"Bitcoin Will Bite the Dust" report

[evenlydistributingfuture]

The Cato Institute just released a new report with the above title--will Bitcoin bite the dust?

I guess most people here would disagree, but does anyone have a response to this report?

Any rebuttals for ideas like that the BTC mining industry is a natural monopoly because of economies of scale?

 Is there such a natural drive toward centralization and will it kill off Bitcoin?

Here it is: http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2015/5/cj-v35n2-12.pdf

[1714765075]

1714765075

[1714765075]

1714765075

[jonald_fyookball]

mostly complaining about centralization due to pools.

old news.

Bitcoin is fine.

https://blockchain.info/pools

[Cashew]

At the moment bitcoin's price reflects its fundamental value! As the difficulty increases, the mining industry becomes more centralized! It domes't cause any severe problem to bitcoin! As the adoption rate increases, more ppl will adopt bitcoin! Hopefully the big whales would sell some percent of bitcoin to the public and the more ppl hold bitcoin, the stronger its ecosystem will become!

[hikedoon]

 The Cato Institute suck Koch for a living.

[funkenstein]

"We would therefore regard Bitcoin as an instructive creative failure... "

I would therefore regard the authors of this report as total failures, but not in any sense creative ones.  A 26 page overview about bitcoin, apparently written in 2010 or so,  doesn't contain the word "counterfeit".  The only evidence of failure is they said so.  Talk about not getting the point.  

"it’s easier to trust central banks that print fiat money, because the people in charge and their interests and motives are more or less known, or at least are the subject of much study and speculation."

This is easier to trust than what?  Than discrete logarithms being hard to do on elliptic curves?  Call me crazy, I'm actually more inclined to trust my own eyes and basic math than somebody I never met or know the name of who has "studies" made into "their interests".  I guess I just don't understand finance eh?    

[BADecker]

The things in the report have some strength.

Bitcoin is the beginning of a realistic currency movement. Even though there have been many other cryptocurrencies, the thing that will probably last the longest are variants of Bitcoin that use the Bitcoin blockchain. When these become numerous, trading among people might become really free. Bitcoin XT is something like this. Things like Mastercoin/Omni and Counterparty might be considered others.

I don't find anything in the article that talks about what might happen with Bitcoin when the fiat money system collapses. When it collapses, will the whole Internet go down? Or will the Internet go down bringing forks to the Bitcoin blockchain based on nations that uphold their own Internet structure, only? In addition, the fiat system will probably crash very rapidly... like in one day. Will Bitcoin survive the massive flux into it, as new people become the new wealthy overnight, because they held a lot of bitcoins?

The reasoning in the report is okay in a world where nothing else changes. But the world will likely change in many ways. How will Bitcoin react to the world changes?

[TheGame]

Well that's just their opinion, but I don't think it will bite the dust because of this. As long as someone is mining and its profitable to do so then miners will keep mining. I do wish it was somehow still possible for newbs to get involved and it's a shame anyone just can't pick up some basic equipment and make money.

[Fullbuster]

if it rises fast as it collapses faster, but i dont think btc will bite the dust, since it has risen stably.

[balu2]

They could be right but then there will come in a coin which is more decentralised to replace BTC. That's what i am thinking anyways: centralisation WILL kill it and in the long run the leading coin will also be the most decentral because what has this all been about in the first place? Only decentralisation gives it value in the first place. Less decentralisation means it'll become prone for DDOS which would kill it instantly. I think the issue with centralisation of mining is hugely underestimated.

Anyways: the end of bitcoin will not be the end of cryptocoins.

[Hazir]

There is something about statement that Bitcoin is gravitating towards centralization. You already can see it, that bitcoin on its own is nothing, you need exchanges to sell and buy, you need satellite services to process payments. And we still can't figure it out how to create decentralized marketplaces or exchanges.

[LoyceV]

In the bigger picture, it doesn't matter if bitcoin makes it or not. But the concept of cryptocurrencies is here to stay.

[RodeoX]

Why would the Cato institute know anything about bitcoin? The only one of them I have met that understands bitcoin at all left them to go into bitcoin.

[pedrog]

Didn't read the all thing, does the author address the fact that it would hurt financially everyone in the bitcoin ecosystem including the 'mega centralized mining pool' or mines?

It goes against the economic interest of the bitcoin industry players, specially the big ones, to turn it into another centralized system.

[QuestionAuthority]

This is going to piss off a lot of people here. Why would I care what a libertarian think tank has to say? Libertarians aren't exactly plugged into the mainstream consciousness.

[ThEmporium]

Do not listen to naysayers they always want to make everyone down as they afraid that other one will empower them, We as a bitcoin favorites, never going to give a bit care to the rubbish and deterring talks pertaining to bitcoin digital currency.

[franky1]

i read the first paragraph and found it mis represented.

supposedly wrote by a british scholar and an american journalist..
but just that first paragraph tells me of the american influence exceeded the british..

honor=american
honour=english

then comparing bitcoin to stones that are too big to use... um... no.. bitcoins are the easiest currency to move, EVER.
even with the bit where they say they publicly announce a chance of ownership, yet the stones never move.. that is like someone writing a message signed with the privkey/pubkey to show the ownership of a private key has changed hands, but the funds on the key have not moved.

they say the flaw of bitcoin is the mining competition, which they say is unsustainable.. well my dear scholars, we are no longer in the pickaxe game of gold mining where everyman and his son can get gold. and where now it requires large investment of machinary and expertise.... yet no one is complaining about gold flaws.

in bitcoin, mining will continue, whether there are 2 people mining it or 200,000.. and if it got to a point where 2 people were mining it, 1000 people will club together to pool their resources to fight the attempts of 51% hash ownership.. oh wait its already happened..

when scholars only think about the creation and not about the use. they miss the whole economics of it. EG pawn brokers and jewellers make money from gold without having to dig any dirt. economics is not about who has the biggest slush machine... its about the control of ownership once in circulation. and 95% of miners dont keep their the majority of their hoards.

i became less bothered by their opinions at this point. i might waste my time later and read the rest, editing this message accordingly.. but for now i dont consider it a true economic understanding of bitcoin

[Gleb Gamow]

This is going to piss off a lot of people here. Why would I care what a libertarian think tank has to say? Libertarians aren't exactly plugged into the mainstream consciousness.

[Gleb Gamow]

Bitcoin Will Bite the Dust

Kevin Dowd and Martin Hutchinson

https://en.wikipedia.org/wiki/Kevin_Dowd

Dowd's main subject of research is private money and free banking – monetary and financial systems that operate without any government intervention and in the absence of any central bank. A related focus of his work is on central banking and other forms of state intervention into the economy, most particularly, on deposit insurance, the lender of last resort and bank capital adequacy regulation. He has repeatedly called for the abolition of central banks and an end to state intervention in the financial system.

He advocates competitive monetary systems: his latest book, New Private Monies – a Bit-Part Player?, is supportive of private gold money systems such as the Liberty Dollar and e-gold, and expresses measured support for Bitcoin. Dowd is a supporter of commodity-based monetary systems such as the gold standard and is a critic of fiat-based money issued by a central bank.

https://www.cryptocoinsnews.com/martin-hutchinson-predicts-2015-demise-bitcoin/

MARTIN HUTCHINSON PREDICTS 2015 'DEMISE' OF BITCOIN

BITCOIN OPINION, NEWS 29/12/2014 BY P. H. MADORE

Retired investment banker and former US Treasury adviser to Croatia Martin Hutchinson recently penned a hit piece in which he made clear two things. One, he does not understand how Bitcoin mining works and two, this lack of understanding leads him to believe that Bitcoin will fall flat on its face in 2015. In his article for the Reuters Breakingviews site, he uses outdated metrics as well as a clearly weak understanding of how cryptocurrency works to make this prophecy.

À la Mary Matalin and James Carville, did these two end up in bed together after a happenstance meatup at some pup?

[Kprawn]

I would have thought with the inputs received from Gavin Andresen, as stated in their credits, they would have understood the basics of mining pools. This natural monopoly that are being created by China and some of the bigger mining pools are still more decentralized than the fiat system.

The "failed experiment" would only fail, if the cow dies. This is the part that they do not understand. If these mining pools create a situation where they can double spend, people would leave Bitcoin and they will be left with something with no value. It is not in their interrest to kill the cow, that is producing the milk.

The mining monopoly is not a good thing, but it is not a issue, when you consider the result. 

[Amph]

In the bigger picture, it doesn't matter if bitcoin makes it or not. But the concept of cryptocurrencies is here to stay.

if bitcoin fall which is the coin that is carry the whole crypto concept, then it would cause a huge loss of confidence in the cryptoworld, it's better for bitcoin to stay alive

so it actually matter

apparently the article can not understand the difference between farm and pool, there is no centralization in mining until one big farm or pool is controllig 51%