----


> If you could somehow decay the value of held currency to encourage spending directly

Freicoin has a demurrage fee, based on the theories of Silvio Gesell:

http://freico.in/

https://en.wikipedia.org/wiki/Silvio_Gesell

-----


Looking at http://en.wikipedia.org/wiki/List_of_radioactive_isotopes_by..., californium-253 has a nice 17 day half-life. I propose we make this our new value of currency.

-----


That reminds me of a suggestion by Charles Eisenstein in his book Sacred Economics - decaying currency, along with zero or negative interest. It would be interesting to see such a "funcoin"! It might not even have to decay that fast to fend off speculators.

-----


Interesting idea - can we make a cryptocurrency whose tokens have an expiry date, like the Zimbabwe dollars?

-----


I like it. Another idea I had would be to make the client show the balance multiplied by some derivative of network hash rate. Since network hash rate is pretty closely correlated to fiat exchange rate (through mining profitability) this might result in a currency that was more easy to reason about for most people.

(instead of a coin being worth 5 times as much as when you bought it, your wallet would contain ~5x as many coins, with the balance increasing and decrease with market volatility)

-----


I'll buy into a cryptocurrency as soon as I see one that doesn't have the extreme built-in deflation of bitcoin etc. With the cornucopia of alternates surely there should be one.

-----


I was in the early days of Dogecoin

It launched two weeks ago.

-----


>>I was in the early days of Dogecoin >It launched two weeks ago

Yup.

-----


If you go back and read what people thought about money in, say, 1870, there was a time that the notion of purely paper currencies was widely held to be the same sort of absurd folly that cryptocurrencies are accused of exhibiting today. Yet, they eventually wound up conquering the global financial landscape. They got their start by being convertible into the prevailing forms of money (gold & silver), just as BTC relies on convertibility into USD now.

None of which is to say that BTC will necessarily be the next Big Thing in the world of currencies, but just that the ideas in the world of money which are widely held to be ridiculous today could very well be commonplace in 4 or 5 decades.

-----


I'm starting to think there's a place for something like Dogecoin as a teaching tool. Although, heh, certainly not if there are too many people take it so seriously on either side of any debate about its value.

Sure, limited liquidity on exchanges like Cryptsy suggests that DOGE currently holds some* "real value" at present. I think it's best described as a high score contest. You can't sell a million USD worth of Doge to anybody right now, but that's not a bad thing! If a crypto-currency-game with a cute mascot gets more kids and teens into learning about computer science and math, we should find ways to keep it innocent and fun!

I remember running Distributed.net as a teenager, just to see how much processing power in keys per second I could personally muster. It was exciting because it taught the power and limitations of parallel computation.

To anybody who has managed to search and hack their way to mining their first Dogecoin (or anycoin) using only source code and blogs? Well done!!! You should consider this a great computing merit badge and maybe even a hacker rite of passage.

I hope future generations will have the same opportunity, community and incentives necessary to participate in the excitement of a gold rush, even if they can only make a actual pennies a day doing it. Having fun while learning at a young age is priceless.

(Looks like about 1.5 million DOGE / 1 BTC?)

-----


I have actually thought the same thing. I think it makes for a really interesting teaching tool.

-----


Dogecoin's value lies in its absurdity. The absurdity makes it fun, people play with things that are fun, and people playing with things makes them grow. Unfortunately, Dogecoin is quickly attracting folks treating Dogecoin as something to "pump" using traditional multi-level-marketing-type propaganda. So there's an emerging culture clash within the quickly evolving Dogecoin community.

-----


Absolutely, this is a hot topic on the subreddit right now. See threads like http://www.reddit.com/r/dogecoin/comments/1tey1w/guys_we_nee...

-----


Here's an interesting observation I made.

You can instantly become both the world's richest and generous person. Take a friend that you trust, and sell him a piece of paper for $10000000000000 billion dollars. Suppose he agrees (even if he doesn't have that money right now, he/his descendants can pay it off over their lifetimes). Now you have $10000000000000 billion dollars of wealth. But, you decide to be generous and give $10000000000000 billion dollars to your friend, for free (which in turn allows him to pay off his debt to you).

Basically, two things happened simoultaneously: nothing, and a two-way exchange of $10000000000000 billion dollars. Which, if you report to the government, you both owe a lot of taxes now because you've had a lot of income.

-----


You've also massively increased GDP, good job!

Another interesting observation on subjective value; if you put your money into another currency, say bitcoin, and the exchange rates change, you have to pay taxes on that. You haven't actually produced anything or gained any income or even sold your bitcoins yet, just changes in exchange rates. Because someone somewhere decided it was more valuable to them.

It also depends how long the tax period is. For example bitcoins can increase in value one month and decrease the next. Over the year you will have gained nothing, but if you had to pay taxes every month then you lose a lot. If we had a super-efficient government that could tax in real time, you would lose some money every time bitcoins (or whatever) increased slightly.

If only taxes could go negative for assets decreasing in value.

-----


Taxes do go negative for assets decreasing in value. You may deduct any (realized) losses in value from your other (realized) gains. You may also deduct up to $3k/year of those losses from your income. If you have losses exceeding this amount, you may carry them over into the following year and deduct again.

*This is the US tax code, but I suspect many countries operate similarly.

-----


I think that's where the IRS' definition of "fair market" value comes into play. They'd only tax you on the market value of that piece of paper... which is $0.

-----


How large does a market have to be to "legitimately" place a value on something? If there exists one person who will pay you $10 for your used tissues, are they worth $10? What if there are 10 such people, or 100?

I'd say the market has to be 1 person, but I suppose the IRS has a different definition.

-----


Good point. But what if it's some weird personalized product/service that is worth a lot to one person but worthless to everyone else (like personal memories, photos, etc.).

-----


If I had before me a fly and an elephant, having never seen more than one such magnitude of either kind; and if the fly were to endeavor to persuade me that he was larger than the elephant, I might by possibility be placed in a difficulty. The apparently little creature might use such arguments about the effect of distance, and might appeal to such laws of sight and hearing as I, if unlearned in those things, might be unable wholly to reject. But if there were a thousand flies, all buzzing, to appearance, about the great creature; and, to a fly, declaring, each one for himself, that he was bigger than the quadruped; and all giving different and frequently contradictory reasons; and each one despising and opposing the reasons of the others—I should feel quite at my ease. I should certainly say, My little friends, the case of each one of you is destroyed by the rest. I intend to show flies in the swarm, with a few larger animals, for reasons to be given.

AUGUSTUS DE MORGAN A BUDGET OF PARADOXES http://www.gutenberg.org/files/23100/23100-h/23100-h.htm

-----


Personally I think Dogecoin is hilarious. I put together a guide for anyone that is interested in playing around with it.

http://cryptojunky.com/blog/2013/12/19/getting-started-with-...

Regardless the intention of Dogecoin, it seems to be working as an introductory cryptocurrency for a lot of new users. Can't tell whether or not it will stick around yet, but I've heard a lot of responses from users saying it is the first cryptocurrency they've wanted to try out.

-----


I think one of the reasons Dogecoin is working so well as an introductory cryptocurrency is because it's all being done for a laugh. A lot of the most vocal people in the other currency communities are out to promote their mining pools or attract money into their favorite alt-coin, which turns off newcomers by giving the whole thing an air of carnival barking.

-----


Agreed. I think unit bias might have something to do with it as well. People love receiving even 10 dogecoin, but the equivalent value in Bitcoin, which would be some small decimal, is not regarded as being as valuable (even though they're equivalent on exchanges).

What's more is that dogecoin's transaction fee is much much smaller than litecoin or Bitcoin, making it easier to make small transactions and give internet tips.

-----


For some reason, I have seriously considered mining dogecoin despite having no interest in obtaining bit, alt, lite or other 'serious' coins.

What attracts me seems like a good question ponder. I feel like I have a chance to actually 'find' some coins. Whether successfully mining coins is truly more likely, or whether the doge coins mined would actually have more value than whatever other types of coin I could find with equivalent effort, I have no idea currently.

I've always liked the doge of shibe meme... And the absurdity of doge coin is highly appealing.

It seems that indeed, probably the first currency I will learn to mine is dogecoin.

-----


The funniest part about Dogecoin was how the initial point was to make fun of bitcoins, but it rapidly turned to people taking it pretty seriously but pretending they aren't. Dogecoin mining pools, dogecoins for sale on ebay... they've become what they hate.

-----


I disagree, it was not making fun of bitcoins as a concept, but only satirized some aspects of the bitcoin community, and at the same time trying to make the cryptocurrencies to be more accessible to people. Moreover, part of the joke was that it very well could become real.

-----


Here we have more evidence of the miraculous ability of crypto currencies to turn unassuming computer programmers into economics experts. Let's take a look at some choice quotes.

There’s no inherent reason that a piece of paper has a certain amount of value. There is a subjective reason, though: namely, that a large enough number of people agree that USD is a worthwhile commodity. They believe that for a number of reasons, including that our Army will go off and fucking kill anybody who threatens to break the spell that makes everyone agree that USD are worth your time to accept.

That's a bunch of needlessly cynical and completely ignorant bullshit. We don't use the army to convince people to use dollars. That's quackery. People use dollars because the value is relatively stable, most goods for sale in the U.S. and exported from the U.S. are priced in dollars, people in the U.S. pay their taxes in dollars, oil tends to be priced in dollars internationally, foreign countries hold lots of dollars as reserves, in the U.S. you can have a bank account denominated in dollars that will retain it's value up to $250,000 even if the bank blows up(!), and so on. All of these are reasons people use dollars. It isn't something that's done at the point of a gun.

Everyone agrees that dollars are worth something, and we trade them all the time. They’re really easy to trade. I don’t know of any coffee shop near me that takes Euros, so even though 1€ is “worth more” than $1 USD, the Euro note I have in my backpack is basically useless for me to get some coffee. Economists call this property ‘liquidity,’ and it basically means ‘how easy is it for me to get what I want with this commodity.’

Stop calling currencies commodities. Currencies aren't like some weird subset of commodities. The reason Euro isn't useful in the U.S. is because there are no good reasons for it to be useful. I can't pay my taxes in Euros. Almost nothing for sale here is priced in Euros. If I try to deposit Euros in my dollar denominated bank account I will get a shitty FX rate from the bank. There is a lot of obvious friction involved in using things other than USD as a currency in the U.S. It has nothing to do with "liquidity."

Imagine a “Dogecoin VISA”, a credit card where I hold a balance in DOGE.

Great idea! Ok so now a bank has given me a certain amount of dogecoin denominated credit. Presumably that is backed up by dogecoin denominated savings accounts or whatever. People give their dogecoins to the bank and the bank lends the dogecoins to me. I spend my full line of credit but I can't pay it back. Suppose there are a bunch of crappy dogecoin debtors out there and none of us can pay back our dogecoin denominated debt. Now suppose the banks depositors get wind of the situation and all try to withdraw their deposits at once. Classic bank run. Depositors are all fucked because there is no FDIC insurance for dogecoins.

* TWTR -> USD -> BTC -> DOGE -> MYCOMPANY *

You lose money at every step along the way. You pay the spread for every transaction, and if banks get involved, you can probably expected to get fucked in all sorts of mysterious ways by the FX desk at some point too.

-----


The OP gets snarky about the reasons people think dollars are a viable medium if exchange; you get serious. But four of your six reasons why people use dollars kinda boil down to "people use dollars because lots of people use dollars".

He's realized that "money" is just a very complicated game we play with each other. Possibly this is the lead-in to realizing that society is also a complicated game we play with each other. Either way, dude just had his mind blown because a silly joke currency made him start to think about What Money Is for the first time in his life.

That said, yeah his lengthy chains of currency exchange are a bad idea. Which is why there are exchanges that let you buy and sell BTC (and other cryptocurrencies, maybe even DOGE - I'm not going to bother checking) in currencies other than USD.

And there are a lot more rules that need to be added around cryptocurrencies before having a DOGE credit card, or bank account, is a sane game to play. Don't be putting anything you can't afford to lose in DOGE, or BTC for that matter.

-----


And the author figures out it is all about liquidity, which it is. The reason you might take a Euro for something is that you can give it to your bank and they can convert it into something you can use for more things (dollars, rupees what ever).

I'm really curious though about what happens when someone walks up to Coinbase (as an example) and says "I've got 150,000BTC, please convert that into dollars for me at the market rate. What? No worries I'll just wait here. You can wire the dollars to this account here ..."

Let's assume that BTC were trading at $600 each, that is $90M dollars. Where does Coinbase get the $90M to cover their side of the transaction? Since nobody "bought" the BTC from Coinbase (perhaps some was bought there, but perhaps someone had just stolen it from the FBI or something) the counter party to that transaction (the person who gave dollars for BTC or gave watt-hours for BTC) their contributed value isn't at Coinbase, it is spread across perhaps a half dozen exchanges.

How does that even work at scale?

-----


It's not about liquidity. EURUSD is one of the most liquid currency pairs in the world. You can exchange millions or tens of millions in one trade at a firm price. That's liquidity at scale. In spite of that, Euro is still completely useless as a currency in the U.S. The liquidity argument is not a real argument.

-----


Perhaps we're not talking about the same thing. For any national currency, a bank has a way of resolving your request to exchange their currency for a local, more acceptable, currency. That is part of what the banking system does, and BitCoin eschews.

In my fictional example, if an exchange didn't have deposits to cover the conversion they would go to their currencies central bank for the $90M and then exchange the BTC they got with the BTC central bank for $90M and pay back their overnight 'loan' from the local currency bank. How does that work for an exchange with BTC? Do you clean them out of all the dollars they have? Then what happens to other people who have BTC deposited and want dollars out? How does that work? Do the later people have to wait until someone buys some BTC and puts in dollars? If you have two people waiting for dollars out, who gets the dollars you just got? First one to request to get out? best customer? first one you can satisfy their complete withdrawal?

Those questions are the "liquidity argument" if you want to call it that. Who pays the price for not being able to convert coins? The exchange? The customer? Lets say the price of BTC plummets, people head for the doors and want their money in dollars now. Does the exchange give them dollars that they won't recover? Or do they wait on all withdrawals until the number stabilizes and the pay out at that price? In the former the institution takes the risk, in the later the customer takes the risk.

I totally get the BTC market as an awesome way to exchange markers securely. I'm not sure how it gets to be a currency without something providing the banking function. (one of those functions being liquidity as the author points out)

-----


There are a lot of question marks in your comment and I'm sure some of them are meant to be rhetorical and maybe some aren't. Also you mentioned something about exchanges talking to central banks which isn't something that happens. Your fictional example is:

I've got 150,000BTC, please convert that into dollars for me at the market rate. What? No worries I'll just wait here. You can wire the dollars to this account here ...

That isn't the kind of thing you do at the teller window. That kind of liquidity doesn't exist in bitcoin (though it would be a cinch in other major currencies). At this point you are in need of a really clever broker to find you someone to take the other side of the trade at a price that doesn't totally suck. Though that probably isn't very likely...

You seem to imply that the exchange has some responsibility here that I don't understand. The exchange matches buyers and sellers at a price they can both agree on. If there are no buyers for what you are trying to sell, that's too bad but it isn't the exchange's problem. Go look on the CME product list and you'll see tons of contracts that are listed but have no bids because nobody is interested in trading them.

If you want to trade a shitload of a questionable thing then you just might find there's no bid. See also: people selling mortgage backed securities in 2008. The price for not being able to sell a thing is paid by the people that own the thing (especially if they purchased the thing with borrowed monies and they are forced to price the thing by marking it to the market).

I think maybe your question is just "What happens if you want to sell bitcoins and nobody wants to buy them?" and in that case the sellers are just screwed.

-----


I think maybe your question is just "What happens if you want to sell bitcoins and nobody wants to buy them?" and in that case the sellers are just screwed.

Nicely summarized. We are talking about the same thing.

That particular point is lost on a lot of people who are looking at Bitcoin. They see the surface aspect. Gee 1 BTC gets me $X and $X gets me 1 BTC. And from that they leap to 1 BTC is $X. That leap doesn't work because there is no equivalent of a market maker in BTC. I explain to folks who are wondering about BTC like this, "the more you want to trade the less they are worth, probably all the way to zero." So unlike Euros where 100 euros might be worth $132 and a million Euros $1.32M$ 100 BTC could be worth $X and a million BTC could be worth (small fraction x (10000 x $X)).

It is the difference between a currency and a collectibles market. Euros are the former, BTC are the latter.

Funny anecdote. My brother in law was buying property in europe and needed to do the transaction in Euros, prior to closing escrow he noticed that at the Hotel desk in the Caribbean where he was staying they had a better conversion rate than the bank had quoted him. The down payment was about $100,000 USD. On a whim he asked the desk clerk if he could change $100,000 USD to Euros and the clerk said, "Cash or check?" That one really through my brother-in-law for a loop!

I agree though, generally large foreign exchange transfers are scheduled things but they aren't all that complicated and seem to happen in the same 24 hr transaction window that other wire transfers do.

-----


>It is the difference between a currency and a collectibles market.

What, the size? I bet there are currencies from small countries that are harder than bitcoin to exchange without crashing the price. I don't think your distinction is a good one.

-----


If you have access to currency markets, absolutely, EURO/USD is incredibly liquid. At the point of sale, I do not have access to this market, so my Euros are not liquid. If they accepted credit cards (the shop I was at did not) and I had, say, a VISA that was denominated in Euro but which the bank would change into USD, my Euro would be liquid.

Another way to think about access: if I give a homeless man in the Mission 20 Euro, is that useful to him?

The actual form that you have the asset in matters.

-----


"at a market rate" doesn't mean "at a current price", but "at the amount people would be willing to pay".

Selling such a high position would lower the price of bitcoin on all the exchanges, until enough people would be willing to buy them.

So, for example, if you wanted to sell 100k BTC on MtGox in an instant, you could do that. It's just that the price would get down to around $120, and you'd get "just" $35M. (real numbers, via http://bitcoinity.org/markets/mtgox/USD )

As for Coinbase - as far as I understand, they don't hold a bitcoin position, but use internal trading and external exchanges. So both the money and the btc would come from people willing to buy Bitcoin.

-----


> Either way, dude just had his mind blown because a silly joke currency made him start to think about What Money Is for the first time in his life.

For the record, _I_ know this, it's that I think that _other_ people will start to think of this.

> Don't be putting anything you can't afford to lose in DOGE, or BTC for that matter.

Plus a zillion here.

-----


"That's a bunch of needlessly cynical and completely ignorant bullshit. We don't use the army to convince people to use dollars. That's quackery. People use dollars because the value is relatively stable, most goods for sale in the U.S. and exported from the U.S. are priced in dollars, people in the U.S. pay their taxes in dollars, oil tends to be priced in dollars internationally, foreign countries hold lots of dollars as reserves, in the U.S. you can have a bank account denominated in dollars that will retain it's value up to $250,000 even if the bank blows up(!), and so on. All of these are reasons people use dollars. It isn't something that's done at the point of a gun."

a) The value isn't stable. Dollars have lost ~90+% of its value since the fed was created. b) You pay taxes in dollars, because otherwise you'd be thrown in jail by force. c) Oil doesn't "tend to be valued in dollars". It's an agreement between the us and the saudis, to only sell oil in dollars, in exchange for protection. Leaders of other countries trying to change that, were suddenly found to be dictators, deposed and killed. d) Foreign countries hold dollars because otherwise they can't buy oil. e) The bank account doesn't hold it's "value" of 250k. It holds its nominal price.

Finally, because of the oil thing, the us has been happily printing dollars, and exporting its inflation to the whole world, stealing everybody.

Sorry, but you are the ignorant.

-----


"The value isn't stable"

Stability here means not volatile. USD is not volatile, nor are the other major currencies of the world. USD moves tiny amounts day to day and year to year versus other currencies.

You are of course referring to inflation. But inflation in the US has been a slow, gradual thing. The Fed was created 100 years ago. You might have been able to buy a lot more with $1000 in 1913, but you got paid a lot less. Since your salary, and taxes, and almost all goods, were paid for in USD, it didn't matter if all the numbers crept up together slowly.

To call USD unstable, while defending something like BTC or Dogecoin, seems somewhat ignorant, or at least misleading.

-----


"Since your salary, and taxes, and almost all goods, were paid for in USD, it didn't matter if all the numbers crept up together slowly."

The key word is "together". They don't go up together. There is a time differential, with salaries trailing behind. People get constantly negatively affected this way.

-----


Let me put it this way: they go up together far, far, far more than whatever BTC or Dogecoin is doing.

Talking about very normal inflation in order to make make BTC/Dogecoin look bad is just weird. BTC dropped 50% in a day. And it could go up 100% tomorrow. That's volatility. Denying this just comes off as trolling.

-----


I am not arguing for bitcoin or dogecoin. I am arguing against the dollar, and the notion that the dollar isn't backed (just) by force.

-----


a) A predictable low rate of inflation is good for a currency.

b) Yes, that's my point.

c) I didn't say it was "valued in dollars" I said it was priced in dollars. Point me at a liquid oil futures contract not priced in USD that outpaces Brent or WTI and I'll retract my comment.

d) Wat.

e) I have $250k in the bank. Bank blows up. FDIC gives me back $250k. What don't you understand?

-----


"oil tends to be priced in dollars internationally"

And when that doesn't happen, suddenly they have the CIA overthrowing their leader, creating terrorists groups for false-flag operations, the US government spreading lies about WMDs, and then the entire army can go and fight the illegal (by international laws) war on terror.

There should be a war on ignorance, so that we don't have to read comments like yours anymore.

-----


When oil isn't priced in USD what do you think it will be priced in? And what do you think CIA will be able to do about it?

-----


Euros or dinars, or anything that looks less of a ponzi scheme than the USD.

What will the CIA be able to do? What I said, overthrow their democratically elected leader, create terrorist groups, etc:

https://en.wikipedia.org/wiki/1953_Iranian_coup_d%27%C3%A9ta...

You might also have heard of Libya...?

-----


For many years it seemed likely it would be the Euro. At least Russia and Iraq circa 2002/3 publicly threatened making the switch, there may have been others. However, it seems that Iran stopped trading oil in USD (as of 2012) and apparently now uses a variety of other currencies[0], although I haven't looked into this to see if it actually happened yet. I am under the impression that China currently buys oil from Iran in Yuan/Renminbi.

I'd be interested to know if Iran went ahead with its plan to stop accepting USD altogether. I'd personally be surprised if threats and posturing regarding Iran's nuclear program went away without some sort of agreement on USD oil trade.

If Iran has stuck to its plan to stop accepting USD for oil AND the US backs off I think that signals a pretty significant loss for the US not just in terms of its relationship with Iran but ultimately, in the long term, in its attempts to remain a dominant force in the global economy. It would be a result of pressure from an international community that the US government feels it needs to keep on side, but also conversely an international community that may have an interest in reducing the economic dominance of the US.

Your second question is an interesting one. I think the US' next move - or Iran's (potentially changing its mind about USD oil trade) - will tell us how strong the US is at this moment in time. The position of economic & military dominance the US currently enjoys (which helps its "intelligence" agencies to get away with actions that would be otherwise considered acts of war) is bound to end at some point. I'm not willing to stick my neck on the line and predict the end of US hegemony is nigh (I'm not really a crystal ball kind of person) but I'd just say that the signs of a superpower fighting for its position should be evident. There will come a point where the US can no longer risk such interventions.

EDIT:

Having read a bit more (though not much, to be honest, so I'm happy to be corrected) it seems the Oil Bourse is for oil-derived products not crude oil (it actually says this on the Wikipedia article, doh). Also part of the agreement that reduced sanctions on Iran was to stop taking gold as payment for oil[1]. So there's no need to worry about the US' position in the world just yet.

Anyway, hopefully in 2014 some members of OPEC will be seriously advocating trading oil in dogecoin ;). To the moon!

0: http://en.wikipedia.org/wiki/Iranian_oil_bourse 1: http://www.bloomberg.com/news/2013-11-24/iran-agrees-to-hist...

-----


> That's a bunch of needlessly cynical and completely ignorant bullshit. [...] It isn't something that's done at the point of a gun.

Alan Greenspan is of the opinion that our Iraq wars were 'largely about oil' and economic stability. The point is debatable, but certainly not completely ignorant bullshit.

-----


If the 'point of a gun' element was the major determinant in how much currencies are worth, Zimbabwe, which had and has a military sufficient to kill its own citizens, would never have had hyperinflation.

-----


The US's place in the global economy is just a bit difference than Zimbabwe, so that's a false equivalence.

Hint: I was talking about imperialism, not "buy stuff with the national money, citizen!"

-----


The American hegemony is bigger and involves a lot more moving parts, sure, but is that really a difference in kind rather than scale?

And if being a global superpower is the key to running an economy based on fiat money, how did it get that big in the first place?

-----


America didn't start with fiat. The transcontinental railroads (http://en.wikipedia.org/wiki/First_Transcontinental_Railroad) provided the backbone for a continental network that helped unleash human creative potential, much like the Internet is doing today. This led to an economic boom. Then two world wars destroyed Europe while leaving America virtually untouched. In the aftermath America had risen to superpower status (http://en.wikipedia.org/wiki/Aftermath_of_World_War_II).

-----


> Currencies aren't like some weird subset of commodities.

Actually, currencies are considered to be the ultimate commodity. They don't degrade, they're 100% fungible, and they're instantly moveable worldwide. They're even susceptible to runs and shortages.

Think of it this way, what is the price of money? Is it $1 for a sandwich or 1 sandwich for a dollar? In this way, money has a price. So if the price of money goes up, by say everyone worrying that they'll lose their job and not spending anything, "prices" for goods will drop. Conversely, you can get runs when people think their money will lose value, eg during a war or disaster.

-----


I'd argue that cryptocurrencies have a fair amount of commodity worth to them. The security of the coin is enabled by work put into the system by miners. Hypothetically there is some value in linking a commodity compute operation to crypto coin value.

BTW, I looked to see if there was a correlation between oil commodity and USD, and here's what I found: http://en.wikipedia.org/wiki/Petrocurrency

Note the bit about oil in the Middle East being paid for by USD.

-----


"I'd argue that cryptocurrencies have a fair amount of commodity worth to them. The security of the coin is enabled by work put into the system by miners. Hypothetically there is some value in linking a commodity compute operation to crypto coin value."

You got causality backwards. Intrinsic value is what you can get out of a commodity, not what you spent putting into it. I can spend $100,000 cooking a hotdog over a Tesla Roadster bonfire; this does not inject $100,000 of intrinsic value into the hotdog.

-----


A cryptographically secure currency network is infinitely more valuable than a warm hotdog.

Via Wikipedia: causality is the relation between an event (the cause) and a second event (the effect), where the second event is understood as a consequence of the first.

In this example, the consequence of proof-of-work (mining and transaction validation) gives way to a distributed trust effect (crypto currency). i.e. work put into the system by miners gives the value of trust and security to the currency.

-----


A cryptographically secure currency network is infinitely more valuable than a warm hotdog.

Conversely, a global food distribution network is infinitely more valuable than a single dollar. You're conflating two radically unrelated things: the utility of the existence of a monetary system, with the concrete value of a specific instance of currency. The value of USD doesn't derive from the abstract utility of money. 1920's German hyperinflation didn't reflect people deciding that money systems, in general, are worthless.

Understanding that we're talking over each other:

* I have no doubt that cryptocurrency's utility is "enabled" by the effort spent in cryptographic validation;

* I'm saying it's value does not derive from that cost; it is not causally linked

-----


I spend a bunch of money buying electricity to run my electric kettle but that doesn't mean there's a huge market for selling hot water.

-----


You are correct, but your statement doesn't make a valid comparative argument against mine. Read up on the value of proof of work: http://bitcoin.org/bitcoin.pdf

-----


Except when there are, like in areas that has central heating.

-----


Why is this the top rated comment? I just stopped reading it because of all the twisted logic, I was worried for my brain.

-----


Ask a question or offer a critique of my twisted logic and I'll respond to it.

-----


> Currencies aren't like some weird subset of commodities.

I have a chart that is just begging to disagree with you:

https://www.google.com/search?q=usd+vs.+euro

To wit, "Currencies! So stability! Wowe!" A mere 25% fluctuation over the past 5 years! And at the scale of the Euro and the USD, no less!

Also, if currencies were as magically stable as you presume, then "currency trader" wouldn't be a thing. This also wouldn't be a thing:

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

Also,

> dogecoin denominated debt

Cryptocurrencies don't allow credit/debt systems. Just like I can't carry a "negative cash value". You either have cryptocurrency or you don't. And before you respond with "well then how would people buy houses and pay for college?", note that college costs have gone up BECAUSE of student loan availability, not IN SPITE OF it. And you know what? It's about time this happened, because fuck debt slavery.

-----


Cryptocurrencies don't allow credit/debt systems.

Sure they do. If you lend me 5 crypto coins with the understanding that I'll repay you 6 crypto coins next year then we have a system of credit. The invention of credit predates the invention of money by thousands of years. In ancient times people would borrow seed under an agreement to repay at the harvest with associated penalties for default.

-----


wow. much serious. many tears. so angry.

I specifically said I wasn't an expert. ;)

> That's a bunch of needlessly cynical and completely ignorant bullshit.

We're arguing the same thing. I'm just being a bit snarky about _why_ those things are true. You're totally right that those are the first-order reasons.

> Stop calling currencies commodities.

Sorry, my Marxism is showing. From a Marxist perspective, money _is_ just another commodity, though a special one. Maybe shouldn't have mixed that concept in, good call.

> Depositors are all fucked because there is no FDIC insurance for dogecoins.

Agreed. That's why I describe myself as 'scared.' I just said it's possible, not that it's a good idea. You won't find me quitting my job and starting that project any time soon.

> You lose money at every step along the way.

Absolutely, which is why you have to account for that when making the trades. I assumed that was too basic to bother to mention.

-----


Sorry steveklabnik, I would have replied sooner but got stuck on a long phone call.

I'm not angry. I thought the post was worthy of a reasonably harsh takedown comment (sidenote: HN loves harsh takedown comments) because of its hubris. "Ho hum. We SF computer guys have got this shit all figured out. Paper currencies are bullshit because x, y, z. Also U.S.A. will bomb you if you don't agree." It's so completely fallacious and it ignores the decades experience that have got us to where we are.

I'm a tech person as I'm sure all of you are, but I think we are doing ourselves a disservice when we show up in other fields as arrogant outsiders proclaiming truth without understanding any of the details. I follow you on twitter and I think you understand this in terms of employment gender and discrimination issues but maybe not so much in terms of macroeconomic topics. That's all.

-----


It's all good. I enjoy your other comments on HN, i've upvoted many of them. I probably should have been working today rather than writing blog posts, oh well.

I do not think paper currencies are bullshit. I really really hate it when people say 'fiat' as a derogatory term. I also agree that SF techies running into other people's fields is terrible. However, economics is a field that I have actually attempted to educate myself on. This post was written with my 'junior economist' hat on, not my 'software dev' hat.

I think that you undervalue the role of imperialism with regards to the purchasing power of USD, but really, that whole thing is a sidenote anyway.

I still am unclear as to what your actual objection is. My assertion is that Dogecoin is just as legitimate of a currency as every other currency, as long as enough people believe in it as a medium of exchange, and that as long as the BTC <-> USD exchanges hold up, that it provides legitimacy (and liquidity) for all other cryptocurrencies. That's basically it. Oh, and that lack of consumer protection, like the FDIC insurance you mention, will harm people until we take cryptocurrency seriously and regulate it like we do other financial instruments.

-----


I think that you undervalue the role of imperialism with regards to the purchasing power of USD

Point me to a historical example of the US government saying "Use dollars or else!" and I'll change my tune. I think foreigners use dollars because dollars are actually a really great currency relative to the local alternative ... or bartering (3 goats for 1 iPhone sort of thing).

My objection to your argument is that USD is better than alternative cryptocurrencies because the Federal Reserve does a good job of managing the stability of the value of the currency, and that's a social good for everyone. If your latte costs 3 dogecoins today and 6 dogecoins tomorrow you can be like "lol. so latte. much coins." That's funny for you and that's great. But if a bushel of wheat doubles or triples in price overnight because it's priced in some weird volatile currency, people will starve. And that's not funny.

I moved to Chicago recently and I work on the technology behind some of the commodities markets here. I guess that has sort of forced me to think more about these kinds of things. If you are in Chicago hit me up and we can bullshit face to face (over coffee that's probably better than whatever you have in SF. Zing!)

-----


I think you are overlooking some serious changes to the way the Fed regulates the money supply in the last five years. They are printing over 85 billion dollars every month. The stock market is soaring... why? because the government is artificially controlling interest rates which makes the value of your dollars go down fast- so people are forced not to save their money in a bank account but instead put their money "into" the economy- wealthy people are putting it into hard assets, and people that don't have as much are dumping money into the stock market as a hedge that their savings is loosing value every day. The result is a market that looks like it is doing great but is quiet volatile itself.

I agree that we should be very careful to just suddenly start running around yelling "the sky is falling" but I have heard an economist at the Fed (during a banking townhall) say "We are in totally uncharted territory" referring to how they will pull back all of the liquidity they have pumped into the market.

As for your comment about the US government saying "Use US Dollars or else..." that may not be the way that it looks on the surface but the US Government is very heavy handed in how other countries are allowed to control their own currencies, how multilateral trade deals are written in terms that force other countries to give up control over their own monetary policy.

You are correct that individuals around the world views the US dollar as stable and prefer to keep at least some portion of their wealth in US backed treasuries- but I would caution anyone from thinking that this is a foregone conclusion.

The fed uses a few people to try and hit multiple targets all at the same time... they have to deal with a bureaucracy that favors age and longevity, they have political pressures (see the Greenspan article above), and they have to make certain that their decisions keep their institution (coincidentally not a gov't institution but a private company)alive. The Fed is first and foremost a US-centric org. Whereas cryptocurrencies use the global market to find their level- whatever people agree is the price is the price... set number of bitcoins, completely liquid, and can cross borders without blinking... making trade easier than has ever been imagined before.

-----


You can only pay your taxes in Federal Reserve Notes (which are neither Federal, not backed by any reserve, and not notes).

THAT is why the income tax and US fiat currency were put into law at almost exactly the same time. Same as in ancient China and many other empires and countries - people can be forced to use fiat if they go to jail for not paying their taxes. Thus they have to work to get fiat.

Your statement about the Federal Reserve is laughable... I suggest some remedial learning, perhaps Ron Paul, or even just Zerohedge.com.

-----


Basically, I agree with Greenspan, before he recanted:

> Without elaborating, he writes, "I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil."

http://www.washingtonpost.com/wp-dyn/content/article/2007/09...

Every so often, OPEC threatens to switch over to the Euro...

But really, I don't think modern imperialism works via direct threat. That was the style of the 1700s. You won't find a direct statement to 'use the dollar or else,' you'll just find lots of wars and economic sanctions.

I don't think cryptocurrencies are 'better' than USD. I agree that the Fed is good for basically everyone, or at least, I don't think abolishing the Fed is a good idea. I agree that the volatility of DOGE makes it bad for anything but playing around at this point, and BTC dropping 50% in a day means that it's also nothing more than a speculative commodity at this point.

I've been thinking about this more because I moved here to work for a payments company, so ha! I actually know someone in Chicago who's working in commodities market stuff, IIRC... I always thought I'd live in Chicago before SFO. I'll certainly tweet if I'm ever there, and feel free to go take the blue line to Forest Park and put some flowers on Emma Goldman's grave for me ;) (I bet the coffee is better there, luckily, I don't really have a taste for good coffee, it's all just about the chemicals for me.)

-----


I don't understand how you could read Steve's post as saying 'we have got this shit figured out' and 'proclaiming truth'. It's just someone's take on (crypto)currency; no reason to get all huffy about mistakes, let alone about disagreements.

-----


> wow. much serious. so angry.

You said it yourself. People are scared by this. Anger comes with fear.

-----


There’s no inherent reason that a piece of paper has a certain amount of value.

There is one actually: the cost of Labor and the perceived value of the services or goods that labor produced/produces/will produce. The value of money does not just appear, it is backed by everything everyone in a nation produces and consumes.

-----


> oil tends to be priced in dollars internationally, foreign countries hold lots of dollars as reserves

The first bit there has nothing to do with the US military, and the second bit there is not because of the first.

Repeat after me; Petrodollar warfare is just a paranoid conspiracy theory.

-----


Just asking, but isn't there a flaw in the logic and that this is actually not a one-way, but a two-way system? Like folowing:

* TWTR → USD → BTC → DOGE → MYCOMPANY *

* MYCOMPANY → DOGE -> BTC → USD → TWTR

-----


Basically, the author is saying that the absurdity of Dogecoin made him realize that most currency is intrinsically worthless, with the only reason that it has value being a state power or arbitrary group of people (as in the case of cryptocurrency) has assigned it one... also known as fiat.

A very old and evident observation.

Not exactly enlightening, but there you go.

-----


To be clear, _I_ already knew this. I'm saying that I think that it might lead _other_ people to reflect upon the nature of money.

-----


Why dogecoin? Why not megacoin, that's also pretty absurd.

-----


> Megacoin , Your Global Currency. Your Modern Wallet. Global, Anonymous, Secure.

Sounds pretty serious business to me.

-----


Are there any crypto-currencies that are not anonymous? I like secure, modern, low cost transactions, but I don't like the anonymity. I want a currency where everyone knows how much I spent, what I bought, and it applies to everyone. Does that exist?

-----


Just Tweet your Bitcoin address. All Bitcoin transactions are inherently public in that everyone knows which addresses have sent how much to which other addresses; the only anonymity is that nobody knows who (as in which real-world person) owns/controls the address.

-----


That doesn't address the stated " it applies to everyone" requirement.

-----


Or if you really want to prove it, use your Bitcoin address to sign a message containing your Twitter ID.

-----


Bitcoin is not especially anonymous. Researchers have demonstrated techniques for de-anonymizing users through transactions: http://eprint.iacr.org/2012/596.pdf

-----


Every transaction to every address is public with blockchain technology. The tricky bit is associating an address with a particular human...

This would affect any attempt at making something like this. I'm not sure that you can enforce the human/address connection in software.

-----


> I'm not sure that you can enforce the human/address connection in software.

It's a hard challenge, but not impossible. Online banking (mostly) works because it's possible.

-----


That's not enforced by the software. And a person can have more than one bank account.

-----


really i might not know your name but if i tried hard enough i could trace the blockchain to where you bought it and look at the transaction, price of items, value at that time, and figure it out... but id never know it was you ;)

-----


I think that such a currency would have a particularly low buy-in from people, making it quite difficult to get off the ground. Simple privacy like "I don't want my friend who I'm dieting with to know I sneaked off to get a burger" is just the start of the issues...

-----


I believe you that many people wouldn't want this; but I'm curious about something like that. It'd be fun to try.

I don't need to keep it a secret that I'm eating a burger, for example. It's pretty fun and liberating to have as few secrets as possible. Less things to worry about keeping secret, less work (and I'm lazy).

-----


> with the only reason that it has value being a state power or arbitrary group of people (as in the case of cryptocurrency) has assigned it one... also known as fiat.

While that's true, a state has much more power in "assigning" value to currency. They have the power to levy taxes on all economic activity in their territory, and the power to demand payment of those taxes in the national currency.

If you have a job, do business, or make any other sort of profit in the U.S., you must pay taxes, and you must pay them in USD only - otherwise the state will throw you into jail. This means that there is always a demand for USD, no matter which other currency you use for transactions.

-----


Yep. Pretty silly to write a whole article about it.

-----


I thought I was reading economics 101.

-----


Spoiler alert: you were.

-----


There is one other aspect here I find very interesting, and it has to do with the efficient market hypothesis. The fact that people are buying Dogecoin simply because it is a fun internet meme kind of flies in the face of people who still view the price of financial assets as mostly rational, value-based prices, that can be deconstructed along the lines of asset-based valuation, financial ratios, available information, et cetera.

Dogecoin kind of shits all over that. If people will buy a financial asset literally because it was a funny meme they saw on Reddit, then it kind of untangles the notion that prices really must have anything to do with reality. Someone might rightfully ask the question, "Should I invest in Dogecoin?", and at this stage of our financial markets, I really don't have a good answer for that.

-----


> The fact that people are buying Dogecoin simply because it is a fun internet meme kind of flies in the face of people who still view the price of financial assets as mostly rational, value-based prices, ...

I don't see anything particularly unique about all of this. They buy dogecoin because they value the dogecoin more than the asset they're using as payment. That's how all purchases and trades work. You're just pointing out that the reason people value dogecoin more than the money they spend for it has to do not with something "essential," like buying food to stay alive, but rather for entertainment. The way you phrase things is making the concept sound more unusual than it actually is.

-----


Part of the reason is because for the longest time, the smallest unit of "value" recognized by most people was 1 US Cent.

Crypto currencies, like Dogecoin are intrinsically more divisible.

If someone made a funny comment on the internet, and i wanted to reward them.

In 2012, I might "like" or "upvote" their comment -- a subjective measure of appreciation.

In early 2013, I might "give gold" or "gild" comments or posts I like on reddit.

In 2014, I'll probably just give some Doge, or whatever the new popular currency is (which I can easily buy with my other altcoin/currencies online). I can also give more or less based on how much I want.

This wouldn't work with pennies or USD because 100 Doge still __feels__ like a lot -- even though it's some fraction of a penny.

For a long time, people would give each other "internets" to reward what they like. The only difference now is that you can buy internets with real money, and they retain at least some quantitative value.

-----


Don't forget that each transaction is recorded and secured as well. There is a ton of Doge to be made in analyzing the interactions.

-----


This is one of the most insightful things I have read. If doge turns into the defacto "tipping" or "internets" coin, then it truly will be something useful ;)

-----


The fact that people are buying Dogecoin simply because it is a fun internet meme kind

I think the point is that people do not buy Dogecoin because it's fun in itself but because it's the currency of fun, in other terms, their currency. "Their" meaning "a slice of the population" as a country is a slice of the population too. "Before", currencies were determined by geopolitic, now it's up to the people proximity in the wider sense. It's not happened yet but that's what the success of Dogecoin suggest.

-----


Bingo. There's not really much overhead to creating a new cryptocurrency, so worries about deflationary pressures should be removed since new currencies can emerge. The currencies will emerge out of specific cultures, in this case the meme culture, but as we've seen in the past, through various gaming cultures and as someone else suggested "Bieber-coin". (Exercise for the reader: is this much different than dot-com bubble paper millionaires with thousands of options?)

Think of who is in the 1% of a country's wealth--a mix of capitalists who were good at acquiring that currency and folks who inherited it. In the cryptocurrency world, the moneyed are the creators, the miners and in the case of dogecoin, the creative-meme class who serve as a marketing arm. Many of them are in it for the lulz, and consequently have great upside with little downside, since it will always retain an intrinsic value as a karma proxy. The speculators may inadvertently make real-world millionaires out of this class.

It would not surprise me at all in the next year to see companies with large social subcultures at least attempt to launch their own cryptocurrencies, or extend their in-game currencies to become linked to a cryptocurrency.

-----


In-game currencies are already a thing, but I suspect the reason they never caught on as viable liquid currency is their centralized nature.

-----


For in-game currencies so far, the centralization has meant two strikes: one, fear of the proprietor's control; two, the risk other entities (governments) could exert control via pressure on the proprietor.

Emergent decentralized currencies address both – and might also improve centralized-proprietor currencies by competition and precedent. (Proprietors will accept more community input, and win greater tolerance from governments, because of pressure from alternatives.)

-----


Exactly. In-game currencies showed the potential since they broke out to have value in the real world, but could never really catch on beyond those gaming subcultures due to the friction involved. Dogecoin's light attitude is a great marketing tool and will help further reduce the friction involved in using it.

The thing to watch for: when another online community embraces the dogecoin tipbot culture. That would be a strong indicator of long-term stickiness. The OP joked about having no /u/dogetipbot on HackerNews, but that's exactly the kind of feature that I suspect will start turning up in a number of communities.

With regard to games, Valve hired an economist some time ago. I'd love to see if they have anything planned with regard to innovating in this space. Could you have an in-game currency backed by a cryptocurrency?

-----


Someone might rightfully ask the question, "Should I invest in Dogecoin?", and at this stage of our financial markets, I really don't have a good answer for that.

This is where recognising a distinction between investing and speculating comes in handy. It's quite possible to speculate in dogecoin (relying on greater fools coming after) in the short term and make some money. In the long term it is extremely unlikely to have any value at all, so if you take investment to be long term search for value, the answer to should I invest is no.

The interesting thing about fiat (all our currencies at this point, including crypto ones, unless you want to quibble over semantics), is that it depends on confidence for its value. Without confidence it is worth nothing (Assignats, Zimbabwean dollars etc). This realisation doesn't give me great confidence in Bitcoin or any of its spin-offs though. It's an interesting experiment and noteworthy, but I think fatally flawed as a currency or an investment because of the explicit rejection of verified identity, regulation, and inflation and its attempts to emulate paper cash.

Perhaps the next currency to emerge will be corporate sponsored rather than state-sponsored, as corporations are still rising in power over states, but it will be a very interesting century, because most of the national currencies probably won't survive it, and by 2100, no-one will be using physical tokens for payments (cash). States will naturally resist any encroachment on their power over currency and taxation, which up to now has been absolute. I expect any stateless currencies which do manage to rival say the USD to come under heavy pressure from both speculators like Soros, and currency blocs who perceive a threat to their monopoly on trade.

-----


I disagree. Dogecoin has the backing of one of the strongest communities on the internet. It's quite feasible to see it as a virtual currency used to pay for online goods, such as karma, games, or media.

It's friendliness means it may be adopted by the majority of consumers, who are scared off by the volatility and high price of bitcoins.

What needs to happen? First, it needs to distance itself from the meme part of it, and just become the standard fun, digital currency. Second, the barriers to entry need to be reduced. That means buying DOGE with USD instead of bitcoins, and easy online wallets. Finally, it needs uses, the most likely to happen are inter-app payments, such as over reddit or imgur.

-----


Dogecoin is a joke, not a currency (a good joke, but a joke nonetheless), it is not the official reddit currency, that would be reddit gold.

-----


Reddit gold is a product or service, not a currency. You cannot trade it.

-----


I believe you meant "intra" app payments rather than "inter".

-----


Yes.

-----


> Perhaps the next currency to emerge will be corporate sponsored rather than state-sponsored,

What about celebrity-sponsored? "Buy his next album in Bieber-coin."

-----


That would be hilarious, and quite in keeping with the status of celebrities in our society as the new aristocracy. Gaga-coin or Bieber-coin - millions of fans would actually buy that sort of thing. I think they'd need physical gold coins though, for extra bling, or perhaps Gaga would go for pink plastic. Oh, just looked, and it turns out someone already thought of this but with dollar bills:

http://www.trendhunter.com/trends/pop-culture-cash-by-james-...

-----


There has been talk that Snoop Dogg (I think he changed his name back from Snoop Lion, yes?) is going to sell his next album in Bitcoins...

-----


People have always bought silly trinkets and useless things, what's wrong with that? This doesn't "fly in the face" of anything, the price is being set by supply and demand. It just so happens memes can create demand.

The people actually investing in dogecoin are doing so because they believe the price is going to go up, the same as people who invest in anything else. They will lose or gain money depending on whether they are right or wrong.

-----


Dogecoin is a good, not a medium of exchange. Why do people buy iPhone apps? iPhone apps don't even have resale value.

-----


The word you're looking for is "asset", and mediums of exchange are by definition always assets. When people talk about their aspirations for Bitcoin, the most techno-utopians want it to become a commonly accepted store of value or unit of account.

Keep in mind that mediums of exchange can be seen as purely "any mechanism that can signal the irrevocable transfer of the value". The innovation btc brings to this is instead of transferring physical items you create cryptographic hashes that you then publicize.

It's worth noting that when we talk about money we're trying to describe emergent phenomena. This is what we've got, and the following items are just useful ways of thinking about the issue - except unlike in physics we don't have the leeway to conduct careful, repeatable experiments.

http://en.wikipedia.org/wiki/Asset http://en.wikipedia.org/wiki/Medium_of_exchange http://en.wikipedia.org/wiki/Store_of_value http://en.wikipedia.org/wiki/Unit_of_account

I forget the (accounting/financial) term for talking expenditures like videogames or movies or haircuts. I'm pretty sure we can describe those all as "services" but I've yet to find the appropriate wikipedia article. If someone can jog my memory that'd be great.

-----


How is Dogecoin a good if its only feature is the mode by which it is exchanged?

Disclaimer: I possess Dogecoins

-----


It makes the people that hold it laugh, which is valuable to them.

-----


except they do have a resale value.

-----


Try reselling Angry Birds.

-----


sure - apps dont have a resale value. but that doesnt mean video games in general dont. You're just providing an exception to a rule that's all. Also - you're defying your original point of something being a good. Angry birds is not a good - its a service.

-----


"Rational" has never meant that people know what they need, only that they know what they want. And people can "want" things for any number of silly or rational reasons. In the case of Dogecoin, it may be silly to you, but humor is the "rational value" people are getting from trading it.

-----


Some people got beanie babies because they liked them, others because they thought their value would increase. The same thinking drives Dogecoin.

-----


I look at buying a dogecoin like buying one of those "joke-a-day" calendars. It's probably going to sit in a drawer in your desk, not actually used for its original purpose as a calendar, but you take it out every few months and rip off the old pages, reading the jokes. It's just a shitty joke book, made to look like a calendar, thereby encouraging you to destroy it and buy another one next year.

If someone were to ask me if they should invest in joke-a-day calendars, then the obvious answer is, unless you are interested in getting in the business of printing joke-a-day calendars, or selling them, then no, joke-a-day calendars are not an "investment".

-----


The DOGE phenomenon is pretty interesting. Aside from lightening things up a bit, it does point to the ridiculousness of fiat currencies in general. Essentially we're fighting and clawing over numbers, abstractions if you will.

At the least dogecoin brings a bit of levity to the idea of currency. Currency is simply information and in the void of a better solution, a necessary instrument.

If dogecoin is some sort of absurdist art project, it certainly seems to be working.

-----


It will date pretty fast, just like every internet meme before it. Imagine an AllYourBaseCoin, or a StuffOnMyCatCoin. Or even a KonyCoin. It will run it's course and people will forget it - I'll be coloured surprised if doge[coin] is anything but a footnote in a year.

-----


wow. such blog. much words.

-----


Please, for the love of doge, put the meme phrases in the correct order.

-----


So judgement. Much sourpuss. Very nitpick. Wow.

-----


There's an order? I thought you were supposed to take a shotgun approach.

-----


such sarcasm. much miss. wow.

-----


You would like http://suchbloge.com/

-----


Totally agree, as a Bitcoin fan who also sees Dogecoin as a positive sign.

Some Bitcoin boosters believe "there can be only one" winning digital currency, and hope/predict it will be Bitcoin.

I instead expect many to be tried, most to fail, but a wide variety to survive and live in strange, ever-changing symbiosis. They're just so easy to bootstrap, now, and the possibility/exploration space is so large. Bitcoin might always hold a special position, as the first, most-capitalized, hard-money option (and as Klabnik notes, gateway)... but many of its assumptions may not fit other niches. All sorts of subcommunities, including pranksters, can assign moneyness/value to whatever they'd like easier than ever before.

I'd especially expect regional movements and cross-cutting projects to mint new tokens as a tool of common-purpose and incentive-coordination: something straddling the worlds of equity and currency.

Crazy times ahead. Dogecoin may eventually seem obvious and mundane in retrospect.

-----


Yup. The lighthearted nature of both the coin and the community is drawing a lot of attention from people who haven't cared about cryptocurrency before, including myself.

It shouldn't be that surprising to anyone on Hacker News: marketing is important. Bitcoin was all "we're going to destroy fiat currency, fuck the government." Dogecoin is "hey lol isn't this silly? Have some coins." It's no wonder that people are reacting to it in a completely different way, even though they're (basically) the same thing.

> They're just so easy to bootstrap, now, and the possibility/exploration space is so large.

I saw a tweet that said "Hottest Christmas gift 2013: build your own cryptocurrency kit." Since all of this is open source, it should be really interesting to see what happens once you can basically alter a configuration file and get your own currency, wallet (online and off), exchange, HFT bot, faucet, poker site...

Not to mention the more 'serious' altcoins, like Sexcoin. I haven't investigated that coin in serious detail, but coins trying to take on a specific vertical are _very_ interesting.

And that's not even getting into things like Namecoin, which build legitimately new tech on top of the blockchain.

It's all terribly interesting.

-----


I have been involved with Bitcoin since 2011 and Dogecoin is seriously hurting my brain. I can't wrap my head around 1) why so many people are mining a coin (spending their hard earned money to protect the dogecoin blockchain) and then turn around and repeat "much wow, such doge, etc etc" on the subreddit. AND 2) just how popular this thing has become.

I mean, it's a joke... right? And yet people seem to infatuated with it. Their subreddit has over 12,000 subscribers and it's just under 2 weeks old.

I love a good joke, but I still don't understand dogecoin.

-----


you don't have a doge i guess. Such miss.

-----


there was a spike in dogecoin prices last week, making it the 9th most valuable cryptocurrency: http://www.ibtimes.co.uk/bitcoin-alternative-dogecoin-soars-...

though it's dropped back to 14th since.

with the viral aspect of it, I can see dogecoin actually gaining some traction. It would be funny if it unseats the likes of namecoin, primecoin or other serious cryptocurrencies.

-----


The power of dogecoin comes from the community. If it can become the "default" crypto for redditors and the like, it will see huge success. No other currency has launched with such a strong community backing.

It's one of the reasons I think Dogecoin is such a good bet.

-----


The most likely scenario is that future monies, both government and non-government backed, will likely adopt crypto proof-of-work as the specie value. It becomes just another feature that brings more to the table than "full faith and credit." I don't have any faith that any G20 economy will not end up like Greece on the long-term, so crypto currencies in 30 years could be more viable than stockpiling gold bars, fine furniture and artwork.

-----


Two things people miss about Bitcoin, Litecoin, Doge, etc.:

-- these currencies are not denominated in other currencies except as a convenient way of thinking about their value; they can serve the purpose of "exchange" without any particular currency

-- there is no debt attached to their creation; in that sense they are not like Euros and USD, which always have been borrowed into existence; they are more like a physical item used as currency in that way, like silver or gold

-----


I think dogecoin is hilarious. Even more amusing is the fact that it's getting more attention than Litecoin on Google right now:

http://www.google.com/trends/explore#q=litecoin%2C%20dogecoi...

-----


Now that several exchanges have implemented DOGE/BTC, I've been joking that I should build a HFT bot in Rust.

I probably won't, but the idea is amusing.

-----


Which part is amusing? I already operate a HFT bot written in Go.

-----


I can't really explain to you why HFT on a meme-backed currency is funny to me, I guess we just have a different sense of humor. It just seems incredibly absurd.

-----


Cryptocurrency arbitrage bots are indeed a thing. They help keep exchange values aligned.

-----


Of course. DOGE has only been in existence for about a month, and only got on multiple exchanges within the last 48 hours.

But really, I think a serious answer is missing the entire point. Which is that doing serious things to something that's so absurd is, in and of itself, kind of absurd.

-----


It's probably already been done. The values of two cryptocoins track their exchange rate very closely, and vica versa. I can only assume arbitrage bots are already operating.

-----


The writer mentions that he doesn't believe in the subjective theory of value, but doesn't explain why. I am really curious as to what his reasons are.

-----


Any speculation going on amongst the HN crowd concerning Dogecoin? How high do you think it will go? Do you think it can maintain value, or is it just a fad?

-----


Does "Dogecoin was began" make sense?

-----


No. "was began" is never, to my knowledge, valid. "Was begun" works sometimes though.

-----


Might be a regionalism, or I might just suck at writing. I wondered that upon a re-read, but decided to leave it because I couldn't tell.

-----


"was begun" or "began" would be the correct usages I believe. FWIW, "came into existence" or "started" seem like they'd fit nicely there :)

-----


Changed. If /u/dogecoinbot worked here I'd tip you. ;)

-----


A tracker for the current top 59 cryptocurrencies: http://coinmarketcap.com

-----


'Unobtainium'? I might actually mine for some of that...

-----


It's fitting that cryptocurrencies become a giant CCG.

-----


Dogecoin confirms everything about Bitcoin, but the pious is the pious.

Some MLM-minded peeps know you have to be at the top, so they start their own half-assed thing and prod the overly self-loving crowd of rabidly anti-fiat currency Ron Paul lovers and a few naive shiny thing followers to pump and dump the hot new thing. Cryptocurrency.

Make millions in the comfort of your own home working only a couple hours a week. You could live this lifestyle and so much more. You could probably become an Herbalife distributor!! The first to accept only cryptocurrency.

-----


So the author got angry because he thought Dogecoin was making fun of cryptocurrency, then (wrongly) decided that Dogecoin was actually making fun of all currency?

Cryptocurrency is a very interesting phenomenon, especially since it involves very significant amounts of money. But the total value of all cryptocurrency is still very small compared with say, M0 (the most equivalent measure of the total number of US dollars). I personally predict a future with neither huge upward or downward movement in the total value of bitcoins. There is still plenty of room for improvement and innovation in fiat currency, and fiat currency doesn't have the problem that new ones pop up all the time.

-----


This is one of the longest and most interesting threads I've read in a long while.

And since Paypal bought a bank to become legit, what stops some entity from becoming a bank somewhere, and allowing whatever crypto currency (heck, all of the respectable ones) and lets you get a Visa/Mastercard that lets you buy stuff anywhere, meaning they, in real-time, auto-denominate your crypto coins in whatever jurisdictional currency you are active in, and if you have enough to buy the thing in question, it's yours!

And for liquidity, the bank in question could simply API into coin base/cryptsy or whatever else is trading stuff, and sell off your coins when you transact (and what do they need to cover? Just the value fluctuation, not linked to any fiat currency, since they run to zero value as time goes to infinity).

Probably the Visa/Mastercard dudes will require a settlement in some fiat currency, so the coins would be settled to that, whatever it is.

-----




Applications are open for YC Summer 2015

Guidelines | FAQ | Support | Lists | Bookmarklet | DMCA | Y Combinator | Apply | Contact

Search: