Bitcoin Forum

Dmytri Kleiner wrote a piece about a week ago that was so misguided it couldn't go unchecked.

He original article: http://www.dmytri.info/bitcoin-and-public-money (http://www.dmytri.info/bitcoin-and-public-money)

Our response:
http://blog.bitinstant.com/blog/2012/11/9/response-to-dmytri-kleiner-on-the-origin-of-money.html (http://blog.bitinstant.com/blog/2012/11/9/response-to-dmytri-kleiner-on-the-origin-of-money.html)

Erik: your article is chessmate for Dmytri's.  Well done.

Well done man, you nailed it. I'm sick and tired of sophistry and I'm very happy someone is willing to step up, take the time and do the work of calling it out for what it is - garbage.

Agreed.

You know, it's hard to combat mythologies like these, because the inventors of these myths often aren't the ones doing the brunt of the effort of propagating them -- that would be the useful idiots like Dmytri who believe what they are told blindly.

Take ΅the origin of money is tribute" as an example.  This truth-bearing statement is very much obviously a lie (and also a myth because people like Dmitry believe in it without any valid evidence to support his belief).  At some point, when Dmitry was told this lie, he just believed this lie at face value and incorporated it into his belief system.  At no point in time did he bother to question or fact-check the lie against any number of facts already widely available.

The result of this pattern of ingestion of lies: when people like Dmitry talk about any subject, they explicitly (or, worse, implicitly) fill in lies as established premises in their arguments, therefore coloring and sabotaging every single possible thought they could experience about reality and share with others.  Furthermore, the very confidence with which they express their unsubstantiated and false premises as unquestionable truths acts as reinforcement.  Sort of how "which president is the 'good' one?" implicitly establishes the unsubstantiated premise that "having a president is good / mandatory / inevitable" without actually saying it.

The result of that link in the chain of lies: people who consume this kind of superstitious garbage read arguments like Dmitry's and bellyfeel "well, perhaps something in the argument might be questionable, but surely the initial premises must be correct", reinforcing the myths as time goes by.

This is convenient for the liars who make up these myths, because the useful idiots genuinely believe the lies and repeat them to one another, which makes them that much more convincing when they spread the lies, and that much more difficult to accuse them of corruption and venality.

All of this reminds me of how people remember they learned about their pet lies.  They remember the lies as truths that somehow must be true because everybody around them has heard of them and pretty much accepts them.  What they don't remember is that teachers (or other authority figures like priests) told them these lies when they were children, and threatened them with punishment if they refused to believe them.  Since their brains weren't fully developed, they can't remember the threats attached to the lies -- they only remember the lies as truths.  This is the tried-and-true process mechanism that all religions (including statism) have used to spread their poison, it's very effective, and it's still going on.

Our job is so much harder than theirs.  They get to use threats to "convince" children to believe in lies ("God/vernment loves you", "when God/vernment forces you to give them money that's charity", "when you don't obey or give money to God/vernment you are being a bad boy", "God/vernment is good when they smite people who refuse to pay and obey").  We're limited to using reason and evidence to try and extirpate these cancers rooted in adults carrying them decades ago.

I'd already posted in the comment stream of the article.  I posted once more, and here's the text of my comment in case the Staazi doesn't publish it:

-------------------------

Dmytri,

You're right when you say that people doing business as "the State" can certainly threaten everyone else into paying up, whether they transact in Bitcoin or seashells.  Nobody contested that.

With one condition: for them to threaten anyone, first they need to be aware of some activity that (in their mind) justifies their threats, and Bitcoin (plus prudent behavior on the part of the activity's participants) makes that pretty much impossible for them.  No one can punish what they can't find.

And that's just great!  That's exactly what we want.  That is why Bitcoin doesn't need to replace fiat currency.  Bitcoin can be used to hide people's economic activities from this mafia.  Make no mistake, this is a deliberate design decision in Bitcoin. This decision will eventually de-fund and weaken this mafia you speak of.

Of course, again, some of your conclusions about how Bitcoin can't replace fiat currency are true (even if the premises you use to arrive at them are completely wrong).  Public money may or may not continue to exist, but there will inevitably come a time when nobody will use it, because a better alternative -- Bitcoin -- has arrived.  It happened in the Roman Republic, it happened in Zimbabwe, and it will happen here too.

Isn't that just fantastic?

Very well said Rudd-O :)

To demand any type of medium-of-exchange already assumes the definition/concept 'money'.

What a pile of nonsense, typical european waffle. Tributes can be paid in many ways besides money - in goats, in military service, in free labor (as in Dmitry's motherland) etc

Erik, I sometimes think you're lending entirely too much credence to ass-clowns like him by bothering to reply to his baloney. Or to put it another way, would a modern-day neuro-surgeon sit down to have a serious medical discussion with a shaman from 2000 years ago?

 :)

Thank you very much, guys.  I welcome your appreciation.

Of course Dmytri is not on this forum, but he is defending himself in an educational tweet-a-thon;
https://twitter.com/dmytri and here https://twitter.com/jonmatonis/status/267255183443120128

"Thousands of bitcoins for cryptosecurity, but not one damn satoshi for tribute!"

Derrive=derive.

And after all that, Dmytri is still correct. If you think bitcoin is going to replace govt currencies then you are so far out to left field you dont need to reply. This place is just like Apple forums. Fanboys. You do raise some good points though.

Typically an assertion like that is followed by an argument.  WHY do you think Bitcoin can't replace government currencies?

'?
More to the point, does Bitcoin even need to replace government currencies?  Who cares, right?  Bitcoin is sound money, superior to government currencies, so it'll replace the currency used in the market, or most of it, or only a significant chunk of it.  This will be the first case of good money displacing bad money :-)

Best discussion on Bitcoin and money in forever - this is getting to the heart not of whether Bitcoin is good or bad, but of how we value the boundary between private and public goods in the next, networked century. I applaud Dmytri for bringing up the issue, and for highlighting the challenges that both Bitcoin *and* the state face.

My own opinion is that the Bitcoin crowd has a long way to go, and that Dmytri is "right". To be on the fence about it, I want Bitcoin to succeed in order to improve the effectiveness of both individuals *and* common action. Both can do better, and indeed *have* to if we're going to face up to an ever-changing, fucked up world.

Right now, Bitcoin is still "at risk" IMHO. It has promise. But it's also naive. It is an experiment that could go either way. But the challenge is not to rebel against existing hierarchies, nor to replace them.

The challenge is to re-build them. Better.

Rebuild reputation models. Rebuild tax models. Rebuild payment models. Rebuild banks and insurance models. Rebuild user interfaces. Rebuild local currencies.

Redefine "fiat".

The world is fucked up because of coercion, not because the coercion isn't efficient enough.

There is no such thing as a better tax model that will result in improved common action, because pointing guns at people and ordering them around is the exact opposite of common action.

When taxation becomes impossible, and the institutions which subsist on it collapse, then the opportunity for common action will start.

Government will (in the end) tax your house, your land, your car etc. and will demand BTC. You cannot hide physical property too much and they will tax it. For bitcoins!    ;D

It won't work.

There's a form of EROEI that applies to taxation. Governments have a exponentially-increasing need for taxation to bribe the dependent classes, pay public sector pensions, and to make legislators rich by diverting money to their cronies in the "private" sector.

Eventually the need for taxation will exceed the available productivity and the state will collapse just like it did in Rome, Weimar Germany, the USSR, and many others. That point comes much faster when the enforcement cost rises. If the government has to spend $0.01 per dollar of revenue in enforcement costs the game can go on a lot longer than if it has to pay $0.10 per dollar of revenue.

If taxes must be attached to tangible property and collected directly from individual taxpayers the "return on investment" from the perspective of the government drops catastrophically.

Dmytri is right about this much: Bitcoin will never replace Government fiat money completely... at least not in powerful western nations any time soon. The reason why has nothing to do with the inability of the Government to tax a currency like bitcoin. The reason is because the system is so heavily dependent on endless streams of debt-based fiat money. They will never recognize a currency like bitcoin as an official financial tool for paying public debt and they will never allow us to pay taxes or fines in anything other than their fiat Government currency. Well certainly not in our life times. Bitcoin will simply fill it's own niche in the currency market, all other Government currencies will still exist along side bitcoin... they each serve a purpose and have different properties, the Government will always use a currency with properties they desire. And they've spent a lot of time crafting this absurdly mind-boggling debt based system made of unicorns and rainbows.

This theft might or might not happen in the future, but at least Bitcoin will have prevented the biggest heist of all: inflation.  ;-)  In my book, that's progress.

Utopian vision? I have nothing of the sort. Bitcoin doesn't make the world perfect, and a libertarian world in which freedom is respected would not be a perfect world either.

And there is a very good strategy to achieve "our aims" (though you've already made a mistake in thinking all libertarians have the same aims). My strategy is this: build Bitcoin. I'm not destroying anything, I'm building. I'm building an alternative to the decrepit system we now use.

And nobody is hoping that anything "magically rebuilds." Rather, some of us understand that it is man's natural tendency to build, and that the extent to which coercive elements of society are removed is the extent to which man can best build and create. It's not magic, it's nature.

What IS wishful thinking is the Statists who, for some reason, think that a group of men can plan the economic relationships of millions of people. What IS wishful thinking is the Statists who believe the unending printing of money can actually create real wealth.

The libertarians are not the ones destroying anything. They are not the ones bombing, building machines of war and destruction, and crushing the spirits of millions of otherwise creative people with regulations and fallacious dogma. Those who are involved in Bitcoin are trying to build something crucially important. There is very much a strategy to it, and no magic is involved. Markets work because of the natural tendencies of humans, and we're demonstrating this every day we continue forward.

Yep. It's right in the language. Libertarian=liberty. Government=govern (manipulate, control, restrain).

Well said.  This very, very obvious point is often missed.

There is no plan, nor any need for one.

When people stop believing that threatening other humans with violence is a valid way of solving social problems the State will end, just like how slavery ended when people stopped believing it was right to own other humans. When the State ends, people will find alternate ways to solve their problems, just like they found alternatives to slave labor. It's impossible to predict the precise form those alternative solutions will take, because making that prediction is equivalent to solving the economic calculation problem.

a) ruthless, tribal governments (organically arise)
b) centralized, highly organized governments

take your pick.  People will never be civil enough to sustain ancap.

Certainly as long as the world if full of dysfunctional, exploitive families it will be difficult for people to stop conflating their childhood experiences with human nature.

I concede that maybe you won't be civil enough.  I, my loved ones, and pretty much everyone I interact with on a daily basis, will be, because we are civil already, and we are civil not because but despite threats.  We civil human beings outnumber people like, perhaps, you, probably 25 to 1.

My observation to you: if you fear death in such a world order without violent authorities, perhaps you would like to learn to be civil before it takes place?  Since not being civil will certainly cost you your life in ancap society, it pays off to learn civility.

If you arent taxed how do you think all those highways and roads and thousands of other things are paid for? There is no centralization we see scams all the time and there is nothing you can do about it. Your computer gets hacked you are done. Dotn care how many backs up you have it takes a matter of seconds to empty your wallet once its broken in to and you will not be reimbursed by anyone. I can go on and on. Mostly the arguments why bitcoin is superior are just lousy points aka quick transaction times and low fees, yawn.

Generally speaking I completely agree with the conclusion of your response, but there is one point you make which is just flat out wrong:

"The origin of money is barter. In fact, money derives directly and unavoidably from barter."

Nowhere in recorded history has money ever derived from barter. It has always derived from credit or the need for mobilization of armies. http://www.amazon.com/Debt-First-5-000-Years/dp/1933633867

<cough> No sorry.  Money is the most liquid good in a barter economy, and arises naturally.  And it does so, so quickly that there is no recorded example of a stable barter economy; at least not in the sense that some form of commodity didn't function as the monetary "change" in a barter transaction.  There are plenty of examples of societies that evolved money well before any need to raise or mobilize an army, even before the invention of writing in order to record same.

Don't argue with me, argue with David Graeber and history.

You do realize what you are actually teaching your child (using this example) is not to fear exploration for fear of harm to himself, but fear exploration for fear of harm from his parent? If the point is to make them remember this occurrence, what do you think will happen when they get old enough to leave the nest?

I don't have to do either.  history is already on my side, just not in Graeber's mind.  You made this reference, it's up to you to argue that it's correct.  I don't personally care what you believe, but to just say "Graeber says this" is committing the 'appeal to authority' falacy using someone I do't even view as a an authority on the matter.

I concur.  Don't waste your time on that guy.

I don't mind that you deleted the posts - I'll take that as acknowledgement rather than a clear abuse of power.

Take it how you like, but I've not deleted anything.

EDIT: Well, I have now.

For clarification - I said credit OR the mobilization of armies.

I suppose we will agree to disagree on this point in general. I simply do not agree that there has ever been such a thing as a "barter economy" nor that it has escalated from such a thing to a monetary economy. I, like graeber choose to use physical evidence, rather than masturbatory intellectualism to fill in the blanks of history.

Post edited for being in the wrong venue.

Try again in the split topic where this belongs.

Reply moved to https://bitcointalk.org/index.php?topic=123798.0 (https://bitcointalk.org/index.php?topic=123798.0)

Ryann, listen carefully and I'll explain how things are paid for without taxation. It works like this: you take your money, and pay for the things you use. Simple. When you fly, you pay an airline and airport company. When you drive, you pay for a car. When you eat, you buy food. When you want internet service, you pay an ISP.

In the case of roads, the fact that they are -currently- paid for via taxation doesn't mean that without taxation they cannot be paid for. Indeed, the early days of roads in America, they were all privately run. Heard the term "turnpike?" That used to refer to private highways that were paid via tolls. And before you say, "but tolls are so obnoxious!" you should know that, once again, private industry solves that problem via either pre-paid subscription models or RFID drive through tolls. In Dubai, the "toll booths" are just small structures that cross over the freeway. They scan a sticker in your car window when you drive underneath at 80 miles per hour. Easy.

Roads are not hard to build, and it's easy to charge those who use the road for their usage. Far more complex services exist in the private marketplace... indeed the computer on which you're typing is far more complex than a road, and was "paid for" privately by private individuals. Should government pay for and manage all our computers?

And don't get me started on "if there is no centralization we see scams all the time"... It is the centralized State which is the largest scam of all.

Heheheh the fact that you cite a book which reviews the past 5,000 years betrays a misunderstanding of money, which is much older than that. We are not talking about round metal coins here. "Money" was deerskins and seashells long before coins existed, and long before any of the more advanced financial instruments examined by Graeber.

It's you who is arguing with history. It does not take a rocket scientist to realize that 50,000 years ago cavemen were exchanging one good for another (barter). You agree, right? During this barter, a smart caveman would realize that if he traded not just for things he personally wanted, but things which others might want, then he could get more for his efforts. The first time a caveman realized this, and traded his meat for the fur which he knew another valued, money was discovered. As other cavemen realize that it's always easy to trade a fur to someone else, they begin using furs as a medium of exchange. This is money. The world did not fundamentally change when these first cavemen started behaving this way, there was no point in history when mankind shifted from "barter" to "money." It's a progressive, natural process of marginally favoring certain goods over others which leads to one or several goods tending to become used as money.

Money is thus inseparable from barter. Stated differently, we're all still bartering every day, and the item we prefer to barter for is now called Federal Reserve Notes, at least here in the US.

Perhaps I have misunderstood Graeber, but isn't one of his central themes that barter economies were not the start, but credit (like 'I do something for you, and you will do something for me in the future' -> credit)?

This is a fantasy. A widespread fantasy which is talk in every economics 101 book, but a fantasy nonetheless. Economies have not historically been built to facilitate value exchange, but for other reasons, incomprehensible to economists. The problem arises because we have taken our economics and worked backwards - whereas what was needed was a comprehensive look at what actually took place (and is taking place today in primitive tribes around the world) in order to understand how money was created.

...and I'm still waiting for the part where you prove what Erik said to be a fantasy. Feel free to write another inconsequential paragraph about it.

Even if Graeber was correct in all the historical evidence he describe, at best that would prove that credit transactions pre-date spot transactions. In all his the examples he shows, whatever was used for money had already been a highly desired good prior to the record of it being used as a money. His own words show that he does not understand economics.

Ummmm I can assure you that almost none of my opinions are obtained from an Econ 101 textbook. I'm merely thinking inductively. If I were a caveman (which we know existed), and I had possession of some object (which we know occurred), I would sometimes trade it for other objects. Noticing other cavemen doing similar activities, I'd adjust my trades so as to acquire goods which could be traded easily to others.

Unless you can prove that my hypothesis there is wrong, then money was indeed formed naturally from barter. I'm not using a book to figure this out, I'm just using my brain.

Yes, tollbooths are shitty only when they're statist, because there's no incentive to make them not stupid and not slow.  When you have voluntary customers, the last thing you want is to ruin their trip with delais.

Bingo

Obviously never been on trains in England.

That said, I agree with the above. But unpicking "voluntary customers" brings up many issues around where situations are involuntary. Most state-vs-individual discussions seem to assume that people either act in accordance to their will, or forced to act against it by state forces. Sadly (or not) there are more powers in the world than the human race, which disrupts the notion of "voluntary will" on a day-to-day basis.

Where people are forced into a situation not because of will, nor of the state, should we be looking to a third model of institution, and therefore a third purpose of money? Or is all economic activity locatable along a 2-dimensional axis (heads/tails or vertical/horizontal in Dmytri's original article, IIRC)? Or is that a false dichotomy?

Genuinely interested in answers, as only really figuring this out as I go along.

In addition, it's a established fact that many aboriginal cultures did barter, and others had developed money out of that.  The fact was that they bartered between tribes, but used a gift economy within a tribe.  The American Indian tribes that existed near the East coast during the early colonial days would do this with other tribes as well as the European settlers.  Many island cultures would do the same, ultimately developing to the use of money such as Rai stones (http://en.wikipedia.org/wiki/Rai_stones).  And despite the long standing use of carved stones as money, the Yapese people had no concept of credit.  It only takes one counter example to disprove the theory, and there it is.

Indeed you guys are talking about two different aspects of the economy. It's a fact that gift economies were actually very common within early communities. They did not barter amongst themselves, they simply shared everything by giving. In some societies there was actually competition on who gave the most. It was never "for free" however, there was always a non-written agreement that stated "you owe me something". So they were basically gift economies based on credit relations.

Between different communities or tribes barter was used. So was gifting. The size of the economy and the interconnections of different communities determine the importance of barter. As the economy gets bigger and involves many communities and individuals, barter becomes a much better system than a gift economy. Gift economy is quite natural in a family setup or in small communities but the importance of barter grows when the relationships of people in the economy change and become more complex.

I don't agree with this statement, and would like you to support it.

This tracks my own thinking on the subject. I guess the two questions I have are (1) isn't this pretty much unknowable? How would we know if the late Thag Simmons,* prior to his untimely passing,  traded some of his mammoth meat for furs, planning to trade those furs for berries (what he really wanted)?  And (2) why does it matter how we got here? Let's assume that Graeber's got the story right, what are the practical implications?  Is anyone challenging Say's law which says that "products are paid for with products"?

*http://upload.wikimedia.org/wikipedia/en/6/65/Thagomizer.png (http://upload.wikimedia.org/wikipedia/en/6/65/Thagomizer.png)

This is why I always say that I have no problem with socialism ... so long as it's voluntary. It seems to work reasonably well at the level of a family or small tribal community.  It just doesn't scale (and it should never be forcibly imposed by the threat of violence).  Your post reminded me of a video (which I couldn't find) talking about evolutionary psychology and why people tend to be somewhat uncomfortable with explicit exchange (i.e. quid pro quo, market exchange). Basically, explicit exchange was something you did with outsiders so it sends a message of social distance (which people don't necessarily like).  There was also the idea that many people long for the security (in a social sense) of a tribal economy.  But again, the solution is not to seek to impose that on the level of a modern and hugely-complex national economy. The "solution" is allowing people to voluntarily associate to form their own communities within (or even somewhat apart from) the larger economy.

From wiki


and a very nice interview wich explains tons of things here http://www.nakedcapitalism.com/2011/08/what-is-debt-%E2%80%93-an-interview-with-economic-anthropologist-david-graeber.html

Really? Lol

I guess I don't understand why we're calling that money. Thag gives you a mammoth fur. Under the (unwritten?) rules of your civilization, you owe Thag one mammoth fur. Is that I.O.U. recorded? Is it negotiable? Can it be redeemed only for a mammoth fur or for anything of equivalent value?


That sounds reasonable. I'm not an anthropologist. But I'm not sure why that changes anything. Can a family get by without explicit exchange using money or even barter? Sure. My wife never pays me (at least in cash) for taking out the garbage. And a small tribe is basically just an extended family. But you do need explicit exchange when dealing with people from other tribes or for complex transactions which are required as the number of goods increases and labor becomes more specialized. So I'm not sure how much that changes the "story of money" or how much disagreement there really is here.

Note the key modifier there.  Of course there is no such evidence.  There is much evidence that barter occurred, but none that any particular society relied upon it, for as soon as one did, some commodity became the dominant money.  Yet, nor is there any evidence that no society has not relied (primarily or otherwise) on barter.  You can't prove a negative, and neither can Graeber, but that doesn't mean that his assumptions about how money develops is correct.  If I can find a single instance in the historical record, his theory is busted; but the problem is that the historical record is vague, and no one really kept records of early economic development because even in cultures that kept records no one knew there was any value to recording this information.

Did you read the link posted?

"Now, I’m an anthropologist and we anthropologists have long known this is a myth simply because if there were places where everyday transactions took the form of: “I’ll give you twenty chickens for that cow,” we’d have found one or two (economies that worked that way) by now.
Read more at http://www.nakedcapitalism.com/2011/08/what-is-debt-%e2%80%93-an-interview-with-economic-anthropologist-david-graeber.html#yFpxiiB5eJMsrrBO.99 "

"So really, rather than the standard story – first there’s barter, then money, then finally credit comes out of that – if anything its precisely the other way around. Credit and debt comes first, then coinage emerges thousands of years later and then, when you do find “I’ll give you twenty chickens for that cow” type of barter systems, it’s usually when there used to be cash markets, but for some reason – as in Russia, for example, in 1998 – the currency collapses or disappears.
Read more at http://www.nakedcapitalism.com/2011/08/what-is-debt-%e2%80%93-an-interview-with-economic-anthropologist-david-graeber.html#yFpxiiB5eJMsrrBO.99"

Like I said, it's for unintelligible reasons to us reasons that value exchange started. Our society is run by a monetary economy and for us to consider providing for our needs in another way is simply gibberish. That being said, for all of recorded history until a few thousand years ago, we did provide for our needs in another way entirely. Therefore, the exchange that we saw between tribes was usually for reasons that wouldn't "compute" in todays society. For example, many tribes give offerings to other tribes in order to insult them by showing how powerful they are that they can then afford to give so much to the other tribe. These types of scenarios only take place when your source of provision is derived from very "primitive" modes of provision whereby provisional reliance is personal or tribal.

Didn't feel the need.  Wrong is wrong.  It's also a appeal to authority fallacy.  If you can't make the argument here, then the validity of the argument is dependent upon the credibility of the presenter, and is thus and invalid argument.

We have.  Several, in fact.  I have already mentioned some.  The above argument assumes that barter must be the dominate means of value exchange in  a given society.  That is far from necessary.  All that is necessary for money to evolve is that the common man in the society has experience enough with barter in order to preform the act when the opprotunity arises, not that the common man need be dependent upon his bartering skills for his livelyhood.  Barter is always an opprotunistic event, the development of money in it's place increases those opprotunites, and that is why the evolution flows that way.

Well, I wouldn't say that "our society is run by a monetary economy"; I'd say that money is a tool we use to coordinate economic activity.  And up until a few thousands years ago, "providing for our needs" translated to eking out a living through subsistence farming.  Money evolved because it was useful. Again, small socially-cohesive groups might be able to get by without a system of explicit exchange based on money, but it won't work for a large, complex economy.  The price mechanism is the most powerful and efficient tool we've discovered for coordinating the activities of huge numbers of people who may live thousands of miles apart and never meet.  Something tells me that the laptop I'm using to type this comment on would not have been built if all of the people involved in its design and manufacture had needed to rely on a system of informal obligations created by reciprocal "gifts."


That computes just fine.  If anyone would like to demonstrate their power (and my inferiority), they can do so at the following address: 1PjN1PegGNq9ERYvLi1Zg2HNTgWqneMMrT
(Remember, the more you send, the more bad-ass you are.) ;)

That may be so but if someone hacked my comptuer and emptied my bank account I would get reimbursed 100% by the banks and they would even investigate on their own terms.. With bitcoins will get back 100% of nothing. It just gone to some unknown hash address. I understand your passion towares bitcoins since you run a very profitable bitcoin gambling site but realistically there are far to many negatives for bitcoin to become anything more than a novelty item. Its increasingly difficult for me to even buy bitcoins. Its pathetic. I have a credit card and paypal but I cant buy coins at the going rate. That there is the biggest hindrence. Liquidity.

While that is true, bear in mind that there is no such thing as a free lunch.  You are paying for that kind of support already, and with Bitcoin you can choose not to do so.  There are plenty of people responsible enough to look after their own affairs to build a very large bitcoin economy, $10 trillion at a minumum; which is why it appears to you that the costs of such support is very inexpensive, it is currently bourne by the responsible and irresponsible alike.  You should not assume that it will always remain this way, now that the responsible have a cheaper alternative.

Because the going rate is based on irreversible payment methods. Credit card, PayPal? "Great, I received 20000 BTC, now it's time to call my credit card company/PayPal and tell them to reverse the charge because 'the goods weren't received' or 'I was hacked'! Then I can sell the BTC for gold and I'll be fucking rich!"

Exactly.   BTC x greenbacks is one thing, BTC x PayPal is another.  You should not expect the price relationships between these parts to be the same.

That's exactly my point. Liquidity is the main bitcoin problem. Make sure you read the entire post before commenting.

I have a credit card and paypal but I cant buy coins at the going rate. That there is the biggest hindrence. != Liquidity.

This forum is more worried about trying to correct people and show how intelligent they are than any other forum ive seen. If you read my post you'll fully understand.  It is pretty straight forward regardless of me saying liquidity or illiquidity. Its a liquidity issue.

No, it's showing how stupid I am, because I can't see why liquidity/illiquidity, Bitcoin, credit cards & PayPal should even appear in the same paragraph.

Someone really needs to invent cold wallets, paper wallets, brain wallets, the idea of making multiple copies of a file, strong encryption, online security best practices, diversification (spreading large balances across multiple addresses stored in different locations / formats), multi-sig addresses, and the concept of insurance agreements.  Until at least a few of those advances are made, I think the hacking / accidental loss problem is probably insurmountable.   :)

And two-factor authentication.

No, high prices is not a bitcoin problem. Illiquidity is. Its to hard to get coins. You need to go through to many middlemen just to make a simple purchase.

Please elaborate on "too many middlemen". Sounds like a case of "you're doing it wrong".

Socialism cannot be voluntary. It requires coercion. If you have people "giving" and "sharing" with each other voluntarily, that is not socialism... it's liberty.

Libertarians are never opposed to individuals choosing to live in whatever way they wish, so long as they don't aggress against each other. I assume most people would end up living in "profit seeking" ways, but surely some people would form communes or any other structure they wanted. All of this is liberty, and is the opposite of socialism, which is a forced structure.

The reason you get reimbursed by your bank is because there is deposit insurance. Deposit insurance can be provided by the private market as well. The fact that no bitcoin entrepreneur yet offers deposit insurance doesn't mean it can't be done. Simply, the bitcoin economy's not quite large enough to warrant that service yet (though you can bet your ass that some ewallets will emerge in the next 1-3 years that offer deposit insurance by default).

Furthermore, the deposit insurance your bank gives you is actually Federal deposit insurance. The government pays for that, meaning that all of society is forced to pay for the protection of your bank account. If you're morally okay forcing other people to bear the costs of protecting your assets, then fine, but I'm morally opposed to it (it's also terribly destructive as it leads to perverse economic incentives on behalf of the banks - the risk they take is socialized across the country while their profits from that risk belong to them).

However, you're correct that buying bitcoins is currently the biggest hindrance. Many of us are working on this, and indeed it is already far better than last year. Next year will be far better still. As with the deposit insurance, don't make the mistake of assuming that just because a nice service doesn't yet exist, that it won't tomorrow.

Ryann's point is a good one, though "liquidity" may not be the right term. The fact that you can't buy BTC with credit cards sucks, and is a major hindrance. Now, there is good reason why this occurs, but it still sucks, and we should all be finding ways to fix it or find alternatives (and indeed many people are doing this).

As it becomes easier to get in and out of bitcoin, the entire system will skyrocket in popularity.

I don't disagree with that from the perspective of "what is the technical definition of socialism?" My point is more rhetorical. For obvious reasons, socialists aren't eager to acknowledge the coercion inherent in their political system. They want to make a socialist society sound like it's one big happy family. I'm trying to point out the gun in the room.

Hehehe yeah it's important to point out the gun in the room. The irony is that most socialists/leftists are very much opposed to guns, yet their ideology requires institutionalized violent threat via gun.

Yep, but I'm not sure it's ironic. In fact, I think it explains socialist opposition to our owning guns pretty well.

Its starting to sound like you dont understand how to purchase bitcoins. You cant just buy bitcoins without going through at least 2 types of exchanges. Minimum being Bank wire > MTGox

Not all methods of buying bitcoins have that many middlemen. LocalBitcoins is a site that has users in 86 countries and over 400 cities. It's a free to use platform that makes it easier to have face to face meetings and exchange bitcoins and local currencies. It's also way more anonymous than using the exchanges.

I primarily use exchanges but I do use LocalBitcoins as well. It's a good site.

https://localbitcoins.com/

Then I have to meet some random person who knows that Ill have a bunch of money on me face to face. That usualy works out well :S

While that may be your experience, I've literally never bought bitcoins on an exchange of any kind.  I actually predate MtGox, but only by a little, and as of yet have not been forced to use a bank transfer of any kind to aquire bitcoins, so I know for a fact that it is possible to buy bitcoins entirely outside of the current financial structure if you are both patient & determined.

Do it in a public venue; preferably one with free wifi & many distractions, such as a bowling ally at league night.  BTW, a bowling ally locker rental is an excellent place (besides a bank safe deposit box) to store important things small enough to put into a bowling bag.  It's a good idea to keep some of your backups in a place that would still be accessible in the event of a bank holiday.  Even better if you happen to like to bowl.

Of course, to the extent that it IS "difficult and expensive to buy bitcoins," the problem is entirely on the side of the legacy payment systems. Thus, it would be more accurate to say "it's difficult and expensive to transact with fiat." And that's precisely why Bitcoin will be successful. I remember, when I first got into Bitcoin, having to figure out how to send an international wire transaction. It was kind of a pain. It cost me 45 bucks to send a thousand. And it was like three days before the money was credited to my newly-created Mt. Gox account. After purchasing my bitcoins, it took me about ten seconds to transfer them to my personal wallet. At a cost of less than a penny. Those contrasting experiences really drove it home for me. It's like the Berlin wall. The barriers aren't really there to keep you out of Bitcoinland. They're really to keep you locked in Fiatville. And like the Berlin wall, they're ultimately doomed to fail.

You arent being realistic at all. I dont hate bitcoin and dong care for it either so im not biased whatsoever. Bitcoin is difficult to get compared to fiat money. You have no guarantee that you will even get the coins after you purchase them and there is nothing you can do about it if someone decides to rip you off. Im not talking about trasnfering my coins to a wallet. Thats simple and means nothing becausey ou already have the coins. So pelase tell me what happens whne you purchase coins and dont receive them? Do just go complain on a forum? Pretty much all you can do.

Bitcoin has only existed for less than 4 years, with very little people knowing about it in the beginning (and still), did you really expect there to be an entire foolproof service package and legal system to be built around it already?

As time goes on it will become more and more clear which services are reliable businesses in it for the long haul, and which ones are scammers that want to make some quick bucks.  Moreover, as the economy groes bigger, it should get easier and easier to get bitcoins, with lower fees and smaller spreads.

The economy has nothing to do with the difficulty in obtaining bitcoins. There will never be reversable transactions.

Feature, not bug.

No one will ever use cash because you can't do reversible transactions. And it's too bad no one has invented the concept of escrow.

Well I can imagine there being created a service with legal authority that registers transactions between 'state-registered' addresses that are linked to an individual, or something similar.  Just because you don't see the solution to certain problems does not mean somebody else can't come up with one.
And like Roger said, escrow is an option too.

So the services that give you bitcoins have nothing to do with how you get bitcoins?

It's it's very literal in another sense: only if you can't defend yourself from guns, are you ready for the enslavement that socialists want for you.  Socialists saying "guns are bad" suddenly makes sense when you understand what they are not saying: "...except in our rulers' hands".

When did this thread devolve into a red scare circle jerk  ???

http://blogs.guardian.co.uk/digitalcontent/images/commies27feb2008-1-tm.jpg

If the reds don't git'cha...

http://activelydisengaged.com/actively-disengaged-7-keep-looking-over-there/

I find that picture hilarious, because open source (by subverting copyright's goal of monopolizing knowledge and turning it upside down) is probably the most fantastic example of a peaceful market of individual actors, working together for interests mutually aligned, in entirely voluntary non-coercive interactions.  I love free software -- and free culture in general -- because it embodies voluntaryism.  :-)

Government-welfare-queen monopolist Microsoft, on the other hand...

Good luck with that. Escrow just to exchange money lol. Real legit