(self.Bitcoin)
submitted   by Capt_Roger_Murdock
So the other day I was reading through this thread on "people that understand Bitcoin but have a negative view on it," and it occurred to me that most skepticism of Bitcoin falls into one of two categories: there's skepticism of Bitcointhe concept and then there's skepticism of Bitcoin's implementation.
Bitcoin the concept
What do I mean by Bitcoin the concept? Well, what are Bitcoin's key intended features? It's digital, decentralized, censorship-resistant, and has a fixed supply. If you don't think that's a desirable feature set for money, you're probably not going to be a huge fan of Bitcoin.
And skepticism of Bitcoin the concept can arise as a result of individuals having a problem with any one of those features. If you're a goldbug who thinks that "real money" must have "intrinsic value," you probably consider Bitcoin's purely digital nature to be a deal-breaker.
Similarly, if you think that money must be "backed by" a state in order to have value, the fact that Bitcoin is decentralized may cause you to dismiss the idea.
If you're someone who thinks the state should be able to monitor and control how you spend your money (to prevent things like "money laundering," "tax evasion," the sale of politically-disfavored intoxicants, and Americans from playing online poker, etc.), you might also dislike the fact that Bitcoin is designed to be censorship-resistant.
And finally, you might be convinced that a fixed-supply currency is simply a terrible idea because you think it will lead to "hoarding" and economic stagnation.
Bitcoin's implementation
But even if you get past the objections outlined above, and still think that the promise of Bitcoin the concept is a good one, you might have doubts about Bitcoin's ability to actually deliver on that promise.
I won't try to list all of the objections in this category but they include doubts about Bitcoin's scalability ("you can't run the world economy on seven transactions per second!"), worries about mining centralization and/or declining block subsidies rendering the network vulnerable to a crippling 51% attack ("do you really think a system in which two or three pool operators control over half the hashing power is 'decentralized'?"), the possibility that the cryptography on which Bitcoin is based will be broken ("quantum computers, yo!"), the risk that concerted action by world governments will succeed in destroying Bitcoin ("the powers that be will never allow Bitcoin to survive"), the vague certainty that "something better" will come along and successfully displace Bitcoin ("Bitcoin is gonna be like, the mySpace of cryptocurrency") and the belief that Bitcoin won't gain mainstream adoption because it's too difficult for "non-techies" to use securely ("do you really expect my grandma to use Bitcoin?").
Why it matters
One thing to note is that the objections to Bitcoin the concept are primarily political or economic in nature, whereas the objections to its implementation are largely technical. And yet, it seems as though people who are skeptical of Bitcoin the concept tend to also be skeptical of its implementation. Similarly, people who think the concept is great tend to think that the implementation is great (or at least not fatally broken). And that correlation strikes me as a not-terribly-surprising example of cognitive bias. If you love the idea of Bitcoin, you're going to want to believe that it can work. If you hate the idea, you're going to want to believe that it can't. I also think the distinction matters because it seems to me that we should be addressing people's conceptual objections first. If Bitcoin the concept is a bad idea, well then we can probably end the conversation there and I don't have to try to understand what the hell a "bloom filter" is. On the other hand, if Bitcoin the concept is a good idea, then for God's sake let's try to figure out a way to make it work and improve its implementation -- as opposed to mindlessly jeering from the sidelines about its current perceived shortcomings.
My own views
Personally, I'm not too impressed by the arguments against Bitcoin the concept. Considering Bitcoin's digital nature to be a bug rather than a feature is, I think, symptomatic of a failure to understand the nature and purpose of money.Money is always a ledger, notwithstanding the fact that we've sometimes used physical tokens (such as pieces of shiny yellow metal) to serve as the accounting entries in that ledger. I also view decentralization as an incredibly important feature of good money. I'm firmly of the view that power corrupts, absolute power corrupts absolutely, and that--in our money-driven world--a monopoly power over the issuance of money comes uncomfortably close to absolute power. I also want my money to be censorship resistant, because well, I don't like censorship, and because I believe that financial privacy and financial freedom are basic human rights. And finally, I think that money should have a fixed supply and that its purchasing power should increase as the economy grows, not stagnate or decline, because I view saving money as the functional equivalent of investing in the overall economy. Money isn't wealth. Instead, it gives you the effective ability to make a claim on a certain amount of real wealth. When you don't exercise that claim immediately, the resources that would have gone to satisfying your present consumption remain available to be used by others who do choose to spend now -- whether for consumption or investment. You have, in effect, "loaned" those resources to society. In an economy that uses sound money, deflation thus represents the market-determined interest rate on this form of low-risk "loan," a loan that can be recalled at any time (by spending the money).
And so, just to make my views crystal clear, not only do I not consider Bitcoin's concept to be fatally flawed, I think it is absolutely brilliant. In my view, Bitcoin (assuming it works) has the potential to be the single best form of money the world has ever seen. For the first time we've got something that combines (and exceeds) the reliable scarcity of gold (the "store-of-value" aspect of money) with the transactional efficiency of a purely digital medium (the "medium-of-exchange" aspect of money).
What about the technical / implementation criticisms? Well, I feel less capable of evaluating these because of my ... let's just say "less-than-impressive" background in computer science generally and open-source projects, cryptography, and distributed systems more specifically. Having said that, I will offer a few general thoughts from my layman's perspective. (Also, I have written in a little more depth about the "altcoin" issue here, which I suppose is actually more economic than technical.) So, in part because I feel less capable of evaluating technical criticisms, I tend to worry about them more, but I'm still pretty (cautiously) optimistic about Bitcoin's future. Why is that? Well, one observation I have is that, in 2014, it's not really possible to be completely skeptical of Bitcoin's implementation. In 2008, you could have read the white paper and said, "cool idea, but it'll never work." You can't really say that today because Bitcoin is working. It's been almost six years now, and the Bitcoin network is still here, still processing transactions, still reaching consensus without any central authority, and still facilitating the transfer and storage of real economic value. And so, if you want to convince me that Bitcoin is doomed to fail, you have to convince me, not that Bitcoin can't work, but instead that it will stop working AND that it will stop working in a way that can't be fixed. So why aren't I convinced of that? Well, one reason, as suggested above, is simply that Bitcoin is still here. Every day that passes without it dying is another small piece of evidence suggesting that Bitcoin might be more resilient than its detractors think. But there's another reason, and it has to do with the fact that Bitcoin just isn't that complicated. It's a distributed public ledger that's independently maintained and verified by every full participant in the network using a common set of rules. Public key cryptography is used to allow users to prove ownership of (and reassign) particular entries in that ledger. And so the basic idea is actually quite simple. The only really tricky part was figuring out how to solve the "double spend problem" in a decentralized way. And that problem boils down to figuring out a way for participants in a distributed network to reliably reach consensus about the order in which transactions are received. That's it. And so the "consensus algorithm" is the tricky piece of Bitcoin, and that means that it's also the piece that's most likely to break. But, and here's the important part, the consensus algorithm can break without breaking the all-important ledger (e.g., even if an attacker gains control of 51% of the network, they can't rewrite the ledger an arbitrary distance into the past), and the consensus algorithm (and the protocol more generally) are not immutable -- if they fail or come under attack the network can adapt to counter the threat. As long as the ledger survives, and a solution for achieving consensus going forward can be found within a reasonable period of time, Bitcoin survives.
And finally, I'd just point that even if Bitcoin does fail catastrophically such that its ledger can't be preserved, that won't mean the end of cryptocurrency. We'll simply take the lessons that are learned from that failure and get to work building the next Bitcoin. Why? Because we believe that, no matter the challenges, the dream of a money that's honest, efficient, and free is one that's worth pursuing.
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[–]chowbungaman 10 points  
Great post! You summed it all up nicely. I basically arrived at the same conclusion, but what do you think about the argument that Bitcoin just does not solve a real problem or need? Yes, it solves the double spend problem etc., and thus allows for digital cash to exist...but do people need it? Grandmas found the internet to be very confusing, but they were willing to learn and try it because they really wanted to send their grandkids an email. People went to great lengths to overcome the technical issues of the early internet because the internet had so much pull, even if in just the form of pure entertainment and wonder. Personally, bitcoin has pulled me in, like you, but will it draw the masses in? Speculation pulls people in right now, but is that what will pull the masses in? Remittance use will pull some people in. Maybe savings on purchases if that becomes a big thing. What do you think?
[–]Amanojack 8 points  
Let's imagine a scenario where Bitcoin gets stuck in niche uses with no compelling reason for most people to use it. Once it saturates those niche uses, its price should stabilize as there is no more upside since by hypothesis it is stuck. But a stable price really makes it look silly to hold gold instead of bitcoins, since then Bitcoin has almost every advantage in the store of value function that gold bugs seek. But replacing a large part of the gold market makes Bitcoin enormous in terms of market cap, and allows for many other uses not possible today. The ubiquity certainly would allow for pretty cheap and frictionless remittance, which gives another huge set of people the motivation to use it.
But here's where the magic happens. Think of the community of Bitcoin holders and users as an economic bloc, or as a virtual city. Any business that operates entirely within that city gets to experience the full benefits of Bitcoin: for example, not just cheaper remittances but almost free remittances with zero hassle since there is no need to go through fiat money at all. Frictionless transactions for everything. This is a city many businesses will want to "move to" simply because it's more profitable. At first it might only be manufacturers paying suppliers overseas in Bitcoin but dealing in fiat money with customers (B2B aspect is entirely in the city, but B2C remains outside). This accretes step by scarcely noticeable step, each one enabling things that were previously impossible, each one motivating more people to join the city and move more and more of their dealings under its umbrella.
The question of whether Bitcoin (or at least something like it) will take over was, to my mind, answered quite a while ago, when it was not only clear that the endgame of everyone using Bitcoin would be an extremely compelling future, but that the snowball had already starting rolling down the hill. Even if no further innovation happens, I think Bitcoin is destined to replace gold, for example, simply because it offers advantages that gold cannot ever offer. There's just nothing conceptually standing in its way other than volatility, which eventually goes away whether it stays niche or goes mainstream. Now implementation is another matter, but your question of whether Bitcoin solves a real problem is a conceptual one.
EDIT: This also suggests a sub-dichotomy within those who object to Bitcoin on a conceptual basis: those who believe a world where everyone uses Bitcoin is not a desirable outcome, and those who merely believe that in the world as it is today Bitcoin adoption by a single individual provides little or no benefit to the average person, so that even if full mainstream adoption would be a great ideal it can never be reached since there is no motivation by the average person to take the necessary steps to get there.
[–]lee1026 3 points  
An asset with a long term movement of zero is not always a stable market. For example, gold is rather volatile, but it have more or less saturates a few niche uses.
[–]robogarbage 1 point  
You mention that bitcoin has advantages over gold - that's like saying highways have advantages over parking lots. Of course they do - they're two different things. Gold is a store of value. Bitcoin is a transaction method. Storing value in bitcoin is like parking your car on the highway, it's not a great parking spot and it interferes with the flow of traffic on the highway. The biggest cause of volatility in bitcoin is the fact that a huge % of bitcoins are held by speculators/hoarders. That pushes the price up, but everyone knows that the price could come crashing down at any time if some speculators decide to cash out. That volatility undermines its usefulness in transactions. If it's not useful for transactions (e.g. suppose a better system comes along) then it's worthless. I think the bitcoin system has a big future ahead of it, but I don't think owning original bitcoins is a way to own a piece of it. I don't think there's any way to own a piece of the system, since it's open source.
[–]fiat_sux4 7 points  
Whoa! You got your whole point backwards, so your conclusion is the opposite of what it should be.
Hoarding increases the price, yes, which decreases, not increases volatility. Just think, if the price went down to $.10 per bitcoin, that would mean a market cap of $1.3 million. Anybody could sneeze and the market would go up or down by a factor of 2. Instead, as it is, it takes millions of $ to make the market move a few percent. If the price went up to $100000, all the biggest holders would have cashed out for the most part by then and there would be way less power to move the market.
[–]itsgremlin 4 points  
You couldn't be wronger.
[–]lifeboatz 1 point  
I am not sure if you are serious, because this seems so fundamentally flawed. A hilarious post!
[–]Capt_Roger_Murdock[S] 1 point  
Thanks! I don't find the argument that Bitcoin fails to solve a real problem convincing at all. Again, I think fiat is broken because (among other reasons) it's not reliably scarce, and I think gold is broken because I can't instantly teleport it halfway across the world. How does Bitcoin's world takeover play out, assuming for the moment that it is in fact going to happen? Well, I don't know. In general, I think it plays out iteratively over the next 10-15 years. More people learn about Bitcoin and begin to experiment with it. The network gets bigger and more valuable. People continue to develop tools that make Bitcoin easier to use securely. Those tools and the network's growth makes new applications feasible (ETF's, remittance networks, OpenBazaar, etc.). People develop those applications. Those applications encourage more people to join the network. That growth in turn means that other applications are now feasible, etc., etc.
[–]xcsler 4 points  
Excellent post, especially the accurate use of quotes in the 'Bitcoin the concept' paragraph.
Aside- Any thoughts on Ethereum?
[–]Capt_Roger_Murdock[S] 3 points  
Thanks! Re: Ethereum, honestly I haven't been following it very closely.
[–]volhareng 1 point  
While it may have strengths in other areas, Ethereum will have permanent inflation, making it a poorer store of value.
[–]bambitron76 5 points  
Well stated sir. Thank you for your post.
[–]Bungeebones 6 points  
I think those are secondary issues. The main issue is whether or not humanit wants to continue debt slavery based on money created out of thin air or not (that's the present system).
Bitcoin, on the other hand, is a 130 year plan to extricate to world's population from debt.
So, will they choose the red pill or the blue pill?
[–]fuynut 1 point  
Bitcoin [...] is a 130 year plan to extricate to world's population from debt.
I like that definition: Bitcoin is a 130 year plan, or 20 year plan (shhh, don't tell everybody), to extricate to world's population from debt.
[–]fuynut 3 points  
[...] the consensus algorithm can break without breaking the all-important ledger [...] As long as the ledger survives, and a solution for achieving consensus going forward can be found within a reasonable period of time, Bitcoin survives.
This is the right answer to the questions: "Can it be hacked?", "Isn't everything hackable, if not today, in the future?"
If I vandalize a WWI Wikipedia page am I changing History?
[–]xeromys 3 points  
Excellent post. I appreciate the time, effort and eloquence of your article.
The problem Bitcoin solves, in a nutshell, is the implementation of 'scarcity' , a true break through in computer science in my opinion.
[–]ferretinjapan 2 points  
I was initially sceptical of Bitcoin when I first heard about it. Satoshi's claims were extremely bold after all. But soon after I read the white paper and was convinced the concept of a purely decentralised network via PoW was do-able, I still wasn't 100% convinced though because as any programmer will tell you, the devil is in the details. Bugs can cripple systems and this is especially so when you are using a piece of software to support an entire self-sustaining economy. Programmers are very diligent when it comes to uncovering bugs, and though I didn't have time myself to trawl Bitcoin's code base, I kept a very sharp eye on the developer mailing lists and forums because I knew that Bitcoin's claims were extremely bold, and that programmers will gladly tear apart his code if it was badly written, but the thing that really struck me was no-one was openly voicing their doubts about Bitcoin's functionality because of it being badly implemented. That is when I really started to take Bitcoin seriously. It wasn't simply a good idea, Satoshi had also done a very careful job of writing up the implementation too.
[–]Frankeh 1 point  
There's three categories. You missed out 'Bitcoin the community'.
[–]Capt_Roger_Murdock[S] 1 point  
I guess I don't see how a dislike of the self-selected people who frequent /r/bitcoin would translate into skepticism of the technology?
[–]DigitallyDisrupt 4 points  
How about skepticism from those that know how markets are manipulated, how important the SEC is to stock... and the fact there is no such thing in bitcoin, creates a large risk of price failure.
[–]Amanojack 5 points  
To make a complete argument for market manipulation resulting in "price failure" you'd have to at least theoretically show how a series of buys and sells could drive the price to zero or keep it down indefinitely.
I can think of ways to keep the price bottled up for a while, but in the case where Bitcoin continues its exponential adoption all of those ways merely delay the inevitable price rise and make the explosion all the bigger when it finally happens. You can only shake out weak hands (price chasers) for so long before the strong hands form the vast majority, and then manipulation becomes a losing proposition as it's just donating coins to the strong hands (strong hands here denotes any investor who is dead-set on holding regardless of price movements, or dead-set on buying if they don't yet have any).
[–]flakesobran 6 points  
I've been poking around the fringes of bitcoin for about 2 years and I can tell you I like Bitcoin the satoshi whitepaper and theoretical prototype.
But I do not like Bitcoin the cultish libertarian echo chamber.
Don't know where that puts me on your spectrum.
[–]Amanojack 18 points  
If the creators of Tor or BitTorrent or HTTP were cultish libertarians would that matter to you?
[–]IGETSHIVERSWHENIP 1 point  
I suggest you stop using all currencies immediately, stop using whatever currency you use, pedophiles use your currency all the time. I'm sorry that I had to be the one to beak it to you, be strong. Rid yourself of that evil money by putting all your money in a large envelope, and sending it to me.
[–]pennyservices 1 point  
I know this isn't the point, but just to save the searching:
Bram Cohen, creator of BitTorrent is more socialist than libertarian. "I find Ayn Rand completely unreadable due to a total lack of literary merit".
Tor was developed by the US Naval Research Laboratory to protect US intelligence communications.
[–]theonetruesexmachine 1 point  
I mean Satoshi wasn't a cultish libertarian, he just didn't like banks. It's the fucktards that came right after that are the problem here, and they haven't left...
But yes, I fully agree that this is an issue that will resolve itself in time. And any bit it slows down adoption is just cheaper coins for me.
[–]nanosapian 1 point  
In Delueze's model of capitalism, it's the fringes that create the future centers of growth, so the bigger concern would be if the political fringe wasn't involved.
[–]Capt_Roger_Murdock[S] 10 points  
I think that's orthogonal to my spectrum. I don't see how the political views of today's "Bitcoin community" (which in reality, run the gamut) really matter. It's a technology. If you find it useful, use it. If you don't, don't. If Bitcoin continues to grow and become more popular, the views of its users will necessarily "normalize" to more closely reflect those of the wider public. In fact, we've already seen this. (I seem to recall seeing some survey results of Bitcoiners from maybe a few years back and last year, and the percentage of self-described anarchists / libertarians had dropped pretty sharply.)
[–]cqm 1 point  
if you can read chinese you can be exempt from libertarians!
[–]CeasefireX 2 points  
i think it will pass in time honestly... or at minimum be diluted in due course.
[–]veritasBS -2 points  
[–]notisis 4 points  
The Fed's great accomplishment was that they solved, to a great degree, the need to lower the volatility of the value of money thru stable, low-grade inflation. This should not be in dispute.
The advent of treasury bond futures in the 1970's opened up the invention of thousands more financial products and a totally different approach to risk management. The details are plenty and I've no time to get into them here.
A tradeable product like Bitcoin solves the problems with traditional money while providing a mechanism to offload risk. SInce Bitcoin is not managed by a central entity, its value will remain volatile. It's on the users to manage the risk.
[–]Capt_Roger_Murdock[S] 9 points  
The Fed's great accomplishment was that they solved, to a great degree, the need to lower the volatility of the value of money thru stable, low-grade inflation. This should not be in dispute.
Even if I were to agree that the Fed had successfully reduced the volatility of the dollar's value, I'm not sure I'd agree that that's a good thing. The way I see it, the value of money is simply its price. Allowing a central authority to manipulate the quantity of money in an effort to change that value is a form of price controls. Those price controls (like all price controls) interfere with the signalling and rationing functions that prices are supposed to perform.
[–]notisis 9 points  
I'm not a Fed supporter. For everything they've accomplished, there's been a corresponding drawback: inflation, boom/bust cycles, wealth inequality, etc. However, you can't argue that the Fed has done their job: stable inflation and the protection of the upper class' stranglehold on wealth.
[–]eliazar 4 points  
"Allowing a central authority to manipulate the quantity of money in an effort to change that value is a form of price controls." Mind blown!
[–]crshbndct 2 points  
It's on the users to manage the risk.
And therein lies the rub.
[–]mughat 2 points  
Volatility is the market finding the right price. That is infact good not bad.
Money needs to be limited in supply. Not inflated.
[–]notisis 1 point  
I agree with your second paragraoh.
The volatility of money, however, is only good or bad relative to the audience. It's good for individuals to see money's supply limited and its value stable. Steady inflation and low volatility benefits business and borrowers.
[–]blanket12334 0 points  
I would dispute the feds impact on reducing volatility of the value of money. Despite fed control we have seen many periods of instability in the price of money.
Of course prices are more stable in the last 50 years than they were 150 years ago... we have modern efficient capital markets in which many players can help set and stabilize prices. The Fed isn't the only difference between modern and historical money markets.
[–]pizzaface18 3 points  
When you say stable prices, I think you mean steadily going up. Motel 6 is a great example.
[–]blanket12334 1 point  
Yes, I do mean that.
[–]notisis 1 point  
I really think you're wrong. You can dispute that money's value should be volatile so prices can adjust to economic conditions more fluidly and rapidly. But you can't argue that intervention leads to more stable prices.
The point of my post was to say that BTC will remain more volatile than traditional currencies but that's ok. It's a tradeable mechanism that allows users to manage risk It's a lot like how Treasury Bond futures allowed regional banks to manage their interest rate risk.
[–]blanket12334 1 point  
you can't argue that intervention leads to more stable prices.
I didn't. I'm confused by your post.
[–]rydan 3 points  
And so, if you want to convince me that Bitcoin is doomed to fail, you have to convince me, not that Bitcoin can't work, but instead that it will stop working AND that it will stop working in a way that can't be fixed. So why aren't I convinced of that? Well, one reason, as suggested above, is simply that Bitcoin is still here. Every day that passes without it dying is another small piece of evidence suggesting that Bitcoin might be more resilient than its detractors think.
Pretty much the same argument I use here in favor of the dollar which is supposedly about to collapse at the drop of a hat sometime within the coming months.
[–]Capt_Roger_Murdock[S] 4 points  
Of course, but I'd argue that the dollar is broken (e.g., centralized, not reliably scarce, not censorship-resistant), and that it's broken in a way that can't be fixed. (It's not an open-source protocol that can simply be forked. There's no viable way for the dollar to become decentralized.) But will it collapse in a matter of months? Probably not. It does benefit from the inertia of very, VERY large network effect. But am I confident that it will be around in its current form in 20 years? Not at all.
[–]crshbndct 1 point  
It doesn't matter if the objections/criticisms are valid or not. It matters if people believe them.
[–]Mikadily 2 points  
Uhh, I love this sentence a lot.
In an economy that uses sound money, deflation thus represents the market-determined interest rate on this form of low-risk "loan," a loan that can be recalled at any time (by spending the money).
[–]sexibilia 2 points  
Great write-up, thanks.
[–]dreugeworst 1 point  
Why did you put money laundering and tax evasion in scare quotes?
[–]Capt_Roger_Murdock[S] 1 point  
I think the whole concept of "money laundering" as a crime is ridiculous. Here's a good column on "money laundering as financial thoughtcrime" that I'd agree with. And I'm an anarchist, so I personally consider the supposed crime of "tax evasion" to be equivalent to "robbery avoidance."
[–]dreugeworst 2 points  
Yeah that's pretty much what I thought the reason would be. This is not in any way a minority view in this subreddit, and as other commenters have pointed out it's somewhat offputting for people with different political views.
People voicing what are in my opinion legitimate concerns about how bitcoin will affect the functioning of the state are told repeatedly that the state is unnecessary in many ways. This makes bitcoin a very libertarian tool as its community does not see a need to address these issues. Perhaps the issues are in fact inherent to cryptocurrencies.
I believe this to be a big problem for bitcoin, as the majority population is not in fact libertarian and does feel a need for the state to be able to levy taxes. They will be concerned at the lack of control over bitcoin and mass adoption will not ensue unless confidence in the government is very low indeed. Here in Europe, that is not the case although in other countries (many developing countries perhaps) it may be.
I got attracted to bitcoin because I don't want the banks to have as much control as they do. I like the fast transactions and low transaction costs. Many of these may also be achieved by other means however as evidenced by the much better situation in Europe as opposed to the US when it comes to banking.
Well I didn't mean to make this so long, and don't want yet another argument on libertarianism either, but I feel many of the non-problems of bitcoin become actual problems when you're not a libertarian...
[–]Capt_Roger_Murdock[S] 1 point  
Thanks for the reply. So I guess my response would be that Bitcoin will not kill the state (even though I'd like it to), at least not by itself. The state's real source of power is not its control over money (although that's important). Its real source of power is the widespread (and in my view, misguided) belief in its legitimacy. Even if Bitcoin were to see massive mainstream adoption, the state will still have 9,000 different ways to collect revenue and sniff out "tax cheats" (obligatory scare quotes ;)). What Bitcoin may do is shift the balance of power back towards the individual somewhat when it comes to financial freedom and privacy. And I think that's something that even a lot of non-libertarians might see as a good thing. /u/changetip 1 internet
[–]changetip 1 point  
/u/dreugeworst, Capt_Roger_Murdock wants to send you a Bitcoin tip for 1 internet (1.096 mBTC/$0.42). Follow me to collect it.
[–]daringpooplord 1 point  
There's a third camp: Those who believe that Bitcoin has utility, but believe that the current value is based mostly on speculation and may not be reflective of that utility.
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[–]jokes_on_you 3 points  
I'm interested to hear what some of the internet's greatest minds have to say about this post.
[–]Apatomoose -2 points  
I believe in the Blockchain technology. It has the potential to revolutionize finance and contracts.
I don't believe that Bitcoin itself is perfect. The biggest problem I have with it right now is the volatility. To me that is a much bigger issue than the block size.
Bitshares looks promising to me. They seem to have solved the volatility problem with BitUSD.
NuBits also has a solution, but it looks too much like a pseudonymous Fed to me.
[–]Capt_Roger_Murdock[S] 8 points  
I don't believe that Bitcoin itself is perfect.
What the hell dude? Let me guess, you're a paid shill for the banking lobby? ;)
Edit: to make a serious point in response to your comment, I'd agree that Bitcoin's current volatility is a huge problemif Bitcoin were supposed to be a currency right now, but at least from my perspective, that's not the case. Right now, Bitcoin's primary utility is as a highly-speculative (high risk, high potential reward) asset. If it continues to succeed and grow, it may transition to being a less-speculative (lower risk, lower potential reward) gold-like store of value. And if it's really successful, its primary utility may one day be as a currency, i.e. a direct medium of exchange with lots of "closed loops" where people earn and spend bitcoins without ever converting to fiat. But success as a currency is much more reliant on network effects and so will take a much longer time to achieve (assuming it ever happens at all). Finally, it should be noted that some of Bitcoin's current speculative value is based on its future potential usefulness as a currency.
[–]BitcoinFuturist 4 points  
No they haven't, its nonsense, its not technically possible to peg a crypto currency to the dollar.
see https://bter.com/trade/bitusd_usd prices fluctuate between 0.91 and 0.97
[–]Apatomoose 2 points  
That's a heck of a lot tighter than bitcoin.
[–]BitcoinFuturist 1 point  
Are you kidding that's nearly 10% !
Just look at the order book and trade history, its a farce !
[–]Amanojack 2 points  
It's possible, but you need reliable oracles. In BitShares the oracles are provided through the DPOS system. This merely pushes the question over to whether PoS is viable long term, and I don't think it is. Once there is enough incentive to game the system, and enough people know about it who aren't busy making money elsewhere in the cryptospace, I think people will game it. See the article Gavin linked about the flaws in PoS.
[–]MeTHoDx 1 point  
Maybe during the first week it launched. The last 3 months I've only seen it between 0.98 and 1.02. If anything, the peg is working better and better as time goes on. Here is a link that draws from the full pool of liquidity:http://coinmarketcap.com/assets/bitusd/ at the time of this post BitUSD is as 0.999. Looks pretty damn good to me.
[–]lee1026 0 points  
Of course it is possible to peg a crypto currency to the dollar. Chase can easily* issue a coin that is completely pegged to the dollar. It would be different from bitcoin in 2 simple ways:
  1. No one is allowed to publish blocks other than Chase itself.
  2. Each block would issue a variable number of coins.
Chase can say that "Anyone can exchange these coins for account balances at Chase" and that "Anyone can exchange account balances at Chase for these coins".
With these simple changes, we would have a coin that is 100% pegged to the dollar (or whatever the bank wants to peg it to), and is useful in the most of the ways that crypto currencies are useful for.
*subject to AML laws. I understand tech, not AML.
[–]walloon5 1 point  
If Alice sends Chasecoins to Bob, Chase has to know who Bob is, the lack of fungibility comes from Chase having to do AML on Bob who is on the other side of the world. Maybe he wants to be anonymous to Chase. Now Bob doesn't want Alice's Chasecoins. Alice so sad, Bob kind of mad.
[–]lee1026 2 points  
Depends on the details of AML laws, I don't know the laws anywhere nearly enough for that. I know in the US that it is legal to have bearer bonds, which is "Pay X dollars to the bearer of a document". Chase can probably make that argument, but again, I am not enough of a lawyer to know the answer. Bob will (probably) need AML before Chase will pay him, but he can always spend it, and have someone else who can go though KYC at Chase actually redeem it.
Again, the details of AML regulations is complicated, and I don't claim to fully understand it.
[–]walloon5 1 point  
Yeah I thought we still had bearer bonds but apparently they were too cool and now new ones can't be issued here. Rats.
You know though, with the right lawyers Chase could pull it off. It might seem illegal on it's face but Napster seemed that way too and they got kind of far before it fell apart..
[–]lee1026 1 point  
I don't think its that new ones can't be issued. From what I can find, it is only that interest on them isn't tax deductible (which is a moot point for ChaseCoin, as it presumably won't carry interest), and that the redeemer needs to supply KYC information. That won't pose a problem to any merchant.
[–]BitcoinFuturist 1 point  
Okay let me rephrase, Its not technically possible to peg a decentralised trustless cryptocurrency to the USD.
If chase only can update the ledger, what have they achieved ? Theyve already got a ledger only they can update.