A huge rise in values seems good, if you're used to looking at stock charts. But for a virtual currency that has no mechanism for adjusting supply relative to demand, it can be a kiss of death. As Joe Weisenthal points out, bitcoins are now undergoing massive hyperdeflation. People are hoarding bitcoins rather than spending them on stuff. Which makes sense. If you think your bitcoins will be worth twice as much next month as they are now, why would you spend them on online-dating services? No, it simply means you will spend half as many on the on-line dating service you would have purchased anyway ... who doesn't like 50% off?! Real people don't want their money to double in value in a month – I wonder how many "real people" they actually asked to arrived at this amazingly stupid conclusion? Beggars belief how silly people behave when their world-view is inverted. |
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Indeed, given the speed of the rise in value it looks a great deal more like a bubble: something that private currencies and unregulated financial markets are prone too, as we know. First fail: A Fellow from the Adam Smith Institute harbouring delusions toward the perfection of regulated markets? Myself, if I had any, I’d be cashing out around now. Second Fail: He doesn't have any to cash out ... lolol ... not qualified to comment. Wonder what the Adam Smith Institute position on free market money vs State monopoly fiat is? Old guys in suits need to wake up to their responsibilities, particularly to the suffering wrought by a failed financial system. |
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Increasing the maximum block size beyond the current 1MB per block (perhaps changing it to a floating limit based on a multiple of the median size of the last few hundred blocks) is a likely future change to accomodate more transactions per block. A new maximum block size rule might be rolled out by: Did not know Gavin (or anyone) was considering floating MAX_BLOCK_SIZE, when I suggested it a while back on IRC it went down like a lead balloon. Anyway, imo it needs to float and be based on some sensible calculation of previous block sizes over a 'long enough' period. Also I think there needs to be a way to float the min tx fee, this is the other piece that is hard-coded and adjusted by human 'seems about right' to prevent spam tx. Obviously as the value of btc goes higher then what is and isn't considered spam tx changes. The two variables max_block_size and min_tx_fee are coupled though. Maybe a simple LQR controller for a 2 variable system could be sufficient for closing the loop for stability here? |
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Good piece I thought for such a short clip.
Big fail Simon Smith "archetype london financier" ... he is basically saying because adoption is so rapid it is a bubble. Since bitcoin is NETWORK of nodes, bubble-like adoption rates can be expected for any useful networks, it is called the network effect. A bubble forming and a network being adopted will look identical. It is exactly the same as all the people who were discounting the rise of the Internet itself in the early '90s, financial types who discount bitcoin as a bubble do so at their peril, they need to do a little reading about the network effect, (their ignorance is curious since their very livelihood depends on the network effects of efficient markets).
Arwar Mahdawi seems to be a v. astute commentator. She appears to have thought deeply about the topic and brings some new interesting takes on familiar ideas that regular people will be able to relate to, decentralisation of trust, "network regulating the currency", very clear and well spoken also.
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There's been a very insightful post earlier on this thread, stating that we're screwed because we can either
1. Use banking services, and get bail-in / haircut screwed, cyprus style
2. Use only cash, and get fined / jailed because it's forbidden in most places above a certain threshold.
(3. Use only bitcoin : you're not screwed, but it's a bit early yet)
In other words, we are required by Law to use unsafe banking services, with no means of checking banks risk exposure. In other words, we are officially serfs with essentially no private property rights, since the very system that is supposed to enforce those rights is built around a huge fallacy. Some people already knew this, but now it's official and undeniable. Yes, I think that was me that posted that thought. I've been pondering some more on this and it was perplexing to me why these cash controls limits were really being rolled out so rapidly as they are known to be so destructive to economic activity so it is a desperate move, official reason was "tax evasion" like everything they are doing with capital controls ... but the more I think about it is probably because large reserves of paper cash outside the banking system is going to leave the banks undercapitalised. They use these unsecured deposits as Tier 1 capital when assessing the bank for solvency under the Basel rules so people pulling money out of the system in the form of paper cash and stuffing mattresses is going to crash the system, since all the banks are now tied together in vast web of derivatives that share the risks all around equally, the macro risk from cash leaving the system in the form of paper has now become a systemic failure risk. The net effect being that paper cash cannot be allowed in large quantities since the digital fiat system cannot function alongside it ... seems to me much more plausible than the weak and unsupported, unquantified "tax evasion" argument, the economic pain incurred from banning a cash economy is justifiable since the financial calamity of systemic failure is a worse outcome. In another note, when you loan money from a bank invariably collateral in some form is demanded. Now that it is obvious that a cash deposit at a bank is essentially an unsecured loan to the bank, (except for custodial accounts) perhaps it is time for cash depositing customers to be demanding collateral from the bank before extending unsecured overnight cash deposits? |
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the real "tell" in the entire interview is what i experience with everyone i've tried explaining Bitcoin to and that is this:
the lady kept asking "where can i get some?"
yeah ... she needs to check out girlsgonebitcoin, she could probably get some on there, bloomberg bitcoin tips, not so much. http://en.reddit.com/r/GirlsGoneBitcoin/airhead |
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Another excellent article from Mr. Tucker, well thought out and worth the the read.
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Title:"Clipping deposits sparks rethink on risk" Several paragraphs about increased inquiries to Peter Schiff's new offshore investment vehicle. Then this brief coverage: Bitcoin, a virtual currency created by a secretive technologist called Satoshi Nakamoto, has become one of the best performing assets this year despite its crypto-currency status and entirely computer-based existence.
Mr Nakamoto has been blunt about his rationale for inventing the cyber coinage ever since first laying out the Bitcoin concept in a late 2008 paper.
“Commerce on the internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments,” he wrote in November that year. “While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust-based model.”
Bitcoin attempts to eliminate the need for a trusted – financial – third party by allowing users to “mine” the currency online.
The amount of coins in circulation is tightly controlled by computer code, but still susceptible to volatile booms and busts. The lack of any type of Bitcoin “authority” means the currency is also vulnerable to attacks by hackers and thieves who target virtual wallets.
But the point is that uncertainty surrounding traditional banking and monetary mechanisms is helping create a motley set of experiments and new entrants – from the mysterious Bitcoin of cyberspace to new offshore banks in the Caribbean. ... so FUD from the pink sheet, didn't expect much else but now we know. They are establishment tool of oppression through and through. |
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And you mine in my design with only your PC (no need to buy ASICs or GPUs), and get free coins too. Media would love this, they can show themselves earning a coin during a broadcast with a regular PC.
The ability for common people to earn coins simply by downloading the client, is the killer feature that could overtake Bitcoin. Agreed. That and user-friendly strong privacy. What language are you going to be writing it in? Send me the source if you need someone to look over it. |
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There is also another effective constraint and it is related to bitcoin's first mover advantage and the length of time until the deficiencies that you've identified become apparent to the bitcoin users/miners. It won't be until the block reward drops sufficiently low that the issues with fees structures becomes apparent. Until then competing with bitcoin's zero-debasement protocol rule in the open market will be nigh on impossible and meanwhile it will keep building on its first mover advantage. So not only do you need to produce a monetary product that competes with bitcoin in the long term, when it will be easier due to better fee structure, debasement rules, etc ... you also need to compete with it in the short term to gain enough market share that your product can survive long enough to prove itself when the "abstract" problems of bitcoin become real. Also you run the risk that bitcoin could always just adopt any solutions you provide to their long term problems and incorporate them into the source, since by necessity your product will be open source also. Edit: this is all not to say that it can\t be done, just it should not be underestimated the size of the task. Strong anonymity or inherently easy to use privacy of transactions is an area that bitcoin can be competed with in the short term.  ... which is why I'm following this thread. Zerocoin has some good ideas it seems. |
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I am not talking about a large debasement. Very slow similar to gold. Set in the protocol, nobody can manipulate it. FYI: New gold is mined at about the rate of 2.5% per annum, based on existing mined stock. And this "debasement" has held steady over very long time scales. Why not just create a hard fork of bitcoin (or with merged-mining) and a new rule to hold inflation at 2.5% once it drops to that level around block 600,000 in year 2020. |
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I am doing the first step first. The next step comes to writing the code, once people say "yes please go make it".
As I said, I would prefer that Bitcoin would be fixed, but Bitcoin refuses to make the necessary fix. And I understand why they won't make the fix, because the fix requires an ongoing debasement. That is why I explained in my OP that ongoing debasement (if small and automatic and known to all) is actually better. Gold has an ongoing debasement.
Satoshi put the "no debasement" design in because he knew you guys were gullible enough to fall for it, and he was working for the power elite.
Okay, all my gentle ribbing and prodding seems to have not worked. You make some good points, bitcoin has flaws, the fee structure is suspect, it is potentially vulnerable to cartel behaviour and govt. control (there exists no evidence of this as yet) and it has privacy vulnerabilities. An alternative solution choice is needed in the market place of free monetary system competition. Yes, please go make it! Hope that is clear enough. NB: bitcoin is still light years better than the cartelised, endlessly debased, zero-privacy, paper ledger legacy database, crap fiat monetary system in existent today. |
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I guess OP hasn't heard about merged-mining?
If a superior form of crypto-currency blockchain comes along, it can co-opt the bitcoin mining power and take-over ... it is a level playing field for any good ideas to compete upon.
Wait, don't tell me, that is diabolical?
You fail to understand the technical problem in the OP. Merged mining does not fix the threat. The threat is the corporations can make it uneconomic to mine because they can offer it for free and the other miners will get paid nothing for mining, thus they control all of the mining (merged or otherwise). Before you attack that, go re-read the OP more carefully. I won't be re-reading any drivel from an amateur loud-mouth like you ... anyway i thought i was on ignore? I wasted enough time already on the first skim through. It is easy enough to blow hard and loud on forums, go and produce the code. A fully anonymous, merged-mine coin (anonymcoin) will out compete bitcoin, we 'just' need someone to build it, not talk about it. As I said I'll be watching to see how much code you produce ... not just talk about it. |
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The worse thing is that they have effectively criminalised cash holdings and then started confiscating bank deposits.
So what can a little guy in business do?
It may have been intentional or not but the net effect is they have corralled all businesses to be keeping all money in the bank and then taken it from them. It absolutely is a robbery in essence when you strip away all the legalese and politco weasel words. These guys had no option but to hand over their money.
Note also a lot of the money has ended up in the hands of the bank bondholders and shareholders who have by some evil laws have been placed higher up the creditor list that the bank deposit holders.
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I guess OP hasn't heard about merged-mining?
If a superior form of crypto-currency blockchain comes along, it can co-opt the bitcoin mining power and take-over ... it is a level playing field for any good ideas to compete upon.
Wait, don't tell me, that is diabolical?
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And here is where the hidden diabolical quality of Bitcoin (and Litecoin too) becomes too obvious when the technical details of the design are closely scruntinized by an expert programmer such as myself. hehehe, quite full of ourselves aren't we? You seem to like that word diabolical too much, make sure it doesn't boomerang on you there. Will be waiting and watching for your best imitation of Satoshi's genius, for that's all it will ever be, an imitation. Might even buy a few if they are good enough, . |
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If you want to use guiliotine on government - please do it wisely and with constructive arguments. Don't forget that the European Union was created to prevent another devastating war and it served quite well for that purpose so far. So respect that, even if it's a time for the system to change or go away.
People should be careful with the anarchy they want as they may get it. And then you would have much have bigger problems than even Bitcoin wouldn't solve. The lawlessness and anarchy is being ushered in from on top ... how can you not see that? The criminals already firmly have the reins of power, how else is the plunder, pillage and gross misallocation of resources able to scale to such magnitudes. Every increment in the totalitarian response to financial problems is actually making the situation worse for everybody, except for themselves. The EU can no longer be looked upon as benign force for good, they are out of control and damaging peoples lives. |
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I think the article might have been written to fit the "witty" headline (punchline) ... and then a saner head prevailed and it got pulled.
Bitcoin is really blowing some minds out there in the finance industry and economics profession. They are just saying/writing some of the most stupid and childish things ... it's kind of like watching kids at Christmas.
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You just got robbed, call the cops.
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