Bitcoin Forum

This weekend I was at the International Students for Liberty conference where Peter Thiel gave the opening keynote. I asked him about PayPal's crypto-anarchist roots and the future of Bitcoin and currencies that might follow (in retrospect, I should have specified Bitcoin, because he was a bit vague with his response), and he seemed somewhat fond of the idea, hinted that some sort of cyber-currency future is inevitable, but said that Bitcoin isn't likely to have the network effects necessary to take off, and said that gold-backed currencies already have a great deal of support, and would serve as a better fit for a competing currency. He said that he would have more to say on the topic. Someone I talked to who attended a private social with Thiel mentioned there was an impression that Thiel hadn't done his homework when further questioned on the topic.

I don't have his exact response, but I know the event was taped, and suspect that videos will be uploaded by Students for Liberty after editing.

Edit1: CoinSpeculator shares details of a more in-depth discussion with Thiel
https://bitcointalk.org/index.php?topic=64610.msg760848#msg760848

Edit2: The official video of his response is up:
http://www.youtube.com/watch?v=5fsUMoHZ1cY#t=857s

Isn't he the guy behind funding a city build on the ocean for startups?  What a cool guy.

Sounds like he has not done any of his homework...

But then again why would he?

Looks like the videos are just now starting to hit YouTube: http://www.youtube.com/watch?v=38ScwWPoR38

Did you know?: http://en.wikipedia.org/wiki/Peter_Thiel

He's an interesting cat for sure.  Log cabin Republican, strong Libertarian, and basically head of the Bilderbergs.  One of these things is not like the others (and these days, that would be Libertarian rather than Bilderberg).

of course the rich, if acting out of self-interest, would advocate a top-down cyber-currency backed by gold or by big corps (google, facebook) rather than a digital grassroots bottom-up currency like bitcoin.

Yep, Thiel lost it for me after they caved and rolled-over on their original vision for PayPal.
http://reason.com/archives/2005/08/01/who-killed-paypal

I'm SFL Alumni and really wanted to attend that conference and hear Peter talk . What college are you from?

 

Proving Peter Thiel wrong in 3, 2, 1.... http://www.thebitcointrader.com/2011/12/goldmoney-is-no-longer-money.html (http://www.thebitcointrader.com/2011/12/goldmoney-is-no-longer-money.html)

Why is it so hard for people to understand that a "gold backed" currency has counter-party risk in the backer?? Sure, it's superior to fiat, but it's inferior to a decentralized commodity currency like Bitcoin.

+1

I found this interesting in that quoted article:


Bitcoin:

He's an awesome all round transhumanist/technolibertarian who think big. However, like others said, he didn't to do his homework on bitcoin.

Or he did do his homework and cleverly sidetracked the issue.

~Bruno~ (not Rossi Bruno)

Skynet

I was the one who asked him questions at the IHS social.

Basically I said that in every objective measure of a currency's usefulness, bitcoin is superior to gold.  Then he informed me that currencies didn't have objective value, which was sort of funny standing next to to the head of YAL who was an avowed objectivist.

Anyway, I asked why gold was any better than eggs, or shells, or beads, or anything else with the classical notions of concrete tangible value that predated gold and he explained that gold was concentrated and easy to transport.  So I then asked him if being able to load the 1.5 billion value he sold paypal for onto one usb drive rather than the 400 tons of gold he would need to lug around otherwise had objective value.  He kinda dismissed the point and tried to explain how no one used bitcoin and that was its downfall.  I pushed back again pointing out the million or so dollars traded for bitcoins in the last day, the 60,000 GPU's mining bitcoin right now, and the 40,000 or so Silk Road users as all providing fairly stable bootstrapping mechanisms along with the interest in adoption by those in destabilized economies such as Africa.

I then tried to point out other advantages such as being impossible to counterfeit, far more divisible than gold/paper/etc., and soon to be added 2-party escrow/multisig transactions.  I don't think he really grasped the usefulness of each of those factors and I decided to stop pressing the issue so some other kid could ask about what school they should go to or something equally inane.

The whole conference was so encouraging because of raw numbers (over 1000 libertarians) but it was rather sad that it was more about shiny suits than debating ideas.  I would have loved to give a presentation on bitcoins, spectrum property rights, and inevitable deflation of the federal reserve system to spark at least something.  The Stossel taping that will be showing on Thursday was also rather sad, John Bolton was a complete tool and the crowd rightfully booed him, but I'm sure it won't play well on television.

Meh. He lost me at "being founder of PayPal," and not that I learned he's a Log Cabin Republican, I just plain dislike him. there's a HUGE difference between Republicans and Libertarians, and Log Cabin guys are just some sort of weird hypocrisy. I don't know why he would even bother with the former if he calls himself the later. So, him not knowing about Bitcoin is "eh, whatever." If Bitcoin takes down PayPal before he realizes what happened, it'll be a good thing.

I still believe there is little use in trying to convince people up high to buy into Bitcoins and just let them be with their ignorance and/or FUD and instead just come to an understanding that it's us who are in charge.

The less you debate about Bitcoin the more gets done > more applications > more users > more profit.


But I'm sure it raised some people's attention in the back rows.

Peter Thiel, last time I check, doesn't own paypal anymore.

+1
Sometimes it feels like trying to convince the CEO of Kodak that digital cameras are the future, and should be adopted as a replacement of their film industry, 10 years ago.

Unfortunately, Students for Liberty tends to stay on the Cato/Reason/IHS/FEE side of things, and in an effort to maintain the appearance of consensus and consistency doesn't bring up the controversial edge cases (such as regulating the spectrum as you mention) of applying libertarian philosophy to stage, so all we get is the simplistic/cherry-picking version of libertarianism from top-down that people like Stossel exemplify and inevitably condemns libertarianism to the margins of politics. However, I had great discussions with other attendees and it seemed to be a great opportunity for networking.

Heh... maybe 15 years ago, more than 10, but the analogy is a good one!

There's something a lot about you, CoinSpeculator, I like. I envision you debating Bitcoin with some naysayer, and not even skipping a beat. I also like your writing style, but don't tell evoorhees I said such.

~Bruno~

Well done. It is also important to not sound like a raving lunatic. Bitcoin doesn't need wide acceptance to muddy the waters until it is more useful. Each new innovation will enlighten more people.

+1. 

"Don't worry about what anybody else is going to do… The best way to predict the future is to invent it. Really smart people with reasonable funding can do just about anything that doesn't violate too many of Newton's Laws!"  - Alan Kay

That is great advice. It would really be nice if Bitcoin were a 'silent giant'. The best businesses are those no one even knows exist.

One thing to keep in mind with Bitcoin is that it is a sterile asset, even more so than gold in my opinion, and as such and any increase in the value of bitcoins is a result of wealth that was already produced and stored in some other form being transferred to the holder of the bitcoins. Why even let people know their wealth is being siphoned away as Bitcoin grows?

I have started to hear of this Peter Thiel character over the past year or so, and I have been impressed with his intellect and his focus on issues that our dear to our hearts, here on this forum.

Clearly he has not yet grasped the full impact, if he is still thinking of Bitcoin and Gold as competing things, instead of thinking of Bitcoin as a new technology that will someday be used for transferring gold. The Bitcoin community and the digital gold community are going to merge. The whole will be greater than the sum of its parts. Both commodities have important roles to play in a larger picture of things. Those who still think that it will be "one community or the other" have not yet grasped the full implications of what is happening.

However that is no matter, because soon everyone will come around, and probably Mr. Thiel sooner than most.

As for Bitcoins and gold, it's important to keep in mind that neither has "intrinsic" value.
Rather, both are valued by men for their unique properties.

Gold is:
-- Divisible.
-- Fungible.
-- Value dense.
-- Recognizable.
-- Durable.
-- Zero counter-party risk.
-- Stable in supply, yet minable.
-- Liquid.
-- International.
-- Non-manipulatable. (Non-centralized.)


By comparison:
-- Diamonds, while valuable, are NOT divisible, nor are they fungible.
-- Water, while valuable and divisible, is not value-dense enough to compete with gold as a form of money, on the free market.
-- Food, while valuable, is not durable.
-- Dollars, while liquid, do not represent zero-counter-party-risk (rather, they are debt-based.)
-- Dollars, while recognizable, are not stable in supply (inflation is a worry).
-- Dollars are also not minable. (Production is available only to a monopoly cartel, versus gold, which anyone can produce.)
-- Food, which anyone can produce, is not liquid, especially in comparison to dollars or gold.
-- Dollars, while you can hold them in your pocket, a board of bankers still has the power to reach into your pocket and manipulate its value. (This is not the case with gold.)


Soon it becomes very clear that gold was never "declared" to be a form of money by any "authorities" but rather, became money due to natural market forces.
If gold became money strictly due to natural market forces (as a result of its unique properties) then clearly the only reason it has been supplanted by dollars is due to artificial restraints imposed on the market by government force. (Such as legal tender "laws", tax "laws", money laundering "laws", etc.)
Such forces must be constantly active, otherwise, natural market forces would immediately resolve back to gold again as they have for thousands of years.


Now let's consider Bitcoin's unique properties:
-- Divisible.
-- Fungible.
-- Value dense.
-- Recognizable.
-- Durable.
-- Zero counter-party risk.
-- Stable in supply, yet minable.
-- Liquid.
-- International.
-- Non-manipulatable. (Non-centralized.)
AS WELL AS:
-- Non-confiscatable.
-- Accounts cannot be frozen.
-- Anonymity is possible.
-- Electronically transferrable.


As you can see, Bitcoin's unique properties are similar to those of gold, although it adds new properties due to its ethereal nature.

Those new properties (non-confiscatable, non-freezable, pseudonymous, transferrable electronically) all serve to route-around the artificial forces that are currently being used to supplant gold with the dollar. After all, the various immoral, legal-tender legislation in place today uses the force of a gun to impose fiat money onto an economy that would otherwise resolve to gold by natural forces. That artificial force depends on the government's collusion with banks and their collective monopoly on the ability to issue, store, freeze, confiscate, track, and transfer dollars.

What happens once Bitcoin destroys their ability to do so?

===> What will happen is that Bitcoin will take a pre-eminent role for all digital currency transfers (for ALL currency types including gold.)
===> It will also serve as the censorship-proof "universal medium" for all other online settlements.
===> Gold will eventually revert to its status as money, due to natural market forces that will be unleashed by the technology of Bitcoin, etc. (Just as Bitcoin has enabled people to buy drugs online, meaning Bitcoin has brought natural law to the drug market, so in the same way, Bitcoin will enable people to use gold as money, meaning Bitcoin will also bring natural law to the monetary system.)
===> Of course, gold has already reverted to its status as money at the elite, national, and central-banking levels. But Bitcoin has the potential to enable this for the livestock/slaves at the plebe level as well. (The proletariat.)
===> Ripple will fill the need for credit lines and expansion, in an F2F manner. It will also enable all participants to exchange in-and-out of all other currencies, including fiat currencies, while entirely routing around all existing government-imposed bottlenecks and "money-transmitting authorities". People will easily be able to exchange in-and-out of the system by way of their own trusted friends and attorneys.
===> I believe also that small vault operators, as envisioned by Andrew McMeikan of PKTP, will have an important role to play.
===> As will various transaction servers along the lines of Ricardo, PKTP, Loom, Truledger, and Open-Transactions.
===> As well as various DGC issuers and Bitcoin voting pools.


The next time one of you gets an opportunity to explain Bitcoin to Peter Thiel, please give him more of a "big picture" view of things, and don't let him go astray down the primrose path where people still think of Bitcoin and Gold as "either-or" sort-of-things, when in fact each has unique properties, and its own part to play in a larger, overall vision.

Would it be fair to say that, in light of Bitcoin, gold is no longer "value dense?"

The video is now up: http://www.youtube.com/watch?v=5fsUMoHZ1cY#t=857s

he means, like, e-gold?

Been waiting for that, muchos gracias.

Gold is so 17th Century. Gold coins have been counterfeited since they've been invented and are still today. Much of it can be found at the bottom of the ocean where it was unsuccessfully protected by the ships that carried it. You may assay gold to a point, but you are not assured 100% results. Gold is just not a convenient form of exchange. Every time it changes hands there is risk of it being stolen. Holding gold is nothing more than enabling the irrational behavior it elicits. I just don't see any reason to treasure gold any more than the artwork much of it was melted from. Who knows, maybe guys like Thiel will bring back pirates and highwaymen armed with metal detectors and weapons? Lock your doors and hide your gold well. Or you can always trust the banks to keep it safe, look how well they treated your paper money, after all.

Interestingly enough, this is actually false - gold coins were originally used by kings as a way of forcing their citizens to support local armies by making it the only legal tender for taxation. Genuine decentralized societies tended to use proto-Ripple-style credit systems. Read David Grabeber's Debt: The First 5000 Years.

Counterfeited gold coins HAVE to be made of gold to a (not small) degree. If not then alloy density will simply mismatch too much. USG scanners show structure of insides; even wolfram based fakes will not pass such a test.

For a comparison, paper currencies are counterfeit to a much higher degree already. And found fake banknotes lose all their value immediately. So gold coin (even when faked) is much safer.


Even today we have catastrophes of many kinds; people die and/or lose all their wealth. Do you mean that because there is always some kind of risk we should dismiss ways of wealth preservation?


No - gold as physical element has enough unique properties to be 100% sure it's gold. Unless an assayer is completely incompetent.


Every time you are going to use cash there is chance it may be stolen. Every time you are making credit card transfer there is a chance it may be stolen. Basically every time you are getting out a house you may get robbed, too. So what you really says is that bad accidents do happen? Yes they do - it's just life like it is...


?

Then I don't understand your previous statements... As anything else BTC has it share of associated risks too.

Really? You think everyone should carry gold coins in their pockets again?

Yet they are often counterfeited even today. Do you expect everyone to own USG scanners?

For a comparison, Bitcoin cannot be faked, even a little. It is much safer.



Bitcoin is 100% secure for anyone bothering to encrypt and duplicate their secure wallets. No natural disaster can make you lose them. Only carelessness can destroy bitcoins.


What do you call an assayer that graduates at the bottom of his class? An assayer.

This forum is about Bitcoin. I never said anything about cash or credit cards. Soon we will have Bitcoin based checks and cards. A Bitcoin based instrument not only cannot be used if stolen, but your identity will never be required to be shown for anyone to steal. They will even be safe for children to carry, because m-of-n signature capabilities can keep their parents/guardians in the loop.


Only carelessness can put Bitcoin at risk. Well, that and the destruction of the internet.

Uhuh, ok, some remarks of mine:

• lots of gold-owners in the crowd
• "Creating something completely different from scratch is something very hard to do" <- let me quote JFK: "we choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard". and also: dude, we kinda did it already, didn't we?
• how would this gold-based currency "idea" of yours work online and why are pecunix and e-gold (started early last decade) not reaching the tipping point yet, then?
• I agree that Thiel did not do his homework on bitcoin.

Yeah, nobody use gold for anything BUT storing it as wealth protection.

Fellowtraveler - your post regarding gold and bitcoin was one of the best I've seen. Really well stated, and absolutely correct.

Gold and Bitcoin are both valuable due to their specific attributes, some of which are in common and some of which are unique between themselves. Far from being mutually exclusive, they are beautifully complimentary, and anyone who understands the reasons gold is "real" money ought to understand (with a bit of explanation) why Bitcoin is also real money, and vice versa.

That's not true. For example we need tons of staff and huge secure buildings and trucks to secure dollar transactions. When we switch to Bitcoin we save are wealthier and more value is stored in Bitcoin than previously was stored in dollars. From a more individual perspective we are wealthier when we move our commerce into the Bitcoin realm because we save tx fees.

Bingo. A bitcoin-based economy moves resources more efficiently, meaning less is lost and more is produced. Thus, humanity itself is wealthier, and if one could do a proper accounting of this phenomenon I'd imagine that wealth gain would be quite extensive.  Compare it to letters and email... society gained massive wealth by utilizing email instead of paper letters.

yeah, i remember Fellowtraveler making a key argument last Spring on a podcast about the "liquidity" of Bitcoin.  he actually uses the term in an incorrect manner if you're thinking in financial terms but i understood him quite well in meaning that Bitcoin can move around the globe seamlessly and instantaneously without friction.  i like his way of thinking and totally agree.

What about the jobs lost moving the money around? What about the companies that loose money because they no longer sell armored trucks? I don't really think you gain as much as you say. There no doubt would be some gain, but most of the "gain" is really just moved from somewhere else. You only need to move money around as fast as product is made. anything faster is just convenience for the most part (there is some marginal benefit, but i am not seeing anything as big as you describe.).

That labor capital would now be free to do something productive. It's like asking what about the hundreds of farming, or factory assembly jobs that were lost because of tractors and robots? Bitcoin will essentially free up people that used to dig up and fill in holes, and allow them to do something much more productive.

This is true. Where would people find the time for casinos and drug dealers if they were slaving away at jobs? Let's not even talk about the seedier occupations.

Doing accounting for growing businesses and entrepreneurs, security for people and places that actually need it, software development for ideas that manage other things besides currency tracking. You make it sound as if bankers are all just blue collar workers who can only either do bank related jobs, or have to resort to desperate seedy jobs. Where are all the farmers, factory workers, and more recently phone support people who's jobs got outsourced, now? Dealing drugs and gambling? Do you honestly believe that when something disruptive comes around and destroys a certain type of job, that everyone who held that job becomes useless and permanently unemployed?

Run tell dat

There's a story Buffet tells about his visit to china where they are showing him this big civil construction project in progress.  Its a bridge or a canal or something.  Anyhow he points out that they could replace 50 or so of the chinese workers digging wtih shovel with one big earth moving truck and 2 operators.  The chinese dignitary looks at him slanted as if Warren were out of touch, and tells him that in China they have a need to create as many jobs as possible.

Warren replies, if this is all about created work for people then why give them shovels?  Give them spoons.

The point is that doing more with fewer workers raises the standard of living.  The automation of the factory has put so many workers out.  Did you know that GM builds about as many cars as the did in the 80s.  But now they do it with half as many workers.  Cars are now more affordable.  hell they even have all kinds of complex things the cars from the 80s didn't, ubiquitous auto trannies, anti lock breaks, air bags, crumple zones etc.  There are many more parts and much more assembly required.  Yet all the car companies do it with about half the labor the needed a few decades ago.

Never cry for 'lost' jobs when a more efficient and better innovation comes along.  We'd still be living in caves. 

Now to beat the dead horse, what about the mechanized tractor/plow/planter?  Put a lot of farm hands out of work.  But they moved to the cities and took up manufacturing jobs.  coinciding wiht a general rise in the living standard.  Now they have gps guided planters that don't even need a driver.  They put more farm hands out of work.   The benefit is cheaper food.   Who can argue with feeding people for less?

Reminds me of an excerpt from the book "Jonathan Gullible (http://www.jonathangullible.com/translations/UK_Comnt040222.pdf (http://www.jonathangullible.com/translations/UK_Comnt040222.pdf))":

"Jonathan looked up and
saw two men dragging a young woman, kicking and yelling, down
the trail. By the time he caught his breath, the trio had disappeared.
Certain that he couldn’t free the woman alone, Jonathan ran back up
the trail looking for help.
A clearing opened and he saw a group of people gathered around
a big tree – beating it with sticks. Jonathan ran up and grabbed the
arm of a man who was obviously the supervisor. “Please sir, help!”
gasped Jonathan. “Two men have captured a woman and she needs
help!”
“Don’t be alarmed,” the man said gruffly. “She’s under arrest.
Forget her and move along, we’ve got work to do.”
“Arrest?” said Jonathan, still huffing. “She didn’t look like, uh,
like a criminal.” Jonathan wondered, if she was guilty, why did
she cry so desperately for help? “Pardon me, sir, but what was her
crime?”
“Huh?” snorted the man with irritation. “Well, if you must know,
she threatened the jobs of everyone working here.”
“She threatened people’s jobs? How did she do that?” asked
Jonathan.
Glaring down at his ignorant questioner, the supervisor motioned
for Jonathan to come over to a tree where workers busily pounded
away at the trunk. Proudly, he said, “We are tree workers. We knock
down trees for wood by beating them with these sticks. Sometimes
a hundred people, working round-the-clock, can knock down a
good-sized tree in less than a month.” The man pursed his lips and
carefully brushed a speck of dirt from the sleeve of his handsomely
cut coat.
He continued, “That Drawbaugh woman came to work this
morning with a sharp piece of metal attached to the end of her stick.
She cut down a tree in less than an hour – all by herself! Think of
it! Such an outrageous threat to our traditional employment had to
be stopped.”
Jonathan’s eyes widened, aghast to hear that this woman was
punished for her creativity. Back home, everyone used axes and
saws for cutting trees. That’s how he got the wood for his own
boat. “But her invention,” exclaimed Jonathan, “allows people of all
sizes and strengths to cut down trees. Won’t that make it faster and
cheaper to get wood and make things?”
“What do you mean?” the man said angrily. “How could anyone
encourage an idea like that? This noble work can’t be done by any
weakling who comes along with some new idea.”
“But sir,” said Jonathan, trying not to offend, “these good tree
workers have talented hands and brains. They could use the time
saved from knocking down trees to do other things. They could
make tables, cabinets, boats, or even houses!”

People who understand the concept of resource depletion.

That story is about Milton Friedman, not Warren "I'm a God Damned Socialist" Buffet. Warren would be the one advocating the spoons.

+1

Prescient comment in light of Peter Thiel's investment in BitPay.

http://www.coindesk.com/peter-thiel-founders-fund-lead-2m-funding-round-in-bitpay/ (http://www.coindesk.com/peter-thiel-founders-fund-lead-2m-funding-round-in-bitpay/)

Is the founder of PayPal bigger than any one of his progeny, or is he just finagling for a board seat at the competition?