I think Pantera is not going to like it. Tim Draper is nuts for Bitcoin and will bid aggressively.

Dan Morehead ‏@dan_pantera
Bidding closed for US Marshals #Bitcoin auction.  Pantera placed bids below the market.  Results out tomorrow by 2pm PST.  Probably earlier.

no wonder they're scared.  i'd be too:

What if Bitcoin's payment system was significantly more limited (for example let's say a payment took weeks because of the crypto or both parties had to be physically present). Bitcoin would still have the fixed 21M supply, but do you think it would be widely used if that were the case? Probably not. And without being widely used those 21M wouldn't have much value.

What about Rai stones? They perfectly achieve the store of value function, but since payments are a tad difficult that system did not exactly take off, which in turn limits the total stored value.

My point was simply that the more useful the payment function is found to be, the more people use it, which in turn increases the total value of the system.So I thank payment functionality goes hand in hand with store of value functionality, not necessarily one driving the other.  

Many of Bitcoin's early adopters were drawn to the store of value function and sound money principles, but if we see wider adoption it will be due to the usefulness of the payment functionality of Bitcoin. It's likely a majority in the US today disagree with Bitcoin's fixed supply nature and believe the government needs to "adjust" supply to "grow with" the economy. This wrong, but probably 95% of the people I know believe it anyway. They will join Bitcoin for payment functionality first, then benefit from sound money principals as they adopt it.

That said bitcoin's payment or remittance functions are what make the store of value function valuable.

We are in agreement, this is also why most of bitcoin's earliest adopters are those who were already looking for a sound money alternative with independent control of the money supply.

That said bitcoin's payment or remittance functions are what make the store of value function valuable. The more useful the payment functions are and are used the more valuable the store of value function becomes. Imagine bitcoin with no payment function but the same store of value function, yes the store of value function would work and remain fixed, but it wouldn't be valued very much.

This is the fiat money as a technology invention argument on why dollars beat gold, better payment functionality makes a given money system more used, which in turn makes it more valuable. The fact that bitcoin's payment functions are superior to fiat is what makes the project have a fighting chance.
 

Why screw over bitcoin if it can be your salvation

Here is a US government rescue plan with bitcoin 
1. Buy bitcoin with government tax-payer money until you have a million BTC or so.
2. The price will inevitably rise but who fucking cares since you're buying them with tax money screwing over all tax payers.
3. When the price is high and you're government is loaded with bitcoin do a big order of physical gold from a foreign country. This will dump BTC back into the system indirectly screwing foreign countries out of their gold.
4. Wait for everyone to panic the shit out of themselves because some gold vendor is dumping the BTC for fiat. Everyone will hate these foreign gold vendors and not the government.
5. Go to 1 and rinse and repeat until your federal reserve is full of shiny bars of gold.

Thanks for your reply. So in essence you believe that the markets would not be convinced that the lower price sold by the attacking banks is valid and would simply take their fiat losses. I can see the validity in this point perhaps. Then again, big selling of this type could cause market sentiment to sink.

In addition, you believe that the damage to the fiat economy would be too great for them to try this. Not sure I'm convinced about this since the Bitcoin economy is so small at present, and considering their past willingness to risk very high inflation and worse.

Well I disagree, and I think this is just part of the process of recognizing that you can't separate the protocol from the ledger. Otherwise, you could simply argue that we already have a ledger (fiat) and we should import that into the protocol. Which of course is exactly what the "bitcoin the protocol not the currency" folks are saying.

You need a new currency because the currency and the protocol are inexorably linked. Change the protocol and the currency also must change. For example, one might imagine (non-bitcoin) protocols that can't work with a fixed money supply because it doesn't charge transaction fees at all.

You can't logically argue that "there is only one ledger" and still accept bitcoin because bitcoin is already creating a new ledger (as it must).

Change the protocol and the currency also must change.

We're back to this silly idea of separating the currency from from the blockchain. You can't, they are one in the same.

This "ledger" rhetoric is a paraphrase of the false idea they are separable.

The system is the blockchain is the currency is the protocol is the ledger.

Yes, they will fight tooth and nail. The question is what are their viable strategies?

Passing a law saying "you may not accept bitcoin as payment, under penalty of 10 year prison sentence", would pretty much destroy bitcoin in that country. There's no ecosystem when no law-abiding person can use it at all.

However that's not the end of the story, other countries' bitcoin economy would continue to flourish at the expense of the iron-fist country. It's possible that pressure might open things back up.  I think the equilibrium is where some fraction of the people use bitcoin, and the rest won't be bothered due to regulations and simple lack of demand. The drug war is similar - drug policy doesn't really stop anyone from smoking a joint, but you have to want it a little more, compared to it being freely available on every corner. The government just selectively enforces the law for their benefit (disproportionately on minorities). Same will happen with bitcoin.  They'll just create a multi-billion-dollar governmental department just for enforcing "bitcoin crime".

I think the "hyperbitcoinization" scenario is sheer fantasy. The vast majority of the population do as they are told, if the tv says bitcoin is for terrorists, they will not be interested.  Only when those people die off and are replaced by bitcoin-savvy youth, might there be a chance for a takeover.

This is basically where I see Bitcoin going.  The coin itself will be (more or less) irrelevant, but the technology (or something like it) will play center stage.  The U.S. government isn't concerned about Bitcoin as a threat to the dollar.  The IRS has already made it impossible to use as a traditional currency without running afoul of tax code.  Report capital gains on every transaction?  Yeah right.  They knew exactly what they were doing .. marginalizing Bitcoin.  Digital currency has been here ever since banks established electronic lines of intrabank credit.  This technology will likely be adopted in some form by governments, with their own strings attached (100% oversight).  People will go along with it.  Middle/upper class Americans simply don't have the stomach for dissent.  They've too much to lose.  Credit cards work fine for now, and when the time comes, a shift will be made to something a bit more streamlined, all the big players will be right there at the trough, make no mistake.

Let's be clear here. Taking the existing banking system, add in lower fees and faster transactions, is nothing like bitcoin.  It's just the same old shit, but not quite as stuck in the dark ages as it is now.

The concept of a government-controlled blockchain is complete nonsense.  Those two things are mutually exclusive, as soon as a central authority has control of the blockchain, the entire thing becomes a waste of resources. You'd get the same effect from the government just running a centralized database, except it's much more efficient.

Could not disagree with this more.

Gold bugs have spent 100 years knowing  they are "right" and waiting for everyone else to education themselves understand history and see the light. Never happened.

In the meantime the state resorted to banning private possession of gold for almost 2 generations in order to break the public's view of gold as money. The state will fight Bitcoin just as hard.

This is exactly right, Bitcoin enabled real competition with state fiat money and has provided us a fighting chance.

My main point was it will be a fight and Bitcoin's success is anything but a given.


And those views will be part of the fight, a fight proponents of the gold standard lost BTW. The majority today are against a gold standard, I can't count the number of times I've been told that the gold standard caused the great depression, which is blatantly false but has been taught in the common core for generations. I think it will be an uphill battle to convince minds they should prefer "Bitcoin as a better gold standard" over a slow inflation fiat money with _perceived_ security.

The views held in this thread are contrary to many many people, even if we know we are "right".

I think this significantly underestimates the threat of alt coins and why Bitcoin is not a given (I'm saying this as someone who believes/hopes in the project)

For example what if the US government created a USDollarCoin that:
1) has all of the benefits of programmable money, you can have your own wallet and spend it through computing devices
2) has the _perceived_ benefits of centralized control including the ability to "recover" lost coins and "reverse fraudulent" transactions (possibility a majority of people prefer this based on Bitcoin's detractors' views). This could be accomplished with forced use of multisig where the FED has co-control.
3) has significantly easier tax implications to deal with (meaning no tax implications) compared to bitcoin where EVERY transaction is a taxable event
4) launches with mass adoption through automatic bank account conversion
5) was legislated as the only legal currency

Maybe that doesn't scare you, but it scares me.

The first wave of alts were simple clones, it was almost a given that network effects would hold them back here. However the next wave of alts are going to
a) come with real innovations and then
b) come with government sanctioned force

Network effects & Bitcoin's programmable nature will probably keep a) at bay, however network effect might actually work against Bitcoin if b) ever came to pass.

I'm not saying this will happend, and it may seem far fetched today, but it is in the realm of possibilities. The US government lives off of the inflation tax and if Bitcoin ever becomes a real threat, the state will definitely try more and more attempts to maintain control of the money supply. It's possible the proposal above would be a last ditch attempt to save itself.

On monoculture and diversity...


The term "coin" is introducing confusion. The question is, what if the ledger fails?

This makes it clear that we must be careful to distinguish between the ledger (a conceptual spreadsheet keeping track of who owns what percentage of the economic community known as "the Bitcoin ecosystem" and later perhaps just "the global economy") and the protocol for updating that ledger.

Now here I wondered how you could possibly mean that a ledger - a mere spreadsheet - could "fail" for economic reasons. Then I noticed later you posted this, which is a common economic misconception that I recommend rooting out of your thinking completely:


The problem is in imagining that the money supply needs to expand to accommodate an expanding economy (or contract in an contracting economy). As a ledger, all that matters is what percentage of total supply you own. Disregarding the physical difficulty of working with very tiny pieces of gold, even a single ounce of gold would be enough to power the world economy, no matter how it may grow or shrink. Any amount of money works the same, because again it just comes down to what percentage of the total supply you hold. The term "1 BTC" just means 1/21M of the total ledger (or 1/13M of the current ledger). 130,000 BTC is just another way of saying "1% of the current ledger." An ounce of gold is just another way of saying X% of the total gold supply.

Laboring under that misconception, and thinking in terms of "coins" instead of a ledger (and these two confusions go hand in hand), I can see how you might think the Bitcoin ledger could fail due to there "not being enough money."

With that possibility out of the way, you are still quite correct that Bitcoin the protocol could fail for technical reasons, so arguably a monoculture in protocols is bad. However, monoculture in the sense of everyone using the same ledger is not a bad thing at all, and it's kind of the point of money in the first place; the only way it could be bad is if the system for updating that ledger were faulty, which again points to the protocol as a possible weak point, not the ledger itself.

TL;DR: Monoculture in protocols may introduce weaknesses; monoculture in a having a single ledger doesn't, and is pretty much the point of having money at all.

That's the problem with tail risks. How do you know what is a "long enough time?"

This is why the catastrophic failure issue suggests there shouldn't really be one coin after all, and trying to maximize "network effect" may be over-fitting. Monoculture is fragile.

Bought the wife a Kindle DX while we were living in Asia. At the time she spent 2-3 hours a day on buses and subways traveling to various jigs.

The Kindle DX connectivity was both free and worked flawlessly everywhere she went. It was one of the few times we've been pleasantly surprised by how well something worked beyond our expectations.

But the connectivity was only useful for purchasing and downloading kindle ebooks and not much else. That's a several MB's per month at most and why the model works. Doubt you'd be allowed to run a Bitcoin node over that free connection...

wow, seems ripe for exploitation.

Can't be completely ruled out.  Your Bitcoin Savior could also have fluffy fur, long ears, and carry a basket of Easter eggs.
I wouldn't bet on it, but don't let that discourage you