I went off the deep end long before the first block was mined.  Interested in PM's, found more plausible explanations for the WTC event observations than Muslims in caves, etc, etc.

In fact, getting interested in Bitcoin and actually trading some USD for BTC pretty much qualifies as a 'deep end' indicator in and of itself.  To most normal people at least.

I expect that Krugman would grasp the major concepts of Bitcoin in about 5 minutes...and likely already has.  They are vastly more simple than the complexities of Keynesian economics that he adheres to.  I think that Krugman is on a dead-end along with the current monetary system which is due for a re-set.  Further, that he is probably well aware of this.  But that would not necessarily present itself in his writing in part because it would not serve his purposes which are, at least in his opinion, in the best interests of the American public.

I'm guessing that Kaku is right about milking silicon technology to the limit (and I'm not holding my breath for quantum computers to do almost anything useful in my lifetime.)

I think that one mistake people make (especially those Bitcoiners who are relying on Moore-like principles to solve all problems) is to assume that just because technology exists, it will be readily available.  If anything, what technological improvements that are in the cards will likely produce major and potentially terminal challenges to Bitcoin as it is currently implemented.  As always, just, my gut feeling.

What damages your thesis (or would...see below) is that there is relatively less reason for people not to hold their own BTC and thus have counter-parties, necessary for fractional reserve schemes, involved.  This contrasts with gold in that there are very compelling reason to relinquish control of the medium to a (supposedly) secure custodian.

Of course as it becomes less and less practical to hold one's own BTC, and more and more common to rely on bank-like entities due to the scaling issues popping up, this principle is muted.  A potentially saving grace is that what one actually has are private keys and certain solutions do not require complete surrender of value.  But then again most people are to lazy and/or uneducated and/or not sufficiently paranoid to prefer such solutions I'm guessing.  In any event, a bank-like entity could likely gain control of many people's secret keys by offering some 'interest'.

Amen brotha...I as well (though I'll not turn down a monetary reward if it pops up to be honest, and if I did decide to 'give some back' to the cause, it would probably be only a fraction.)

As for gambling, it's not my thing but many people and most cultures embrace it.  Some people have fun throwing away their money, and other people make a living off taking it.  I'm not going to produce any resistance simply on the basis that I find it rather ignorant and/or mildly exploitative.  If gambling kills Bitcoin than Bitcoin was simply not strong enough to face it's bigger challenges on the horizon anyway IMHO.

As for 'greed and usury'. I consider it an impossible task to 'stop'.  It's just the way humans are wired.  The best solution is to design things such that these unseemly aspects of human nature serve to strengthen the solution.  That's tricky, but I actually feel that the designer(s) of Bitcoin did a pretty fair job of doing just this in certain parts of the implementation.  Beyond that, Bitcoin seems pretty neutral.  There is a lot of latitude on how it could be used, and how revolutionary it turns out in practice is a huge question mark in my mind.

A credible threat by a population to choose an alternative to 'legal tender' is, I believe, an immensely powerful thing.  Much more relevant today than what the founders of the U.S. came up with back in the late 1700's when they were mulling over the problems of balances of power between the citizenry and the central government (that is to say the 2nd amendment which is, insofar as it is an invitation to revolt, a pretty unusual thing to have codified in the 'design documents' of a government.)

Anyhow, that is probably the biggest reason why the solution of peer-to-peer crypto-currencies has such a draw to me.  As a potentially credible 'poison pill' against centralized tyranny.  OTOH, it opens the door for more localized tyrannies....so who knows how things could turn out...

Ya, I'm feeling forced to consider the cloud, or worse, putting trust in (and pay fees to) operators I do not know in order to use Bitcoin.  The block-chain is currently 50% of my monthly total network allowance...and I pay extra money to double it else it would be close to 100%.  Of course if I were careful I would not need to download the blockchain monthly or burn my traffic allotment supporting the network, but growth trajectory is such that the end is in sight.  For me.

A real problem with P2P is that in the case where there is an adversarial relationship between classes (which is the only case that is worth putting much thought into whether or not it has cropped up in a major way so far) people are reliant on network providers as a means of struggle.  It's a certain FAIL to rely on one's adversaries for arms.  Now, of course, alternatives like the cloud are that much worse, but anyway...

Although side-band solutions like mesh networks sound good, the technical challenges to getting them working at all, much less to the level of service we've come to enjoy from commercial carries, and much much less to actually keeping them operational in the event that they are needed, are vast.

To me, the most interesting lines of development are ones which are designed to be extremely tight and thus possible to thread their way through commercial networks unmolested.  Bitcoin is NOT on that trajectory and it really detracts from my appreciation of the future potential of the solution.  In a bad case at least...or put another way, in the case where we actually *need* the solution.

I've not studied Ripple...it's on my list of things to do.  But, if what you say is true it does not strike me as particularly promising, or at least not very scalable.

It seems to me that one of Bitcoin's strengths is that it completely eliminates 'trust between people' as a construct upon which it as built.  Also, I observe that with few exceptions, the (multitude of) failures that Bitcoin has experienced are a direct result of trying to map the 'trust' we've become habituated to in other forms of currency to Bitcoin.

When I look deeply into Ripple I hope to find a fairly tight and default 'web of trust' structure as the basis for it's design.  That will give me some hope that it can be at least a valuable augmentation of (potentially) trust-less solutions such as Bitcoin and gold.

Agree.  And I agree strongly if I make myself consider it.

In reality, it is likely that various things will crop up over the years which have some advantages and disadvantages to Bitcoin proper.  Similarly, it is likely that Bitcoin will be used in ways which are considered positives and others which will be considered negatives to each one of us.  My main hope is that Bitcoin and future related technologies tend toward forming symbiotic relationships with one another rather than that they are seen as adversaries by default.  And, or course, that these symboitic relationships further what I consider to be positives in our societies.

As a 'hardcore goldbug' myself, and one who has been interested in Bitcoin for some time, I'm not especially delighted to see Libertarians picking it up more than is already the case.  I'm more of a hard-left person and would rather see inroads made in that community.

It would be absurd to equate Libertarians to the large-ish contingent of scammers and criminals who are already present in the Bitcoin world, but I honestly don't see Libertarians having a much larger positive impact on the solution than do these folks.

Of course if goldbugs, tax cheats, and/or Libertarians turn en-mass to Bitcoin it will very likely serve my economic interests fairly well.  I'm still of the mindset that the real beauty of the general solution of peer-to-peer crypto-currencies lies with their potential to shift balances of power to a more appropriate state, and it remains the case that this is more important to me than gross wealth accumulation on a personal level.  For how much longer I'm not sure

Good points both and I cannot disagree.  Neither loss (or gain) from gambling has effected me, nor have I had anything stolen (except for a few BTC which I left at Bitcoinica and I anticipated that as the likely outcome.)

For my part, I'm content to just sit on the Bitcoin I have obtained.  For years.  The main danger I face is not being able to remember how to get them out of deep storage if/when I have reason to.  Because my assortment of computers and network gear changes, I'll probably have to build a machine upon which I wish to run bitcoind and try to get bitcoind to compile on it (and now download a rather massive amount of data) in order to re-activate my wallets.  Both of these are tedious.  Probably I'll end up doing in the cloud since by the time I get around to it, it will be wholly unworkable to run Bitcoin at home.

DOS-like constructs such as 'satoshi dice' will just shift power to the 'money changers' where it can be more easily pilfered a bit at a time if not flat out stolen.  Not being a gambler myself, it is easy to hypothesis that that is part of the goal of 'satoshi dice'.  It would be really interesting to know how 'Satoshi' would like his name pinned on this construct.

OTOH, 'satoshi dice' really is something which is getting the attention of the more philosophical and technically capable of the crypto-currency community.  On balance, I personally sense that it is a positive contribution at an opportune time for that reason alone.  But then again my attention has wandered away from crypto-currencies generally of late so I've paid even less attention to it than I normally would.

Try open sourcing things.  In that world, people who demonstrate a significant expertise in a particular field are often retained by those who value said expertise.  In exchange for money.

I'll bet a few of those who 'troll you' incessantly actually have some respect for, and interest in, your insights and find you to be out in front in certain lines of thought...even if they disagree somewhat with your synthesis.  Indeed, this thread, which shows little sign of abating or being terminated by TPTB, has proven a pretty decent vehicle for some open-source philosophical work.

While neither gold nor Bitcoin has been a bastion of stability over the last year or two, Bitcoin seems to be significantly more volatile.  This is, of course, completely unsurprising (to me at least.)  Gold's performance has neither helped no hurt me recently.  I would neither have bought nor sold gold no matter what it's performance.  Same with Bitcoin.

I've thought (incorrectly) that gold was 'about to launch' for going on a year now.  In spite of it's failure to do so, I suspect very little chance of a significant crash.  As for Bitcoin, I've always anticipated more chance that it will 'collapse' than that it will 'take off'.  The fact that it has done neither (to my specifications) is actually a pretty promising development.

Switching from [win|mac|linux] to [win|mac|linux] is a bitch if one is familiar mostly with the original.  If you guys are prepared for some annoyances and have researched that what you absolutely _need_ to do is do-able under Linux then there is a fair chance that at the end of the day (or the end of next year) you'll be enjoying benefits which you might not even ever really know about.

In my case I don't normally used any of the three aforementioned OS's.  The OS I use is unpleasant to the point of usability for most people, but I've been using it for a decade and understand it pretty well which is _the_ factor in making it work for me.  I actually find the latest Ubuntu distros to be even less intuitive and more annoying than Windows.  I still choose Ubuntu over Windows when I can because the tools I like are available if one digs deeply enough and with enough effort it can be modified to work in the ways I like.  And, of course, I trust the security more.  I use Windows more than normal lately since there are some things which are simply not realistically available under my preferred OS's.  I studiously avoid doing anything of real importance on my Windows laptop, however, and would not even consider putting a decent sized wallet on it.  I don't even log on to my bank account from it.

Anyway, good luck in your adventures.  If you are prepared for some amount of trade-off and some amount of head-scratching then there is every reason to believe that it will be a good move.

I got almost all of my BTC from Tradehill and kept a dump of my activity.  Will the IRS by happy with that?  Dunno.  Will find out if/when we get to $100-ish/BTC and I recoup my USD outlay I guess.

For the record, I don't trade for a bunch of reasons, several of the primary ones being:

1) Expense.   It costs money to third parties to exchange almost anything, and it complicates tax considerations as well.  Of course if one is in the business to capitalize on other people's trading it's a different story, but that's a pretty big commitment.

2) Disadvantageous asymmetries in: information, regulatory preference, legal protection, etc.

3) Counter-party risk is inherent in most trading adventures, and I try to avoid it as a matter of principle.

You are right that I don't follow the 'news' as much as you, and when I do follow it it is never really mainstream sources that I pay attention to.  In any event, it is 'theory' that interests me more than 'news', and news is mostly just a way to build up or knock down various hypotheses of mine.

I've a short attention span and a fairly broad range of interests.  By investing/speculating almost completely on fundamentals I can completely neglect any news or research for months long periods without any impact on my financial affairs.

I think I've demonstrated some understanding of the mechanism as you describe it, and do not disagree with your interpretation.


It's tricky when the 'worth' is a nebulous term.  The toxic paper is 'worth' quite a lot as the fed will spend up to $40,000,000,000/mo to take it off one's books and put it on their own and will continue to do so indefinitely (if I remember the details of QE3 correctly.)

As long as $40x10^9 is considered a fair chunk of change, that paper is as good a collateral as any.  The 40-billion can be deployed to obtain more broadly values collateral (than toxic paper) and the game continues.

I would not doubt that the game could continue for many years if management is particularly adroit, but the whole thing 'feels' to me like there is a lot of internal stress and a structural failure (should someone drop the ball) could very well be fairly catastrophic.

The article seems lite on detail of the mechanism you propose.

I would say that the primary effect contributing to deflation (except for outright default of course) would be that entities burdened with decreasingly valued assets are less well positioned to take on more debt as their collateral is diminished.  Nothing a few accounting rule tweaks cannot deal with though.  I think it was on zerohedge that I read about the US having no plans to implement the Basel-II accords...and we still operated under significantly lightened FASB rules interpretations in terms of mark-to-market as I understand it.  I bet that 'doing right' on either of these away would snap the system like a pretzel.  Bet using PM's and Bitcoin that is.

No matter how optimistic I am about the future of Bitcoin I intend to sell down to a certain amount if/when we hit a point where I can re-coup the fiat funds I put in while still retaining a sizable percentage of BTC I've obtained.  For me that price target is a ways off but a lot of folks who got in sooner and have bigger piles loot might hit that point a lot sooner and liquidate what to a lot of people may seem like some decent coin.  Namely people who were not around when a pizza went for 10,000 BTC.

In reality I'm sure there are a mix of people in different catagories who actively and imediately part with Bitcoin with prices through all ranges.  I actually think it a bit remarkable that more BTC are not actively on Mt. Goxes' auction block as we speak though as many people point out, there are a variety of reasons why the painted pixels can and often do give a mis-leading view of reality.  OTOH, I find that a quick glance at the general lopsidedness is *my* most reliable indicator of trend-ing moves.  That's probably because I don't pay for other people's newsletters, and never tried to figure out various kinds of TA, Idiot Elliot Wave analysis, etc, etc.