Bitcoin Forum

Wow... what an appalling bad article.  In fact, the only reason I am posting it here is really so that you shouldn't even waste your time reading this.  Unfortunately I read it - although the comments that attack the author's "points" are quite entertaining.  Sadly, the author still defends his position to the end...

Hard to believe the level of ignorance still around (unless its just a targeted hatchet piece).  Sad to see from Forbes, when I have become so used to seeing John Matonis' fantastic articles.

http://www.forbes.com/sites/stevefaktor/2013/08/30/10-reasons-bitcoin-is-the-myspace-of-money-and-what-might-save-it/

There are many, many deplorably poor articles on Forbes re:Bitcoin/cryptocurrency. Perhaps we've just been introspectively selective in our choice of those that have been posted on this sub-board. Contemplating buying into something you don't understand at $130 must be hard on the minds of these people  :D  Penning disparaging articles is the only action they can take to soothe their febrile indecision  ;D

Actually that article is not completely negative and makes some valid points about bitcoin's risks. The title makes it sound more negative then it is.  

For better or worse, it’s Bitcoin or bust. The mission for entrepreneurs is clear: 1) Fix Bitcoin’s flaws – if you can. 2) Win over regulators. 3) Build a business on top of Bitcoin’s open architecture... This whole experience will accelerate The Bitcoining of the US Dollar and the death of cash. That will create some big opportunities and hairy challenges.

The problem I have is with the first half of the article with the 10 problems he outlines. They seem so narrow-minded that I had a hard time trying to keep the interest to read the rest of the article. Erik does a great job in the comments addressing these points.

The suggestions he has are not entirely bad, but they come after having to wade through so much tripe.

I think you're right about the articles that get posted here. I try to Google the news for bitcoin to see what's new, then usually come back here for discussion. It seemed to me that the articles have become genuinely better and or more positive over the summer, so it's ones like this that stand out to me.

First paragraph smear words: "disciple, PETA, jihad, apostles" - so you know what the game will be.

The author says about himself "I have a small obsession with solving big problems. After the economy tanked and my portfolio looked like a tip jar in Tikrit...." In other words, he didn't see it coming.

In an attempt to conceal his ignorance he indulges in way too many bad analogies, allegories and mixed metaphors. Insecure, techno-phobe no doubt. The style is designed to invite controversy while adding nothing of substance. Notice how he juxtaposes libterteers with criminals in his kindergarten pie-chart ... Statist money stooge protecting his lunch money, the longer these kind of guys are out of bitcoin the better. Suck it up chumps, we ain't going nowhere.  :D

(NB: he'll be buying in at the top ... and worrying all the way up that he missed out on the biggest step change in monetary usage in 3 centuries.)

True. And it was overwritten. But there were some funny jokes, at least. +1 OP

Put people in imaginary boxes, exaggerate and attack things that aren't there. It's a classic approach.

From my point of view, the author's comments reveal the most:

"The fact that dollars lose value makes you spend or invest them. That is what drives economic activity"

I think a lot of Bitcoin enthusiasts got ahead of this old way of thinking. If depreciating dollars would drive activity, our economy would be booming for the last 30 years non-stop.

Good luck holding on to your dollars (and shaky ideas), Sir!

"This article says bitcoin won’t work, just like the internet didn’t work, or email didn’t work. I’m sure there was some monkey somewhere saying, “Don’t go out of the trees, it won’t work. Don’t waste your time.”


 ;D :D

(Not going to read any article with "MySpace of money" in the title, but...) If the USD stopped inflating, the US would be completely fucked. Can you even imagine the implications of houses without that strong upward pressure on nominal value, and loans actually costing money? The housing market would tank from all the new underwater housing loans, setting off an economic shitstorm. The global economy would falter and possible enter a global depression for a decade or more. USG default would be unavoidable if the USD quickly moved from being inflationary to deflationary. We'd lose all that effective revenue from devaluing our national debt, so it'd probably be necessary to cut off the vast majority of welfare, and while it might be nice that the price of bread isn't increasing a few % each year, they won't be buying any bread with no job, decreasing equity in their house, and no welfare.

The USD isn't popular just because it's legal tender. Huge USD loans are practically free, often value-generating for consumers and businesses. A BTC-denom mortgage might sound cool, but it'd be a flat-out stupid choice by the lendee, and that's why I doubt BTC will ever successfully kick a fiat currency out of any country without an ideological uprising. Parents Against Inflationary Numismatics?

ETA: liberatarians love to talk about inflation and the national debt separately, but tend not to connect the two. Our national debt is right around $17t. In FY2012, we paid ~$360b on that. If we achieve 5% annual inflation, that $17t debt devalues by $850b. The USG would effectively generate $490b by having issued a shit-load of debt while inflating the currency and still maintaining confidence in that currency and the USG. The USG debt GENERATES REVENUE, and we make other countries pay for it. That's the most awesome Jew-fu out there.

It is also good to listen to our critics so that we can better craft the antitoxin messages.  The truth is a great disinfectant.  The author also seems to hate Liberty Dollars so here we go...

1) Marginally legal.  There is nothing illegal about owning/bartering Liberty Dollars, gold or Bitcoin.  Fraud is always illegal, so don't lie about money, no matter the type.
2) East to shut down  Easy is a relative statement.  Is the Internet easy to shut down?  None of the things he claims is easy to shut down has been shut down, they just (usually) route around the legal barriers to avoid the parts of the network where they are legally prohibited.
3) It fluctuates  Yes, mostly up.
4) It’s scarce, by design No problem. Unlike NY taxi medallions it is divisible and spendable at any fraction of a whole, 1/1000000 bitcoin is still money.
5) It’s deflationary The requirement for inflation is a myth.  Economies do not require it to exist, quite the contrary, variable inflation has crashed economies through hyperinflation.
6) Nobody cares Hi, meet nobody.  Pleased to meet you.  
7) It’s more complex than Linux  So was Linux, you should have seen Debian in '93, seems to be doing ok after a few decades.
8) Benefits to merchants are marginal  I'm happy with +3% margin, thank you!
9) It’s online only psst... heard of Amazon, or Google?  Most money is digital these days 1.2Trillion USD is physical, 44Trillion is digital, so maybe there is some use for it.
10) Sketchy origins and security  Has Jeckyll Island beat there (origin of the Federal Reserve).

Sure, Bitcoin is an experiment.  So was the automobile.

By "we", to whom are you referring?  "We the people" or "We the federal government" or some other we?

Hint: Bitcoin is global.

"Gee, uh, if we just, I dunno, take away all the things that make Bitcoin good money, then it'll be good money!" Author is clearly a little upset that he's the wrong side of thirty and can't go back and learn what he needs to understand this phenomenon. All 10 are either fallacious tunnel vision or just the plain opposite of reality. He's gonna have to buy in on "faith" alone, which is obviously little different to the way he understands the value of the money in his wallet right now.

I'm perfectly aware how the system works. That does not change the author's bad economic reasoning. The kind of reasoning that got us into this mess and such.

USG. I'm trying, but it feels treasonous and tinfoil-y to.... can't..... terrorism... brain...  money laundering is enabled by terrorists using terrorist methods of moving money around, like cash and Bitcoin, not a corrupt bureaucratic Iron Triangle. Terrorists can't use banks, because laws are carefully crafted by wise, hardened politicians. No. Iron Triangles refer exclusively to evil communist tunnels terrorists snuck around in because they were nefarious and too incompetent to fight directly with technologically-superior Americans of heavy stock (due to our exceptionally high level of productivity enabled with the most brilliant of minds and the most hard-working muscles on the planet). What? Kitchens should only use American box wine from Freedomfornia. Privacy is a criminal idea. :'(  ???

+1

When the blatantly wrong spew forth this sort of nonsense it becomes comically tragic (for them).  Economic activity does not need to be driven, it is driven already by the essential nature of humanity.  We do stuff, we cooperate often, we are social, we like to trade stuff, so imagining that we NEED additional external suffering in order to DRIVE US like some whipping slave master into economic activity is the worst sort of pandering for evil.

Hey, lets make our money out of ice cubes so that it goes away faster and we are encouraged to spend it so we are driven more.  Such wisdom we can do without....

But... I am sure there is an alt-coin that does things this way, and it probably does a better job of it than the monetary policy folks who are tasked with driving us with their inflation "management".  So even this nonsense has a better answer waiting for it in crypto if they had the minimal curiosity to look for it.

What is funny is the author is somewhat AWARE of bitcoin, but chooses to ignore its potential and sit on the sideline.  Everyday the price continues to rise.  I wonder at what price point he will slap himself and finally jump on board!  Today BTC is $148.  I would suspect by the time it is $275 he will be scrambling to secure a few coins!  :)

In light of some of the rumours circulating that try to account for the recent price uptick, could it be that Forbes staffers know that the penny has dropped done a super-splash from the top rope in the finance community, and they're engaging in a campaign to suppress while they get as much cheap buying action in as possible? Tempting thought....

Your whole analysis is flawed since it is based on the assumption that inflation appears to be a net benefit to the economy.

It is not, it is a net cost. (Not the least of which because it increases wealth and income disparities.) You cannot print your way to prosperity .... dyodd.

It's not proven that it's a net cost for society, AFAIK. There are plenty of costs, and plenty of benefits, though government reaps most of them (so you probably need to come from a position where the current USG is mostly beneficial to society to believe that inflation isn't a bad thing). We're a nation of debt, so I'm inclined to believe inflation is very possibly a net gain for the US, especially for the middle class. The jobless poor are probably getting screwed (Welfare is the government's apology), the 10 cranky old men refusing to take on debt are probably getting screwed, but everyone else is very possibly coming out ahead, given foreigners buy our national and corporate bonds. For the world as a whole? Definitely a net loss - but if we reversed course now, it'd be an incredible loss for reasons I briefly went over (which is all theory, too, but with reasonable foundation, I think) -- very long-term (next generation), it could turn into a net gain.

I'm more interested in rambling about what an incredible system it is (even if detrimental, possibly evil, or at the very least, manipulative), and people should have the whole picture on inflation before believing it's bad based only on it being a hidden tax. It's really an awesome set of ideas which're working together, in the same way ICBMs are awesome.

Following the OP author's lead, then - inflation is the ICBM of economics.  :P

So on that logic, hyperinflation must be a massive net benefit for the economy?

This is possibly one of the stupidest and worst thought out articles I've ever seen on Forbes. Props to them for raising the bar on idiocy.

You'll have to quote where you're getting that idea. Hyperinflation is no good since it would erode confidence in the USG's ability to keep things under control. Treasury bonds are still considered by too many as guaranteed safe. If confidence in t bonds drops, this awesome cycle can't continue. It's a delicate balancing act which makes everything work as intended.

This is neither the time or the place to get into this but your assertion that inflation is somehow "good" for the economy is entirely unsupported, as much as you try to put the onus back onto someone who says otherwise to prove the negative ...

... i.e. if inflation is a net benefit to the economy, then on a simple linear trend hyperinflation would be awesome (clearly it isn't) so you must then be arguing that the inflation=good functionality is not simply linear but some other functionality that has local maxima and minima with an optimal "goldilocks" value for inflation that is necessary for the economic goodness of inflation to reveal itself ...

... now the onus is on you to prove/show that "inflation goodness" function is not linear and indeed has a local optima that provides just the right amount inflation to produce net benefit to the economy ... go for it, (suggest over in the "Economy" section).

Inflation is wiping out the middle classes, as it always does.

Someone posted a reply to this article on reddit. I thought it was quite well written, so here it is: http://peaceandmarkets.com/2013/09/01/so-people-still-dont-understand-bitcoin/

The author of the article (Steve Faktor) is simply trying to promote the traditional banking systems and credit card companies. The following is from his website:

"Steve Faktor is IdeaFaktory‘s founder and CEO. He is an entrepreneur, futurist and digital commerce expert.  Steve is the former head of the American Express Chairman’s Innovation Fund and senior strategy and innovation executive Citi, MasterCard and Andersen."

The text above highlighted in red was on his profile on the Forbes website on Friday. It now does not seem to be present on Forbes; I wonder why. He is trying to protect his traditional bankster friends by spreading dis-information.

He tries to act witty and attempts to use some clever analogies to try and convince readers of his points. In reality a lot of his arguments were straw man. Many brilliant people are putting enormous talent and effort into Bitcoin. It is a distributed open source system, so it will evolve as it needs to.

Thanks for that reveal, it explains much.  The folks on the outside working to talk down Bitcoin have their work cut out for them, it is almost pitiable.   

This article stuck in my craw too. Not sure if you all read the responses, there were some good ones, such as the one below.

Response from Erik Voorhees:
"Steve – let me say, your writing is excellent. Let me also say, you’re wrong about Bitcoin. I’ll address each of your 10 numbered arguments.

1 – It’s completely legal. And outlawing it will be as effective as outlawing filesharing.

2 – You can’t cut off money transfers into/out of Bitcoin. Any two people can exchange directly with each other.

3 – Volatility gets lower over time. It’s far more stable today then last year, or the year prior. Markets stabilize. Give it time.

4 – Feature, not a bug. You’re suggesting Bitcoin would fail because it will only appreciate in value? Think that through a little more.

5 – It is a fallacy that a growing population requires a growing money supply. Inflation is a scam, not a feature of quality money.

6 – You’re right, most people don’t care about Bitcoin today. They also didn’t care about the Internet before they started using it and now, can’t live without it.

7 – It’s complex because it’s new. Entrepreneurs are making Bitcoin easier. Again, give it time.

8 – Benefits to merchants are superior to any other payment system, loyalty program, or other gimmicks. Bitcoin means an instant “money good” transaction from anyone, anywhere, with near-zero fee. As point 7 is addressed, you’ll see merchants come to Bitcoin in droves.

9 – The Internet is also online only. Are you suggesting the Internet will fail because of this “bug”? Nobody is suggesting Bitcoin works well in a caveman society, but it works amazingly in a society with power and internet.

10 – So an open-source software project is “sketchy”, but a currency created out of thin air, with no limit, by a select group of central bankers and politicians is just dandy?

Bitcoin is not the MySpace of money. It’s the Internet of money. Money now moves freely, instantly, anywhere. Good luck stopping that. But again, I like your writing, Steve :) "

The good Voorhees talks like a priest. Well done.

cheers

It is fairly clear that the dollar is failing as a currency, but it isn't happening rapidly.  Not yet.  When it does, as every fiat currency ever created has, it won't go down alone.  Many others would go with it.  This is the central banking process in action.
To understand the mechanism by which they are propped up and supported it is good to study the Basel accords.  These are the central bank meetings where the many central banks gather and determine the framework for interoperability.

Increasingly the central banks are becoming interdependent upon each other.  This is by design as they are all in the same confidence game together.  When any of them fail, it reduces the confidence in all the others.

Until this time, the current stakeholders are going to talk down alternatives until they have bought in as much as they want.  Then they will talk it up.  When I see articles like this, it suggests buying.