Bitcoin's Dystopian Future

[dacoinminster]

I have seen the future of Bitcoin, and it is bleak.

The Promise of Bitcoin

If you were to peak into my bedroom at night (please don’t), there’s a good chance you would see my wife sleeping soundly while I stare at the ceiling, running thought experiments about where Bitcoin is going. Like many other people, I have come to the conclusion that distributed currencies like Bitcoin are going to eventually be recognized as the most important technological innovation of the decade, if not the century. It seems clear to me that the rise of distributed currencies presents the biggest (and riskiest) investment opportunity I am likely to see in my lifetime; perhaps in a thousand lifetimes. It is critically important to understand where Bitcoin is going, and I am determined to do so.

My hundreds of hours of thought experiments have been productive. I published a whitepaper about the future of Bitcoin, and because of that paper I’ll have the great privilege of sitting on the “Bitcoin in the Future” panel at the 2013 Bitcoin Conference in San Jose. Through these years of deliberation I have satisfied myself that the answer to the “Trillion Dollar Question” of whether any form of distributed currency can ever achieve a stable price, is “yes”. (There are three ways this will happen, as I have written elsewhere).

I have been predicting for years that the world’s first trillionaire by USD valuation will be an early investor in distributed currency — quite possibly Satoshi Nakamoto, whoever he/she/it/they may be. I own a few bitcoins, and I intend to keep them until I find a more attractive investment (that is, I want to invest in whatever replaces bitcoin or builds on top of it).

To many people, this sounds like an implausibly rosy future, and for early adopters that is true — it feels like winning the lottery every day. However, for most other people, the ascendancy of distributed currency systems will feel like a disaster. If you are involved in Bitcoin now, you should prepare to be almost universally hated someday.

In this article, we will examine a few simple thought experiments to show how the rise of distributed currencies such as bitcoin could create massive social upheaval due to governments’ rapidly degrading capability to fulfill their core functions of taxation and regulation of commerce. We’ll see how the end result could be extremely painful for common citizens due to previously unimaginable wealth disparities, hyperinflation of previously stable government-backed fiat currencies, and a greatly empowered criminal class.

The Bleak Future of Fiat Currencies

Anarchists and hardcore libertarians love Bitcoin, but most people outside those circles are not in favor of completely doing away with their government. If you aren’t part of a fringe political movement, chances are there is something the government does that you like, whether it’s handing out entitlement money, killing enemies, putting people in prison, building dams and roads, funding research, or any number of other things. The government can do these things because the government can collect taxes, which in turn they can do because the flows of money are highly regulated and tracked at every level. Whether you are collecting a paycheck, buying furniture, cashing out investments, or simply dying and leaving an inheritance, the government knows about it and takes a cut.

For our first thought experiment, let’s imagine a world where distributed currencies like bitcoin have become wildly successful due to technological advances which make them easy to use and completely stable. In this world government-issued money is as good as dead. It may take a few years for everyone to realize it, but there will come a point when the ever-increasing outflows of money from fiat money into untaxable, unseizable decentralized currency will reach a tipping point, and we’ll have a financial panic like the world has never seen. Frightened lawmakers and banks will try to stop people from cashing out, but that will just increase the panic. Those who don’t get out before the door closes will be in dire straits indeed. This is the ultimate bank run — the run on the world’s central banks, and who could possibly step in and restore order?

When people think of hyperinflation, they usually envision a Zimbabwean printing press running around the clock in the dark corner of a mud hut, putting ever more zeroes on cheap paper. Has it ever occurred to you that hyperinflation can happen while the printing presses are off? The value of the money in your pocket is not ultimately guaranteed by your government, but by simple supply and demand. The government controls the supply, and we control the demand. If demand falls precipitously, we have hyperinflation without ever needing to print another dollar or euro. If people start fleeing government currencies en masse, hyperinflation is the inevitable result.

The good news is that you don’t need to worry about current government debt in this scenario. If government currencies lose their value rapidly, debts which previously seemed overwhelming suddenly become much more manageable. Perhaps your debt-laden government will someday completely pay off it’s national debt by simply selling a few gold bars and a couple national parks.

The Bleak Future of Retirement

For our next thought experiment, let’s consider what will happen to Grandma. For her whole life, she has carefully saved her money, and now she is living in reasonable comfort. She gets money and health care from the government, and she has her own savings to fall back on. Grandma has done everything right, including taking her savings out of the stock market; most of her savings are now invested in the safest asset known to man: U.S. Treasury Bonds.

Rather suddenly, things start to go wrong. At the same time all her expenses start skyrocketing, the government has a liquidity crisis; they are having trouble collecting taxes and can no longer pay for her health care. Her savings are still “safe” in the sense that she will get U.S. Dollars out of them, but that is little comfort when those dollars which should have lasted years can barely pay her weekly grocery bill.

Grandma’s retirement has been sabotaged by the rise of a new kind of money that she can’t even begin to understand. All she knows is that she did everything right, and now she has nothing.

The Bleak Future Wealth Disparities

All the world’s wealth has essentially been stolen, but by whom? By you, dear reader.

We’ll be very lucky if we aren’t all rounded up and summarily executed. Thankfully, you’ll be able to use some of that money to purchase protection, but I’m not at all convinced that it will be enough. A wrathful government backed by an enraged population is a fearful enemy. Satoshi foresaw this long ago, and I doubt he/she/it/they will ever voluntarily come into the light.

If there are enough of us, and we are very careful and charming, we may be physically safe. However, the massive displacement of wealth will still have some awful consequences. People argue all the time about the societal benefits and drawbacks of wealth disparities, and the rise of distributed currencies will create disparities that previously did not seem possible. It seems clear that there will be a lot of jobs created by the new wealthy, but whether the average person is better off or not, one thing is sure to rise: resentment. What right do we have to take all the wealth of the world and put it in our pockets? Sure, a nifty new idea should pay off for early visionaries, but nobody ever expected a new idea to suck all the wealth out of the world like a financial black hole!

The Bleak Future of Law Enforcement

This is where things get really bleak. Currently distributed currencies facilitate money laundering, black market commerce (the Silk Road), and insider trading (TorBroker). These applications in their current form are just a snowflake on the tip of the iceberg. Not only will they get MUCH bigger, but we will see applications which are much less savory. Historically, the “Dark Net” accessible by Tor and private networks has been nothing more than a hidey-hole for illegal files and a hangout for paranoid schizophrenics, but it is quickly becoming the platform of choice for large-scale illegal commerce.

For this thought experiment, we will imagine that your child has been kidnapped and put up for sale on “TorSlaver”. Their business plan is to kidnap children and sell them to the highest bidder, whether parent or pedophile. The winning bidder is sent the location of the child, probably bound and gagged and dumped somewhere. As long as they don’t get caught doing the kidnapping, the kidnappers can do this again and again with complete impunity. Once someone proves it can be done, copycats will come out of the woodwork, and it won’t matter if the first mover gets caught.

As a parent of three small children, I cannot describe to you how awful this makes me feel. I have always been a very reluctant bitcoin investor, for this very reason. I don’t invest in bitcoin because I think it will bring about a happy utopian world. Quite the opposite. I invest in bitcoin because the rise of distributed currency is inevitable, and owning some bitcoins seems to be the best way to prepare for the chaos ahead. And just maybe, if I position myself correctly, I can make things a little less awful.

The Government Strikes Back

Does anyone really expect the government to sit back quietly and watch while their currency is debased, terrorism is funded, and children are kidnapped? The only question is when and how they will strike back against these forces. While the government does have a lot of options, ultimately those options only slow things down. At some point, we collectively with our governments face a difficult choice between trying to survive this deadly storm or attempting to destroy all decentralized computer networks (including the internet). The former seems unthinkable, the latter, impossible.

I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.

What Should We Do?

We need people thinking about this. I’ll admit that many of the things I wrote about may not happen at all, or may happen very differently than I imagine. However, there are lots of people touting the fantastic benefits that bitcoin and its children can give us, and I don’t see anybody talking about how bad things could potentially get.

We need solutions. When the government finally starts taking decentralized currency seriously, it will probably be doing so in a state of panic. We need to be advising governments now about how they can survive the storm and protect their populace. We need to think of ways the government can pay for its most critical operations, and what legislation makes sense to mitigate these new risks while preserving as much freedom as we can.

The Lifeboat Foundation is attempting to provide this thinking, advice, and solutions. They are already getting ready for a new advisory board, culled from computer scientists, economists, and bitcoin experts. If you make a fortune from your investments in decentralized currency, I urge you to consider how you can help all the people harmed by these rapid changes. Many bitcoin enthusiasts seem to think they will get to retire on a private island with a harem and a stable of Italian sports cars. This is wrong. Bitcoin investors need to someday become bitcoin philanthropists, and our giving needs to be targeted at helping all the people we have harmed. The Lifeboat Foundation is one option, but I’m sure there will be others.

I first published this article on the blog of the Lifeboat Foundation: http://lifeboat.com/blog/2013/04/bitcoins-dystopian-future
Reddit version is here: http://www.reddit.com/r/Bitcoin/comments/1cos8x/bitcoins_dystopian_future/

tl;dr: Wildly successful distributed currencies could hurt a lot of people.

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[BTC Books]

You are one grim SOB.  'Bleak' and 'dystopian' doesn't even begin to cover it...

I suppose somebody has to think of this stuff though.

[n.b., "utopian" is in my browser's spell-checker by default.  "Dystopian" is not.  Curious.]

[nwbitcoin]

Very interesting read - but to be trusthful, while I might agree with you, there is no point in predicting the future and then try and avoid the future you've imagined!

You have no idea what everyone else is planning for the same future!

[cbeast]

Yeah, there are some possible grim side effects, but they mostly have to do with currently conditioned human behavior and its reaction to change. The behavior problems can be addressed independently of the financial system. The real benefits of Bitcoin that cause positive behavioral changes will overshadow the negative in the short term. Ultimately, we are people with our foibles. It will take something more drastic than Bitcoin to change that.

[justusranvier]

Does anyone really expect the government to sit back quietly and watch while their currency is debased, terrorism is funded, and children are kidnapped? The only question is when and how they will strike back against these forces. While the government does have a lot of options, ultimately those options only slow things down. At some point, we collectively with our governments face a difficult choice between trying to survive this deadly storm or attempting to destroy all decentralized computer networks (including the internet). The former seems unthinkable, the latter, impossible.

I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.

You overestimate the dedication the government has to their own organization. They are in it for the money, mostly. When it is no longer profitable to keep the structure in place they abandon it.

That's exactly what happened in the USSR. Everybody in the government could see that the system was headed for collapse due to unavoidable mathematical realities, and when that knowledge spread they looted what they could and abandoned ship. The number of true believers who were addicted to power for its own sake weren't great enough in number to hold things together.

The same thing will happen to the western governments when socialism collapses here. As Bitcoin grows large enough to represent a real threat governments might make noise about regulating it or shutting it down, but the entire time politicians are spewing hot air insiders throughout the bureaucracy are going to be quietly stashing whatever money they can get control over in Bitcoins. All the scare stories that pop up between then and now are designed solely for the purpose of scaring early adopters into letting go of their bitcoins so those who don't have them yet can buy in cheaply.

[wumpus]

You're really focused on the negative stuff. Nothing of this is really new, and your dystopia can happen with fiat currency just as well, or any money at all. Hyper-commercialization is evil (but so are other ideologies taken to extreme).

A distributed global currency can bring a lot of good stuff as well. For example, by encouraging cooperation between people in different countries without barriers, it could be a force for peace.

Then again, no one knows what the future will bring. But I doubt cryptocurrencies will play such a big role as you think in creating an utopia/dystopia. It sounds a bit like the airpunk/steampunk/cyberpunk/... fantasies in which one technology somehow dominates everyones life and everyone is obsessed with it.

[warpio]

Most of OP's predictions will happen regardless, with or without Bitcoin. This just speeds up the process a little bit.

[Mike Hearn]

I need to read it more thoroughly later, but I just wanted to quickly observe that Bitcoin is not untaxable. There are proposals for building income/sales tax systems that can apply to cryptocurrencies and it's a topic I intend to write more about in future.

[Come-from-Beyond]

This thread must be sticked.

[nevafuse]

I always enjoy reading people's opinions on the future effects of bitcoin.  I'm personally a little more optimistic, but can certainly respect a negative outlook.

I hope grandma takes some much needed advice from friends/family/financial adviser & convert her wealth to a more stable currency in the event T-bills' days are numbered.  Even in the worse case scenario, people are pretty giving (especially with all the extra money they will have when they stop paying taxes).  The transition will be so gradual, you'll basically have to be living under a rock to miss it.  Trust in new currencies doesn't happen over night.

I personally believe the greatest reason for wealth disparity is governments.  Laws, grants, contracts, etc give many an unfair piece of the pie.  Between lost coins, cashing out, & regular business, bitcoins will get dispersed.

I definitely think your increased fear of kidnapping & extortion due to Tor/bitcoin is baseless.  Those same things can & do happen now with cash.  Although not non-existent, I'd venture to say they are pretty rare.  Not to mention most government security is a joke.  For profit, non-government security will make what we consider safe now seem dangerous.

Of all your theories, the one I fear most is government backlash.  There are a LOT of powerful people that rely heavily on  benefits of central banking & taxation.  My hope is that those people are too arrogant to attempt to stop bitcoin while it is young.  An attack now might not kill bitcoin, but it would certain set it back a few years.  Maybe we'll get extremely lucky & Rand Paul will get elected in time to prevent a law banning bitcoin.  Regardless, bitcoin will continue to flourish, and the people who embrace it will eventually overtake the people that don't.  I just hope that doesn't result in war.

[Akka]

[n.b., "utopian" is in my browser's spell-checker by default.  "Dystopian" is not.  Curious.]

Oh no! Newspeak! They are already in our browsers.

[Wekkel]

I see a paradox. For BTC to become successful, it's adoption must rise but on the other hand, you see enormous wealth disparity. Somewhere down the line, these two will cross. Moreover, those that got in later are probably the people who are the producers in this world. Gradually, their position will be better because they provide stuff people want/need. Granny could be taken care of by her kids who have more time and means to support her.

Another thought: the more people put into BTC, the more their debts can be paid of by rising BTC value compared to fiat. Less burdened by debt, their situation will improve and improve as a function of time, taking along more and more new people. Once people learn of this phenomenon, it's game over for the system. Much more intriguing than very dark scenarios.

[Snowfire]

Most of these scenarios are only plausible if national currencies completely disappear. Though many on these boards predict this outcome, I do not. Instead, a more likely outcome is that Bitcoin and other cryptocurrencies will exist alongside national currencies in a stable equilibrium, each used in contexts where it works better than other alternatives. In this scenario, any threat to Grandma's pension will come not so much from Bitcoin as from other factors. As has been pointed out, human trafficking will exist, even without cryptocurrencies, regrettable as that may be.

[kangasbros]

You're really focused on the negative stuff. Nothing of this is really new, and your dystopia can happen with fiat currency just as well, or any money at all. Hyper-commercialization is evil (but so are other ideologies taken to extreme).

Most of the stuff on this forum focuses on the positive side of bitcoin. I'm delighted to find this kind of post here.

[Littleshop]

Rather suddenly, things start to go wrong. At the same time all her expenses start skyrocketing, the government has a liquidity crisis; they are having trouble collecting taxes and can no longer pay for her health care. Her savings are still “safe” in the sense that she will get U.S. Dollars out of them, but that is little comfort when those dollars which should have lasted years can barely pay her weekly grocery bill.

Grandma’s retirement has been sabotaged by the rise of a new kind of money that she can’t even begin to understand. All she knows is that she did everything right, and now she has nothing.

Already happening before Bitcoin, in countries all over Europe and around the world.  With a total value of less then a few billion the SNACK FOOD industry has more of an impact on the economy. 

For this thought experiment, we will imagine that your child has been kidnapped and put up for sale on “TorSlaver”. Their business plan is to kidnap children and sell them to the highest bidder, whether parent or pedophile. The winning bidder is sent the location of the child, probably bound and gagged and dumped somewhere. As long as they don’t get caught doing the kidnapping, the kidnappers can do this again and again with complete impunity. Once someone proves it can be done, copycats will come out of the woodwork, and it won’t matter if the first mover gets caught.

As a parent of three small children..... (bla bla bla)

This is already happening as well, in Mexico, off the shores of Africa and in many other places.  Does not need Bitcoin to flourish, just people willing to pay kidnappers. 

I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.

Already happening, mostly due to the drug war and 9-11 security theater crap.  Bitcoin does not accelerate this either. 

The Lifeboat Foundation is attempting to provide this thinking, advice, and solutions. They are already getting ready for a new advisory board, culled from computer scientists, economists, and bitcoin experts. If you make a fortune from your investments in decentralized currency, I urge you to consider how you can help all the people harmed by these rapid changes. Many bitcoin enthusiasts seem to think they will get to retire on a private island with a harem and a stable of Italian sports cars. This is wrong. Bitcoin investors need to someday become bitcoin philanthropists, and our giving needs to be targeted at helping all the people we have harmed. The Lifeboat Foundation is one option, but I’m sure there will be others.

I first published this article on the blog of the Lifeboat Foundation: http://lifeboat.com/blog/2013/04/bitcoins-dystopian-future
Reddit version is here: http://www.reddit.com/r/Bitcoin/comments/1cos8x/bitcoins_dystopian_future/

tl;dr: Wildly successful distributed currencies could hurt a lot of people.

If you want people to take you or lifeboat.com seriously, don't publish link bait FUD CRAP like the above.   

[djalexr]

very interesting post, thanks

[Come-from-Beyond]

If you want people to take you or lifeboat.com seriously, don't publish link bait FUD CRAP like the above.   

I doubt he needs ur advice. U sound like a kid.

[wumpus]

Most of the stuff on this forum focuses on the positive side of bitcoin. I'm delighted to find this kind of post here.

I think the general point is that nothing of it is specific to bitcoin. What he describes is kind of the neocon hyper-capitalist "dream", which was already a dystopia far before cryptocurrencies were even thought of. A warlike and expansionist government combined with corporate plutocracy could result in the same outcome with say, USD.  Oh wait.

[Littleshop]

Most of the stuff on this forum focuses on the positive side of bitcoin. I'm delighted to find this kind of post here.

I think the general point is that nothing of it is specific to bitcoin. What he describes is kind of the neocon hyper-capitalist "dream", which was already a dystopia far before cryptocurrencies were even thought of. A warlike and expansionist government combined with corporate plutocracy could result in the same outcome with say, USD.  Oh wait.

Exactly.  These things may happen but to blame it on Bitcoin or cryptocurrencies is false.  The reaction to 9-11 and the drug war have far more to do with this then Bitcoin.

[lunarboy]

A well presented and thought out thesis, and slightly terrifying to say the least.

Personally I feel your being overly pessimistic. Yes this is one set of possible futures. To me though, it has overlooked a key element or flood gate of the money flow into the crypto-currency world.

For sure the potential for a Fiat black hole exists, but it will never all be sucked into it, because fiat is actually backed by something. A proof of work of its own you. People will always require things, companies will still produce those things. A grain of rice will still be worth a grain of rice.  

If your future is inevitable would not the governments simply flick a switch and revert back to kind of gold standard where everything they own armies, roads, gold, would be worth something in bitcoin......they Would still be worth trillions in bitcoin value.  Fiat may no longer exist but a system similar would.

I don't believe bitcoin will destroy governments it will just change the way they work. The debt ridden corrupt financial system will have the big red RESET button pushed and we will have economies of worth, of real value.  

Further the assumption governments will not be able to find away to tax, is to my mind is also overly dystopian. People will still work, they will have physical locations, houses, phones computers. They will have to be paid in, and for bitcoin. If a company is to exist in this new world, they will have to be open to the government of face closure. We live in a world of tracking and information overload. The money flow will be monitored and taxed like never before. Apple will have to disclose its public accounts and taxed on them. Yes some intelligent few will be able to float freely through the system, but with a system where every transaction and following transactions can be traced to the minutest detail, government agencies would quickly adapt to claim their precious revenue.  ....

The incentive is that clean slate with a debt burden that will now no longer exist.

[Sword Smith]

A government is a company like any other company. Its business model might be challenged by crypto currencies just like Western Union's business model will be challenged but it will have to adapt.

If a government is a company, what is its core service? Security!

In an anarcho capitalistic world (no govenments), there would still exist a demand for security as you point out. This demand will be filled by some entity and the best way to provide security is to control a geographical area, like in a gate community - and what, if any, are the fundamental differences between a gated community and a government? None! We are already living in a world of "privately" owned security companies competing with each other. We just happen to call these kind of companies "governments". We are living in an anarcho capitalistic world already. We who call ourselves libertarians are just not too happy with the quality and price that these companies provide.

Governments will not die since there is a huge demand for their service - security. Governments will adapt and figure out new ways to get a revenue either through property taxes or through head taxes but many people will be hurt in this process as you correctly point out.

[conspirosphere.tk]

As Bitcoin grows large enough to represent a real threat governments might make noise about regulating it or shutting it down, but the entire time politicians are spewing hot air insiders throughout the bureaucracy are going to be quietly stashing whatever money they can get control over in Bitcoins. All the scare stories that pop up between then and now are designed solely for the purpose of scaring early adopters into letting go of their bitcoins so those who don't have them yet can buy in cheaply.

Fore ever and ever. Same shit, and same asshholes.

[unk]

this is cute and imaginative, but it is better as fiction than as social science or prediction. if the professional economists can't predict anything two years ahead, why do you think you can?

1. even if bitcoin were untaxable, which it's not, why would the government be unable to find some other source of funds? it could tax land (owners or renters), for example. at the very worst, tax fraud through bitcoin could slightly undermine progressive income taxation, but it's unlikely to do even that because there would still be real-world employers with physical presences that are easy targets of tax enforcement. most salary-based tax is voluntarily reported by individuals, except for that portion declared by institutional employers. your view is a bit ahistorical, too: the income tax isn't even very old.

2. you seem to be assuming that the value of an individual bitcoin will reach $1 million. (that is probably what would be necessary for satoshi to be a 'trillionaire'.) why would anyone without bitcoins throw so much money into bitcoins, however? they might be useful, and they might be enough to attract both speculation and real use, but a century before your fanciful claims would materialise, those with present wealth would find it far easier to set up an alternative cryptocurrency.

2a. bitcoin would not actually be a robust way to store the amount of wealth that would be necessary for your story to materialise. it could still probably be disrupted by $5 million's worth of asic chips. it presently stores, also, nowhere near as much as the widely reported 'market capitalisation' figure.

3. why do you think bitcoin enables your nightmare scenarios, like kidnapping children in the suburban united states to sell them to paedophiles? if there were already drive to do this and people thought they could get away with it, i'm sure suitcases of cash or wire transfers to borderline-lawless jurisdictions would make for suitable, less trackable payments.

[Rassah]

This OP makes me think that Bitcoin will be a MAJOR push towards something like seasteading, or a private island nation, simply because those who became bitcoin-wealthy will likely want to come together to support each other; strengths in numbers and safety in sticking together kinda thing. In the end, we may just end up with a super-wealthy micronation that likely works as a non-binding corporation/conglomerate of wealthy owners, residing within the safety of their own privately militarized, protected gated community/island/ship, with its tentacles in every business in the rest of the world.

The nice thing about markets and economics is that people will always need "stuff," and as long as people need "stuff" and other people are willing to make "stuff" for money, there will always be work and "stuff" being made, regardless of who holds all the wealth.

[uMMcQxCWELNzkt]

I feel Bitcoins are a new step in human history, or at least, the currency will at least plant the idea for future generations to accomplish. At this point there is no going back. I have to disagree with your negative perspective on Bitcoin's future, electricity for example has made is possible to share your thoughts across the globe, as it has enabled aircraft to drop bombs across the globe. All tech will have both positive and negative consequences and as a species I hope for the day where we can take a step back and say enough is enough, I don't want to participate in this slave driven system, I can think for myself.

Before I was banned from Abovetopsecret I should say that this list does not phase me in the least lol. Microchips are not necessary for control either, believe me school, supermarkets, tv, music, news, chemicals in food etc all do a fine job.  

[virtualmaster]

 
I must say that reading some articles on bitcointalk is more amusing for me than watching a comical serial.
For outsiders probably even more.
I think at the moment they look on us more like on some mad people:
http://www.time.com/time/magazine/article/0,9171,2140782,00.html

[nevafuse]

We are living in an anarcho capitalistic world already. We who call ourselves libertarians are just not too happy with the quality and price that these companies provide.

Governments will not die since there is a huge demand for their service - security. Governments will adapt and figure out new ways to get a revenue either through property taxes or through head taxes but many people will be hurt in this process as you correctly point out.

I kinda agree with this mentality, but there is more involved than disagreeing with quality & price.  As technology advances, old ways of doing things become obsolete.  In our case, decentralized money makes government issued money obsolete.  Now we can save money (not pay taxes), without losing the advantage of a stable, nonconterfeitable currency.

Your argument is a little different because you mention government's main service is security over money.  I'm not sure I agree with that though.

[unk]

I must say that reading some articles on bitcointalk is more amusing for me than watching a comical serial.
For outsiders probably even more.
I think at the moment they look on us more like on some mad people:
http://www.time.com/time/magazine/article/0,9171,2140782,00.html

my favorite recent bizarre post that captures much of the ethos of this forum was:

[Google CEO Eric] Schmidt is the guy who wants to make personal ownership of drones illegal.

Authoritarian from the word go.

Google + Bitcoin is not a good fit.

[leemar]

Like many of the respondents here I have a greater faith in human nature to provide a compassionate response to what may be coming.  However if the European experiment we have just seen unfold tells us anything, you cannot have a single monetary system without a single government.  I see that transition as being a monumental challenge, and will require visionary leaders to take leaps of counter-intuitive faith.

[uMMcQxCWELNzkt]

Thanks, OP!

For the most part I agree. A word you were probably looking for (or trying to avoid in order to stick to plain English) is seigniorage, which I've mentioned a few times before. Just like the issuers of governmental cash make profit from money supply inflation, the 'issuers' (early adopters) of bitcoins profit immensely from Bitcoin's growth. We steal other people's slices of the "global value pie".

However, I have confidence that most people can adapt, so I'll put an alternative spin on your points:

Re: The Bleak Future of Fiat Currencies
I think it's only as bleak as governments are untrustworthy and unstable. I guess we'll have to wait and see how they'll cope, and how people will adapt their governments.

Re: Wealth Disparities
You seem to assume people will continue to rally behind Bitcoin's brand-name chain, and that the spin-offs will continue to be small-time wannabes. Maybe, but I hope that Ripple (or something similar) takes off, enabling easier exchange between various esoteric "coin ideas". I doubt they made it Open Source just so everyone would religiously rally behind the real Bitcoin. The way I see it, the free knowledge is supposed to help redress the unfairness of seigniorage. Everyone is welcome to create their own crypto flight miles, crypto discount coupons, crypto shares,... whatever their imagination comes up with.

Re: Law enforcement
I suspect many law enforcement agencies are well aware (or at least have some awareness) of the economics of crime. The harder they fight against drugs or child porn etc., the more scarce and therefore more lucrative it becomes. But how would society react if politicians said "actually, we shouldn't take child pornography off the Internet. If we just leave it there and ignore it, it'll be freely available for all the sickos and the makers of new stuff will go out of business." Maybe there would be an uproar and it would be the end of that person's political career. Maybe not. Drug reform is probably a safer bet because it's less contentious. It will take time.

Re: What should we do?
Never stop learning.

Government don't just want to stop criminals(non-government) from illegal lucrative activity, the government themselves profit from such activities. Drugs are a great example, as long as they can control it, they can profit from scarcity and the handling of supply. Then you have prisons, war and all that good stuff that the government loves to collect your money for. Government only care about reform when they have no financial stake in said reform, if they have nothing to gain from you then you can rest assured that they only care if they can instead divert you while pick pocketing you elsewhere. 

[BitcoinAshley]

Grandma’s retirement has been sabotaged by the rise of a new kind of money that she can’t even begin to understand. All she knows is that she did everything right, and now she has nothing.

I disagree. Hyperinflation will happen with or without bitcoin. It has happened in many countries to date, before bitcoin was even a whisper in Satoshi's brain. The way the central banks are managing currencies, fiat is going to die a very violent death whether or not Bitcoin exists.

It just so happens that bitcoin provides a viable alternative, as well as silver and gold and hey - good old barter. This spring I'll be trading turnips for bales of hay to feed my rabbits. Grandma will be fine, I promise.

I agree that we should put our bitcoin brains to work thinking of ways to use Bitcoin to ease peoples' troubles when fiat does collapse. But I disagree that bitcoin is necessary for a fiat collapse to occur. Ben Bernanke & Co are doing well enough on their own

[deadweasel]

Grandma’s retirement has been sabotaged by the rise of a new kind of money that she can’t even begin to understand. All she knows is that she did everything right, and now she has nothing.

I disagree. Hyperinflation will happen with or without bitcoin. It has happened in many countries to date, before bitcoin was even a whisper in Satoshi's brain. The way the central banks are managing currencies, fiat is going to die a very violent death whether or not Bitcoin exists.

It just so happens that bitcoin provides a viable alternative, as well as silver and gold and hey - good old barter. This spring I'll be trading turnips for bales of hay to feed my rabbits. Grandma will be fine, I promise.

I agree that we should put our bitcoin brains to work thinking of ways to use Bitcoin to ease peoples' troubles when fiat does collapse. But I disagree that bitcoin is necessary for a fiat collapse to occur. Ben Bernanke & Co are doing well enough on their own

+1

Amen BitcoinAshley.

[Daily Anarchist]

I enjoyed reading this, and while there is some truth to what is written, I think the author is missing the forest through the trees.

Every. Single. One. of his fears are happening RIGHT NOW... ALL THE TIME... EVERYWHERE... at the hands of GOVERNMENTS.

There is going to be a total power shift from the criminal organization known as THE STATE, and all who cling to its coattails, to the producers of value and those who engage in voluntary commerce and interactions between and among individuals.

[BTC Books]

my favorite recent bizarre post that captures much of the ethos of this forum was:

[Google CEO Eric] Schmidt is the guy who wants to make personal ownership of drones illegal.

Authoritarian from the word go.

Google + Bitcoin is not a good fit.

Why is that bizarre?  (The quote was mine - although in a different context and on a different thread)

[marcus_of_augustus]

Have some faith man! Regardless of the woeful state of monetary affairs, the world you are talking about is made of people interacting with other people. Adversity has a way of flushing out the chumps and bringing the best out in people. Regardless of the worst possible scenario you can imagine (you seem pretty good at these) the numbers on our screens or in our brains is not going to cause us to mistreat each other for no good reason, even cows do not behave like this ... those numbers can all dissolve and in the end it is one human animal interacting with another human animal. If everybody were cruel, unfeeling, starving, cold beasts then the future you portray is possible ... the fact is we are higher beings and for the most part well-fed and comfortable.

Also take issue with several parts;

Grandma has done everything right,

No, whatever else she may have done but on the whole Grandmas have endlessly voted for a bunch of misguided, uneducated, shallow, lying. cheating leaders offering to fix all her problems for her. This is her biggest error more than all the others. Democracy was a gift not to be squandered on selfish unthinking goals.

then this

a new idea to suck all the wealth out of the world like a financial black hole!

... was that supposed great wealth ever there to begin with? Numbers in a database are not wealth, they are representations of wealth (that were inflated beyond all rational calculations). All the real assets and productive capabilities of the globe are not going to disappear because of a geek experiment ... but they may one day come to become valued against such a tool. The run to hard assets of alternative currencies was set in motion long before bitcoin came on the scene, all it will do is merely accelerate the demise of the rotten, failed fiat monetary structures.

[gollum]

You forgot about this competitors to bitcoin in your dystopian scenario:

1) Alt-coins
2) Gold and silver
3) USD alt-coin, EUR-altcoin and so on... If they cant beat bitcoin, they simply have to embrace bitcoin and create their own alt-coin. Crypto currencies are even better than cash for the government, every little transaction can be traced. Nothing is hidden from taxation.

[Operatr]

Bitcoin definitely has the potential to rock the boat in a big way as the vaccuum of trust people have in their banks and governments continues to grow, and as Cyprus already cased, Bitcoin is the exit door on a failing economy, that is only months or years from a complete collapse. Bitcoin is so readily and easily deployable compared to the current nightmare hose beast of a system that it could in theory provide a backstop against a failed economic system. Bitcoin will continue to spread and over-write the bad financial sectors, with whatever positive wealth there is shifts to BTC and other coins, and leaving the mountain of debt to rot in the 7th circle of hell with the FEDs printing press.

I have researched a lot on the New World Order, I have to say I think it is one of those things hard to accept if you are a decent human being that such a terrible evil could possibly exist. But look at our lives. The rich and powerful used their gilded tower to buy more wealth and more power to rob us of our common wealth and power. I exist in one of those in a smaller college town, there is nothing I can do here to get past around $10 an hour when everything keeps getting more expensive. I went to school and got a degree like they told us to, at least thankfully I went into IT instead of some other dying profession. This is the life I was given, and it feels like the end.

Bitcoin isn't just a currency to me, which is why I happily give my life to it to ensure it succeeds. A chance to start a real business from the future at the very start, is an amazing opportunity where really no others exist. My choices othewise are fix people's computers for a pittance, or do something else for a pittance, and that is all I have to look forward to until I died, until I found Bitcoin.

Bitcoin doesn't just have users, it also has believers like me, broken down and attacked at every angle into a maw of near-poverty, ready for a chance to take the power back that was stolen from us. I don't see my developing business as a hardware maker, I see it as a heavy arms manufacturer in the coming currency wars.

I am finished fixing the problem with the problem, doing my best work for a tiny scrap of fiat money into a machine that ultimately screws me, I hope the day comes I never have to see a Dollar bill in my real life wallet ever again.  Bitcoin is my living protest against a destructive, terrible system that only breeds misery and corruption worldwide.

Find me anyone that feels that way toward a fiat currency right now, and I'll print out this post and literally eat it.

I don't know about anyone else, but it is boom or bust for me. At least it beats sitting around hoping the world's nightmare governmental system pulls it's head out of its collective ass, when you secretly know it isn't profitable for the powers in charge to allow you to have a living wage and a home.

There is a line in the sand between the world fiscal gestapo and the tech geeks. Remember when BitTorrent was taken down a few ye...oh right, that is still there too. Bitcoin isn't going anywhere.

[TheKoziTwo]

A glimpse into the dystopian future after the rise of bitcoin:


I'm sorry, just couldn't resist.

[gollum]

In my dystopian future where automation and robots has replaced most human workforce the society will fork into two chains:

The lucky 20% - Those who owns the resources, and those who are needed to run the corporations and the government. The government has created its own crypto currency that Wall Street banks mines and the block reward is determined by Federal Reserve.

The struggling 80% - Those who are not needed by the system got to survive somehow, the government might give them food stamps and some benefits to prevent riots, but riots occur now and then. They have no other choice than to use bartering, local currencies, handwritten IOUs and bitcoin since they do not have any employment.

[Birdy]

If this is ever going to happen, I don't wanna be a rich-ass jerk.
I would try to use the gained influence to make the world a better place, not one far worse.
After all, we would be the ones with the new wealth, so we would be the ones that could change things.

on a side note: let's hope Satoshi is one of those idealistic good types, he could change the whole earth with the wealth he would gain.

[freequant]

One much more likely outcome is that US government will pass a bill to have full and unrestricted access to ISP traffic, outlaw peer-to-peer technology and cryptography in all forms, and crack down on anyone they catch using cryptography and / or peer-to-peer technology. The use of cryptography was regulated a decade ago, there is no reason this cannot come back if the government sees fit to it. Ah, and yeah, of course all the other governments will follow suit like nice little lap dogs.

[Ekaros]

In my dystopian future where automation and robots has replaced most human workforce the society will fork into two chains:

The lucky 20% - Those who owns the resources, and those who are needed to run the corporations and the government. The government has created its own crypto currency that Wall Street banks mines and the block reward is determined by Federal Reserve.

The struggling 80% - Those who are not needed by the system got to survive somehow, the government might give them food stamps and some benefits to prevent riots, but riots occur now and then. They have no other choice than to use bartering, local currencies, handwritten IOUs and bitcoin since they do not have any employment.

I feel like this is the scenario we are moving towards anyway.

And the 80% wont be good. I think feudalism might rise again... And bitcoin or any other cryptocurrency won't stop this in anyway...

It's really depends on separation of those parts of populations...

[phelix]

Thanks for your post, it is always important to think about worst case scenarios to be able to prevent them.

Governments would have to buy Bitcoin / cryptocoins (with fiat or gold). They could even back fiat money by cryptocoins. Lack of taxes may bring serious problems, though:

People could be linked to an address by their dns in a government controlled public database. Whenever you pay VAT will be deducted automatically. If you send to or receive from unregistered addresses the police will visit you and ask questions.

Note that this would even be easier with centralized money. It could happen though, that a cryptocurrency forces governments into doing it.

[wachtwoord]

Bitcoin doesn't just have users, it also has believers like me, broken down and attacked at every angle into a maw of near-poverty, ready for a chance to take the power back that was stolen from us. I don't see my developing business as a hardware maker, I see it as a heavy arms manufacturer in the coming currency wars.

I am finished fixing the problem with the problem, doing my best work for a tiny scrap of fiat money into a machine that ultimately screws me, I hope the day comes I never have to see a Dollar bill in my real life wallet ever again.  Bitcoin is my living protest against a destructive, terrible system that only breeds misery and corruption worldwide.

Made me think of:
YOUR FAVORITE MARTIAN - TAKE OVER THE WORLD: https://www.youtube.com/watch?v=rtWDQHNhuBs

[Adrian-x]

Bitcoin doesn't just have users, it also has believers like me, broken down and attacked at every angle into a maw of near-poverty, ready for a chance to take the power back that was stolen from us. I don't see my developing business as a hardware maker, I see it as a heavy arms manufacturer in the coming currency wars.

I am finished fixing the problem with the problem, doing my best work for a tiny scrap of fiat money into a machine that ultimately screws me, I hope the day comes I never have to see a Dollar bill in my real life wallet ever again.  Bitcoin is my living protest against a destructive, terrible system that only breeds misery and corruption worldwide.

Made me think of:

"The Story of Your Enslavement" https://www.youtube.com/watch?v=Xbp6umQT58A&feature=youtube_gdata_player

[wachtwoord]

Thank you. That gave me goosebumps.

[thoughtfan]

... it could tax land (owners or renters)...

This ^

Except that land taxation always taxes owners not renters.

There is a carrot to land taxes I'm on a mission to point out to people (see my blog link) but I also think Bitcoin and anything that makes it easier for more income, purchases and wealth more difficult for governments to keep up with also acts as a stick towards a means of public revenue that's been staring them in the face for a century and more!

[unk]

... it could tax land (owners or renters)...

This ^

Except that land taxation always taxes owners not renters.

except where it doesn't, like in the uk. i wish more people here would learn more about the actual world before coming up with grand political or economic theories (or at least before trying to correct me).

[Hawker]

If Bitcoin were to replace fiat currency, government would move from taxing incomes to taxing resources.  Think water rates, road tolls, etc.  The state system would tick along just fine.

[thoughtfan]

i wish more people here would learn more about the actual world before coming up with grand political or economic theories...

As do I sire, as do I

But I don't either believe one should be obliged to know the ins and outs of every tax jurisdiction prior to being free to post 'grand political or economic theories'.

... it could tax land (owners or renters)...

This ^

Except that land taxation always taxes owners not renters.

except where it doesn't, like in the uk.

I understand that both business and residential rates in the UK are paid by occupiers not landowners.  What I would question is your classifying the uk system as 'land tax'.   I know Scotland and Wales have variations on the system but as far as I understand it neither domestic nor business rates are based on land values but on rateable values for business premises and on 'Council Tax Banding' for residential.  The latter, based on 1991 values fails dismally to reflect the increased polarity between land value in prosperous and impoverished regions.  Business tax at least is more current but still includes the value of the building itself.  Neither tax is payable on vacant building land.  In my eyes it would take some stretch to classify either as 'land tax'.

Although not impossible (which I suppose my wording incorrectly implied) I can not see any organisation putting a land tax system in place without at least having enough of an understanding (and, as you suggest, doing enough research) to know it can only work if it is the land owner that pays.  What's more, because rental values are determined by demand and are independent of the cost of supply then these charges can not be passed on to the tenant so not even indirectly does the tenant pay.*

As it happens I wrote a blog about Land Tax this morning.

No hard feelings.  I wrote as I did for clarification rather than as criticism/correction.

* The tenant would likely eventually end up paying more but only because another consequence of Land Value Tax is that other forms of taxation are reduced/abolished meaning more money is available meaning the competition for the same rental units is increased resulting in landlords being able to raise rent.

[gollum]

The OP believes that criminality will increase if anonymity can be guaranteed in communications and transactions but we already have criminality and trafficking today. The society won't change a lot because of some more anonymity.

Anonymity is a tool. You can use it for good or bad. I believe the consciousness and morality of humanity is evolving, therefore increased anonymity is not a threat to the society.

Some people thinks that the rulers (Governments, Bankers and Big Corporations) will buy into bitcoin, they probably won't.
The rulers will watch how the bitcoin experiment unfolds, learn from it and create their own cryptocurrency. Their primary goal will of course be control, so they design their cryptocurrency in a way that gives them 100% control over who, where and when was involved in each transaction, each wallet must be connected to a person or company. Cash-fiat will be totally abandoned since it is anonymous. Gold, Silver coins might emerge as an easy alternative for anonymous transactions offline.

[Crypto Canary]

All the world’s wealth has essentially been stolen, but by whom? By you, dear reader.

We’ll be very lucky if we aren’t all rounded up and summarily executed. Thankfully, you’ll be able to use some of that money to purchase protection, but I’m not at all convinced that it will be enough. A wrathful government backed by an enraged population is a fearful enemy. Satoshi foresaw this long ago, and I doubt he/she/it/they will ever voluntarily come into the light.

Nah, everyone else will just mine Bytecoin, Trytecoin, Crumbcoin, or Hexcoin or whatever name they come up with next.   Bitcoin's current value is based mostly on the fact that most people don't know how it works. Once the other iterations of bitcoins start getting attention, the value will probably even out between them.

[phelix]

All the world’s wealth has essentially been stolen, but by whom? By you, dear reader.

We’ll be very lucky if we aren’t all rounded up and summarily executed. Thankfully, you’ll be able to use some of that money to purchase protection, but I’m not at all convinced that it will be enough. A wrathful government backed by an enraged population is a fearful enemy. Satoshi foresaw this long ago, and I doubt he/she/it/they will ever voluntarily come into the light.

Nah, everyone else will just mine Bytecoin, Trytecoin, Crumbcoin, or Hexcoin or whatever name they come up with next.   Bitcoin's current value is based mostly on the fact that most people don't know how it works. Once the other iterations of bitcoins start getting attention, the value will probably even out between them.

Ever heard about the network effect?

[wachtwoord]

All the world’s wealth has essentially been stolen, but by whom? By you, dear reader.

We’ll be very lucky if we aren’t all rounded up and summarily executed. Thankfully, you’ll be able to use some of that money to purchase protection, but I’m not at all convinced that it will be enough. A wrathful government backed by an enraged population is a fearful enemy. Satoshi foresaw this long ago, and I doubt he/she/it/they will ever voluntarily come into the light.

Nah, everyone else will just mine Bytecoin, Trytecoin, Crumbcoin, or Hexcoin or whatever name they come up with next.   Bitcoin's current value is based mostly on the fact that most people don't know how it works. Once the other iterations of bitcoins start getting attention, the value will probably even out between them.

Ever heard about the network effect?

He obviously hasn't 

[BTCLuke]

It is obvious to me that the OP has missed a major piece of the puzzle.

It's not just cryptocurrency that is making all of these changes... It is decentralization itself that is... And those changes will be far, far larger than monetary.

Decentralization is nothing less than the removal of power from those who have it and scattering it around to all that want it.

Gnutella was technically the first decentralized program. (That I know of.) They may have fizzled, but today we have Bittorrent, Mega, and TOR, among others, to share information through. Together these make IP laws start to seem kinda silly.

Bitcoin is a bigger jump, because it represents half the economy; any product or service that someone wants to sell, worldwide, we can now buy in a decentralized way. But it's just the buying half...

3D Printing using DEFCAD search and the resulting industry built around downloadable products will represent an even larger jump... They are the other half of the economy, and everything one could sell will eventually be manufactured and sold this way. (Destroying pretty much all existing industry worldwide.)

But that's not all! What else can we decentralize?

Well, if the government does it today, why can't we decentralize that too?

Security? But of course. Why use the .govs police when you can have free-market security services bought and sold in a decentralized environment?

Law? No problem. There are already websites like judge.me that offer non-nationalized law... Making those into a decentralized solution would be childsplay.

Whenever you think it can't be decentralized, trust me, it can. Even roads can be built privately, and decentralized marketplaces can expedite them. Fire services? Same as security. It can all be done without any government once the interest to do so is there.

So I submit that bitcoin's influence on our future is one of many 'decentralizers.' -And not the largest one by far.

One much more likely outcome is that US government will pass a bill to have full and unrestricted access to ISP traffic, outlaw peer-to-peer technology and cryptography in all forms, and crack down on anyone they catch using cryptography and / or peer-to-peer technology.

So I guess you haven't heard yet that you don't have to use their internet?

We'll all be our own ISPs in a few short years. Wireless Mesh networking is real tech and they've even had it in the One-Laptop-Per-Child computers for several years now.

The range of wifi has been the largest stumbling block, however we are only 1 wifi standard away from having complete and total wireless freedom without any centralized points in it that governments can control.

[gollum]

It is obvious to me that the OP has missed a major piece of the puzzle.

It's not just cryptocurrency that is making all of these changes... It is decentralization itself that is... And those changes will be far, far larger than monetary.

Decentralization is nothing less than the removal of power from those who have it and scattering it around to all that want it.

Decentralized governments is actually not a new concept, between 10th to 15th century Italian cities was independent states.
http://en.wikipedia.org/wiki/Italian_city-states

With the help of technology and p2p currencies it is easier and more efficient to run small states today than 1000 years ago. When our current governments fail, smaller states will be formed which means smaller gap between the leaders and the people. When people have a stronger connection to their government they will also be more loyal to each other and the government which decreases the chance of the worst case scenarios.

Switzerland is a good example of a functioning small country with decentralized democracy already:
http://en.wikipedia.org/wiki/Direct_democracy#Switzerland

[cryptoanarchist]

I think OP fails to realize that the money with decentralized currencies is going to flow to the most creative/productive and those types of people are the ones who can "create" jobs.

There will be LESS unemployment - not more. Government jobs will be eradicated, but replaced by even more free market jobs. In fact, for every regulatory agency that shuts down there will be whole new industries that spring up as a direct result.

I think the problem will be that those who have gotten their money through our current system of looting and mooching will suddenly find themselves at the bottom of the income brackets instead of the top. ( A municipal judge, having no actual productive skills, may have to work at McDonald's someday.)

To those people I say -"too bad"

[nazgulnarsil]

Bitcoin allows capital flight to a degree never before seen in history.  This will enable people to vote with their feet much much more easily than ever before.  People will choose to live in places where security against physical and economic violence is best.  This should result in higher quality governance as places with poor governance experience massive capital flight, leaving them poor and ineffective.  This boon is worth minor negatives.  We must get away from the status quo in which optimizing for conquering others is a more effective strategy than optimizing for standard of living.

[dacoinminster]

A glimpse into the dystopian future after the rise of bitcoin:


I'm sorry, just couldn't resist.

I know I shouldn't laugh at that, but I did.

Other than that, I'm kind of surprised at the high quality of thought and discussion going on here. Thanks everybody who chimed in. Some of you actually made me feel a tiny bit better

[lunarboy]

A glimpse into the dystopian future after the rise of bitcoin:

I know I shouldn't laugh at that, but I did.

Other than that, I'm kind of surprised at the high quality of thought and discussion going on here. Thanks everybody who chimed in. Some of you actually made me feel a tiny bit better

You must have some faith in the good of humanity or why bother even trying? Faced with a choice of two similar financial investments promising similar returns, surely more than 51% of us will choose the one most morally and environmentally beneficial to the planet and their fellow humans?

Keep steering the world in the direction you believe is the right one, and we will all be the better for it.

 I know I am.    

[Traktion]

If Bitcoin were to replace fiat currency, government would move from taxing incomes to taxing resources.  Think water rates, road tolls, etc.  The state system would tick along just fine.

Yes, agreed.

However, this would likely hit rent seekers the hardest. As rent seekers exploit violent monopolies in order to extract wealth from others, it would likely be a better situation than we have now.

In the UK for example, less than 1% own much of the land and charge rent upon it. As said people influence the state heavily (House of Lords etc) governments won't tax them until they absolutely have to.

That's not to say that you need a state in order to identify and respond to coercive monopolies (the state is one too, after all). It's just that they are more likely to tackle them when they have no alternative.

Ofc, at the other end of the spectrum, there is nothing stopping the state offering voluntary subscription services. They could then compete with any other service providers and if they do the best job, then good for them.

Ultimately, states will go after anything which can't be easily hidden or moved. However, expect their actions to come under close scrutiny when they can't print money and fund folly with other taxes. It's difficult to bury things in the figures when there are only a few sources of income.

[Traktion]

... it could tax land (owners or renters)...

This ^

Except that land taxation always taxes owners not renters.

except where it doesn't, like in the uk. i wish more people here would learn more about the actual world before coming up with grand political or economic theories (or at least before trying to correct me).

There is no land value tax in the UK.

Besides, why would a land lord charge less than he otherwise could? I'll answer that for you - he won't. Therefore, tenants are already paying the maximum they can afford. That's why land value taxation hits the landlord instead.

Land rent is just privately collected tax. It's exploiting a coercive monopoly on a location.

[QuantPlus]

A well presented and thought out thesis, and slightly terrifying to say the least.

Personally I feel your being overly pessimistic. Yes this is one set of possible futures. To me though, it has overlooked a key element or flood gate of the money flow into the crypto-currency world.

I don't believe bitcoin will destroy governments it will just change the way they work.

A young man living in freaking San Jose in 2013 thinks life is "bleak"...
Dude, you need to see your pastor or psychiatrist or witch doctor.

All government power flows from it's currency via taxation via Banking System...
Probably 80% of the population would chose this over anarchy.

Crypto-currencies will be co-opted by the Banking System, soon:

http://www.americanbanker.com/bankthink/governments-must-co-opt-bitcoin-to-avert-disaster-1058380-1.html

But I'm a BTC optimist solely due to it's global, international distribution...
It will be just one of many successful crypto-currencies.

[Adrian-x]

I know I shouldn't laugh at that, but I did.
Other than that, I'm kind of surprised at the high quality of thought and discussion going on here. Thanks everybody who chimed in. Some of you actually made me feel a tiny bit better

You are falling into a self fulfilling trap of despair; research Medieval Europe and the Enlightenment that came out of it, we are transitioning and yes there are problems - these problems are the result of malinvestment, and will be hard for some to deal with, but most people in the world live with some of the problems you describe daily, and that innocent grandmother who did nothing wrong, she is not so innocent, she drove a car, bought tiers for that car, the rubber for which came from the Congo in a time like the one you describe, only she indirectly funding an unjust global system she didn't take the time to research, had she, she would have seen Bitcoin as a way of elevating that extreme poverty and bought in now.  

You are projecting while maintaining the same base, the world will change community will become stronger, huge impersonal cities will be relics, but with an educated population with imperial knowledge readily available the transition to the new enlightenment (Eckhart Tolle: A New Earth) will unlikely resemble anything from the medieval dark ages.  We will have to adapt and that will look uncomfortable to some, but to about 3% of the population - not involved in Bitcoin this will be the opportunity of a lifetime.

There were some other authors I would recommend but I can't remember who they were (I just heard a book review / summary in a podcast interview), but they define generational evolution in society as seasons.  Great well researched (historically speaking) with very heart warming projections.

Try applying some of that insight to your thought experiments.  

[dacoinminster]

A young man living in freaking San Jose in 2013 thinks life is "bleak"...
Dude, you need to see your pastor or psychiatrist or witch doctor.

My life (in Seattle) is actually quite nice. It's the future of Grandma and everyone else that I'm worried about.

You are falling into a self fulfilling trap of despair; research Medieval Europe and the Enlightenment that came out of it, we are transitioning and yes there are problems - these problems are the result of malinvestment, and will be hard for some to deal with, but most people in the world live with some of the problems you describe daily, and that innocent grandmother who did nothing wrong, she is not so innocent, she drove a car, bought tiers for that car, the rubber for which came from the Congo in a time like the one you describe, only she indirectly funding an unjust global system she didn't take the time to research, had she, she would have seen Bitcoin as a way of elevating that extreme poverty and bought in now.  

You are projecting while maintaining the same base, the world will change community will become stronger, huge impersonal cities will be relics, but with an educated population with imperial knowledge readily available the transition to the new enlightenment (Eckhart Tolle: A New Earth) will unlikely resemble anything from the medieval dark ages.  We will have to adapt and that will look uncomfortable to some, but to about 3% of the population - not involved in Bitcoin this will be the opportunity of a lifetime.

There were some other authors I would recommend but I can't remember who they were (I just heard a book review / summary in a podcast interview), but they define generational evolution in society as seasons.  Great well researched (historically speaking) with very heart worming projections.

Try applying some of that insight to your thought experiments.  

Sounds interesting, but . . . heart worming projections?!

[Adrian-x]

Sounds interesting, but . . . heart worming projections?!

Sorry I love the phonetics guide to the English language but that must have been a Freudian slip.

[jubalix]

we already live in the dystopian future, grandma's super/pension is being taxed and devalued out of existence already

some rumor has it, it's been that way since...*cough*.....well, it's not polite to say....but you know when what's his name and co tried.....and we would be on Mars by now....but hey you can't be blamed (well maybe a little) you only have had one side of the story all your lives....and its just to awful to find out maybe that's just what it was. One side of a story. Believe what you will

[AnonyMint]

I posted some detailed discussion on this topic recently in several threads linked below.

https://bitcointalk.org/index.php?topic=322058.msg3578196#msg3578196

https://bitcointalk.org/index.php?topic=323988.msg3582544#msg3582544

https://bitcointalk.org/index.php?topic=318001.msg3581429#msg3581429

https://bitcointalk.org/index.php?topic=322058.msg3580502#msg3580502

https://bitcointalk.org/index.php?topic=331325.msg3571527#msg3571527

[Realpra]

So you're saying we will have a bleak "future" were the pensions fall apart, some are super wealthy while the governments fail to take proper care of the middle class?

Why that would be horrendous.

Honestly though; good post, but I think the positives will far outweigh the negatives - consider this for one: The defunding of the US government will decrease their ability to wage wars for no reason and suppress the world and their population.

[Mike Christ]

Honestly though; good post, but I think the positives will far outweigh the negatives - consider this for one: The defunding of the US government will decrease their ability to wage wars for no reason and suppress the world and their population.

Not just that, it becomes impossible for any nation to build an empire, ever.  You absolutely need a centralized currency to move huge amounts of wealth from citizens and future citizens to the state in order to build an empire, otherwise no tax-payer would ever spring for such a goal.

[AnonyMint]

I detailed in the links of my prior post how Bitcoiners are going to jail.

Does anyone really expect the government to sit back quietly and watch while their currency is debased, terrorism is funded, and children are kidnapped? The only question is when and how they will strike back against these forces. While the government does have a lot of options, ultimately those options only slow things down. At some point, we collectively with our governments face a difficult choice between trying to survive this deadly storm or attempting to destroy all decentralized computer networks (including the internet). The former seems unthinkable, the latter, impossible.

I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.

You overestimate the dedication the government has to their own organization. They are in it for the money, mostly. When it is no longer profitable to keep the structure in place they abandon it.

That's exactly what happened in the USSR. Everybody in the government could see that the system was headed for collapse due to unavoidable mathematical realities, and when that knowledge spread they looted what they could and abandoned ship. The number of true believers who were addicted to power for its own sake weren't great enough in number to hold things together.

The Russian oligarchs didn't abandon anything, and are richer now than they were.

The game theory of socialism never changes, see the links in my prior post.

The same thing will happen to the western governments when socialism collapses here. As Bitcoin grows large enough to represent a real threat governments might make noise about regulating it or shutting it down, but the entire time politicians are spewing hot air insiders throughout the bureaucracy are going to be quietly stashing whatever money they can get control over in Bitcoins. All the scare stories that pop up between then and now are designed solely for the purpose of scaring early adopters into letting go of their bitcoins so those who don't have them yet can buy in cheaply.

Pure fantasy to propose the masses (the 99%) are going to tolerate a 100000X devaluation of the western financial system handing half of society's net worth to the bitcoins minted in the first 4 years.

To be a viable currency, Bitcoin would have to be distributed to the masses, because the 97% only gain their wealth from money spent as currency. The wealthy Bitcoin early adopters aren't going to spend, rather they will invest their coins to gain more coins than they had.

Thus the masses would be forever impoverished in Bitcoin's coin supply model.

Sorry Buttcoin is a Trojan horse. See the links my prior post for details.

[AnonyMint]

I see a paradox. For BTC to become successful, it's adoption must rise but on the other hand, you see enormous wealth disparity. Somewhere down the line, these two will cross. Moreover, those that got in later are probably the people who are the producers in this world. Gradually, their position will be better because they provide stuff people want/need. Granny could be taken care of by her kids who have more time and means to support her.

Another thought: the more people put into BTC, the more their debts can be paid of by rising BTC value compared to fiat. Less burdened by debt, their situation will improve and improve as a function of time, taking along more and more new people. Once people learn of this phenomenon, it's game over for the system. Much more intriguing than very dark scenarios.

Not even 1% will be in Bitcoin before it reaches astronomical price and market cap that already devalued western civilization. We are handing the world's wealth to a few speculators. Sorry the world will never allow this to stand. This is a declaration of war against sanity. Bitcoin's supply model is typical goldbug insanity. See my links in my first post, to get more details on this.

And the producers can never work their way out this hole if Bitcoin was allowed to stand, because they will be forever in debt to just survive. Additionally a recent Oxford study says 45% of all existing jobs will be automated and lost within 20 years.

Bitcoin is a dystopian slavery system masquerading as a Utopian ideal.

My expectation is the last laugh will be on the Bitcoin millionaires who will find themselves in tax debtors prison.

[AnonyMint]

I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.

Already happening, mostly due to the drug war and 9-11 security theater crap.  Bitcoin does not accelerate this either. 

Incorrect.

If Bitcoin's market cap stays on the exponential trend, it will consume the global wealth in a few years.

[AnonyMint]

A government is a company like any other company. Its business model might be challenged by crypto currencies just like Western Union's business model will be challenged but it will have to adapt.

If a government is a company, what is its core service? Security!

In an anarcho capitalistic world (no govenments), there would still exist a demand for security as you point out. This demand will be filled by some entity and the best way to provide security is to control a geographical area, like in a gate community - and what, if any, are the fundamental differences between a gated community and a government? None! We are already living in a world of "privately" owned security companies competing with each other. We just happen to call these kind of companies "governments". We are living in an anarcho capitalistic world already. We who call ourselves libertarians are just not too happy with the quality and price that these companies provide.

Governments will not die since there is a huge demand for their service - security. Governments will adapt and figure out new ways to get a revenue either through property taxes or through head taxes but many people will be hurt in this process as you correctly point out.

Government exists because it has a monopoly on the use of force, taxation, and issuance of the currency.

They will not give up any of those.

Bitcon has been designed to be taken over by cartel (and thus the government). See the links in my first post for the undeniable details.

[AnonyMint]

2. you seem to be assuming that the value of an individual bitcoin will reach $1 million. (that is probably what would be necessary for satoshi to be a 'trillionaire'.) why would anyone without bitcoins throw so much money into bitcoins, however? they might be useful, and they might be enough to attract both speculation and real use, but a century before your fanciful claims would materialise, those with present wealth would find it far easier to set up an alternative cryptocurrency.

2a. bitcoin would not actually be a robust way to store the amount of wealth that would be necessary for your story to materialise. it could still probably be disrupted by $5 million's worth of asic chips. it presently stores, also, nowhere near as much as the widely reported 'market capitalisation' figure.

Agreed. An altcoin is the solution to both of those problems.

[AnonyMint]

If this is ever going to happen, I don't wanna be a rich-ass jerk.
I would try to use the gained influence to make the world a better place, not one far worse.
After all, we would be the ones with the new wealth, so we would be the ones that could change things.

on a side note: let's hope Satoshi is one of those idealistic good types, he could change the whole earth with the wealth he would gain.

Large wealth is much less helpful than very small wealth.

When you've never thought this out, you imagine you could, but the reality is you can't.

Read the links in my first post (on the prior page 4 of this thread) to understand the math of why you can't.

[AnonyMint]

All the world’s wealth has essentially been stolen, but by whom? By you, dear reader.

We’ll be very lucky if we aren’t all rounded up and summarily executed. Thankfully, you’ll be able to use some of that money to purchase protection, but I’m not at all convinced that it will be enough. A wrathful government backed by an enraged population is a fearful enemy. Satoshi foresaw this long ago, and I doubt he/she/it/they will ever voluntarily come into the light.

Nah, everyone else will just mine Bytecoin, Trytecoin, Crumbcoin, or Hexcoin or whatever name they come up with next.   Bitcoin's current value is based mostly on the fact that most people don't know how it works. Once the other iterations of bitcoins start getting attention, the value will probably even out between them.

Ever heard about the network effect?

We debated the network effect advantage for Bitcoin here:

https://bitcointalk.org/index.php?topic=279650.msg3495695#msg3495695

[AnonyMint]

So I submit that bitcoin's influence on our future is one of many 'decentralizers.' -And not the largest one by far.

That is a possibility which I tend to agree with, but it won't be Bitcoin, because Bitcoin is designed to become centralized. See the links in my first post on page 4 for details.

[BldSwtTrs]

I detailed in the links of my prior post how Bitcoiners are going to jail.

Does anyone really expect the government to sit back quietly and watch while their currency is debased, terrorism is funded, and children are kidnapped? The only question is when and how they will strike back against these forces. While the government does have a lot of options, ultimately those options only slow things down. At some point, we collectively with our governments face a difficult choice between trying to survive this deadly storm or attempting to destroy all decentralized computer networks (including the internet). The former seems unthinkable, the latter, impossible.

I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.

You overestimate the dedication the government has to their own organization. They are in it for the money, mostly. When it is no longer profitable to keep the structure in place they abandon it.

That's exactly what happened in the USSR. Everybody in the government could see that the system was headed for collapse due to unavoidable mathematical realities, and when that knowledge spread they looted what they could and abandoned ship. The number of true believers who were addicted to power for its own sake weren't great enough in number to hold things together.

The Russian oligarchs didn't abandon anything, and are richer now than they were.

The game theory of socialism never changes, see the links in my prior post.

The same thing will happen to the western governments when socialism collapses here. As Bitcoin grows large enough to represent a real threat governments might make noise about regulating it or shutting it down, but the entire time politicians are spewing hot air insiders throughout the bureaucracy are going to be quietly stashing whatever money they can get control over in Bitcoins. All the scare stories that pop up between then and now are designed solely for the purpose of scaring early adopters into letting go of their bitcoins so those who don't have them yet can buy in cheaply.

Pure fantasy to propose the masses (the 99%) are going to tolerate a 100000X devaluation of the western financial system handing half of society's net worth to the bitcoins minted in the first 4 years.

To be a viable currency, Bitcoin would have to be distributed to the masses, because the 97% only gain their wealth from money spent as currency. The wealthy Bitcoin early adopters aren't going to spend, rather they will invest their coins to gain more coins than they had.

Thus the masses would be forever impoverished in Bitcoin's coin supply model.

Sorry Buttcoin is a Trojan horse. See the links my prior post for details.

You seem to think that Bitcoin is going to destroy fiat. It's probably not gonna happen. The existence of gold doesn't destroy fiat for example.
 
Think about the fact that to reach 100 000$ per BTC, Bitcoin needs only to capture 15% of the value of the gold market, without the need to capture any value of the fiat market.

[blablahblah]

Thanks, OP!

For the most part I agree. A word you were probably looking for (or trying to avoid in order to stick to plain English) is seigniorage, which I've mentioned a few times before. Just like the issuers of governmental cash make profit from money supply inflation, the 'issuers' (early adopters) of bitcoins profit immensely from Bitcoin's growth. We steal other people's slices of the "global value pie".

However, I have confidence that most people can adapt, so I'll put an alternative spin on your points:

Re: The Bleak Future of Fiat Currencies
I think it's only as bleak as governments are untrustworthy and unstable. I guess we'll have to wait and see how they'll cope, and how people will adapt their governments.

Re: Wealth Disparities
You seem to assume people will continue to rally behind Bitcoin's brand-name chain, and that the spin-offs will continue to be small-time wannabes. Maybe, but I hope that Ripple (or something similar) takes off, enabling easier exchange between various esoteric "coin ideas". I doubt they made it Open Source just so everyone would religiously rally behind the real Bitcoin. The way I see it, the free knowledge is supposed to help redress the unfairness of seigniorage. Everyone is welcome to create their own crypto flight miles, crypto discount coupons, crypto shares,... whatever their imagination comes up with.

Re: Law enforcement
I suspect many law enforcement agencies are well aware (or at least have some awareness) of the economics of crime. The harder they fight against drugs or child porn etc., the more scarce and therefore more lucrative it becomes. But how would society react if politicians said "actually, we shouldn't take child pornography off the Internet. If we just leave it there and ignore it, it'll be freely available for all the sickos and the makers of new stuff will go out of business." Maybe there would be an uproar and it would be the end of that person's political career. Maybe not. Drug reform is probably a safer bet because it's less contentious. It will take time.

Re: What should we do?
Never stop learning.

Government don't just want to stop criminals(non-government) from illegal lucrative activity, the government themselves profit from such activities. Drugs are a great example, as long as they can control it, they can profit from scarcity and the handling of supply. Then you have prisons, war and all that good stuff that the government loves to collect your money for. Government only care about reform when they have no financial stake in said reform, if they have nothing to gain from you then you can rest assured that they only care if they can instead divert you while pick pocketing you elsewhere.  

Old post, I know, but still deserving of a reply.
There seem to be 2 popular alternatives when comes to governments and money:
1) government has full control over things like M0 supply and interest rates.
2) there's a separation of powers and central bank restricts access.

There seem to be lots of historical examples where #1 resulted in lots of problems, such as a change in leadership followed by theft and hyperinflation. However, #2 also seems to have been gamed, whereby a hierarchy of banks form a shadow government and attempt to starve the real government of funds. Come to think of it, I wonder how long the banks have been trying to crash the US government? Maybe they're not all so bad after all, just misguided.

Those dirty tactics like drug trafficking, wars, and prison slave camps all suggest that the US government may have been been short of funds for a long time, and therefore they had to develop alternative income streams.

[AnonyMint]

Pure fantasy to propose the masses (the 99%) are going to tolerate a 100000X devaluation of the western financial system handing half of society's net worth to the bitcoins minted in the first 4 years.

To be a viable currency, Bitcoin would have to be distributed to the masses, because the 97% only gain their wealth from money spent as currency. The wealthy Bitcoin early adopters aren't going to spend, rather they will invest their coins to gain more coins than they had.

Thus the masses would be forever impoverished in Bitcoin's coin supply model.

Sorry Buttcoin is a Trojan horse. See the links my prior post for details.

You seem to think that Bitcoin is going to destroy fiat. It's probably not gonna happen. The existence of gold doesn't destroy fiat for example.
 
Think about the fact that to reach 100 000$ per BTC, Bitcoin need only to capture 15% of the value of the gold market, without the need to capture any value of the fiat market.

My point is only that if BTC will dominate as proponents expect, then the dystopian outcome will occur.

I don't expect BTC to dominate as a currency for numerous reasons, e.g. a real altcoin will appear, Bitcoin mining is designed to be cartelized so it will be taken over by the government, BTC is not well distributed in society, etc..

So what I am saying is the dystopia will be averted, but how it is averted is important. One possibility is a very bad one for Bitcoin holders-- tax debtors prison. Blame the global debt crisis on the speculators. Tax the rich 1%. We are the 99%. Operation Wallstreet, etc.. But if BTC never makes it to $30,000+, it probably won't happen.

Btw, 21 million ButtHeadcoins x $100,000 = $2.1 trillion

At $1 million, mcap = $21 trillion.

Gold market is $5 trillion or so but much of that is not privately owned. So you must have transposed the digits, you mean 51% of the gold market?

[Akka]

It is obvious to me that the OP has missed a major piece of the puzzle.

It's not just cryptocurrency that is making all of these changes... It is decentralization itself that is... And those changes will be far, far larger than monetary.

Decentralization is nothing less than the removal of power from those who have it and scattering it around to all that want it.

Gnutella was technically the first decentralized program. (That I know of.) They may have fizzled, but today we have Bittorrent, Mega, and TOR, among others, to share information through. Together these make IP laws start to seem kinda silly.

Bitcoin is a bigger jump, because it represents half the economy; any product or service that someone wants to sell, worldwide, we can now buy in a decentralized way. But it's just the buying half...

3D Printing using DEFCAD search and the resulting industry built around downloadable products will represent an even larger jump... They are the other half of the economy, and everything one could sell will eventually be manufactured and sold this way. (Destroying pretty much all existing industry worldwide.)

But that's not all! What else can we decentralize?

Well, if the government does it today, why can't we decentralize that too?

Security? But of course. Why use the .govs police when you can have free-market security services bought and sold in a decentralized environment?

Law? No problem. There are already websites like judge.me that offer non-nationalized law... Making those into a decentralized solution would be childsplay.

Whenever you think it can't be decentralized, trust me, it can. Even roads can be built privately, and decentralized marketplaces can expedite them. Fire services? Same as security. It can all be done without any government once the interest to do so is there.

So I submit that bitcoin's influence on our future is one of many 'decentralizers.' -And not the largest one by far.

This !

Yes, the next age will be the age of decentrilazation.

 -decentralized energy - Buildings as Power Plants(Wind / Solar), Smart Grid, Energy Storages of Electric Cars/ Hybrids as Grid Buffers.

 - decentralized Production - 3d-Printing manufactures

 - decentralized money - Bitcoin


In the new era, everyone can potentially be their own manufacturer, their own internet site, their own power company and their own Bank.

See: http://en.wikipedia.org/wiki/The_Third_Industrial_Revolution

[AnonyMint]

Yes, the next age will be the age of decentrilazation.

 -decentralized energy - Buildings as Power Plants(Wind / Solar), Smart Grid, Energy Storages of Electric Cars/ Hybrids as Grid Buffers.

 - decentralized Production - 3d-Printing manufactures

 - decentralized money - Bitcoin


In the new era, everyone can potentially be their own manufacturer, their own internet site, their own power company and their own Bank.

See: http://en.wikipedia.org/wiki/The_Third_Industrial_Revolution

Agreed, but nevermind those low density (ambient) energy sources. They are not economic. Micro-hydropower is what you are looking for. I studied the numbers.

And I how can we have decentralization if Bitcoin is the only currency? See this:

https://bitcointalk.org/index.php?topic=222998.msg3594303#msg3594303

[thoughtfan]

Yes, the next age will be the age of decentrilazation.

 -decentralized energy - Buildings as Power Plants(Wind / Solar), Smart Grid, Energy Storages of Electric Cars/ Hybrids as Grid Buffers.

 - decentralized Production - 3d-Printing manufactures

 - decentralized money - Bitcoin


In the new era, everyone can potentially be their own manufacturer, their own internet site, their own power company and their own Bank.

See: http://en.wikipedia.org/wiki/The_Third_Industrial_Revolution

Agreed, but nevermind those low density (ambient) energy sources. They are not economic. Micro-hydropower is what you are looking for. I studied the numbers.

And I how can we have decentralization if Bitcoin is the only currency? See this:

https://bitcointalk.org/index.php?topic=222998.msg3594303#msg3594303

AnonyMint, not only did you resurrect this topic - which I did find interesting the first time round - but you appear to be going all out writing lecture upon lecture and cross posting them anywhere you can.  I am always up for a different perspective - especially one that is out of synch with the current conventional wisdom but I'm afraid by your persistence everywhere has just earned yourself an Ignore from me.  There are many smart people on these forums and I'm confident if someone finds more substance to what you're saying than FUD and conspiracy then it will be repeated/quoted by others.  Until then, all the best

[cryptoanarchist]

There is going to be widespread rioting and looting by public sector workers as the dollar and other fiat dries up. I posted about it here: https://bitcointalk.org/index.php?topic=350490

Be ready for the zombies (public sector employees)!!

[Rassah]

There is going to be widespread rioting and looting by public sector workers as the dollar and other fiat dries up. I posted about it here: https://bitcointalk.org/index.php?topic=350490

Be ready for the zombies (public sector employees)!!

Movies taught me that the best way to escape a zombie apocalypse is to move to an island. I'm thinking of Dominica. Anyone else want to join me, or have other islands to consider?

[kwoody]

https://maps.google.com/maps?q=seychelles&ie=UTF-8&hq=&hnear=0x225c21fd70bead3b:0x32d3d0a0d349daf7,Seychelles&gl=us&ei=JhSYUt7kGdLuoASI4YDoCg&ved=0CKEBELYD

Beautiful place. (As long as Somalian Zombie Pirates don't bother you, that is.)

[AnonyMint]

Yes, the next age will be the age of decentrilazation.

 -decentralized energy - Buildings as Power Plants(Wind / Solar), Smart Grid, Energy Storages of Electric Cars/ Hybrids as Grid Buffers.

 - decentralized Production - 3d-Printing manufactures

 - decentralized money - Bitcoin


In the new era, everyone can potentially be their own manufacturer, their own internet site, their own power company and their own Bank.

See: http://en.wikipedia.org/wiki/The_Third_Industrial_Revolution

Agreed, but nevermind those low density (ambient) energy sources. They are not economic. Micro-hydropower is what you are looking for. I studied the numbers.

And I how can we have decentralization if Bitcoin is the only currency? See this:

https://bitcointalk.org/index.php?topic=222998.msg3594303#msg3594303

AnonyMint, not only did you resurrect this topic - which I did find interesting the first time round - but you appear to be going all out writing lecture upon lecture and cross posting them anywhere you can.  I am always up for a different perspective - especially one that is out of synch with the current conventional wisdom but I'm afraid by your persistence everywhere has just earned yourself an Ignore from me.  There are many smart people on these forums and I'm confident if someone finds more substance to what you're saying than FUD and conspiracy then it will be repeated/quoted by others.  Until then, all the best

Since when did persistence instead of the logic of the content indicate veracity and value of information.

If you rely on others to do your DD for you then you will always be late.

Movies taught me that the best way to escape a zombie apocalypse is to move to an island. I'm thinking of Dominica. Anyone else want to join me, or have other islands to consider?

The internet and movies don't prepare you for the reality that you will hate.

You will even hate much tamer islands, simply because you don't realize how important the various little things in your life and culture which go unnoticed:

http://liveinthephilippines.com/content/you-wont-like-living-in-the-philippines/

[bnjmnkent]

What a great OP! Assumed there would only be Bitcoin and no Alt-coin, the ideas presented

had even more impact.  I think, that all models for evaluating the value of Bitcoin have to

be build with regard to all alt-coins possessing a maximum amount of units. Early adopters

of Bitcoin are therefore better seen as early adopters of cryptocurrencies with this attribute.


As there is a possible infinite supply of bitcoin-clones, I see the described dangers somewhat

alleviated due to the fact that the market-share of one single crypto becomes smaller with

every crypto newly introduced.


Edit: Somewhere on BT, the topic of human slavery through machines is discussed (gmaxwell's
       ideas on autonomous agents?). Quite interesting, as machines could take over the role some
       individuals are in, today - now that the financial human-machine interface gets build.

[Rassah]

As there is a possible infinite supply of bitcoin-clones, I see the described dangers somewhat

This is possible in the same way that it's possible for there to be an infinite amount of Facebook and eBay clones, and eventually may be as possible as for there to be TCI/IP and Email clones.

[Rassah]

Your analogy is misleading.

When Facebook came out it was already just the latest in a long line of earlier social media: Myspace, MSN, ICQ...
Facebook only took over from Myspace because
1) Facebook used to have a nice clean interface with no ads, unlike Myspace with all the HTML code snippets that non-coders were pasting.
2) Viral advertising that got people to change over at the same time.

Soon, Facebook will be dumped for something better, if the process hasn't already started.

Granted. My anology was more about everyone being on Facebook, or everyone buying and selling on eBay, because all their friends and family are on Facebook, or all the other buyers and sellers being on eBay thus giving you the best price. Network Effects.

[jubalix]

I think this will go the other-way, BTC/CC's will improve so many things. Most humans like to build things up, improve and care, and even the destructive tendency have an element creation and innovation.

For instance we are at the thin end of the wedge, and what do we have?

Satoshi Forrest, where was that even possible in that form before BTC?

[thaaanos]

OP's warning is on the point. We don't have the luxury not to take proactive action to solve the early adopter problem, It is not for the next generation to think it through, attitude I have seen in many posts, or deal with the problems as the come along, it must be solved yesterday.

As it stands Bitcoin is Capitalism at its purest form, you have Money, and Machines that Generates Money, plus a cartel that gatekeeps transactions: a Banker's wet dream. Which is all that most people here secretly cove, you want to overthrow the financial system only to take it's place. It is the last attempt of Capitalism to recreate itself into the new world. 1% of people hold 99% of worlds wealth and bitcoin will change that? of course not, it will just further the divide even in the 1%. I guess 3rd world is toast for good.

We (the rest) don't care if early adopters play nice and consider to donate, invest, or be good with their wealth. It is not their place/right to make these decisions. Democracy is not run on a geek circle. You are going to need the full support of the population to withstand the backlash/takeover of the Establishment, and the attitude "Well I was an early adopter, its only fair to be filthy rich" will not help.

What should be done?
1. Satoshi should reveal himself.
2. Block reward must be opened to renegotiation.
3. Install a rolling invalidation of rewards/blocks on the blockchain, ie "forgeting" blocks, this will also help with database size.

2&3 will help with price stability as well as keep the economy rolling, as well as democratizing adoption

[Adrian-x]

OP's warning is on the point. We don't have the luxury not to take proactive action to solve the early adopter problem, It is not for the next generation to think it through, attitude I have seen in many posts, or deal with the problems as the come along, it must be solved yesterday.

As it stands Bitcoin is Capitalism at its purest form, you have Money, and Machines that Generates Money, plus a cartel that gatekeeps transactions: a Banker's wet dream. Which is all that most people here secretly cove, you want to overthrow the financial system only to take it's place. It is the last attempt of Capitalism to recreate itself into the new world. 1% of people hold 99% of worlds wealth and bitcoin will change that? of course not, it will just further the divide even in the 1%. I guess 3rd world is toast for good.

We (the rest) don't care if early adopters play nice and consider to donate, invest, or be good with their wealth. It is not their place/right to make these decisions. Democracy is not run on a geek circle. You are going to need the full support of the population to withstand the backlash/takeover of the Establishment, and the attitude "Well I was an early adopter, its only fair to be filthy rich" will not help.

What should be done?
1. Satoshi should reveal himself.
2. Block reward must be opened to renegotiation.
3. Install a rolling invalidation of rewards/blocks on the blockchain, ie "forgeting" blocks, this will also help with database size.

2&3 will help with price stability as well as keep the economy rolling, as well as democratizing adoption

The OP has an investigated his imagination in a Dystopian Future, and used little creativity to solve problems.

1) Bitcoin is more like a voluntary wealth redistribution virus (don't use it if you think it is like rat poison)
2) Bitcoin is more likely a bankers nightmare, no fractional reserve banking.
3) if it ever stops serving the majority, switch to an aultcoin, or start one that is created on a normal distribution curve as apposed to the step function that rewords early adopters disproportionately.
4) you can always erode the wealth of the ultra rich by saving (the rich can only earn by providing value to encourage you to spend) as apposed to saving in fiat you wealth is eroded by inflation that benefits the 1% who borrow new money into existences mechanize production or distribution thus robbing you of productivity in the now.

[fog-or-vos]

I have seen the future of Bitcoin, and it is bleak.

The Promise of Bitcoin

If you were to peak into my bedroom at night (please don’t), there’s a good chance you would see my wife sleeping soundly while I stare at the ceiling, running thought experiments about where Bitcoin is going. Like many other people, I have come to the conclusion that distributed currencies like Bitcoin are going to eventually be recognized as the most important technological innovation of the decade, if not the century. It seems clear to me that the rise of distributed currencies presents the biggest (and riskiest) investment opportunity I am likely to see in my lifetime; perhaps in a thousand lifetimes. It is critically important to understand where Bitcoin is going, and I am determined to do so.

My hundreds of hours of thought experiments have been productive. I published a whitepaper about the future of Bitcoin, and because of that paper I’ll have the great privilege of sitting on the “Bitcoin in the Future” panel at the 2013 Bitcoin Conference in San Jose. Through these years of deliberation I have satisfied myself that the answer to the “Trillion Dollar Question” of whether any form of distributed currency can ever achieve a stable price, is “yes”. (There are three ways this will happen, as I have written elsewhere).

I have been predicting for years that the world’s first trillionaire by USD valuation will be an early investor in distributed currency — quite possibly Satoshi Nakamoto, whoever he/she/it/they may be. I own a few bitcoins, and I intend to keep them until I find a more attractive investment (that is, I want to invest in whatever replaces bitcoin or builds on top of it).

To many people, this sounds like an implausibly rosy future, and for early adopters that is true — it feels like winning the lottery every day. However, for most other people, the ascendancy of distributed currency systems will feel like a disaster. If you are involved in Bitcoin now, you should prepare to be almost universally hated someday.

In this article, we will examine a few simple thought experiments to show how the rise of distributed currencies such as bitcoin could create massive social upheaval due to governments’ rapidly degrading capability to fulfill their core functions of taxation and regulation of commerce. We’ll see how the end result could be extremely painful for common citizens due to previously unimaginable wealth disparities, hyperinflation of previously stable government-backed fiat currencies, and a greatly empowered criminal class.

The Bleak Future of Fiat Currencies

Anarchists and hardcore libertarians love Bitcoin, but most people outside those circles are not in favor of completely doing away with their government. If you aren’t part of a fringe political movement, chances are there is something the government does that you like, whether it’s handing out entitlement money, killing enemies, putting people in prison, building dams and roads, funding research, or any number of other things. The government can do these things because the government can collect taxes, which in turn they can do because the flows of money are highly regulated and tracked at every level. Whether you are collecting a paycheck, buying furniture, cashing out investments, or simply dying and leaving an inheritance, the government knows about it and takes a cut.

For our first thought experiment, let’s imagine a world where distributed currencies like bitcoin have become wildly successful due to technological advances which make them easy to use and completely stable. In this world government-issued money is as good as dead. It may take a few years for everyone to realize it, but there will come a point when the ever-increasing outflows of money from fiat money into untaxable, unseizable decentralized currency will reach a tipping point, and we’ll have a financial panic like the world has never seen. Frightened lawmakers and banks will try to stop people from cashing out, but that will just increase the panic. Those who don’t get out before the door closes will be in dire straits indeed. This is the ultimate bank run — the run on the world’s central banks, and who could possibly step in and restore order?

When people think of hyperinflation, they usually envision a Zimbabwean printing press running around the clock in the dark corner of a mud hut, putting ever more zeroes on cheap paper. Has it ever occurred to you that hyperinflation can happen while the printing presses are off? The value of the money in your pocket is not ultimately guaranteed by your government, but by simple supply and demand. The government controls the supply, and we control the demand. If demand falls precipitously, we have hyperinflation without ever needing to print another dollar or euro. If people start fleeing government currencies en masse, hyperinflation is the inevitable result.

The good news is that you don’t need to worry about current government debt in this scenario. If government currencies lose their value rapidly, debts which previously seemed overwhelming suddenly become much more manageable. Perhaps your debt-laden government will someday completely pay off it’s national debt by simply selling a few gold bars and a couple national parks.

The Bleak Future of Retirement

For our next thought experiment, let’s consider what will happen to Grandma. For her whole life, she has carefully saved her money, and now she is living in reasonable comfort. She gets money and health care from the government, and she has her own savings to fall back on. Grandma has done everything right, including taking her savings out of the stock market; most of her savings are now invested in the safest asset known to man: U.S. Treasury Bonds.

Rather suddenly, things start to go wrong. At the same time all her expenses start skyrocketing, the government has a liquidity crisis; they are having trouble collecting taxes and can no longer pay for her health care. Her savings are still “safe” in the sense that she will get U.S. Dollars out of them, but that is little comfort when those dollars which should have lasted years can barely pay her weekly grocery bill.

Grandma’s retirement has been sabotaged by the rise of a new kind of money that she can’t even begin to understand. All she knows is that she did everything right, and now she has nothing.

The Bleak Future Wealth Disparities

All the world’s wealth has essentially been stolen, but by whom? By you, dear reader.

We’ll be very lucky if we aren’t all rounded up and summarily executed. Thankfully, you’ll be able to use some of that money to purchase protection, but I’m not at all convinced that it will be enough. A wrathful government backed by an enraged population is a fearful enemy. Satoshi foresaw this long ago, and I doubt he/she/it/they will ever voluntarily come into the light.

If there are enough of us, and we are very careful and charming, we may be physically safe. However, the massive displacement of wealth will still have some awful consequences. People argue all the time about the societal benefits and drawbacks of wealth disparities, and the rise of distributed currencies will create disparities that previously did not seem possible. It seems clear that there will be a lot of jobs created by the new wealthy, but whether the average person is better off or not, one thing is sure to rise: resentment. What right do we have to take all the wealth of the world and put it in our pockets? Sure, a nifty new idea should pay off for early visionaries, but nobody ever expected a new idea to suck all the wealth out of the world like a financial black hole!

The Bleak Future of Law Enforcement

This is where things get really bleak. Currently distributed currencies facilitate money laundering, black market commerce (the Silk Road), and insider trading (TorBroker). These applications in their current form are just a snowflake on the tip of the iceberg. Not only will they get MUCH bigger, but we will see applications which are much less savory. Historically, the “Dark Net” accessible by Tor and private networks has been nothing more than a hidey-hole for illegal files and a hangout for paranoid schizophrenics, but it is quickly becoming the platform of choice for large-scale illegal commerce.

For this thought experiment, we will imagine that your child has been kidnapped and put up for sale on “TorSlaver”. Their business plan is to kidnap children and sell them to the highest bidder, whether parent or pedophile. The winning bidder is sent the location of the child, probably bound and gagged and dumped somewhere. As long as they don’t get caught doing the kidnapping, the kidnappers can do this again and again with complete impunity. Once someone proves it can be done, copycats will come out of the woodwork, and it won’t matter if the first mover gets caught.

As a parent of three small children, I cannot describe to you how awful this makes me feel. I have always been a very reluctant bitcoin investor, for this very reason. I don’t invest in bitcoin because I think it will bring about a happy utopian world. Quite the opposite. I invest in bitcoin because the rise of distributed currency is inevitable, and owning some bitcoins seems to be the best way to prepare for the chaos ahead. And just maybe, if I position myself correctly, I can make things a little less awful.

The Government Strikes Back

Does anyone really expect the government to sit back quietly and watch while their currency is debased, terrorism is funded, and children are kidnapped? The only question is when and how they will strike back against these forces. While the government does have a lot of options, ultimately those options only slow things down. At some point, we collectively with our governments face a difficult choice between trying to survive this deadly storm or attempting to destroy all decentralized computer networks (including the internet). The former seems unthinkable, the latter, impossible.

I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.

What Should We Do?

We need people thinking about this. I’ll admit that many of the things I wrote about may not happen at all, or may happen very differently than I imagine. However, there are lots of people touting the fantastic benefits that bitcoin and its children can give us, and I don’t see anybody talking about how bad things could potentially get.

We need solutions. When the government finally starts taking decentralized currency seriously, it will probably be doing so in a state of panic. We need to be advising governments now about how they can survive the storm and protect their populace. We need to think of ways the government can pay for its most critical operations, and what legislation makes sense to mitigate these new risks while preserving as much freedom as we can.

The Lifeboat Foundation is attempting to provide this thinking, advice, and solutions. They are already getting ready for a new advisory board, culled from computer scientists, economists, and bitcoin experts. If you make a fortune from your investments in decentralized currency, I urge you to consider how you can help all the people harmed by these rapid changes. Many bitcoin enthusiasts seem to think they will get to retire on a private island with a harem and a stable of Italian sports cars. This is wrong. Bitcoin investors need to someday become bitcoin philanthropists, and our giving needs to be targeted at helping all the people we have harmed. The Lifeboat Foundation is one option, but I’m sure there will be others.

I first published this article on the blog of the Lifeboat Foundation: http://lifeboat.com/blog/2013/04/bitcoins-dystopian-future
Reddit version is here: http://www.reddit.com/r/Bitcoin/comments/1cos8x/bitcoins_dystopian_future/

tl;dr: Wildly successful distributed currencies could hurt a lot of people.

OP
Couple things,

1) take a hint from your wife and catch some shut-eye...  

2) The past generation has always fucked the future generation and rarely thought about it and even less rarely made amends... fuck em, survival of the fittest. People who have had children already and those children are now adults need to realize that they have had their turn. As soon as your offspring are grown it's time to step aside and allow them to direct the course of history. This 2-generations-deep-grey-hair-voting-majority-bullshit needs to end. Dead weight.

3) The world has never changed, civilizations have never changed. The Golden rule has always applied ($, decisions, dissemination of information, and influence)... Always will.... Govt is bought and sold and will continue that way for all of time. If I can have my time at the bargaining table I'll take it. Don't be apologetic for being on the side of history. Your government isn't.... neither are their financiers....  

4) No matter how utopian  or anarchist or libertarian a vision (or etc. etc.) one has, there is always someone (typically more than one) in that same crowd that is just a bit less so. In an attempt to uphold the vision the outlyer will have their rights trampled and a self defeating cycle begins. Everything naturally regresses to it's mean. See USA in it's current state and her erosion of individual rights in an attempt to maintain those same rights and liberties.

Flattered if you read this far... Great read, well written and I like your perspective! It really gives astounding insight into one's psyche. You should write a novel or screen play! I hope you've enjoyed my satirical/grim play on this perspective/loose retort, not anywhere near the writing skill you poses though and eloquent way of putting it all in text.  

Thanks!

[thaaanos]

snip

The OP has an investigated his imagination in a Dystopian Future, and used little creativity to solve problems.

1) Bitcoin is more like a voluntary wealth redistribution virus (don't use it if you think it is like rat poison)
2) Bitcoin is more likely a bankers nightmare, no fractional reserve banking.
3) if it ever stops serving the majority, switch to an aultcoin, or start one that is created on a normal distribution curve as apposed to the step function that rewords early adopters disproportionately.
4) you can always erode the wealth of the ultra rich by saving (the rich can only earn by providing value to encourage you to spend) as apposed to saving in fiat you wealth is eroded by inflation that benefits the 1% who borrow new money into existences mechanize production or distribution thus robbing you of productivity in the now.

1. virus <> voluntary
2. fractional reserve is money out of thin air, explain how bitcoin differs
3. just like greece can exit euro, that easy
4. if you follow the story of asic manufacturing you will see what deflation means to a manufacturing process.

[thaaanos]

Bitcoin's deflationary quality if unchanged will bring Trade to a halt, that's basic economics, and independent of how many decimal places can exist in a number. Nobody in his right state of mind wants Trade to get hurt. So before that happens, National Security will kick in and Patends, Licences and  bitcoin infrastructure will be seized and protocol will be changed.
IE I see the FBI raid the biggest pools and alter the miner to ignore transactions that dont divert fees to a FED wallet, thats all they have to do, not bureucratic shit, no forms, no checks, just a hardcoded VAT. More countries will follow and boundaries will be raised before you know it. Effectively splitting the transaction tree into a forest, without hurting the blockchain.

[fog-or-vos]

The deflationary arguments are not warranted imo. I would actually spend more. knowing that I can buy more tomorrow without need to have as much in nominal terms.


We are so brainwashed into believing that a deflationary system cant work because we have been drilled with/by the current interests. The current system is on the brink of collapse. Our govts ARE at the level of Zimbabwe inflation but it's not in the units that you can hold in your hand.... Bailouts,  QE and the fact that govts are pretty much doing this in parity makes it a little less visible....

Deflation has been used as a scapegoat at every opportunity of the current failures. The inflationary system is only in place because it is necessitated by an independent central banking system as a business model. The inflationary systems have only been in place since the plans to create private central banks were thought up.

[Wekkel]

Like mild deflation would stop people from wanting that new tech and car. Right 

[greyman]

Bitcoin's deflationary quality if unchanged will bring Trade to a halt, that's basic economics, and independent of how many decimal places can exist in a number. Nobody in his right state of mind wants Trade to get hurt. So before that happens, National Security will kick in and Patends, Licences and  bitcoin infrastructure will be seized and protocol will be changed.
IE I see the FBI raid the biggest pools and alter the miner to ignore transactions that dont divert fees to a FED wallet, thats all they have to do, not bureucratic shit, no forms, no checks, just a hardcoded VAT. More countries will follow and boundaries will be raised before you know it. Effectively splitting the transaction tree into a forest, without hurting the blockchain.

I think you are overestimating the size of bitcoin infrastructure in your country comparing to world-wide infrastructure.

[Adrian-x]

1. virus <> voluntary
2. fractional reserve is money out of thin air, explain how bitcoin differs
3. just like greece can exit euro, that easy
4. if you follow the story of asic manufacturing you will see what deflation means to a manufacturing process.

1) Bitcoin will most likely always be voluntary. If you volunteer to partake in Bitcoin you transfer wealth to get in, if this accelerates because people benefit it will look similar to a infection, spreading in an unhealthy host.

2) Bitcoin doesn't come out of thin air, they can only be issued. They are only issued to those who agree with the protocol, and then provided work to secure it, Bitcoins are issued as part of the protocol. They are backed by whatever you and I are willing to exchange for them.

3) Bitcoin is voluntary don't like it don't use it. Average citizens don't have that choice with fiat.

4) I don't want to regulate a free market, what I think is good fore everyone is irrelevant, my point is if you save, wealth will erode from the unproductive in society and go to the producers, this is no Dystopian Future. Deflection will help prioritize investment with humanities needs as apposed to what we think we need.

[thaaanos]

1. virus <> voluntary
2. fractional reserve is money out of thin air, explain how bitcoin differs
3. just like greece can exit euro, that easy
4. if you follow the story of asic manufacturing you will see what deflation means to a manufacturing process.

1) Bitcoin will most likely always be voluntary. If you volunteer to partake in Bitcoin you transfer wealth to get in, if this accelerates because people benefit it will look similar to a infection, spreading in an unhealthy host.

2) Bitcoin doesn't come out of thin air, they can only be issued. They are only issued to those who agree with the protocol, and then provided work to secure it, Bitcoins are issued as part of the protocol. They are backed by whatever you and I are willing to exchange for them.

3) Bitcoin is voluntary don't like it don't use it. Average citizens don't have that choice with fiat.

4) I don't want to regulate a free market, what I think is good fore everyone is irrelevant, my point is if you save, wealth will erode from the unproductive in society and go to the producers, this is no Dystopian Future. Deflection will help prioritize investment with humanities needs as apposed to what we think we need.

1. Network effect (Cost of not entering the network)
2. You miss the point (So it's not ok for banks to create new coins following protocol rules but it's ok for you to do following bitcoin protocol rules)
3. Network effect/missing the point (cost of exiting the network is bigger than 1)
4. What will producers do when none is willing to ship the goods from producer to consumer?

You all miss the point about what deflation really means. Forget the consumer's view where you just spend your precious coins only when absolutely want/have to. Or the prime producers view. Think about it from the merchants view, who has stocked up goods, or the various processors who still wait materials to arive in their processing pipeline and see that time works against them.
Then you all going to go nagging about how shity preorder, prepay is, and that you still have not get what you bought for, and why on earth vendors don't stock goods in advance, heellloooo because of Deflation maybe?

[thaaanos]

IE I see the FBI raid the biggest pools and alter the miner to ignore transactions that dont divert fees to a FED wallet, thats all they have to do, not bureucratic shit, no forms, no checks, just a hardcoded VAT. More countries will follow and boundaries will be raised before you know it. Effectively splitting the transaction tree into a forest, without hurting the blockchain.

I think you are overestimating the size of bitcoin infrastructure in your country comparing to world-wide infrastructure.

So if you Cross China, India (shutting down BTC), EU, USA taking over btc infrastructure, what is left? Sealand? sure the rest of the world can withstand a 51% attack.

USA and EU would propably rather shutdown Internet than lose control over Euro or Dollar. And please don't give me tha mesh crap radiowaves are regulated too, oh and they can be triangulated also.

[bitrider]

A great thought experiment. And all the absolutist replies make me smile. We are doing the experiment in real time, and there is no turning back. We are still very poor at predicting complex systems future states. Definitely worth thinking these things, and anticipating what we can, but we don't know how this will play out - just face the fact. Probably somewhere between utopian and dystopian - like always.

[thoughtfan]

1. virus <> voluntary
2. fractional reserve is money out of thin air, explain how bitcoin differs
3. just like greece can exit euro, that easy
4. if you follow the story of asic manufacturing you will see what deflation means to a manufacturing process.

1) Bitcoin will most likely always be voluntary. If you volunteer to partake in Bitcoin you transfer wealth to get in, if this accelerates because people benefit it will look similar to a infection, spreading in an unhealthy host.

2) Bitcoin doesn't come out of thin air, they can only be issued. They are only issued to those who agree with the protocol, and then provided work to secure it, Bitcoins are issued as part of the protocol. They are backed by whatever you and I are willing to exchange for them.

3) Bitcoin is voluntary don't like it don't use it. Average citizens don't have that choice with fiat.

4) I don't want to regulate a free market, what I think is good fore everyone is irrelevant, my point is if you save, wealth will erode from the unproductive in society and go to the producers, this is no Dystopian Future. Deflection will help prioritize investment with humanities needs as apposed to what we think we need.

1. Network effect (Cost of not entering the network)
2. You miss the point (So it's not ok for banks to create new coins following protocol rules but it's ok for you to do following bitcoin protocol rules)
3. Network effect/missing the point (cost of exiting the network is bigger than 1)
4. What will producers do when none is willing to ship the goods from producer to consumer?

You all miss the point about what deflation really means. Forget the consumer's view where you just spend your precious coins only when absolutely want/have to. Or the prime producers view. Think about it from the merchants view, who has stocked up goods, or the various processors who still wait materials to arive in their processing pipeline and see that time works against them.
Then you all going to go nagging about how shity preorder, prepay is, and that you still have not get what you bought for, and why on earth vendors don't stock goods in advance, heellloooo because of Deflation maybe?

It never ceases to amuse me that proponents of both anti and pro deflationary models are so convinced they are both right and that the other is stupid!  The beauty of the Bitcoin experiment is we may finally get to see which side turned out to have the valid arguments.  Centuries of economists arguing theory is about to come to an end as the experiment comes to fruition

Does anyone else find it funny that those convinced that customers will have a reduced incentive to spend deflationary money forget the seller of goods and services have an equally increased incentive to sell.  So won't we simply see the price change to reflect this and things carry on as always?  Same with stock.  The store will have the same disincentive pay for stock that is losing value (relative to depreciating deflating/appreciating* currency) as the supplier will be incentivised to sell his goods?  I kinda like that theory but truth is I don't know how it will turn out.  Fact is, neither do those who are convinced their arguments are correct!

Edit: Just read bitrider's response. Looks like we're thinking along the same lines re bitcoin as an experiment and absolutism

*Edit: I meant 'deflationary' but had written depreciating - thanks justusranvier for pointing it out

[justusranvier]

Does anyone else find it funny that those convinced that customers will have a reduced incentive to spend deflationary money forget the seller of goods and services have an equally increased incentive to sell.  So won't we simply see the price change to reflect this and things carry on as always?  Same with stock.  The store will have the same disincentive pay for stock that is losing value (relative to depreciating currency) as the supplier will be incentivised to sell his goods?  I kinda like that theory but truth is I don't know how it will turn out.  Fact is, neither do those who are convinced their arguments are correct!

If the PC and consumer electronics industries could figure out how to adapt to a situation where stock is losing value relative to currency (BTW, bitcoin is appreciating, not depreciating) then other kinds of merchants in a bitcoin world should be able to adapt too.

[bitrider]

Yup. 

[thaaanos]

Problem is that this experiment is not done "In Vitro" and wait and see doesnot apply.
Either Bitcoin community fixes bitcoin parameters, so as to stabilize it and make it work *for* the economy, or it will be done Without you.
Hodling on your bitcoins and wait until you can afford your private isle is very sensible, and most people would agree.

[thaaanos]

Does anyone else find it funny that those convinced that customers will have a reduced incentive to spend deflationary money forget the seller of goods and services have an equally increased incentive to sell.  So won't we simply see the price change to reflect this and things carry on as always?  Same with stock.  The store will have the same disincentive pay for stock that is losing value (relative to depreciating currency) as the supplier will be incentivised to sell his goods?  I kinda like that theory but truth is I don't know how it will turn out.  Fact is, neither do those who are convinced their arguments are correct!

If the PC and consumer electronics industries could figure out how to adapt to a situation where stock is losing value relative to currency (BTW, bitcoin is appreciating, not depreciating) then other kinds of merchants in a bitcoin world should be able to adapt too.

You forget that the price of stock is lowerbound and selling bellow or at the same value the merchand is taking a hit, and that hit gets bigger as time ticks. The only way for a merchant to stay in bussiness is to offload the risk to A) consumer by Preorder/prepay B) producer to delay payment until sold.
So if we have a C_onsumer, M_erchant, P_roducer, someone must accept the cost of depreciation Time. And here we only have the Shipping time, if you add Production Time, Return of Investment Time. You have simply stoped the economy.
I am talking on experience here. I live in F*** Greece, we are deflating for 4 years now. The only economists I know that think deflationary currency is a neat idea is Wolfgang schaeuble, and german banksters who sit on shitloads of Euros, You want to see the future of Bitcoin? look at Europe NOW.

[kisa2005]

thanks for high quality OP and discussion! It is very worthwile even if it just helps a number of people feeling that they are not alone with similar doubts and ethical considerations. A perfect thread to start "BTC self-help group" with - any professional therapists around to moderate such thread? After initial adrenaline shot, I started reflective thinking and experienced a state of semi-permanent thinkaholic awareness shock for a few weeks in a row, somewhat resembling Neo's awakening scene from the Matrix. I believe that anyone should be mindful not to just exclusively focus on negative scenarios, as these are based on the premise that following initial negative development no appropriate communal or governmental reaction is achieved. But wait, humanity - however difficult and disturbing it was - adopted to the spread of christianity, to vasca da gama and columbus "discoveries", to the emergence of nuclear energy a.s.o. it is therefore likely that distributed currencies will represent major challenges and cause major changes. The more of these challenges and changes can be shared with and managed in co-ordination with national democratic majorities and existing influential NGOs, the better the outlook will become. My hope is that potential debasement of G20 currencies against cryptos can be somehow "managed" over long-time period, without creating major political and social disruptions like civil wars. E.g. could the world governments and central banks decide at some point to build up substantial BTC reserves to smoothen the redistribution effect in rather acceptable for the society way? And, indeed, if significant part of early adopters recognizes their ethical obligation to support philantropic causes, then the future might become not as bleak as feared during sleepless nights...

And for pessimistic folks, please try smiling efortfully from time to time, this might help in shifting focus to somewhat better aspects and opprotunities

[thoughtfan]

Does anyone else find it funny that those convinced that customers will have a reduced incentive to spend deflationary money forget the seller of goods and services have an equally increased incentive to sell.  So won't we simply see the price change to reflect this and things carry on as always?  Same with stock.  The store will have the same disincentive pay for stock that is losing value (relative to depreciating currency) as the supplier will be incentivised to sell his goods?  I kinda like that theory but truth is I don't know how it will turn out.  Fact is, neither do those who are convinced their arguments are correct!

If the PC and consumer electronics industries could figure out how to adapt to a situation where stock is losing value relative to currency (BTW, bitcoin is appreciating, not depreciating) then other kinds of merchants in a bitcoin world should be able to adapt too.

You forget that the price of stock is lowerbound and selling bellow or at the same value the merchand is taking a hit, and that hit gets bigger as time ticks. The only way for a merchant to stay in bussiness is to offload the risk to A) consumer by Preorder/prepay B) producer to delay payment until sold.
So if we have a C_onsumer, M_erchant, P_roducer, someone must accept the cost of depreciation Time. And here we only have the Shipping time, if you add Production Time, Return of Investment Time. You have simply stoped the economy.
I am talking on experience here. I live in F*** Greece, we are deflating for 4 years now. The only economists I know that think deflationary currency is a neat idea is Wolfgang schaeuble, and german banksters who sit on shitloads of Euros, You want to see the future of Bitcoin? look at Europe NOW.

I am  sorry to hear you are suffering from the economic tragedy that is Greece right now.  I have Greek friends and know how bad it is.

That being said, are you seriously suggesting the local 'deflation' you are experiencing is the cause of the problems?  When an economy is as crippled as Greece's I can understand why citizens would be crying out for their Central Bank (if you still had one) to be inflating your currency.  However, there are some who do not believe this is anything other than a 'sticking plaster' solution which provides temporary alleviation at the expense of savers.  

Of course if some of the dystopian predictions here come true Bitcoin being essentially deflationary won't do much just as the ECB refusing to inflate for Greece's sake doesn't appear to be helping Greece's situation right now.  However I find it a bit of a stretch to look to Greece to predict how Bitcoin will turn out.

As for appealing to the authorities of the numbers of economists who believe deflation to be bad it doesn't cut it for me sorry!

[BlueNote]

Governments can - at any time - stop inflating their debt-based currencies and stop spending more than they take in. They have the upper hand in that any policy changes they make will ripple through the market on a large scale much faster than any alternative currency can impact the market or have such a large scale effect.

Part of the promise of Bitcoin is that it will eventually force governments to reform their own systems simply by presenting a better alternative to people. In order to compete and retain some semblance of power, governments will have to address the market conditions and become serious about reform, if only for the sake of self-preservation. If things were really looking like all fiat was going to go over the cliff of hyperinflation due to wealth pouring into alternatives, then they would have no choice but to engage in serious reform. Any such reform will help to stabilize national currencies and make them attractive enough to stem the tide of the nightmare scenario described by the OP. People will have time to adjust.

The threat of the use of force on a grand scale by governments is largely a paper tiger. It is only useful for them to use force at the margins, otherwise it becomes counter-productive to the survival of the regime itself. Any regime that goes all out with a show of force on a large part of the population at one time is setting itself up for failure because once you go that route you lose all propaganda value and even the masses are not fooled by your claims of legitimacy. You become ripe for overthrow.

The future currency game, I think, will be more like a chess game than an actual war. There will be ground gained and lost on both sides. If you consider that politics is a marketplace of ideas, and you understand that markets tend toward equilibrium, you can predict that forces on both sides will tend to balance over time. By balance I mean that both sides are always pushing back, and that tends to create short-term stability and predictability. It doesn't mean a 50/50 balance. It just means that the tension between them produces a balance one can quantify presently and predict in the short term. Once that state has lasted for a while, a new picture emerges of who's ahead and who's behind, but both are still pushing against each other. Then the opposing forces adjust their policies accordingly. It's a mistake to extrapolate present trends out indefinitely. Things tend to only go haywire in isolated spots, not in the big picture. So you might get a crazy dictator or an insane political system for brief periods of time in limited areas, but the political market is so wide that these aberrations typically do not propagate throughout the whole world.

The nightmare scenario is of course a tyrannical world-government which is not afraid of displaying an extreme show of force as a matter of policy because it loses its inhibition and thinks it has captured the queen in the grand chessboard of world politics, but it's difficult to see anything like that lasting long term. Ultimately, all these systems rest on the support of the people. They either actively support or acquiesce. But if you push too far, even those who would otherwise acquiesce are forced by the harsh circumstances to take a stand. The only reason for people to compromise with tyranny is if they see self-preservation in it. Once it becomes clear that the survival and comfort of a certain portion of the population is not predictably certain, then you can get an explosive push-back, and that's when revolutions take place.

[Rassah]

You all miss the point about what deflation really means. Forget the consumer's view where you just spend your precious coins only when absolutely want/have to. Or the prime producers view. Think about it from the merchants view, who has stocked up goods, or the various processors who still wait materials to arive in their processing pipeline and see that time works against them.
Then you all going to go nagging about how shity preorder, prepay is, and that you still have not get what you bought for, and why on earth vendors don't stock goods in advance, heellloooo because of Deflation maybe?

Time to get yourself unbrainwashed about that whole Deflation = Bad!!! thing.

Customers don't wait to buy new things, as evidences with people lining up to buy new gadgets.
When currency deflates, customers feel like they have more disposable cash to spend, and thus increase spending.
Merchants will not be working in a deflationary economy with expectations of being in an inflationary. Just as merchants calculate and adjust prices for the rate of inflation, they will adjust prices for the rate of deflation. Right now you expect the value of what you are asking for to fall, so you adjust prices up with expectation that if they sell in a month, you will earn -3%/12 of the current day value. In deflation, you expect the value of what you are asking to go up, so you adjust prices down with the expectation that you will get +3%/12 at the end of a month. I.e. if inflation or deflation is 1% for a period, and your cost of product is $100, you will price it at $101 in inflationary currency, or $99 in deflationary currency, expecting to get the same $100 value when it sells. Customers will just get used to this too.

[Rassah]

So if you Cross China, India (shutting down BTC), EU, USA taking over btc infrastructure, what is left? Sealand? sure the rest of the world can withstand a 51% attack.

Who the hell would spend billions on a 51% attack, and what the hell do they expect to get out of it? 51% attack doesn't automatically destroy bitcoin. At best, it lets the attacker double-spend. It doesn't change the rules of the network, since those are maintained by miners and wallets, and it doesn't even block transactions fromm going through, as there is a very easy fix for that.

USA and EU would propably rather shutdown Internet than lose control over Euro or Dollar.

That would be pretty fun to watch, as every single citizen in the country protests to the point where the politicians who did that are literally dragged out of their government buildings and shot. Though I doubt it would ever come to this, since politicians know they need votes to keep their office, and would rather get anonymous bitcoin donations than vote for laws to shut down the internet.

[thaaanos]

-snip-
I am talking on experience here. I live in F*** Greece, we are deflating for 4 years now. The only economists I know that think deflationary currency is a neat idea is Wolfgang schaeuble, and german banksters who sit on shitloads of Euros, You want to see the future of Bitcoin? look at Europe NOW.

I am  sorry to hear you are suffering from the economic tragedy that is Greece right now.  I have Greek friends and know how bad it is.

That being said, are you seriously suggesting the local 'deflation' you are experiencing is the cause of the problems?  When an economy is as crippled as Greece's I can understand why citizens would be crying out for their Central Bank (if you still had one) to be inflating your currency.  However, there are some who do not believe this is anything other than a 'sticking plaster' solution which provides temporary alleviation at the expense of savers.  

Of course if some of the dystopian predictions here come true Bitcoin being essentially deflationary won't do much just as the ECB refusing to inflate for Greece's sake doesn't appear to be helping Greece's situation right now.  However I find it a bit of a stretch to look to Greece to predict how Bitcoin will turn out.

As for appealing to the authorities of the numbers of economists who believe deflation to be bad it doesn't cut it for me sorry!

Savers? tell that to the Cypriots.... It's not a sticking plaster, it's just a stronger pedal that keeps you on the bicycle when it gets steeper, you only fall when you stop.
Besides It's not only Greece, Spain, Portugal, Italy they feel the burn too and soon the north, Greece was just the canary in the mines, the crisis origins lie with the Euro as a construct. But at least with Euro there is a slight possibility for policy change cause despite all there is room for discussions and maneuvres. In bitcoin it can be worse because a critical parameter is hardcoded with no hope of change, a single person no matter how smart made a decission for millions, that's what ires me in Bitcoin. And I ask you that, would you do it? would you made *any* decision that could affect millions based only in your judgement?
 

[Rassah]

The only way for a merchant to stay in bussiness is to offload the risk to ... B) producer to delay payment until sold.

This results in a regression of risk down the chain of producers, but the risk is ultimately taken on by the bank.
The initial money has to come from somewhere. In inflationary currency, the cash starts with the bank, and goes

Bank -> Producer A -> Producer B -> Merchant

then on the way back, the cash flows

Customer -> Merchant -> Producer B -> Producer A -> Bank

Point is, cash has to come from somewhere, and the bank is the risk taker, despite the final link in the chain, the Merchant, being where all the risk is. If the merchant fails to sell, everyone up the chain loses, too. In a deflationary system, instead of buying and holding inventory, and paying back for it after it sells, likely the bank will be funding the merchant, and the cash will go

Bank -> Merchant -> Producer B -> Producer A

then when product is sold, it will go

Customer -> Merchant -> Bank

This way, the bank knows exactly where it is placing its risk, and none of the producers up the line are at risk or depend on the merchant selling, since they get their cash upfront. Chances are, the merchant and the bank will be the same, or rather the merchant will be operating on savings instead of on debt.

I am talking on experience here. I live in F*** Greece, we are deflating for 4 years now.

The euro is not deflationary, so that's bullshit. Greece problem is not deflation, it's excessive borrowing.

And, indeed, if significant part of early adopters recognizes their ethical obligation to support philantropic causes...

Kisa, can you explain the ethics behind that statement?

[thaaanos]

Governments can - at any time - stop inflating their debt-based currencies and stop spending more than they take in. They have the upper hand in that any policy changes they make will ripple through the market on a large scale much faster than any alternative currency can impact the market or have such a large scale effect.

Part of the promise of Bitcoin is that it will eventually force governments to reform their own systems simply by presenting a better alternative to people. In order to compete and retain some semblance of power, governments will have to address the market conditions and become serious about reform, if only for the sake of self-preservation. If things were really looking like all fiat was going to go over the cliff of hyperinflation due to wealth pouring into alternatives, then they would have no choice but to engage in serious reform. Any such reform will help to stabilize national currencies and make them attractive enough to stem the tide of the nightmare scenario described by the OP. People will have time to adjust.

The threat of the use of force on a grand scale by governments is largely a paper tiger. It is only useful for them to use force at the margins, otherwise it becomes counter-productive to the survival of the regime itself. Any regime that goes all out with a show of force on a large part of the population at one time is setting itself up for failure because once you go that route you lose all propaganda value and even the masses are not fooled by your claims of legitimacy. You become ripe for overthrow.

The future currency game, I think, will be more like a chess game than an actual war. There will be ground gained and lost on both sides. If you consider that politics is a marketplace of ideas, and you understand that markets tend toward equilibrium, you can predict that forces on both sides will tend to balance over time. By balance I mean that both sides are always pushing back, and that tends to create short-term stability and predictability. It doesn't mean a 50/50 balance. It just means that the tension between them produces a balance one can quantify presently and predict in the short term. Once that state has lasted for a while, a new picture emerges of who's ahead and who's behind, but both are still pushing against each other. Then the opposing forces adjust their policies accordingly. It's a mistake to extrapolate present trends out indefinitely. Things tend to only go haywire in isolated spots, not in the big picture. So you might get a crazy dictator or an insane political system for brief periods of time in limited areas, but the political market is so wide that these aberrations typically do not propagate throughout the whole world.

The nightmare scenario is of course a tyrannical world-government which is not afraid of displaying an extreme show of force as a matter of policy because it loses its inhibition and thinks it has captured the queen in the grand chessboard of world politics, but it's difficult to see anything like that lasting long term. Ultimately, all these systems rest on the support of the people. They either actively support or acquiesce. But if you push too far, even those who would otherwise acquiesce are forced by the harsh circumstances to take a stand. The only reason for people to compromise with tyranny is if they see self-preservation in it. Once it becomes clear that the survival and comfort of a certain portion of the population is not predictably certain, then you can get an explosive push-back, and that's when revolutions take place.

You are persuming that goverments will go against their citizens' will against bitcoin? It will be their citizens that demand it.

[Rassah]

That being said, are you seriously suggesting the local 'deflation' you are experiencing is the cause of the problems?  When an economy is as crippled as Greece's I can understand why citizens would be crying out for their Central Bank (if you still had one) to be inflating your currency.  However, there are some who do not believe this is anything other than a 'sticking plaster' solution which provides temporary alleviation at the expense of savers.  

Savers? tell that to the Cypriots....

Did the confiscation of wealth in Cyprus from the savers make Cypriots better off? Cause op was saying at the expense of, and you seem to be disagreeing with something...

It's not a sticking plaster, it's just a stronger pedal that keeps you on the bicycle when it gets steeper, you only fall when you stop.
Besides It's not only Greece, Spain, Portugal, Italy they feel the burn too and soon the north, Greece was just the canary in the mines, the crisis origins lie with the Euro as a construct.

It's not the euro, it's deficit spending. You have two options: keep spending more than you take in, inflating currency, and continue until you hit hyperinflation and currency collapse, OR keep spending more than you take in, but have no methods of inflating currency, and hit a wall at which you can't spend any more, causing social program collapse. Or you could maybe not keep spending more than you take in. I think spending more than you take in is the problem here. The only difference between Greece that can't print its currency, and other countries that can, is how high of a bubble they can inflate before they explode.

In bitcoin it can be worse because a critical parameter is hardcoded with no hope of change, a single person no matter how smart made a decission for millions, that's what ires me in Bitcoin. And I ask you that, would you do it? would you made *any* decision that could affect millions based only in your judgement?

If I knew it was the right decision, sure, why not?

[thaaanos]

So if you Cross China, India (shutting down BTC), EU, USA taking over btc infrastructure, what is left? Sealand? sure the rest of the world can withstand a 51% attack.

Who the hell would spend billions on a 51% attack, and what the hell do they expect to get out of it? 51% attack doesn't automatically destroy bitcoin. At best, it lets the attacker double-spend. It doesn't change the rules of the network, since those are maintained by miners and wallets, and it doesn't even block transactions fromm going through, as there is a very easy fix for that.

It will be war dammit, your blockchain against ours.

USA and EU would propably rather shutdown Internet than lose control over Euro or Dollar.

That would be pretty fun to watch, as every single citizen in the country protests to the point where the politicians who did that are literally dragged out of their government buildings and shot. Though I doubt it would ever come to this, since politicians know they need votes to keep their office, and would rather get anonymous bitcoin donations than vote for laws to shut down the internet.

Well do you expect their citizens watch their hard earned assets vaporized so bitcoin whales come to scoop them up, and not demand their Gs to fence-double-firewall their net and if that fails to shutit down?

The only way for a merchant to stay in bussiness is to offload the risk to ... B) producer to delay payment until sold.

This results in a regression of risk down the chain of producers, but the risk is ultimately taken on by the bank.
The initial money has to come from somewhere. In inflationary currency, the cash starts with the bank, and goes

Bank -> Producer A -> Producer B -> Merchant

then on the way back, the cash flows

Customer -> Merchant -> Producer B -> Producer A -> Bank

Point is, cash has to come from somewhere, and the bank is the risk taker, despite the final link in the chain, the Merchant, being where all the risk is. If the merchant fails to sell, everyone up the chain loses, too. In a deflationary system, instead of buying and holding inventory, and paying back for it after it sells, likely the bank will be funding the merchant, and the cash will go

Bank -> Merchant -> Producer B -> Producer A

then when product is sold, it will go

Customer -> Merchant -> Bank

This way, the bank knows exactly where it is placing its risk, and none of the producers up the line are at risk or depend on the merchant selling, since they get their cash upfront. Chances are, the merchant and the bank will be the same, or rather the merchant will be operating on savings instead of on debt.

In bitcoin there is no Bank hence merchant opperates on savings which translate to goods that depreciate both against bitcoin as well as against "errosion" so why a merchant to even bother stock up? So the risk is eventually offloaded to either consumer or producer.
The producer will have to invest savings to equipment, assets, and general means of productions that depreciate, have to deal with merchands that promise to pay when and if they sell, takes all the risk of faults cause none will insure him, so why bother? He will wait for preorders and possible advance payments and only them begin producing. So the consumer will have to preorder/prepay goods at execive prices in his view and wait unknown time until delivery, so he will buy only what he absolutely needs: byebye to consumerism?
Hell Im in, if only I wasn't that brainwashed to need all the shit that are on TV

I am talking on experience here. I live in F*** Greece, we are deflating for 4 years now.

The euro is not deflationary, so that's bullshit. Greece problem is not deflation, it's excessive borrowing.

Right now within greece the functional problem is deflation. Borrowing is the kludge.

And, indeed, if significant part of early adopters recognizes their ethical obligation to support philantropic causes...

Kisa, can you explain the ethics behind that statement?

guilt?

That being said, are you seriously suggesting the local 'deflation' you are experiencing is the cause of the problems?  When an economy is as crippled as Greece's I can understand why citizens would be crying out for their Central Bank (if you still had one) to be inflating your currency.  However, there are some who do not believe this is anything other than a 'sticking plaster' solution which provides temporary alleviation at the expense of savers.  

Savers? tell that to the Cypriots....

Did the confiscation of wealth in Cyprus from the savers make Cypriots better off? Cause op was saying at the expense of, and you seem to be disagreeing with something...

Yes because the cypriots were *NOT* alleviated and *yet* the savers were fukced

It's not a sticking plaster, it's just a stronger pedal that keeps you on the bicycle when it gets steeper, you only fall when you stop.
Besides It's not only Greece, Spain, Portugal, Italy they feel the burn too and soon the north, Greece was just the canary in the mines, the crisis origins lie with the Euro as a construct.

It's not the euro, it's deficit spending. You have two options: keep spending more than you take in, inflating currency, and continue until you hit hyperinflation and currency collapse, OR keep spending more than you take in, but have no methods of inflating currency, and hit a wall at which you can't spend any more, causing social program collapse. Or you could maybe not keep spending more than you take in. I think spending more than you take in is the problem here. The only difference between Greece that can't print its currency, and other countries that can, is how high of a bubble they can inflate before they explode.

It was the euro that enabled the mercantilistic? attack on the south, just as bitcoin will create opportunities for new mercantilistic policies globaly, and that *never* ended in War.

In bitcoin it can be worse because a critical parameter is hardcoded with no hope of change, a single person no matter how smart made a decission for millions, that's what ires me in Bitcoin. And I ask you that, would you do it? would you made *any* decision that could affect millions based only in your judgement?

If I knew it was the right decision, sure, why not?
[/quote]

gee right any decision you ever make at any point is right (for that time only)

[thoughtfan]

Savers? tell that to the Cypriots....

Are you implying if I suggest it's not OK to rob savers by inflating a currency that it's OK to directly rob from their bank accounts?  If not, I don't get what you're saying?  As Rassah is pointing out there are actually more options than those you are putting forward.

Besides It's not only Greece, Spain, Portugal, Italy they feel the burn too and soon the north, Greece was just the canary in the mines,

That I am aware of.  Around London over the holidays I noticed how 20 years ago bar and serving staff were Australian, then South African.  Ten years ago more eastern European.  Now Italian and Spanish.  It is terrible the young people there have so few options other than to leave if they wish to work.  As for the root causes we'll have to disagree.

But at least with Euro there is a slight possibility for policy change cause despite all there is room for discussions and maneuvres. In bitcoin it can be worse because a critical parameter is hardcoded with no hope of change, a single person no matter how smart made a decission for millions...

Right.  And what ires you is what attracts others to Bitcoin.  It being hard wired from day 1 means everybody knows what the score is.  The 'disadvantage' is it offers no flexibility irrespective of economic circumstances.  The advantage is it can not be dabbled with supposedly 'for the good of the economy/people' usually at everybody's expense.  You don't like it?  Don't use it.  Support an alt or a fork.  I kinda like it and look forward to seeing the outcome

And I ask you that, would you do it? would you made *any* decision that could affect millions based only in your judgement?

I have no idea.  Unlike politicians and central bankers I would hate to be in the position to have to make those decisions.  Fortunately with Bitcoin neither I nor anyone else needs to make those decisions any more.  We all know the score from day one and can plan accordingly.

[thoughtfan]

It was the euro that enabled the mercantilistic? attack on the south....

Thank you for coming and commenting.  I have to admit I really struggle with in particular the Greek and Italian electorates' mentality.  I see now you truly believe your problems are caused by northern Europe and have nothing at all to do with decades of insane spending and deep political corruption in cahoots with the very wealthy whose activities were turned a blind eye to and who have by now escaped with their wealth and invested it in London properties.

Of course it was all the nasty industrial northern Europeans' fault!

[thaaanos]

Savers? tell that to the Cypriots....

Are you implying if I suggest it's not OK to rob savers by inflating a currency that it's OK to directly rob from their bank accounts?  If not, I don't get what you're saying?  As Rassah is pointing out there are actually more options than those you are putting forward.

I am refering to that the "stiking plaster" of inflation would hurt savers, and that the rapid deflation of Cypriot economy *saved* them

Besides It's not only Greece, Spain, Portugal, Italy they feel the burn too and soon the north, Greece was just the canary in the mines,

That I am aware of.  Around London over the holidays I noticed how 20 years ago bar and serving staff were Australian, then South African.  Ten years ago more eastern European.  Now Italian and Spanish.  It is terrible the young people there have so few options other than to leave if they wish to work.  As for the root causes we'll have to disagree.

well until we get to the root north taxpayers will bailout northern banks both blaming the south for being greedy

But at least with Euro there is a slight possibility for policy change cause despite all there is room for discussions and maneuvres. In bitcoin it can be worse because a critical parameter is hardcoded with no hope of change, a single person no matter how smart made a decission for millions...

Right.  And what ires you is what attracts others to Bitcoin.  It being hard wired from day 1 means everybody knows what the score is.  The 'disadvantage' is it offers no flexibility irrespective of economic circumstances.  The advantage is it can not be dabbled with supposedly 'for the good of the economy/people' usually at everybody's expense.  You don't like it?  Don't use it.  Support an alt or a fork.  I kinda like it and look forward to seeing the outcome

it ain't over till the fat lady sings. Would you really buy a car without steering wheel cause some guy sold you that the road is straight, and that way none can change direction at the expense of another?
But I seriously doubt that I will have the option off due to Network effect.

And I ask you that, would you do it? would you made *any* decision that could affect millions based only in your judgement?

I have no idea.  Unlike politicians and central bankers I would hate to be in the position to have to make those decisions.  Fortunately with Bitcoin neither I nor anyone else needs to make those decisions any more.  We all know the score from day one and can plan accordingly.

well satoshi did.

[justusranvier]

Using the after effects of a massive credit bubble to argue that deflation is harmful is as rational as using the existence of hangovers to argue that one should never stop drinking.

[thoughtfan]

And I ask you that, would you do it? would you made *any* decision that could affect millions based only in your judgement?

I have no idea.  Unlike politicians and central bankers I would hate to be in the position to have to make those decisions.  Fortunately with Bitcoin neither I nor anyone else needs to make those decisions any more.  We all know the score from day one and can plan accordingly.

well satoshi did.

Nope, he just made his creation as an experiment, putting into action his ideas that those who follow may chose to participate or not, you included.  I don't go with the car analogy because I don't believe a currency should steer itself around the 'corners' of an economy, rather that it is a tool that serves its purpose better for being predictable.  But you notice I don't state that as fact.  I don't know.  I look forward to finding out.  On the other hand you appear to be immovable and refusing to listen to any opinion other than your own.  Good luck

Oh, and whilst it is true no lone ranger is likely to be able to counter the network effect of Bitcoins if you have valid arguments and can persuade enough people (I suggest you engage differently or look elsewhere) there are plenty of options with different economic models e.g. Freicooin.  Go support them

[thaaanos]

It was the euro that enabled the mercantilistic? attack on the south....

Thank you for coming and commenting.  I have to admit I really struggle with in particular the Greek and Italian electorates' mentality.  I see now you truly believe your problems are caused by northern Europe and have nothing at all to do with decades of insane spending and deep political corruption in cahoots with the very wealthy whose activities were turned a blind eye to and who have by now escaped with their wealth and invested it in London properties.

Of course it was all the nasty industrial northern Europeans' fault!

lol as if Spain, Italy and Greece were born yesterday and all these problems you describe just suddently appeared the last decade and caused the crisis, while north is pristine clear without corruption and this is why they are in better shape, get real. Those problems are/were factored in in the economy for ages and took their toll, nobody claimed that it was optimal and it can be are why we can't put 2 and 2 together and find a way out of the hole we are in, It's not what put as there.
 
The cause is that when they created the euro it was not perfect, they did all they could do, and let future generations (of politicians) handle the problems as they arise. The rest is simply market dynamics, capital flowed from the north creating bubbles, entrenching trade deficits, and cheap debt postponing design faults to the future. Sounds familiar?

[thaaanos]

And I ask you that, would you do it? would you made *any* decision that could affect millions based only in your judgement?

I have no idea.  Unlike politicians and central bankers I would hate to be in the position to have to make those decisions.  Fortunately with Bitcoin neither I nor anyone else needs to make those decisions any more.  We all know the score from day one and can plan accordingly.

well satoshi did.

Nope, he just made his creation as an experiment, putting into action his ideas that those who follow may chose to participate or not, you included.  I don't go with the car analogy because I don't believe a currency should steer itself around the 'corners' of an economy, rather that it is a tool that serves its purpose better for being predictable.  But you notice I don't state that as fact.  I don't know.  I look forward to finding out.  On the other hand you appear to be immovable and refusing to listen to any opinion other than your own.  Good luck

Oh, and whilst it is true no lone ranger is likely to be able to counter the network effect of Bitcoins if you have valid arguments and can persuade enough people (I suggest you engage differently or look elsewhere) there are plenty of options with different economic models e.g. Freicooin.  Go support them

Sorry for beeing *maybe* pedanting but euro started as an experiment, so did the internet, the atomic bomb, but we all know by whom and to what ends. Conducting an experiment in the wild and after it goes viral you dissapear doesn't sound very responsible.

I for one like to always be in a position that maximizes my degrees of freedom. I can't understand the choice of pegging the parameters.
It reminds me of papers that start to create a model of reality and end up doing a fairly good job at it only to find the model too complex and unsolvable. Then in the conclusions they start simplifications, hidden assumptions, pegging parameters to make it solvable. But its not reality anymore. Here only to work bakwards get a solvable? simple model peg its parameters, make that a reality. But reality is known to be a bitch and will hack and slash.

And I have yet to listen to a single argument that deflation is good, all I hear is inflation is bad.

[thaaanos]

Using the after effects of a massive credit bubble to argue that deflation is harmful is as rational as using the existence of hangovers to argue that one should never stop drinking.

+ this,

While perpetual sobriety guarranties free beer

[BlueNote]

Part of the promise of Bitcoin is that it will eventually force governments to reform their own systems simply by presenting a better alternative to people. In order to compete and retain some semblance of power, governments will have to address the market conditions and become serious about reform, if only for the sake of self-preservation. If things were really looking like all fiat was going to go over the cliff of hyperinflation due to wealth pouring into alternatives, then they would have no choice but to engage in serious reform. Any such reform will help to stabilize national currencies and make them attractive enough to stem the tide of the nightmare scenario described by the OP. People will have time to adjust.

You are persuming that goverments will go against their citizens' will against bitcoin? It will be their citizens that demand it.

I'm not sure I understand what you mean. Are you saying that people will always support the government view that its systems are just fine and that alternatives like Bitcoin are the villains? You tell me. You say you're from Greece. Do Greeks think the government monetary and financial system is just fine?

[spooderman]

To the OP:

This thing about children being kidnapped. You're way paranoid. Bitcoin enters the fray. It does not replace everything in existence. Internet exists, yet people still buy books. Chat rooms exist, yet people still meet afk.

Your argument could be made by someone seeing the worlds first webcam and microphone thinking "no one will ever have a real person to person meeting again! Humans will forget what eachother feel/smell like! This will lead to the rise of robot looking machines who become intelligent and (the Matrix for the rest of this analogy).

You should (or maybe have) watch Adam Curtis' "The power of nightmares." In today's world, he who has the darkest imagination wins, or more specifically, gets government contracts.

You have nothing to worry about, or more accurately, nothing WORTH worrying about.

(Also, you say it's un-taxable, this is not true, every legit business would make its addresses known, and this would make it much HARDER for them to avoid tax (given that BTC is a public ledger.))

tl;dr you may not be wrong (although a little inaccurate), but you are a person who sees a glass that contains 50% air, 50% water, have decided that it's half full, and that someone will definitely drown as a result of its existence.

[Adrian-x]

Using the after effects of a massive credit bubble to argue that deflation is harmful is as rational as using the existence of hangovers to argue that one should never stop drinking.

+ this,

While perpetual sobriety guarranties free beer

I had to cross post after reading this : 

Dr Michael Hudson talks about the earliest attempts at
money:
http://www.youtube.com/watch?&v=yQZGv2xL-fw
Ancient Sumer and Babylon - money was created to allow ale to be drunk and
paid for later. What went wrong?

[kisa2005]

And, indeed, if significant part of early adopters recognizes their ethical obligation to support philantropic causes...

Kisa, can you explain the ethics behind that statement?

Well, what I imply is that philantropic attitudes could help to prevent democracy devolving into ochlocracy. With regards to ethics behind my statement, i am not that skilled in philosophy to answer this yet, apologies.

[thaaanos]

Part of the promise of Bitcoin is that it will eventually force governments to reform their own systems simply by presenting a better alternative to people. In order to compete and retain some semblance of power, governments will have to address the market conditions and become serious about reform, if only for the sake of self-preservation. If things were really looking like all fiat was going to go over the cliff of hyperinflation due to wealth pouring into alternatives, then they would have no choice but to engage in serious reform. Any such reform will help to stabilize national currencies and make them attractive enough to stem the tide of the nightmare scenario described by the OP. People will have time to adjust.

You are persuming that goverments will go against their citizens' will against bitcoin? It will be their citizens that demand it.

I'm not sure I understand what you mean. Are you saying that people will always support the government view that its systems are just fine and that alternatives like Bitcoin are the villains? You tell me. You say you're from Greece. Do Greeks think the government monetary and financial system is just fine?

No. Are you telling me that a bitcoin economy is going to remedy that?

[Rassah]

USA and EU would propably rather shutdown Internet than lose control over Euro or Dollar.

That would be pretty fun to watch, as every single citizen in the country protests to the point where the politicians who did that are literally dragged out of their government buildings and shot.

Well do you expect their citizens watch their hard earned assets vaporized so bitcoin whales come to scoop them up, and not demand their Gs to fence-double-firewall their net and if that fails to shutit down?

In our current system, citizens don't have hard earned assets. They have tons of debt. So they won't care. And those who do have hard earned assets in the form of cash will likely keep converting them to dollars. The only ones who will be SEVERELY hurt by this are the lenders holding the debts of the citizens, since fiat losing value against bitcoins and eventually inflating like crazy means citizen's debt is shrinking into nothing. Citizens will support this, wealthy asset holders who know what they are doing will support it, and banks who lend money to citizens will get screwed, if not wiped out.

The only way for a merchant to stay in bussiness is to offload the risk to ... B) producer to delay payment until sold.

This results in a regression of risk down the chain of producers, but the risk is ultimately taken on by the bank.
...
Chances are, the merchant and the bank will be the same, or rather the merchant will be operating on savings instead of on debt.

In bitcoin there is no Bank hence merchant opperates on savings which translate to goods that depreciate both against bitcoin as well as against "errosion" so why a merchant to even bother stock up? So the risk is eventually offloaded to either consumer or producer.
The producer will have to invest savings to equipment, assets, and general means of productions that depreciate, have to deal with merchands that promise to pay when and if they sell, takes all the risk of faults cause none will insure him, so why bother? He will wait for preorders and possible advance payments and only them begin producing. So the consumer will have to preorder/prepay goods at execive prices in his view and wait unknown time until delivery, so he will buy only what he absolutely needs: byebye to consumerism?
Hell Im in, if only I wasn't that brainwashed to need all the shit that are on TV

1) There can still be banks. Loans will just have to be short-term, and for things that are actually worth something, as opposed to for anything at all just to beat inflation. Less garbage for sale, more durable high-quality products, and less impact on environment from resource use and garbage. 2) Just In Time production is already almost a gospel in our economy. Inventory depreciates way faster than money inflates already, so it won't be that much of a difference if that inflation changes to deflation. 3) Once deflation is stable, preorders, or sale prices, can be set to account for that deflation. Also, if you preorder, aka invest, in someone doing something for you now with inflationary money, the money they receive will keep losing value, and they will be working for less and less as time goes on. If you invest in someone using a deflationary currency, such as giving 20BTC to OpenTransaction developers, as time goes on, that 20BTC ($2,000 at the time) will keep going up in value, giving them more and more to work with if they only use small amounts of it at a time.

I am talking on experience here. I live in F*** Greece, we are deflating for 4 years now.

The euro is not deflationary, so that's bullshit. Greece problem is not deflation, it's excessive borrowing.

Right now within greece the functional problem is deflation. Borrowing is the kludge.

Deflation is a shrinking amount of currency, or the economy expanding faster than the money supply (depending on whom you ask). Euro is not shrinking in supply, and Greece's economy is not expanding at all, from what I know. So your problem is that Greece took on too many loans, became way too risky, and now no one wants to lend anyone any more. The problem is entirely from debt and it's risk, not from any money supply issues (deflation).

Savers? tell that to the Cypriots....

Did the confiscation of wealth in Cyprus from the savers make Cypriots better off? Cause op was saying at the expense of, and you seem to be disagreeing with something...

Yes because the cypriots were *NOT* alleviated and *yet* the savers were fukced

That's what thoughtfan was saying. Taking money from savings to pay for government's debt mistakes doesn't help anyone, especially not the savers.

It was the euro that enabled the mercantilistic? attack on the south, just as bitcoin will create opportunities for new mercantilistic policies globaly, and that *never* ended in War.

Actually, it was inflationary currency and easy credit that enabled those things.
You were asking for anyone to say it, so I will: Deflation is good, inflation is bad:

In an inflationary economy, it is cheaper to borrow than to save. It's better to buy something now with a loan, and pay the loan off over time, since even though you are maying more in numbers, you are paying less in actual value. A $600 a month mortgage on a new house now will feel like a $250 a month mortgage 30 years from now. As a result, we now have an economy where 3/4th of people who reach age of 65 have less than $100,000 in their savings and retirement (making them dependent on government), average credit card debt is around $15,000 per person, almost no one has a positive net worth (they owe more than they have), and governments are to the point where most of their tax income is going to pay off debt instead of to pay for infrastructure and actual government services. I would even propose that much of the enormous economic growth over the last 50 years is fake, sustained by borrowiing that will have to be repaid later, and if it can't be, will result in the economies of the governments with massive borrowing dropping right back down to where they would be if no one ever borrowed (i.e. to the level of the country's net worth).
On the other hand, in a deflationary economy, people are incentivised to save and become self-sufficient, instead of relying on government. People would likely be more picky in what they spend their money on, and won't be buying as much. Yes, that will slow our economy considerably compared to what it is in our inflationary system, but as I mentioned above, our current booming inflationary economy many not be "real" to begin with, and may be a giant cycle of global-sized boom and bust. We're just now getting to the bust. In a deflationary economy, there will be booms and busts as well, but more frequent, and much more shallow. Plus less coonsumerism will be much better for the environment. Oh, and don't forget that poor people don't have access to the stock market. Cash is their only means of saving and "investing" for the future. Right now, our inflationary system is robbing their wealth, and giving it to the banks that "print" the new money. A deflationary system will actually allow many poor people to save, invest, and get themselves out of poverty.

[Wekkel]

A major aspect of inflationary policies is the ability of politicians to tax fake asset appreciations. Consider a house that goes up in value from 100 to 200 due to inflation. The government coyld chose to tax the profit of 200-100 upon a sale while nothing of value was created.

[Misesian]

And, indeed, if significant part of early adopters recognizes their ethical obligation to support philantropic causes...

Kisa, can you explain the ethics behind that statement?

Well, what I imply is that philantropic attitudes could help to prevent democracy devolving into ochlocracy. With regards to ethics behind my statement, i am not that skilled in philosophy to answer this yet, apologies.

Democracy will always devolve into ochlocracy (actually it's the same thing) and I believe philanthropic attitudes is one of the reason why that happens. All politicians have philanthropic attitudes especially when it's with taxpayer money, they love giving money to the poor in exchange for their votes.

[thaaanos]

USA and EU would propably rather shutdown Internet than lose control over Euro or Dollar.

That would be pretty fun to watch, as every single citizen in the country protests to the point where the politicians who did that are literally dragged out of their government buildings and shot.

Well do you expect their citizens watch their hard earned assets vaporized so bitcoin whales come to scoop them up, and not demand their Gs to fence-double-firewall their net and if that fails to shutit down?

In our current system, citizens don't have hard earned assets. They have tons of debt. So they won't care. And those who do have hard earned assets in the form of cash will likely keep converting them to dollars. The only ones who will be SEVERELY hurt by this are the lenders holding the debts of the citizens, since fiat losing value against bitcoins and eventually inflating like crazy means citizen's debt is shrinking into nothing. Citizens will support this, wealthy asset holders who know what they are doing will support it, and banks who lend money to citizens will get screwed, if not wiped out.

It may be a cultural gap, but in Greece most households are invested in their own house first and in cash second, and believe me they had a hard time aquiring that asset especially in the Euro bubble. Our experience even before the crisis was that Euro was expensive and questioned the sustainability, but we trusted the powers that be especially EU that they had it under control and gave little attention, we used to call it EU-Autopilot. So when the crisis came if we inflated the economy "sticking plaster" we would have all assets and debts equally loosing value and a balance would be kept while diverting value to promote growth. Intead we tried to deflate the economy and the result is that while assets lost value (and in the cypriot case even the savings), while the debts are not only stable but mounting as goverment increased taxation. So if we now magicaly switch to bitcoin even at a constant rate, situation will not revert only accelarate.
BTW Banks dont have reason/opportunity to exist in an deflationary economy anyway.

The only way for a merchant to stay in bussiness is to offload the risk to ... B) producer to delay payment until sold.

This results in a regression of risk down the chain of producers, but the risk is ultimately taken on by the bank.
...
Chances are, the merchant and the bank will be the same, or rather the merchant will be operating on savings instead of on debt.

In bitcoin there is no Bank hence merchant opperates on savings which translate to goods that depreciate both against bitcoin as well as against "errosion" so why a merchant to even bother stock up? So the risk is eventually offloaded to either consumer or producer.
The producer will have to invest savings to equipment, assets, and general means of productions that depreciate, have to deal with merchands that promise to pay when and if they sell, takes all the risk of faults cause none will insure him, so why bother? He will wait for preorders and possible advance payments and only them begin producing. So the consumer will have to preorder/prepay goods at execive prices in his view and wait unknown time until delivery, so he will buy only what he absolutely needs: byebye to consumerism?
Hell Im in, if only I wasn't that brainwashed to need all the shit that are on TV

1) There can still be banks. Loans will just have to be short-term, and for things that are actually worth something, as opposed to for anything at all just to beat inflation. Less garbage for sale, more durable high-quality products, and less impact on environment from resource use and garbage. 2) Just In Time production is already almost a gospel in our economy. Inventory depreciates way faster than money inflates already, so it won't be that much of a difference if that inflation changes to deflation. 3) Once deflation is stable, preorders, or sale prices, can be set to account for that deflation. Also, if you preorder, aka invest, in someone doing something for you now with inflationary money, the money they receive will keep losing value, and they will be working for less and less as time goes on. If you invest in someone using a deflationary currency, such as giving 20BTC to OpenTransaction developers, as time goes on, that 20BTC ($2,000 at the time) will keep going up in value, giving them more and more to work with if they only use small amounts of it at a time.

Nope forget about it can<>will, Banks are non entities in the Bitcoin economy.
Christ you cant fucking JIT FOOD, OIL, get out of IT Industry mindset, there are TIME contrains that work against you in that model, that will get populations freezing,starving waiting for philanthropy by the OT devs.
What Incentive is there to JIT produce now rather than wait a day and screw the customers over? multiply that risk against the supply chain nodes and your product price shoots up. Add now a production Cycle into the model and watch it shrink away.
The economy is not a planar graph to distribute the risk evenly accross the chain, It contains cycles, in that model all those cycles will be negative loops and phased out one by one until everyone is disconnected and becoming a single node of Producer-Consumer or a Planar graph with one way flow of capital : Mercantilism, expect peace to ensue

I am talking on experience here. I live in F*** Greece, we are deflating for 4 years now.

The euro is not deflationary, so that's bullshit. Greece problem is not deflation, it's excessive borrowing.

Right now within greece the functional problem is deflation. Borrowing is the kludge.

Deflation is a shrinking amount of currency, or the economy expanding faster than the money supply (depending on whom you ask). Euro is not shrinking in supply, and Greece's economy is not expanding at all, from what I know. So your problem is that Greece took on too many loans, became way too risky, and now no one wants to lend anyone any more. The problem is entirely from debt and it's risk, not from any money supply issues (deflation).

we have shrinking amount of Euros within greece as we have
1. Savings flights (especialy after what happend in Cyprus)
2. Investment flight (none is willing to invest with a negative outlook)
3. Increasing Taxation to cover external loans.
4. No new internal loans by the banks as they are now zombies: no fractional reserve induced inflation (No savings, To many loans)

All those bailout money simply went to debt restructuring, nothing ended up inside Greek economy. Do the math

Savers? tell that to the Cypriots....

Did the confiscation of wealth in Cyprus from the savers make Cypriots better off? Cause op was saying at the expense of, and you seem to be disagreeing with something...

Yes because the cypriots were *NOT* alleviated and *yet* the savers were fukced

That's what thoughtfan was saying. Taking money from savings to pay for government's debt mistakes doesn't help anyone, especially not the savers.

No he was saying that inflating the economy alleviates the Debtors at the expense of the Savers, which is not what happened in Cyprus
as they got deflated and both were screwed

It was the euro that enabled the mercantilistic? attack on the south, just as bitcoin will create opportunities for new mercantilistic policies globaly, and that *never* ended in War.

Actually, it was inflationary currency and easy credit that enabled those things.
You were asking for anyone to say it, so I will: Deflation is good, inflation is bad:

*On Average* for the Total of the Eurozone it inflates by a small amount. Unluckily the Variation is greater.
Faulty EU treaties/governance, easy credit combined with a empoverished population, lack of due diligence by german banks, corrupted greek politicians hand in hand with corrupt bussiness practices by german firms, persistant greek nepotism both in public and private sector, aggressive takeover and euthanasia of local industries, spaghetti tax laws, FUDed local/foreign investors, Greek-Turkey arms race.
Nevermind the how and why, right now we are deflating and the feeling is that of misery, melancholy, uncertainty and pessimism.

In an inflationary economy, it is cheaper to borrow than to save. It's better to buy something now with a loan, and pay the loan off over time, since even though you are maying more in numbers, you are paying less in actual value. A $600 a month mortgage on a new house now will feel like a $250 a month mortgage 30 years from now. As a result, we now have an economy where 3/4th of people who reach age of 65 have less than $100,000 in their savings and retirement (making them dependent on government), average credit card debt is around $15,000 per person, almost no one has a positive net worth (they owe more than they have), and governments are to the point where most of their tax income is going to pay off debt instead of to pay for infrastructure and actual government services. I would even propose that much of the enormous economic growth over the last 50 years is fake, sustained by borrowiing that will have to be repaid later, and if it can't be, will result in the economies of the governments with massive borrowing dropping right back down to where they would be if no one ever borrowed (i.e. to the level of the country's net worth).
On the other hand, in a deflationary economy, people are incentivised to save and become self-sufficient, instead of relying on government. People would likely be more picky in what they spend their money on, and won't be buying as much. Yes, that will slow our economy considerably compared to what it is in our inflationary system, but as I mentioned above, our current booming inflationary economy many not be "real" to begin with, and may be a giant cycle of global-sized boom and bust. We're just now getting to the bust. In a deflationary economy, there will be booms and busts as well, but more frequent, and much more shallow. Plus less coonsumerism will be much better for the environment. Oh, and don't forget that poor people don't have access to the stock market. Cash is their only means of saving and "investing" for the future. Right now, our inflationary system is robbing their wealth, and giving it to the banks that "print" the new money. A deflationary system will actually allow many poor people to save, invest, and get themselves out of poverty.

Sure if you can withstand 80% UNEMPLOYMENT, Total collapse of the Middle class, Urban centers, Industry, and Return of the Feudal Landlords.
The Feud is a perfect economic system lets go back to it.

Viva la BTC Revolution - Aristocrats no dead

[Bitcoinpro]

SPAM THREAD THE ONLY THING DYSTOPIAN IS THE OP

[thaaanos]

And, indeed, if significant part of early adopters recognizes their ethical obligation to support philantropic causes...

Kisa, can you explain the ethics behind that statement?

Well, what I imply is that philantropic attitudes could help to prevent democracy devolving into ochlocracy. With regards to ethics behind my statement, i am not that skilled in philosophy to answer this yet, apologies.

Democracy will always devolve into ochlocracy (actually it's the same thing) and I believe philanthropic attitudes is one of the reason why that happens. All politicians have philanthropic attitudes especially when it's with taxpayer money, they love giving money to the poor in exchange for their votes.

Maybe instead of trying to fix the economic mess, it's better to start with the political? Maybe  Instead of the Bitcoin revolution the world need the BitVote revolution... just saying

[thaaanos]

SPAM THREAD THE ONLY THING DYSTOPIAN IS THE OP

SPAM? no
TROLL? maybe
OP DYSTOPIAN? maybe
YOU SIR DYSOPIAN? Definetly

[dynodog]

Great piece.  I feel that your predictions will play out regardless of bitcoin, as these drowning-in-debt sovereigns will eventually implode. I agree that wealth will run to something, whether that's bitcoin, some other virtual currency, or precious metals, etc.  I wonder more about what future will exist for my children as opposed to the elderly.  These are truly the very best of times (the best that have ever existed IMO) - and that is due to living on borrowed money.  When the debt bubble implodes, and the chickens come home to roost as eventually they must, and there is now no one left to do the bailing out, the future will probably be very ugly, and nothing like we have it now. 

[Adrian-x]

Maybe instead of trying to fix the economic mess, it's better to start with the political? Maybe  Instead of the Bitcoin revolution the world need the BitVote revolution... just saying

We have just that, if you think Bitcoin solves problems, vote for it, you can also buy votes, in this P2P system.  He who has the majority vote can have influence.

Don’t like the idea of Bitcoin, abstain from supporting the system. Let it shrivel and die on its own.

Fabricating and supporting stories of doom and gloom to stop people contributing the Bitcoin system is a political move, fortunately it carries no weight in the Bitcoin meme.

[Bitcoinpro]

SPAM THREAD THE ONLY THING DYSTOPIAN IS THE OP

SPAM? no
TROLL? maybe
OP DYSTOPIAN? maybe
YOU SIR DYSOPIAN? Definetly

you forgot the T i think unless your making up a new word  

and just to reiterate my point the OP makes no sense at all~!

[thaaanos]

SPAM THREAD THE ONLY THING DYSTOPIAN IS THE OP

SPAM? no
TROLL? maybe
OP DYSTOPIAN? maybe
YOU SIR DYSOPIAN? Definetly

you forgot the T i think unless your making up a new word  

and just to reiterate my point the OP makes no sense at all~!

beeing Greek I have it easy...
here you are http://www.medilexicon.com/medicaldictionary.php?t=27323

[Bitcoinpro]

SPAM THREAD THE ONLY THING DYSTOPIAN IS THE OP

SPAM? no
TROLL? maybe
OP DYSTOPIAN? maybe
YOU SIR DYSOPIAN? Definetly

you forgot the T i think unless your making up a new word  

and just to reiterate my point the OP makes no sense at all~!

beeing Greek I have it easy...
here you are http://www.medilexicon.com/medicaldictionary.php?t=27323

Bitcoin Is Utopioan 

[thaaanos]

Maybe instead of trying to fix the economic mess, it's better to start with the political? Maybe  Instead of the Bitcoin revolution the world need the BitVote revolution... just saying

We have just that, if you think Bitcoin solves problems, vote for it, you can also buy votes, in this P2P system.  He who has the majority vote can have influence.

Don’t like the idea of Bitcoin, abstain from supporting the system. Let it shrivel and die on its own.

Fabricating and supporting stories of doom and gloom to stop people contributing the Bitcoin system is a political move, fortunately it carries no weight in the Bitcoin meme.

So your counsel is Bystander apathy? because of strong Groupthink incited by a Cash cow that will eventually lead to Escalation of commitment?

[Rassah]

Intead we tried to deflate the economy and the result is that while assets lost value (and in the cypriot case even the savings), while the debts are not only stable but mounting as goverment increased taxation. So if we now magicaly switch to bitcoin even at a constant rate, situation will not revert only accelarate.

So your government tried to do excessive lending in a deflationary economy, and got burned. Why is anyone surprised?

BTW Banks dont have reason/opportunity to exist in an deflationary economy anyway.

Banks can provide extra security, or can provide investment services. People will just have to specifically state their intent to invest money in a possibly risky venture, as opposed to being told that they are putting money into safe savings accounts, while banks gamble with them without telling anyone.

1) There can still be banks. Loans will just have to be short-term, and for things that are actually worth something...
2) Just In Time production is already almost a gospel in our economy...
3) Once deflation is stable, preorders, or sale prices, can be set to account for that deflation...

Nope forget about it can<>will, Banks are non entities in the Bitcoin economy.
Christ you cant fucking JIT FOOD, OIL, get out of IT Industry mindset, there are TIME contrains that work against you in that model, that will get populations freezing, starving waiting for philanthropy by the OT devs.

Food is even more of a JIT thing that IT. IT takes years to develop (build new manufacturing plants), and takes months to become obsolete, while food takes months to grow, and spoils within weeks. With food, you also constantly have to adjust between growing too much, and letting it go to waste, or growing too little, and not having enough. Luckily, we've mostly had problems with the former.
What time constraints are you talking about exactly?

What Incentive is there to JIT produce now rather than wait a day and screw the customers over?

A few. If you borrowed money to produce, your loan is getting more expensive to pay back. If you already produced the components that go into the final product, you don't want them sitting around losing value. And finally, if you don't produce now, your competitors will.

The economy is not a planar graph to distribute the risk evenly accross the chain, It contains cycles, in that model all those cycles will be negative loops and phased out one by one until everyone is disconnected and becoming a single node of Producer-Consumer or a Planar graph with one way flow of capital : Mercantilism, expect peace to ensue

Sorry, no idea what you are walking about. What cycles? (annual, buy/sell, borrow/repay?) What negative loops? Caused by what? Disconnected from what?

Right now within greece the functional problem is deflation. Borrowing is the kludge.

Deflation is a shrinking amount of currency, or the economy expanding faster than the money supply (depending on whom you ask). Euro is not shrinking in supply, and Greece's economy is not expanding at all, from what I know. So your problem is that Greece took on too many loans, became way too risky, and now no one wants to lend anyone any more.

we have shrinking amount of Euros within greece as we have
1. Savings flights (especialy after what happend in Cyprus)

Why are people taking their savings out of the country? Are they expecting that Greece will try to pay off government debt by seizing savings? If that's the case, I think bitcoin would be a HUGE benefit, since even though it's deflationary, it will keep the money in Greece

2. Investment flight (none is willing to invest with a negative outlook)

Isn't this also from excessive risk, both from concern that investments will be taken or nationalized, and from concern that too much was borrowed and it's risky to lend any more?

3. Increasing Taxation to cover external loans.

More debt-related issues...

4. No new internal loans by the banks as they are now zombies: no fractional reserve induced inflation (No savings, To many loans)

And again...

All those bailout money simply went to debt restructuring, nothing ended up inside Greek economy. Do the math

Math says your problem is 100% governmentdebt related, not deflation or inflation related. From what you describe, deflation is just a symptom of fear of future government policy. Get the government and the gov debt out, and outside investment will have no reason to stay out, and neither will savers have a reason to get their money out.

That's what thoughtfan was saying. Taking money from savings to pay for government's debt mistakes doesn't help anyone, especially not the savers.

No he was saying that inflating the economy alleviates the Debtors at the expense of the Savers, which is not what happened in Cyprus
as they got deflated and both were screwed

Inflating the economy (printing more money and making it worth less) DOES alleviate debtors (who's nominal loans are now worth less than before) at the expense of savers (who's nominal cash savings are nor worth less than before). That did not happen in Cyprus, as they didn't inflate. They simply took money from savers, and used it to pay their government debt's, not everyone's. I am sure if Greek government took money from savers, and used it to pay your debt instead of it's own, you are a debtor would feel alleviated, at the expense of the savers they took it from.

You were asking for anyone to say it, so I will: Deflation is good, inflation is bad:

In an inflationary economy, it is cheaper to borrow than to save....
On the other hand, in a deflationary economy, people are incentivised to save and become self-sufficient, instead of relying on government...

Sure if you can withstand 80% UNEMPLOYMENT, Total collapse of the Middle class, Urban centers, Industry, and Return of the Feudal Landlords.

Why would there be 80% unemployment? If you can hire people at any wage you want, you will hire them. Everyone always needs something done. As for middle class, the opposite will happen. Right now poor class stays poor, because they can't save or do anything to get out. All they can do is work 8+ hours a day and buy everything on credit, and that's it. With deflation, their savings will start to actually add up to something, and they will be able to move to middle class much easier. When has economy collapsed from just deflation alone? (Great Depression was a debt spiral spurned on by deflation, just as your situation is a debt spiral spurned on by somewhat of a deflation).

[thaaanos]

Intead we tried to deflate the economy and the result is that while assets lost value (and in the cypriot case even the savings), while the debts are not only stable but mounting as goverment increased taxation. So if we now magicaly switch to bitcoin even at a constant rate, situation will not revert only accelarate.

So your government tried to do excessive lending in a deflationary economy, and got burned. Why is anyone surprised?

Goverment tried to deflate  the economy, the technical term they used was "Internal devaluation", and got burned.

BTW Banks dont have reason/opportunity to exist in an deflationary economy anyway.

Banks can provide extra security, or can provide investment services. People will just have to specifically state their intent to invest money in a possibly risky venture, as opposed to being told that they are putting money into safe savings accounts, while banks gamble with them without telling anyone.

I recall the advice that if you dont have your bitcoins in your wallet, they are not your own. Why would anyone want to keep his bitcoins in a Bank?I thought the whole point of Bitcoin hype was to get rid of banks anyway.
So what we are only left is Investment Brokers : Investment Banks, Hedge Funds : The reason we are in this mess.

1) There can still be banks. Loans will just have to be short-term, and for things that are actually worth something...
2) Just In Time production is already almost a gospel in our economy...
3) Once deflation is stable, preorders, or sale prices, can be set to account for that deflation...

Nope forget about it can<>will, Banks are non entities in the Bitcoin economy.
Christ you cant fucking JIT FOOD, OIL, get out of IT Industry mindset, there are TIME contrains that work against you in that model, that will get populations freezing, starving waiting for philanthropy by the OT devs.

Food is even more of a JIT thing that IT. IT takes years to develop (build new manufacturing plants), and takes months to become obsolete, while food takes months to grow, and spoils within weeks. With food, you also constantly have to adjust between growing too much, and letting it go to waste, or growing too little, and not having enough. Luckily, we've mostly had problems with the former.
What time constraints are you talking about exactly?

Ok you are obviously detached from the food industry...
Trees, Vines, Livestock. you know waiting things to grow... Unless your plan is to only eat bread and noodles...
Not to talk about efficiency even, JIT means that you constanly flush the pipelines, I guess you know what that means...
If not ask a fabric manufacturer this question "Do you shut down machines for repairs if your product has faults?" take a wild guess at the answer.

What Incentive is there to JIT produce now rather than wait a day and screw the customers over?

A few. If you borrowed money to produce, your loan is getting more expensive to pay back. If you already produced the components that go into the final product, you don't want them sitting around losing value. And finally, if you don't produce now, your competitors will.

a lot of unbased Ifs in this statement,
You cant borrow money
You will not have already produced/stocked/procured/preordered/repayed the said components
You have a contract/advance they cant go to competitors

The economy is not a planar graph to distribute the risk evenly accross the chain, It contains cycles, in that model all those cycles will be negative loops and phased out one by one until everyone is disconnected and becoming a single node of Producer-Consumer or a Planar graph with one way flow of capital : Mercantilism, expect peace to ensue

Sorry, no idea what you are walking about. What cycles? (annual, buy/sell, borrow/repay?) What negative loops? Caused by what? Disconnected from what?

Your assumption is that goods flow from A -> B accross a chain right? so you can hedge amortize or whatever the risk, deflation etc
the problem with chains is you know "the strength of the chain ...."
What happens if nodes accross that chain start to fail on deliveries, how can that happen?

Lets just say that a Coal provider needs a constant supply of steel machinery, A Steel Provider needs a constant supply of coal, without stocking up resources, not mentioning workforce here, they will quickly be deadlocked waiting for some external energy (money) to kickstart them. So In order to get a just a single steel pin, you have everytime to pay upfront the cost of kickstarting the whole coal-steel industry.
In simple words economies of scale rely on full Buffers, which you have just made uneconomic to maintain.
What is left ? want to have a pin?, make it yourself. Self-Production aka Disconnected.

Right now within greece the functional problem is deflation. Borrowing is the kludge.

Deflation is a shrinking amount of currency, or the economy expanding faster than the money supply (depending on whom you ask). Euro is not shrinking in supply, and Greece's economy is not expanding at all, from what I know. So your problem is that Greece took on too many loans, became way too risky, and now no one wants to lend anyone any more.

we have shrinking amount of Euros within greece as we have
1. Savings flights (especialy after what happend in Cyprus)

Why are people taking their savings out of the country? Are they expecting that Greece will try to pay off government debt by seizing savings? If that's the case, I think bitcoin would be a HUGE benefit, since even though it's deflationary, it will keep the money in Greece

2. Investment flight (none is willing to invest with a negative outlook)

Isn't this also from excessive risk, both from concern that investments will be taken or nationalized, and from concern that too much was borrowed and it's risky to lend any more?

3. Increasing Taxation to cover external loans.

More debt-related issues...

4. No new internal loans by the banks as they are now zombies: no fractional reserve induced inflation (No savings, To many loans)

And again...

All those bailout money simply went to debt restructuring, nothing ended up inside Greek economy. Do the math

Math says your problem is 100% governmentdebt related, not deflation or inflation related. From what you describe, deflation is just a symptom of fear of future government policy. Get the government and the gov debt out, and outside investment will have no reason to stay out, and neither will savers have a reason to get their money out.

Debt related, Deflation inducing.
To sum up we agree that Greece is in Deflation ok?

That's what thoughtfan was saying. Taking money from savings to pay for government's debt mistakes doesn't help anyone, especially not the savers.

No he was saying that inflating the economy alleviates the Debtors at the expense of the Savers, which is not what happened in Cyprus
as they got deflated and both were screwed

Inflating the economy (printing more money and making it worth less) DOES alleviate debtors (who's nominal loans are now worth less than before) at the expense of savers (who's nominal cash savings are nor worth less than before). That did not happen in Cyprus, as they didn't inflate. They simply took money from savers, and used it to pay their government debt's, not everyone's. I am sure if Greek government took money from savers, and used it to pay your debt instead of it's own, you are a debtor would feel alleviated, at the expense of the savers they took it from.

We agree yes. So inflating would be a better option as at least Debtors would be alleviated, because savers are screwed anyway right?
No in greece they use more indirect ways Taxation (you see we opted for the slow Blues instead of Doom Metal, we are more romantic people)

You were asking for anyone to say it, so I will: Deflation is good, inflation is bad:

In an inflationary economy, it is cheaper to borrow than to save....
On the other hand, in a deflationary economy, people are incentivised to save and become self-sufficient, instead of relying on government...

Sure if you can withstand 80% UNEMPLOYMENT, Total collapse of the Middle class, Urban centers, Industry, and Return of the Feudal Landlords.

Why would there be 80% unemployment? If you can hire people at any wage you want, you will hire them. Everyone always needs something done. As for middle class, the opposite will happen. Right now poor class stays poor, because they can't save or do anything to get out. All they can do is work 8+ hours a day and buy everything on credit, and that's it. With deflation, their savings will start to actually add up to something, and they will be able to move to middle class much easier. When has economy collapsed from just deflation alone? (Great Depression was a debt spiral spurned on by deflation, just as your situation is a debt spiral spurned on by somewhat of a deflation).

I just pulled that number out off my rear, at this point I am entitled to some magic, At least I am not stating that BTC will end up worthing millions...
With deflation everyone gets lazy and postpones to the future, ventures, investments, cunsumption. Do you find that healthy for the labour market?
Why hire personel NOW, when you can hire personel when you get an order even a preorder/advance, why consume now but when you get a job? shy even spend? just Hodl!
The poor... Ah the poor will start to mine bitcoins! oh wait they dont have asics bummer. They cant even afford power as power is now *based* on bitcoin's value, there is not enough anyway... BTC miners eat it all up....
So they will stay poor but now without credit, working by the minute, paid only after the customer had the good (regardless of advances), without welfare, power, sure maybe they can at least sleep warmly enough on  faveles near the Miners's Heat Vents. Dreaming Red Dreams.

[Rassah]

So your government tried to do excessive lending in a deflationary economy, and got burned. Why is anyone surprised?

Goverment tried to deflate  the economy, the technical term they used was "Internal devaluation", and got burned.

Internal Devaluation is functionally the same thing as inflation. I.e. opposite of deflation.

I recall the advice that if you dont have your bitcoins in your wallet, they are not your own. Why would anyone want to keep his bitcoins in a Bank?

In case of investment, banks can manage inestments, including looking for good places to invest, and making sure what is owed is paid back to them, much better than individuals. Regarding security, having all your welath at home. if you have a lot of it, is not very safe, since it opens you up to robbery and torture to try to get you to reveal your password. Banks in the future may use a multi-signature system, where they only keep one of the signatures required to spend your bitcoin, and block any transactions that are over the daily limit or that they deem suspicious, without your consent. It's a lot harder to steal money from you when it requires taking you into a secured building with armed guards, just to get the second half of your password.

So what we are only left is Investment Brokers : Investment Banks, Hedge Funds : The reason we are in this mess.

The specific reason we are in this mess is because investment manbs and savings banks were one and the same. People were putting money into savings, thinking their money was safe and will not be used for extremely risky investments, but banks used it for that, anyway. This meant that people essentially gambled their money on high risk investments without being told about it, and had to be bailed out, otherwise they would have lost all their savings. With bitcoin we can decouple savings and investments, where investment banks and hedge funds will be specifically that, and anyone putting money into those will know that there are risks.

Food is even more of a JIT thing that IT. IT takes years to develop (build new manufacturing plants), and takes months to become obsolete, while food takes months to grow, and spoils within weeks.

Ok you are obviously detached from the food industry...

Possibly. I admit I don't have much experience in those businesses...

Trees, Vines, Livestock. you know waiting things to grow... Unless your plan is to only eat bread and noodles...

What about them? They are goods that have a very strong demand, so you can ask for higher price when they have actually finished growing. (remember, if deflation is fairly constant, everyone can plan for it and adjust prices accordingly)

Not to talk about efficiency even, JIT means that you constanly flush the pipelines, I guess you know what that means...

It means you keep as little inventory as possible, and thus as less debt as possible. You only spend (or borrow) for the couple of items you were asked to produce, and pay back the loan in full almost right away, since you don't have anything sitting around.

If not ask a fabric manufacturer this question "Do you shut down machines for repairs if your product has faults?" take a wild guess at the answer.

Yes they do? What's your point? You don't take out loans on products that don't exist because you are not producing them.

What Incentive is there to JIT produce now rather than wait a day and screw the customers over?

A few. If you borrowed money to produce, your loan is getting more expensive to pay back. If you already produced the components that go into the final product, you don't want them sitting around losing value. And finally, if you don't produce now, your competitors will.

a lot of unbased Ifs in this statement,
You cant borrow money

Why not? You can borrow, you just have to make sure whatever you are adding to the economy has greater value than the money deflation.

You will not have already produced/stocked/procured/preordered/repayed the said components

Why not?

You have a contract/advance they cant go to competitors

Your competitors don't have to go to you, they can use other producers. If you produce for WalMart, they have a contract with you, and they decide to sit and do nothing, Target and Amazon won't care about your contract, and will get products from their own producers, screwing both WalMart and you. It would be stupid to sign a contract that lets your business customer sit around and do nothing while preventing you from selling to someone else.

The economy is not a planar graph to distribute the risk evenly accross the chain, It contains cycles, in that model all those cycles will be negative loops and phased out one by one until everyone is disconnected and becoming a single node of Producer-Consumer or a Planar graph with one way flow of capital : Mercantilism, expect peace to ensue

Your assumption is that goods flow from A -> B accross a chain right? so you can hedge amortize or whatever the risk, deflation etc
the problem with chains is you know "the strength of the chain ...."
What happens if nodes accross that chain start to fail on deliveries, how can that happen?

Lets just say that a Coal provider needs a constant supply of steel machinery, A Steel Provider needs a constant supply of coal, without stocking up resources, not mentioning workforce here, they will quickly be deadlocked waiting for some external energy (money) to kickstart them. So In order to get a just a single steel pin, you have everytime to pay upfront the cost of kickstarting the whole coal-steel industry.
In simple words economies of scale rely on full Buffers, which you have just made uneconomic to maintain.

Contracts for delivery? Basically internal barter exchange, I give you so much steel, you give me so much coal. Besides, there will still be lending in a deflationary economy. It will just be shorter term, and for products that produce good economic value. So there will still be a buffer, but it will just be smaller.

Debt related, Deflation inducing.
To sum up we agree that Greece is in Deflation ok?

Sure. The big difference in the disagreement is that you seem to be saying that deflation is causing the economic woes, and I am saying that economic woes, which were due to government failures and debt, caused deflation.
If there was no deflation, if Greece was free to print their own money as much as they wanted to stave off their economic problems, you wouldn't have a better economy. You would, in fact, have the exact same issues that Argentina and Venezuela are having now, with severe inflation, wages becoming nearly worthless, and a more authoritarian government implementing severe capital controls that prevent you from taking out too much money, moving money across borders, and likely 25% import taxes on anything you buy online.

With deflation everyone gets lazy and postpones to the future, ventures, investments, cunsumption. Do you find that healthy for the labour market?

Deflation (price deflation) is economic growth being higher than the money supply. Less money to go around in a growing economy, more deflation. So if everyone was beng lazy and postponing the future, there would be no deflation, because there would be no growing economy to cause it. Deflation, or rather fixed money supply, at most pots a damper on economy, making it grow at a normal pace, instead of debt-inflated artificial pace.

Why hire personel NOW, when you can hire personel when you get an order even a preorder/advance, why consume now but when you get a job?

That's no different from how things are now. You don't hire people to sit around and do nothing, regardless of whethere there's inflation or deflation. So you hire someone now, if someone else needs your product now.

The poor... Ah the poor will start to mine bitcoins! oh wait they dont have asics bummer. They cant even afford power as power is now *based* on bitcoin's value, there is not enough anyway... BTC miners eat it all up....

Why would the poor mine bitcoin? The poor don't own cash printing presses, either. I think you misunderstood. I only implied that the poor will be able to save for the future, and actually have their savings add up to something. Inflation means the poor net worth will be continuously going negative, as they are incentivised to continue borrowing to live (especially if inflationary wages keep loosing value and they don't get raises), while deflation means the poor net worth will be continuously going positive, since they'll be incentivized to save before spending. Did you know that if your net worth is $1, you are richer than most people in 1st world?

Also, FYI, favelas aren't the result of a free market or a deflationary economy. On the contrary, Brazil has both regulatory and corruption issues, AND money issues.

[thaaanos]

So your government tried to do excessive lending in a deflationary economy, and got burned. Why is anyone surprised?

Goverment tried to deflate  the economy, the technical term they used was "Internal devaluation", and got burned.

Internal Devaluation is functionally the same thing as inflation. I.e. opposite of deflation.

I don't see how halving wages is functionaly the same thing as inflation

I recall the advice that if you dont have your bitcoins in your wallet, they are not your own. Why would anyone want to keep his bitcoins in a Bank?

In case of investment, banks can manage inestments, including looking for good places to invest, and making sure what is owed is paid back to them, much better than individuals. Regarding security, having all your welath at home. if you have a lot of it, is not very safe, since it opens you up to robbery and torture to try to get you to reveal your password. Banks in the future may use a multi-signature system, where they only keep one of the signatures required to spend your bitcoin, and block any transactions that are over the daily limit or that they deem suspicious, without your consent. It's a lot harder to steal money from you when it requires taking you into a secured building with armed guards, just to get the second half of your password.

So what we are only left is Investment Brokers : Investment Banks, Hedge Funds : The reason we are in this mess.

The specific reason we are in this mess is because investment manbs and savings banks were one and the same. People were putting money into savings, thinking their money was safe and will not be used for extremely risky investments, but banks used it for that, anyway. This meant that people essentially gambled their money on high risk investments without being told about it, and had to be bailed out, otherwise they would have lost all their savings. With bitcoin we can decouple savings and investments, where investment banks and hedge funds will be specifically that, and anyone putting money into those will know that there are risks.

Ok here you run around in circles, ending up essentially in the same model as we have now?
Not that I disagree that the fusion of Savings Bank with Investment Banks is a root cause.
Paul Penfield on an MIT opencourse in is series about Entropy&Information discuses about it don't have a link right now.
But if people need security I am sure there will be services that provide just that. (Not a Bank)
People will only go to a Bank to collect Interest, no Interest no Savings Bank, but will Banks be able to provide that or will they have Negative interest rates as FED is planing to? No Fractional Reserve -> No loans -> No Interest
So in my mind Saving Bank is a Non Entity, and that will mean that a lot of people (and capital) will be out of investment options
in private stashes.
Now on Investment Banks, which will capture only a handfull of capital, it will be risky bussiness.
My guess is that there will be many high profile scandals that will discredit and scare people away from banks,
sepecially if it is so easy to just Hodl and gain value.

Is there any recorded case of anyone lending out bitcoins? even as we speak, with bitcoin being currently inflating?

Food is even more of a JIT thing that IT. IT takes years to develop (build new manufacturing plants), and takes months to become obsolete, while food takes months to grow, and spoils within weeks.

Ok you are obviously detached from the food industry...

Possibly. I admit I don't have much experience in those businesses...

Trees, Vines, Livestock. you know waiting things to grow... Unless your plan is to only eat bread and noodles...

What about them? They are goods that have a very strong demand, so you can ask for higher price when they have actually finished growing. (remember, if deflation is fairly constant, everyone can plan for it and adjust prices accordingly)

Regarding the Time constrains, for example Olive trees take decades to grow and start produce, so JITing food is easier said than done.
Farmers have a hard time even now, there are many risks that cannot be factored in the upfront investment to ensure timely returns, Oil and weather screw farmers systematicaly and increasingly, water is about to kick in (as real cost) as well as seeds. One would thought that Farmers beeing closer to the self-production model,positive "trade balance" making them winners in a deflative economy, but that would mean reverting to non-industrial farming, which cannot feed us all.

Not to talk about efficiency even, JIT means that you constanly flush the pipelines, I guess you know what that means...

It means you keep as little inventory as possible, and thus as less debt as possible. You only spend (or borrow) for the couple of items you were asked to produce, and pay back the loan in full almost right away, since you don't have anything sitting around.

Flushing the pipelines means lower clock rates,
 Production delays -> Cost,Risk -> Cost,Cost,
 Less efficiency -> Less machine utilization -> Less capital utilization -> Cost
To balance those costs you have to shrink.

If not ask a fabric manufacturer this question "Do you shut down machines for repairs if your product has faults?" take a wild guess at the answer.

Yes they do? What's your point? You don't take out loans on products that don't exist because you are not producing them.

It's counterintuitive but, No they don't shutdown, because ROI comes from uptimes and utilization, not product quality
So by introducing any kind of delay (say one provider failed to provide on time, without buffers) you push ROI away.

Having said that and going back to the stock problem, bussiness already keep the lowest stock possible (there are still costs to maintain a stock) Problem is that because of higher risk now, involved by a provider failing to provide on time, you need to stock *more* at higher cost.

What Incentive is there to JIT produce now rather than wait a day and screw the customers over?

A few. If you borrowed money to produce, your loan is getting more expensive to pay back. If you already produced the components that go into the final product, you don't want them sitting around losing value. And finally, if you don't produce now, your competitors will.

a lot of unbased Ifs in this statement,
You cant borrow money

Why not? You can borrow, you just have to make sure whatever you are adding to the economy has greater value than the money deflation.

You will not have already produced/stocked/procured/preordered/repayed the said components

Why not?

You have a contract/advance they cant go to competitors

Your competitors don't have to go to you, they can use other producers. If you produce for WalMart, they have a contract with you, and they decide to sit and do nothing, Target and Amazon won't care about your contract, and will get products from their own producers, screwing both WalMart and you. It would be stupid to sign a contract that lets your business customer sit around and do nothing while preventing you from selling to someone else.

Ok so a root argument lies on whether a loan driven deflationary economy can exist. I don't think the backward looking dynamics allow that to happen. In deflation you are not been driven by Prospect, rather than Need, so you are bound to rush into bad calls here.
It will be an environvent with too much entropy, the players will start rely on increasingly fewer providers (insourcing production).
It well may end like Japan, with large Vertical "Corpotations" actually more like Feuds, btw is japan's economy in truth deflative? is Japan's Model stable in isolation?

The economy is not a planar graph to distribute the risk evenly accross the chain, It contains cycles, in that model all those cycles will be negative loops and phased out one by one until everyone is disconnected and becoming a single node of Producer-Consumer or a Planar graph with one way flow of capital : Mercantilism, expect peace to ensue

Your assumption is that goods flow from A -> B accross a chain right? so you can hedge amortize or whatever the risk, deflation etc
the problem with chains is you know "the strength of the chain ...."
What happens if nodes accross that chain start to fail on deliveries, how can that happen?

Lets just say that a Coal provider needs a constant supply of steel machinery, A Steel Provider needs a constant supply of coal, without stocking up resources, not mentioning workforce here, they will quickly be deadlocked waiting for some external energy (money) to kickstart them. So In order to get a just a single steel pin, you have everytime to pay upfront the cost of kickstarting the whole coal-steel industry.
In simple words economies of scale rely on full Buffers, which you have just made uneconomic to maintain.

Contracts for delivery? Basically internal barter exchange, I give you so much steel, you give me so much coal. Besides, there will still be lending in a deflationary economy. It will just be shorter term, and for products that produce good economic value. So there will still be a buffer, but it will just be smaller.

Well contracts mean shit in bussiness, if a provider cant provide no contract can make him, you'll just swallow the delay and be wiser next time. And come on we just created freaking cryptocurrencies only to go back to barter economy? not arguing that it cannot work I can argue that it will be the way economy will respond. but that will reduce bitcoin to catch22.

Debt related, Deflation inducing.
To sum up we agree that Greece is in Deflation ok?

Sure. The big difference in the disagreement is that you seem to be saying that deflation is causing the economic woes, and I am saying that economic woes, which were due to government failures and debt, caused deflation.
If there was no deflation, if Greece was free to print their own money as much as they wanted to stave off their economic problems, you wouldn't have a better economy. You would, in fact, have the exact same issues that Argentina and Venezuela are having now, with severe inflation, wages becoming nearly worthless, and a more authoritarian government implementing severe capital controls that prevent you from taking out too much money, moving money across borders, and likely 25% import taxes on anything you buy online.

Just watching the news: unemployment this month 27,9%,
Nevermind it's a spiral... deflation -> lower GPD -> Higher Debt/GPD ratio -> More austerity -> deflation
It's seems that once you are in this hole you can't dig yourself up again, you need external help, you need a Marshal Plan...
If ECB printed greece out of trouble, it would had minimal effect on Euro inflation, but I guess it would set a dangerous precedence,
and protestant thinking would not accept it selfrighteous bastards they are , Fuck the citizens so they fuck their goverment
On the other hand if we were a State in US, I bet FED would had done just that, and fuck the goverment directly afterwards.
If we had our own currency I don't think we would be in this mess, we would had a more sustainable and consolidated growth.

Argentina and Venezuela were always under the shadow control of US, I tend to blame US policy (over the years) for that mess over there.

With deflation everyone gets lazy and postpones to the future, ventures, investments, cunsumption. Do you find that healthy for the labour market?

Deflation (price deflation) is economic growth being higher than the money supply. Less money to go around in a growing economy, more deflation. So if everyone was beng lazy and postponing the future, there would be no deflation, because there would be no growing economy to cause it. Deflation, or rather fixed money supply, at most pots a damper on economy, making it grow at a normal pace, instead of debt-inflated artificial pace.

I strongly disagree on growth, all dynamics lead to shrinking, If the economy has an any intend to grow it will hit the deflec(a)tory wall and bounce back, just as a recessing economy if inflated will bounce up.

Why hire personel NOW, when you can hire personel when you get an order even a preorder/advance, why consume now but when you get a job?

That's no different from how things are now. You don't hire people to sit around and do nothing, regardless of whethere there's inflation or deflation. So you hire someone now, if someone else needs your product now.

Healthy bussinesses have standing staff, producing products, before a customer even dreams he needs them.
in a deflation Bussinesses hire staff in time in order to produce what the customer asked them.

Also Staff is propably underqualified because who would invest in education?

The poor... Ah the poor will start to mine bitcoins! oh wait they dont have asics bummer. They cant even afford power as power is now *based* on bitcoin's value, there is not enough anyway... BTC miners eat it all up....

Why would the poor mine bitcoin? The poor don't own cash printing presses, either.
I think you misunderstood. I only implied that the poor will be able to save for the future, and actually have their savings add up to something.

I am being sarcastic, at the notion that the poor can ever get to survive much less save

Inflation means the poor net worth will be continuously going negative, as they are incentivised to continue borrowing to live (especially if inflationary wages keep loosing value and they don't get raises), while deflation means the poor net worth will be continuously going positive, since they'll be incentivized to save before spending. Did you know that if your net worth is $1, you are richer than most people in 1st world?

The poor will/need to raise their standard of living first, save second. Inflation/Deflation doesnot touch them, They don't give a fuck about bank accounts. All the poor care about is Jobs.

Also, FYI, favelas aren't the result of a free market or a deflationary economy. On the contrary, Brazil has both regulatory and corruption issues, AND money issues.

you know corruption takes 2 to tango, how many US firms have paid off officials in 3rd worlds countries? how many corrupt officials had CIA installed?
there is local corruption, there is imported corruption, and there is exported corruption,
Latin america suffered hard from US imported corruption, at first due to Cold war, later for economic reasons.
Africa likewise by Europe.
You know USD is not backed up by gold, or guns as Krugman says, it is backed up by Oil.


EDIT: apologies of quoting mayhem

[LightRider]

We will never solve the problems of money with money, even if it is a better money. Investigate a resource based economy.

[thaaanos]

We will never solve the problems of money with money, even if it is a better money. Investigate a resource based economy.

money is Trust, there is no better resource in a human society

[Adrian-x]

Maybe instead of trying to fix the economic mess, it's better to start with the political? Maybe  Instead of the Bitcoin revolution the world need the BitVote revolution... just saying

We have just that, if you think Bitcoin solves problems, vote for it, you can also buy votes, in this P2P system.  He who has the majority vote can have influence.

Don’t like the idea of Bitcoin, abstain from supporting the system. Let it shrivel and die on its own.

Fabricating and supporting stories of doom and gloom to stop people contributing the Bitcoin system is a political move, fortunately it carries no weight in the Bitcoin meme.

So your counsel is Bystander apathy? because of strong Groupthink incited by a Cash cow that will eventually lead to Escalation of commitment?

To the contrary, I only found this forum 18 months after I started mining, my go to for Bitcoin Groupthink was Slashdot. 
All I am saying is, if Bitcoin doesn’t offer any benefits don’t use it that is my advice to all. If you see value in the system, start by backing Bitcoin with wealth you can afford to lose. 

My values are very different from many here, but ultimately my prosperity is derived from the prosperity of all, so I seek solutions to maximise prosperity, a universal p2p triple enter accounting system (the encrypted blockchain) is the most viable solution I have come to understand.

The Rothschilds yielded a power more influential that the armies of Neapolitan and the land he plundered , and those backing Bitcoin yield a power superior to that of the Rothschilds. I buy Bitcoin for the good of humanity.

[Rassah]

Internal Devaluation is functionally the same thing as inflation. I.e. opposite of deflation.

I don't see how halving wages is functionaly the same thing as inflation

Cut wages by half = you earn half as much, things cost twice your wage to buy.
2x inflation = you earn half as much, things cost same as your wage

Crap, you're right, Internal Devaluation sucks way worse

But if people need security I am sure there will be services that provide just that. (Not a Bank)

The original purpose of a bank was to provide security. I just meant that we will have "banks" go back to doing their original function, which is to provide security.

People will only go to a Bank to collect Interest, no Interest no Savings Bank, but will Banks be able to provide that or will they have Negative interest rates as FED is planing to? No Fractional Reserve -> No loans -> No Interest
So in my mind Saving Bank is a Non Entity, and that will mean that a lot of people (and capital) will be out of investment options
in private stashes.

Since bitcoin is already deflationary, there is no need for a savings account that pays a little interest. Investment Banks will be the only reason to actually invest for an interest return. So, people themselves will be the private stashes, looking to invest money directly, or will have a large stash that they will give their investment bank authority to invest for them. We'll go from many people with small amounts of money funding "savings" accounts, to few people with large amounts. I haven't bothered to consider the implications yet.

Now on Investment Banks, which will capture only a handfull of capital, it will be risky bussiness.
My guess is that there will be many high profile scandals that will discredit and scare people away from banks,
sepecially if it is so easy to just Hodl and gain value.

I would hope that would be the case. Only people who know what they are doing, and have a personal vested interest in what's going on, should be investing. Imagine what the 2008 derivative market would have been if everyone actually questioned their bank about what it was doing with their money. Chances are such a market would have never materialized, or would at least have been properly insured.

Is there any recorded case of anyone lending out bitcoins? even as we speak, with bitcoin being currently inflating?

BTCJam has been doing it for over a year now. There were (and probably still are) tons of personal lending in this forum's lending section.

Regarding the Time constrains, for example Olive trees take decades to grow and start produce, so JITing food is easier said than done.
Farmers have a hard time even now, there are many risks that cannot be factored in the upfront investment to ensure timely returns, Oil and weather screw farmers systematicaly and increasingly, water is about to kick in (as real cost) as well as seeds. One would thought that Farmers beeing closer to the self-production model,positive "trade balance" making them winners in a deflative economy, but that would mean reverting to non-industrial farming, which cannot feed us all.

You're right, this may be a problem, but I think that it will actually push farming into more industrial rather than less. A large corporation will be able to track sales and demands, and handle risks, much better than small individual farmers. I guess things with long-term investment, like olives, will become way more expensive. At least for those newly planted. However, since we already have many things planted, and are transitioning from inflationary to deflationary economy, those olives, farms, and other produce is already there, and already producing every year. A new olive tree added to sustain the orchard will just be a cost of continuing to do business. (entrenched old money?)

going back to the stock problem, bussiness already keep the lowest stock possible (there are still costs to maintain a stock) Problem is that because of higher risk now, involved by a provider failing to provide on time, you need to stock *more* at higher cost.

That's one option. The other is to diversify the risk by having multiple contracts with multiple smaller producers. I think that will be a cheaper and better option than to stock more, especially in a deflationary economy. Makes me wonder if inflationary economy is what pushed for large stocking to begin with.

Ok so a root argument lies on whether a loan driven deflationary economy can exist. I don't think the backward looking dynamics allow that to happen. In deflation you are not been driven by Prospect, rather than Need, so you are bound to rush into bad calls here.

A loan assisted deflationary economy can exist, but a loan driven can not, you are right. I think we are living in the results of loan driven economies, with countries and everyone else all straining under enormous debt. I don't know if that's a better alternative than a smaller economy not entirely propped up by debt. You can still be driven by prospect, though. You just have to be sure that your prospects will provide a higher return than the deflation rate. So yes, there will be less people taking extreme risks on new ideas.

It will be an environvent with too much entropy, the players will start rely on increasingly fewer providers (insourcing production).
It well may end like Japan, with large Vertical "Corpotations" actually more like Feuds, btw is japan's economy in truth deflative? is Japan's Model stable in isolation?

I, unfortunatey, have not studied Japan's recent economic situation as much as I should have, so can't comment. With regards to entropy and insourcing, maybe. Maybe we will have a lot of diversification, too, with much more reliance on production being kept to higher standards. Then there's the whole 3D printing thing on the horizon that may change business dynamics entirely...

Contracts for delivery? Basically internal barter exchange, I give you so much steel, you give me so much coal. Besides, there will still be lending in a deflationary economy. It will just be shorter term, and for products that produce good economic value. So there will still be a buffer, but it will just be smaller.

Well contracts mean shit in bussiness, if a provider cant provide no contract can make him, you'll just swallow the delay and be wiser next time. And come on we just created freaking cryptocurrencies only to go back to barter economy? not arguing that it cannot work I can argue that it will be the way economy will respond. but that will reduce bitcoin to catch22.

Heh, good point. Another option is to add discounting to the future purchase at the rate of deflation (somewhat being done now already). I have a contract where you will provide me a ton of steel 30 days from now for $1,000. If you take 45 days, I will only pay you $900. Pretty much the opposite of I sent you $1,000 worth of steel, and you have 30 days to repay me, or will repay $1,100 if you pay in 45 days. Though I guess this will delay production considerably in a JIT system, and would mainly work with established production flow.

A lot of how our economy functions will have to change, though if the rate of deflation is only 1% to 3%, it may not have to be by much.

Just watching the news: unemployment this month 27,9%,
Nevermind it's a spiral... deflation -> lower GPD -> Higher Debt/GPD ratio -> More austerity -> deflation

I see it as the steps by which a debt-based economy inevitably unwinds itself as it finds itself no longer able to borrow. Greece should be a warning to all the other countries who are rapidly getting to the point where they can't print and borrow any more to sustain themselves.

It's seems that once you are in this hole you can't dig yourself up again, you need external help, you need a Marshal Plan...

Or you wait until you get to the actual economic rate of your country, not one propped up by debt, and start from there. Iceland had similar issues, and somewhat cut their suffering short by repudiating their debt, and starting over with much more strict limits on government borrowing and austerity. It has worked fairly well for them, even if a lot of people lost out on the debt. Countries with close knit communities and families will be able to survive this much better than countries with "rugged individualism" (looking at you, USA).

On the other hand if we were a State in US, I bet FED would had done just that, and fuck the goverment directly afterwards.

That's somewhat what has actually been happeming. The FED is inflating like crazy, and the cities and counties that ended up with too much debt are getting fucked directly by having their governments replaced with state appointed unelected "emergency" leaders, who's job is typically to sell off everything the towns had and GTFO before the locals get too restless.

If we had our own currency I don't think we would be in this mess, we would had a more sustainable and consolidated growth.

If Greece kept borrowing and paying out in austerity more than it received from taxes or generated economicaly, you would have a more sustainable growth right up to the point where your borrowing matched your interest payments, at which point no one would lend you any more, and you would either have to hyperinflate, or be in the same situation you are in now. You can't have economic growth without the actual underlying economy. If you are growing through inflation and debt, someone, somewhere, will have to pay for that everntually

Argentina and Venezuela were always under the shadow control of US, I tend to blame US policy (over the years) for that mess over there.

They are quite socialist, which is quite different from what US policy claims to promote. Maybe US meddling caused them to rebel and pushed them further into socialism?

Deflation (price deflation) is economic growth being higher than the money supply. Less money to go around in a growing economy, more deflation. ...Deflation, or rather fixed money supply, at most pots a damper on economy, making it grow at a normal pace, instead of debt-inflated artificial pace.

I strongly disagree on growth, all dynamics lead to shrinking, If the economy has an any intend to grow it will hit the deflec(a)tory wall and bounce back, just as a recessing economy if inflated will bounce up.

Yeah, that's kind of the point I was making. Growth in an economy, or more specifically investment growth, is limited by the highest interest return of the lowest risk asset. It doesn't really matter what it is. If bitcoin is not that asset, but, say, oil will give you the highest return for the lowest risk, then people would only invest in businesses that provide a higher return than oil does. Oil would end up being that deflectory wall that bounces the economy back. The problem with inflationary dollars is that they provide a very low wall, but at the expense of future debt. So the deflectory bounce back is basically being pushed further and further into the future, until it can't be sustained or paid for any more.
Honestly, I'm too distracted to juggle all the economic variables in my head right now, with regards to the effects of this on inflationary and deflationary economies, so I'll leave that up to you.

Healthy bussinesses have standing staff, producing products, before a customer even dreams he needs them.
in a deflation Bussinesses hire staff in time in order to produce what the customer asked them.

Not if the product has a chance of providing higher returns than the deflationary currency. Our tech sector operates under the threat of their investments becoming worthless due to competitors and obsolescence all the time.

Also Staff is propably underqualified because who would invest in education?

The staff themselves, I hope. Not through loans, but by paying their way through education.

I am being sarcastic, at the notion that the poor can ever get to survive much less save

If credit cards are not available to them, they won't have much of a choice.

The poor will/need to raise their standard of living first, save second. Inflation/Deflation doesnot touch them, They don't give a fuck about bank accounts. All the poor care about is Jobs.

I believe part of what keeps the poor poor is debt. Credit cards, dependence on social programs, etc. Inflation also makes their wages constantly depreciate. Under deflation, they would get an automatic slow growth in income. Plus, if they want anything like a TV, they would have to save for it, too. China has a lot of poor people, almost no social programs, and a huge culture of savings, even among the very poor, because they know there won't be anyone to come save them if they get in trouble. This also leads to more closely knit communities with interdependence. I think that is better than what we have now, with everyone being very individualistic, with little empathy for others.

Also, FYI, favelas aren't the result of a free market or a deflationary economy. On the contrary, Brazil has both regulatory and corruption issues, AND money issues.

you know corruption takes 2 to tango, how many US firms have paid off officials in 3rd worlds countries? how many corrupt officials had CIA installed?

Which, again, is why I'm an anarcho-capitalist. Remove the power of the state to give handouts, and there won't be a reasin for firms to bribe officials.

EDIT: apologies of quoting mayhem

Likewise

BTW, very impressed that you know so much at such a high level of understanding. It's refreshing to be so challanged and be forced to think so hard in a debate (especially on this forum )

[thaaanos]

People will only go to a Bank to collect Interest, no Interest no Savings Bank, but will Banks be able to provide that or will they have Negative interest rates as FED is planing to? No Fractional Reserve -> No loans -> No Interest
So in my mind Saving Bank is a Non Entity, and that will mean that a lot of people (and capital) will be out of investment options
in private stashes.

Since bitcoin is already deflationary, there is no need for a savings account that pays a little interest. Investment Banks will be the only reason to actually invest for an interest return. So, people themselves will be the private stashes, looking to invest money directly, or will have a large stash that they will give their investment bank authority to invest for them. We'll go from many people with small amounts of money funding "savings" accounts, to few people with large amounts. I haven't bothered to consider the implications yet.

That would lead to a lot of capital (savings Bank) to be inactive, and lets face it not everyone has investor soul/skills.
This is what a savings bank actually does: hedges the risk among many wannabe/ignorant/fearfull investors
I don't think an economy can afford not to have a saving bank for the above reason.

Now on Investment Banks, which will capture only a handfull of capital, it will be risky bussiness.
My guess is that there will be many high profile scandals that will discredit and scare people away from banks,
sepecially if it is so easy to just Hodl and gain value.

I would hope that would be the case. Only people who know what they are doing, and have a personal vested interest in what's going on, should be investing. Imagine what the 2008 derivative market would have been if everyone actually questioned their bank about what it was doing with their money. Chances are such a market would have never materialized, or would at least have been properly insured.

While it maybe true that enterprises that are led by own money. and by their founders are outperforming enterprises with boards and borrowed money,
but it takes unique circumstances to coexist for that to happen: capital, skillset, opportunity etc, its a gamble, but not something which economy can rely on to happen often, so enter investment banks that can at least take capital out of the equation. There will be always projects too big, or too risky for savings bank, and we would rather not have goverment do their job
So Investment banks is not something you can't cross out easily

I think the problem starts when savings bank are not isolated by investment banks, either by loans, or as a shared capital pool.
-did I mention Paul Penfield has in MIT opencourseware, a course in Information and Entropy series which he discuses this from Information Theory POV-

Is there any recorded case of anyone lending out bitcoins? even as we speak, with bitcoin being currently inflating?

BTCJam has been doing it for over a year now. There were (and probably still are) tons of personal lending in this forum's lending section.

intresting i didnt know (only a week toying with BTC) we will need to see how those transactions play out, any experience/lessons out of it?

Regarding the Time constrains, for example Olive trees take decades to grow and start produce, so JITing food is easier said than done.
Farmers have a hard time even now, there are many risks that cannot be factored in the upfront investment to ensure timely returns, Oil and weather screw farmers systematicaly and increasingly, water is about to kick in (as real cost) as well as seeds. One would thought that Farmers beeing closer to the self-production model,positive "trade balance" making them winners in a deflative economy, but that would mean reverting to non-industrial farming, which cannot feed us all.

You're right, this may be a problem, but I think that it will actually push farming into more industrial rather than less. A large corporation will be able to track sales and demands, and handle risks, much better than small individual farmers. I guess things with long-term investment, like olives, will become way more expensive. At least for those newly planted. However, since we already have many things planted, and are transitioning from inflationary to deflationary economy, those olives, farms, and other produce is already there, and already producing every year. A new olive tree added to sustain the orchard will just be a cost of continuing to do business. (entrenched old money?)

Yes that may well be, as "Verticalization" taking place, but that way lies cartelization, and well food is not something you want to see cartelizied... EU for example has a standing policy of hostility against agricartural co-ops for that reason, EU wants Farmers to work at cost.
True, infrastructure exists, but in this thought-game we have to assume they dont, you cant use products of inflation in your argument And what about future Industries?
In general though after bubbles rise and burst, and debts written off and a general mess, Infrastructure always grows and remains devalued yet, but a seed for future

going back to the stock problem, bussiness already keep the lowest stock possible (there are still costs to maintain a stock) Problem is that because of higher risk now, involved by a provider failing to provide on time, you need to stock *more* at higher cost.

That's one option. The other is to diversify the risk by having multiple contracts with multiple smaller producers. I think that will be a cheaper and better option than to stock more, especially in a deflationary economy. Makes me wonder if inflationary economy is what pushed for large stocking to begin with.

I don't think it will be a very competitive ecosystem with a multitude of providers, I think large vertical players will dominate, who will either try to sabotage/starve each other or cut the pie. I don't see healthy competition there...

Ok so a root argument lies on whether a loan driven deflationary economy can exist. I don't think the backward looking dynamics allow that to happen. In deflation you are not been driven by Prospect, rather than Need, so you are bound to rush into bad calls here.

A loan assisted deflationary economy can exist, but a loan driven can not, you are right. I think we are living in the results of loan driven economies, with countries and everyone else all straining under enormous debt. I don't know if that's a better alternative than a smaller economy not entirely propped up by debt. You can still be driven by prospect, though. You just have to be sure that your prospects will provide a higher return than the deflation rate. So yes, there will be less people taking extreme risks on new ideas.

Crazies will always be there driving the world forward I guess, I just fear for their leverage

It will be an environvent with too much entropy, the players will start rely on increasingly fewer providers (insourcing production).
It well may end like Japan, with large Vertical "Corpotations" actually more like Feuds, btw is japan's economy in truth deflative? is Japan's Model stable in isolation?

I, unfortunatey, have not studied Japan's recent economic situation as much as I should have, so can't comment. With regards to entropy and insourcing, maybe. Maybe we will have a lot of diversification, too, with much more reliance on production being kept to higher standards. Then there's the whole 3D printing thing on the horizon that may change business dynamics entirely...

Corporation organization/ownership is stuck in the middle ages, I believe there is much room there for improvement and democratization within.
3d printing will definetly help the Selfproducer paradigm but that can seriously disrupt capitalism also making our conversation irrelevant...
In a world where anyone can JIT create anything, too much sci-fi here propably, and people work for "hobby", yes a deflatory economy could work but i think by then even the notion money will be long forgoten

Contracts for delivery? Basically internal barter exchange, I give you so much steel, you give me so much coal. Besides, there will still be lending in a deflationary economy. It will just be shorter term, and for products that produce good economic value. So there will still be a buffer, but it will just be smaller.

Well contracts mean shit in bussiness, if a provider cant provide no contract can make him, you'll just swallow the delay and be wiser next time. And come on we just created freaking cryptocurrencies only to go back to barter economy? not arguing that it cannot work I can argue that it will be the way economy will respond. but that will reduce bitcoin to catch22.

Heh, good point. Another option is to add discounting to the future purchase at the rate of deflation (somewhat being done now already). I have a contract where you will provide me a ton of steel 30 days from now for $1,000. If you take 45 days, I will only pay you $900. Pretty much the opposite of I sent you $1,000 worth of steel, and you have 30 days to repay me, or will repay $1,100 if you pay in 45 days. Though I guess this will delay production considerably in a JIT system, and would mainly work with established production flow.

Sure clauses are an option they are used even now, but it adds too much communication, negotiations, predictions in short red tape, But we are assuming here that all parties will try their best, but a single accident down the chain can propagate aggregating costs along the chain (more like tree actually) and bring all parties to a halt, and the resulting blame game will not help much.

A lot of how our economy functions will have to change, though if the rate of deflation is only 1% to 3%, it may not have to be by much.

Habits are the ones you should fear most, it may take 2 generations to either begin stabilizing if at all. You will not have much tollerance either, at the first sign of bad news people will want the good old model that worked back, yesterday.

Just watching the news: unemployment this month 27,9%,
Nevermind it's a spiral... deflation -> lower GPD -> Higher Debt/GPD ratio -> More austerity -> deflation

I see it as the steps by which a debt-based economy inevitably unwinds itself as it finds itself no longer able to borrow. Greece should be a warning to all the other countries who are rapidly getting to the point where they can't print and borrow any more to sustain themselves.

this is how the unwind should be done inflation->GPD up -> lower Debt/GPD -> austerity -> deflation -> public investment -> inflation
with funds from austerity not diverted to debt repayment but to public investment aiming at restructuring and imbalances, easier said than done maybe

It's seems that once you are in this hole you can't dig yourself up again, you need external help, you need a Marshal Plan...

Or you wait until you get to the actual economic rate of your country, not one propped up by debt, and start from there. Iceland had similar issues, and somewhat cut their suffering short by repudiating their debt, and starting over with much more strict limits on government borrowing and austerity. It has worked fairly well for them, even if a lot of people lost out on the debt. Countries with close knit communities and families will be able to survive this much better than countries with "rugged individualism" (looking at you, USA).

In Iceland they are Gods, If I ever decide to skip Greece, thats the only place I would go, if only for the climate. but it was easier to repudiate their debt because it was privately owned, so they simply killed their bad banks and voila!, while in greece it is not easy to kill the state .

On the other hand if we were a State in US, I bet FED would had done just that, and fuck the goverment directly afterwards.

That's somewhat what has actually been happeming. The FED is inflating like crazy, and the cities and counties that ended up with too much debt are getting fucked directly by having their governments replaced with state appointed unelected "emergency" leaders, who's job is typically to sell off everything the towns had and GTFO before the locals get too restless.

If we had our own currency I don't think we would be in this mess, we would had a more sustainable and consolidated growth.

If Greece kept borrowing and paying out in austerity more than it received from taxes or generated economicaly, you would have a more sustainable growth right up to the point where your borrowing matched your interest payments, at which point no one would lend you any more, and you would either have to hyperinflate, or be in the same situation you are in now. You can't have economic growth without the actual underlying economy. If you are growing through inflation and debt, someone, somewhere, will have to pay for that everntually

The gamble here is that you hope that will never happen, as it really is the debt/gpd ratio that matters, as long as you have the denominator rising you can have it under control, (not that i am overenthousiastic about that notion). Still you will be left with the infrastructure in case you default - For example in 1893 Greece defaulted but was left with a railroad system and a ship canal- And inflation will let you change your trade balance.

Argentina and Venezuela were always under the shadow control of US, I tend to blame US policy (over the years) for that mess over there.

They are quite socialist, which is quite different from what US policy claims to promote. Maybe US meddling caused them to rebel and pushed them further into socialism?

Well Venezuela could well be a latin america Saudi Arabia, why has that not happen? seems that Oil is more than a curse than a blessing.

Deflation (price deflation) is economic growth being higher than the money supply. Less money to go around in a growing economy, more deflation. ...Deflation, or rather fixed money supply, at most pots a damper on economy, making it grow at a normal pace, instead of debt-inflated artificial pace.

I strongly disagree on growth, all dynamics lead to shrinking, If the economy has an any intend to grow it will hit the deflec(a)tory wall and bounce back, just as a recessing economy if inflated will bounce up.

Yeah, that's kind of the point I was making. Growth in an economy, or more specifically investment growth, is limited by the highest interest return of the lowest risk asset. It doesn't really matter what it is. If bitcoin is not that asset, but, say, oil will give you the highest return for the lowest risk, then people would only invest in businesses that provide a higher return than oil does. Oil would end up being that deflectory wall that bounces the economy back. The problem with inflationary dollars is that they provide a very low wall, but at the expense of future debt. So the deflectory bounce back is basically being pushed further and further into the future, until it can't be sustained or paid for any more.
Honestly, I'm too distracted to juggle all the economic variables in my head right now, with regards to the effects of this on inflationary and deflationary economies, so I'll leave that up to you.

Why I am thinking of Hausdorf metric now? Anyway why impose an artificial wall (bitcoin) and not let "true" assets determine where the economy goes, at least this way people will try looking for workarounds. Land is expensive -> Go up, Oil is short -> go green/nuclear, Food is low ->

Healthy bussinesses have standing staff, producing products, before a customer even dreams he needs them.
in a deflation Bussinesses hire staff in time in order to produce what the customer asked them.

Not if the product has a chance of providing higher returns than the deflationary currency. Our tech sector operates under the threat of their investments becoming worthless due to competitors and obsolescence all the time.

Still the IT industry is in a bad short sighted shape imho, all innovation lately is about another picture sharing service...
most ideas are at least a decade old. I still wait for my holodeck, my robotic AI maid, my flying car...

Also Staff is propably underqualified because who would invest in education?

The staff themselves, I hope. Not through loans, but by paying their way through education.

studends should only have one job: studying, anything else is a distraction.

I am being sarcastic, at the notion that the poor can ever get to survive much less save

If credit cards are not available to them, they won't have much of a choice.

The poor will/need to raise their standard of living first, save second. Inflation/Deflation doesnot touch them, They don't give a fuck about bank accounts. All the poor care about is Jobs.

I believe part of what keeps the poor poor is debt. Credit cards, dependence on social programs, etc. Inflation also makes their wages constantly depreciate. Under deflation, they would get an automatic slow growth in income. Plus, if they want anything like a TV, they would have to save for it, too. China has a lot of poor people, almost no social programs, and a huge culture of savings, even among the very poor, because they know there won't be anyone to come save them if they get in trouble. This also leads to more closely knit communities with interdependence. I think that is better than what we have now, with everyone being very individualistic, with little empathy for others.

Credit cards just help the poor survive waiting better days, hope is the greatest of all evils according to the myth of Pandora.
They wouldnt need the debt if they had an equal starting chance as others, bitcoin follows that meme too early/late adopters.
So purge sins through suffering? Agreed a strong ancient meme that works, but there must be a better way.

Also, FYI, favelas aren't the result of a free market or a deflationary economy. On the contrary, Brazil has both regulatory and corruption issues, AND money issues.

you know corruption takes 2 to tango, how many US firms have paid off officials in 3rd worlds countries? how many corrupt officials had CIA installed?

Which, again, is why I'm an anarcho-capitalist. Remove the power of the state to give handouts, and there won't be a reasin for firms to bribe officials.

anarcho-capitalism ? Hagbard Celine nailed it "It's the privilege", as long as there are privileged players you can never have free-market.

EDIT: apologies of quoting mayhem

Likewise

BTW, very impressed that you know so much at such a high level of understanding. It's refreshing to be so challanged and be forced to think so hard in a debate (especially on this forum )

Debates for me is the only way to test ones arguments, and move closer to the truth otherwise it's just autism, like many Hodling Parots here , thank you for indulging me
Lol sure after the crisis everyone in Greece focused on "WTF just happened" and all started to talk about economy, I wouldn be surprised if something similar with Japans  post-hiroshima tech-obsession happens here ok maybe wishfull thinking now.

[HappyScamp]

Great thread.. and only part way through it atm...

But: Is there any reason to suppose that governments won't start accepting BTC?  In fact it would be a reasonable forecast that some smaller country somewhere will start piling in and that will probably precipitate the first in several dramatic rises relative to fiat currencies.

Once accepted, they would simply attempt to tax the windfalls that people have.

The NSA and other outfits can already get direct copies of what is happening on your computer screen in real time, I believe.  If not yet, it soon will be that way, or made to become that way.

All just speculation, of course.

[zimmah]

The Bleak Future of Retirement

For our next thought experiment, let’s consider what will happen to Grandma. For her whole life, she has carefully saved her money, and now she is living in reasonable comfort. She gets money and health care from the government, and she has her own savings to fall back on. Grandma has done everything right, including taking her savings out of the stock market; most of her savings are now invested in the safest asset known to man: U.S. Treasury Bonds.

Rather suddenly, things start to go wrong. At the same time all her expenses start skyrocketing, the government has a liquidity crisis; they are having trouble collecting taxes and can no longer pay for her health care. Her savings are still “safe” in the sense that she will get U.S. Dollars out of them, but that is little comfort when those dollars which should have lasted years can barely pay her weekly grocery bill.

Grandma’s retirement has been sabotaged by the rise of a new kind of money that she can’t even begin to understand. All she knows is that she did everything right, and now she has nothing.

Well, your grandma may not be at fault here, but on the other hand their generation (or rather the government of their generation) has 'borrowed' money from our generation by putting up a scheme of massive debt, the same debt we now have to pay off, while a lot of us don't have jobs, and the ones who do have jobs are massively underpaid.

So we are pretty much just 'stealing' back what they 'borrowed' from us in the first place. No offense to your grandma, it's not her fault, solely at least.

The Bleak Future Wealth Disparities

All the world’s wealth has essentially been stolen, but by whom? By you, dear reader.

We’ll be very lucky if we aren’t all rounded up and summarily executed. Thankfully, you’ll be able to use some of that money to purchase protection, but I’m not at all convinced that it will be enough. A wrathful government backed by an enraged population is a fearful enemy. Satoshi foresaw this long ago, and I doubt he/she/it/they will ever voluntarily come into the light.

If there are enough of us, and we are very careful and charming, we may be physically safe. However, the massive displacement of wealth will still have some awful consequences. People argue all the time about the societal benefits and drawbacks of wealth disparities, and the rise of distributed currencies will create disparities that previously did not seem possible. It seems clear that there will be a lot of jobs created by the new wealthy, but whether the average person is better off or not, one thing is sure to rise: resentment. What right do we have to take all the wealth of the world and put it in our pockets? Sure, a nifty new idea should pay off for early visionaries, but nobody ever expected a new idea to suck all the wealth out of the world like a financial black hole!

Well, yes many will see it like this, and it is somewhat true. Every time someone gains wealth, another persons loses it. But by now pretty much everyone in the world has had the chance to hear about bitcoin, and it's their own responsibility to inform themselves of the scam they are living in.

Bitcoin will hurt a lot of people and it will hurt a lot, probably it will hurt more than it will help, (in the short term at least, things will even out in the long run, if we make it that far). But it's a necessity because the fiat scam will only make things worse in the long run. It's already almost impossible to life normally even in a first world country, let alone in third world countries. And this will only get worse the more the debt increases. Debt to whom? Debt to the 0.1% who have the sole 'right' to print money. Either directly or through loans.

The Bleak Future of Law Enforcement

This is where things get really bleak. Currently distributed currencies facilitate money laundering, black market commerce (the Silk Road), and insider trading (TorBroker). These applications in their current form are just a snowflake on the tip of the iceberg. Not only will they get MUCH bigger, but we will see applications which are much less savory. Historically, the “Dark Net” accessible by Tor and private networks has been nothing more than a hidey-hole for illegal files and a hangout for paranoid schizophrenics, but it is quickly becoming the platform of choice for large-scale illegal commerce.

For this thought experiment, we will imagine that your child has been kidnapped and put up for sale on “TorSlaver”. Their business plan is to kidnap children and sell them to the highest bidder, whether parent or pedophile. The winning bidder is sent the location of the child, probably bound and gagged and dumped somewhere. As long as they don’t get caught doing the kidnapping, the kidnappers can do this again and again with complete impunity. Once someone proves it can be done, copycats will come out of the woodwork, and it won’t matter if the first mover gets caught.

As a parent of three small children, I cannot describe to you how awful this makes me feel. I have always been a very reluctant bitcoin investor, for this very reason. I don’t invest in bitcoin because I think it will bring about a happy utopian world. Quite the opposite. I invest in bitcoin because the rise of distributed currency is inevitable, and owning some bitcoins seems to be the best way to prepare for the chaos ahead. And just maybe, if I position myself correctly, I can make things a little less awful.

Some people make me sick, but this might happen indeed and there's little i can think of we can do to prevent it.

The Government Strikes Back

Does anyone really expect the government to sit back quietly and watch while their currency is debased, terrorism is funded, and children are kidnapped? The only question is when and how they will strike back against these forces. While the government does have a lot of options, ultimately those options only slow things down. At some point, we collectively with our governments face a difficult choice between trying to survive this deadly storm or attempting to destroy all decentralized computer networks (including the internet). The former seems unthinkable, the latter, impossible.

I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.

I'm sure you're referring to the biblical prophecy in revelations. I'm not so sure the prophecy will be fulfilled this literally, especially because revelations in particular is a very symbolic book. But on the other hand, I wouldn't be too surprised if it happens. I would most likely resist such marks even if that means I will not be able to buy anything at all (even though at that point I'd be richer than most people on the earth). I'll just know that it's a sure sign that the prophecy is nearing fulfillment and the whole world as we know it will end soon by divine intervention. And the world will finally be cured from it's maddening sickness and corruption. It will be very tough, but it will only be tough for a short while.

What Should We Do?

We need people thinking about this. I’ll admit that many of the things I wrote about may not happen at all, or may happen very differently than I imagine. However, there are lots of people touting the fantastic benefits that bitcoin and its children can give us, and I don’t see anybody talking about how bad things could potentially get.

We need solutions. When the government finally starts taking decentralized currency seriously, it will probably be doing so in a state of panic. We need to be advising governments now about how they can survive the storm and protect their populace. We need to think of ways the government can pay for its most critical operations, and what legislation makes sense to mitigate these new risks while preserving as much freedom as we can.

The Lifeboat Foundation is attempting to provide this thinking, advice, and solutions. They are already getting ready for a new advisory board, culled from computer scientists, economists, and bitcoin experts. If you make a fortune from your investments in decentralized currency, I urge you to consider how you can help all the people harmed by these rapid changes. Many bitcoin enthusiasts seem to think they will get to retire on a private island with a harem and a stable of Italian sports cars. This is wrong. Bitcoin investors need to someday become bitcoin philanthropists, and our giving needs to be targeted at helping all the people we have harmed. The Lifeboat Foundation is one option, but I’m sure there will be others.

I first published this article on the blog of the Lifeboat Foundation: http://lifeboat.com/blog/2013/04/bitcoins-dystopian-future
Reddit version is here: http://www.reddit.com/r/Bitcoin/comments/1cos8x/bitcoins_dystopian_future/

tl;dr: Wildly successful distributed currencies could hurt a lot of people.

I agree that it is likely that in case of a major wealth transfer, possible a transfer the world has never seen in the entire history of mankind, things will not go smoothly.

We'll be rich alright, but the world will most likely be in great chaos and many of them will hate us even more than they hate the bankers now. We may even have to fear for our lives.

[CryptoClub]

I enjoyed reading this, and while there is some truth to what is written, I think the author is missing the forest through the trees.

Every. Single. One. of his fears are happening RIGHT NOW... ALL THE TIME... EVERYWHERE... at the hands of GOVERNMENTS.

There is going to be a total power shift from the criminal organization known as THE STATE, and all who cling to its coattails, to the producers of value and those who engage in voluntary commerce and interactions between and among individuals.

Exactly. Whatever the risks are of decentralization, the current situation has wealth backed by war and torture. Absolute mortal force. It may not seem that bad if you are not paying attention, but, it is that bad. When I first got involved in cryptos, and Bitcoin, I thought the Anarchists were all crazy, now, I realize they have some really good points.

Additionally, the problems with the centralization of wealth will also likely be far better with people able to distribute money and wealth themselves. Rather than the current situation we have now with hellfire missiles and prison states, making sure people, nations, groups, and even ideas, don't get out of line.

The wild notion that I do totally agree with the OP on, is that crypto currencies, Bitcoin, Alts, whatever, are the future of money. Those underestimating it are making a grave error. This will change everything, forever, I am certain. So if possible, the smoothest transition should be encouraged. I certainly would hate to see how bad it could get it power starts to lose control and what they would do to keep it. Anyway, hold on to your Bitcoins, and maybe some of those new anonymous Alts may end up pretty darn valuable over time too.

[serenitys]

I think the OP's wife has long since been fucking the pool boy... 

[jbreher]

Every time someone gains wealth, another persons loses it.

Only in a wealth transfer. But wealth is not a zero-sum game. One can create wealth by applying work to natural resources.

[wachtwoord]

Every time someone gains wealth, another persons loses it.

Only in a wealth transfer. But wealth is not a zero-sum game. One can create wealth by applying work to natural resources.

Yup. This is why the economy grows long term (yes in real terms, so after correcting for inflation).

[Beliathon]

Well thought and well-written, OP. But you missed one important thing. All those governments and people you claim will be our enemies in the future? They won't be. Governments will capitulate sooner or later.

Because by the time we're all millionaires, every single one of those people -governments included - will have melted down their fiat for crypto. Nearly everyone will be on board.

[conspirosphere.tk]

by the time we're all millionaires, every single one of those people -governments included - will have melted down their fiat for crypto. Nearly everyone will be on board.

(unless they opt to take our crypto-toy forcefully). Yes they supposedly can't, but they could try anyway -and knowing the subjects they will. So I would advise to stay mum about your crypto-riches even with your inner circle and have the passport ready to get out of Dodge in no time instead of flashing Lambos when the time will come. Better yet would be to anticipate them moving first to a safer place.

[RomertL]

Like many technologies, Bitcoin can and will be used for good and bad. When fire was "discovered" it was used to cook and to burn down villages. Etc etc. As with any major change in society there will be winners and loosers, lots of people lost their jobs in the industrial revolution, but today I don't hear many people saying they regret it happened. As I see banks and governments crumble and fall or adapt to a new, more liberal society i will have a big smile on my face. This is not Dystopia for me, far from it!  But then again, maybe I'm part of that libertarian fringe -movement...

[TaunSew]

85 people on this planet have more wealth than 3.5 billion people.

Not that Bitcoin's distribution is any better but I suspect it has better distribution than the real world distribution of $Fiat and other assets.

[cccarnation]

Sounded great, until I got to "The Bleak Future of Law Enforcement". You sound like all of these problems are all of the sudden going to appear or get worse because of bitcoin (or whatever distributed currency comes about).

[TaunSew]

Sounded great, until I got to "The Bleak Future of Law Enforcement". You sound like all of these problems are all of the sudden going to appear or get worse because of bitcoin (or whatever distributed currency comes about).

His prediction already did happen in real life and nothing came out of it.  Oligarchs in Eastern Europe, where the Soviet Rouble was immensely devalued or the new currencies devalued, had no problems in hiring armies of bodyguards (armed with bullet-proof vests and assault rifles) to protect them (and all sorts of crime and trafficking did flourish).

Mind you a lot of people were reduced to eating dog food in the early 1990s in the eastern bloc, I don't know how it gets anymore dystopian than that.

[cccarnation]

The problem is "illegal things" have always existed, and people have always found a way to get what they are looking for, illegal or not. This is no different than cash, which is used every day for numerous illegal activities.

[cccarnation]

As for tor, an enourmous tool for freedom of speech is unfortunately used to transmit "illegal activity", the same as cash and/or bitcoin or any other medium of exchange is used for an "illegal activity".

[cccarnation]

Tor, the same as bitcoin, is just another tool, how people use the tools available to them says nothing about the tool, the tool did not choose to do something that was illegal.

[ripper234]

The future is drawing near.

[Beliathon]

Capitalism = violence. Nation-state = violence. Neither one of these can survive without systemic application of violence down a hierarchy.

An atmosphere of violence suffocates reason. Reason = peace. Abandon capitalism and the nation state, and your children can inherit a world of reason, rather than the world of violence and lies you grew up in.

The future is drawing near.

I like you. You'd like this.

[QuestionAuthority]

Capitalism = violence. Nation-state = violence. Neither one of these can survive without systemic application of violence down a hierarchy.

An atmosphere of violence suffocates reason. Reason = peace. Abandon capitalism and the nation state, and your children can inherit a world of reason, rather than the world of violence and lies you grew up in.

The future is drawing near.

I like you. You'd like this.

That video was so cool. Thanks for sharing. All we have to do is remove human nature from the equation and we can make that kind of world.

[ripper234]

Bitcoin's Utopian Future

[CoolBliss]

Your scenario relies on one flawed assumption. That we will just wake up tomorrow and all the sudden everyone is using bitcoins and the value of one bitcoin is not 10k or 100k or even a million but 10 million! That is lunacy to the extreme thus the rest of the dystopia is not based on any or even a small part of practical real reality.

[Rassah]

Capitalism = violence. Nation-state = violence. Neither one of these can survive without systemic application of violence down a hierarchy.

Nation-state centralizes violence. Capitalism decentralizes violence. When violence is centralized, everyone who has a propensity to violence will be drawn to the center, concentrating and increasing it. When violence is decentralized, concentrations of violence themselves attract counter-violence, forcing it to disperse, decentralize, and exist as much lower levels.

[justusranvier]

Nation-state centralizes violence. Capitalism decentralizes violence. When violence is centralized, everyone who has a propensity to violence will be drawn to the center, concentrating and increasing it. When violence is decentralized, concentrations of violence themselves attract counter-violence, forcing it to disperse, decentralize, and exist as much lower levels.

Violence is naturally unprofitable compared to cooperation, ceteris paribus.

There are two ways to profit from violence:

• Disable the victim's ability for self defence via a side channel. This includes disrupting access to the physical tools of self defence, and disrupting access to the mental tools via propaganda.
• Bribe a third party to do the work for the attacker. The rulers of a society rarely have to act directly, because they can rely on a hoard of sycophants who will attack other peasants who start asking why we need the rulers at all.

[cbeast]

Technology reduces our contact and dependency on the many people in our environs. How many of us even know our neighbors? This has the effect of stunting the mirror-neuron development. Because of this few people feel empathy towards the pain and suffering of others. This was an evolutionary development to bond social animals. It drives us to be fair and to not inflict unnecessary harm to others simply for material gain. It also drives us to help someone that seems to be suffering. But nowadays, this empathy seems to be lacking in many folks. Many studies have shown brain scans of people that lack mirror neuron development and they are highly correlated to socially conservative worldviews. I would love to see the brains scans of our elected officials.

As another misfortune of our technological advancement: we have financialized and professionalized the humanistic services of healthcare to the point where only a few people are so efficient with technologies that even they have little time to spend with suffering people. For example, where there was once a trained healer for every tribe, there are now only 13.9 doctors for every 10,000 people globally. They frequently become overwhelmed and detached. Our society lacks the social structure it once took to care for each other and teach each other the skills to help one another.

I suspect this is where the Non-Aggression Principle was born. There are people that experience cognitive dissonance between their own lack of empathy for the suffering of others and the philosophical impracticality of Machiavellian social engineering. They don't feel the physical pain and suffering of others, but they recognize the gift. They see the empathy of others as virtuous, but without the brain wiring to experience it themselves, they justify a cognitive approach to self behavior modification. This is admirable, but it also further detaches the person from actually developing their own mirror neurons. This can only be done through direct human contact where people are suffering. And a little suffering ourselves also helps in the development.

Will Bitcoin help to improve this vector of the Human Condition? Well, it certainly addresses the financialization issue of crony corporatism. It brings transparency to the greed and malfeasance that has destroyed Main Street financial ecosystems. Will it bring back the day when doctors make house calls? I hope so. Maybe someday humanity and empathy will be valued in our society and nobody will feel the need for unnecessary violence for material gain.

[justusranvier]

This has the effect of stunting the mirror-neuron development.

Mirror neuron development happens long before a baby is capable of using technology.

If a human being grows up without empathy it's because of a lack of parental attention and affection.

Many studies have shown brain scans of people that lack mirror neuron development and they are highly correlated to socially conservative worldviews.

That's because socially conservatives mostly likely come from religious backgrounds, and religion is child abuse.

[Catmoonglow]

Nice write up, but i think the whole "if you can't beat em, join em" mentality will overtake the general population at the tipping point, and political associations to money will dissolve.

[cbeast]

This has the effect of stunting the mirror-neuron development.

Mirror neuron development happens long before a baby is capable of using technology.

If a human being grows up without empathy it's because of a lack of parental attention and affection.

Many studies have shown brain scans of people that lack mirror neuron development and they are highly correlated to socially conservative worldviews.

That's because socially conservatives mostly likely come from religious backgrounds, and religion is child abuse.

Brains are developed as babies, yes. But we have the choice how we use them. We can choose to learn what and how to think. We can change our brain wiring, including the mirror neurons. We can choose to physically alter our brain mapping and functionality. We can choose to unlearn the abusive patterns of our parents. The NAP is a method of doing so, but the denial of altruism further isolates ones ability to develop empathy.

[Summer,69]

And then, you know, global warming.
Bill Gates is optimistic for the future though. We should try to be too

[ipnone5only]

And then, you know, global warming.
Bill Gates is optimistic for the future though. We should try to be too

I tend to agree with you. article is full of FUD and shows dark side. bitcoin is nowhere near there, it even cannot interact with existing bank network so far. this view of future seems very, very distant to me. oh, and i don't have any problem with people richer or poorer than me. do you?

[QuestionAuthority]

And then, you know, global warming.
Bill Gates is optimistic for the future though. We should try to be too

I tend to agree with you. article is full of FUD and shows dark side. bitcoin is nowhere near there, it even cannot interact with existing bank network so far. this view of future seems very, very distant to me. oh, and i don't have any problem with people richer or poorer than me. do you?

I have a problem with poor people. They're kind of smelly and scare me a little because they have nothing to lose.

[earnabit]

It would be hard to convince me that bitcoin is anything more than just another great free market innovation. It will make lives easier and cheaper for humans thus increasing overall satisfaction with life. Hopefully it will just slowly replace the dollar and all the early investors will move up a wrung or two in society

[gollum]

It's wrong to assume that cryptography will lead to a chaotic and dystopian future.
Cryptography is just a tool like knife, it can be used for good or for bad.

Some people might use this tool for bad which will disrupt the society negatively, but as a defense response the society will eventually evolve back to what we had before urbanization: strong local communities where people in the local community trust each other but are extremely suspicious to outsiders. Our social relations will be our greatest defense against possible threats from the outside.

Changing the parameters of a system will lead to instability short term but a new equilibrium emerges always.

[spooderman]

well hello again this thread

[BillyBobZorton]

It's wrong to assume that cryptography will lead to a chaotic and dystopian future.
Cryptography is just a tool like knife, it can be used for good or for bad.

Some people might use this tool for bad which will disrupt the society negatively, but as a defense response the society will eventually evolve back to what we had before urbanization: strong local communities where people in the local community trust each other but are extremely suspicious to outsiders. Our social relations will be our greatest defense against possible threats from the outside.

Changing the parameters of a system will lead to instability short term but a new equilibrium emerges always.

But to reach this "equilibrium" we may lead again towards a certain degree centralization, like the coin Bill Gates wants.
Overall I think equilibrium is impossible in total anarco capitalism and it always ends up again with certain degrees of centralization.

[thaaanos]

Changing the parameters of a system will lead to instability short term but a new equilibrium emerges always.

No!
Because the system parameters are ever changing and equilibrium is never reached, but we are mired in a perpetual instability.
this is also why free market doesnot work as advertised, The invisible Hand suffers from parkinson

[manselr]

Changing the parameters of a system will lead to instability short term but a new equilibrium emerges always.

No!
Because the system parameters are ever changing and equilibrium is never reached, but we are mired in a perpetual instability.
this is also why free market doesnot work as advertised, The invisible Hand suffers from parkinson

"The invisible Hand suffers from parkinson" lol great way to put it.

I agree with you and the former poster. Life is all about trying to reach that equilibrium, but knowing it can never be actually reached.

[Grg]

@op; This, sir, is a genius brainstorm! 


I've spent countless night thinking on the subject "adept or perish/block chain" and time after time I get a little confused why no government hasn't adepted already and made their own BTC 2.0 and let people change it vs country-currency 1:1.
With some programs and apps it would make life sooooo..oo....ooooo much easier for 99,9% of the population.

Why aint this already real?
My answer always boils down to three words;
1; Banks
2; Money
3; Power


The block chain is the future, it's UNDENIABLE!

Once again; Thanks for a genius brainstorm!

-Grg

[Cryddit]

Bitcoin is not really economically different from gold.

The supply is quite limited, it is durable, it can be used as a medium of exchange, and people have trouble keeping their individual stashes of it secure against robbery.

Therefore if we want to see Bitcoin's future, we should look at gold's past and present.

We should expect to see people paying online wallets a fee each year to keep their bitcoin safe, the same way people used to pay banks to keep their gold in the vault. We should expect to see the companies that operate those "vaults" buying insurance against theft, the way banks used to buy insurance against theft.  Then we should expect to see them getting laws passed that force their insurance expense to be borne by taxpayers at large, rather than just the people whose Bitcoin they're holding. 

Over time, we should expect to see Bitcoin concentrated in the hands of financial institutions and governments who will then loan it out - then issue promissory notes against it, operating on fractional reserves of it, and then.....  back to fiat currency. 

Face it, when was the last time ordinary people used gold or silver coins in their hands for daily transactions?  Well, Bitcoin is going to eventually occupy the same place that gold and silver do in our current economy; a place for investment capital to flee to, as a last-resort inflation hedge when the productive economy is administered by miss Helena Handbasket.  It will not likely be used by ordinary people.

[StevenS]

Bitcoin is not really economically different from gold.

The big difference between gold and Bitcoin is that you can send bitcoin over the Internet.
But your analogy still holds.

[ebliever]

I'm glad this thread has come back up so I could see it - the author's thinking is very similar to my own, regarding the "tipping point" risk and resulting governmental crisis and social unrest. A few thoughts:

1. I'm relatively more sanguine about the kidnapping issue because kidnappers can be tracked and caught using many tools unrelated to the ransom payment mechanism. So long as the punishments are severe, I don't see crypto driving a surge. (As the father of four young children, I hope and pray I'm right!)

2. There will be great envy towards early adopters when the whole world has to flee to bitcoin amidst a collapse of fiat currencies. But although it will happen quickly, and although some early adopters will no doubt be overnight tycoons of great wealth, I think the pace will be such that a large chunk of the population will at least gain a toehold in crypto. Some will lose a lot in the transition, others (particularly young, indebted people will new home loans in fiat) will come out ahead. And since those young, currently poor and indebted people are the biggest risk in a riot environment, the fact that many of them will be coming out ahead is comforting.

It's also worth pointing out that there is still a lot of wealth tied up in physical property, real estate and so on. Stocks of companies that survive the transition to crypto will retain their value, while bondholders and T-bill holders in fiat currencies will lose entirely. Again, younger people are more inclined to hold stocks whereas older people have the bonds and T-bills and CDs, so unless you fear a bunch of rioting senior citizens we may be able to avoid a zombie apocalypse.  (Or maybe a bunch of rioters from a nursing home will _be_ the zombie apocalypse? :-)

[visual111]

Each step toward utopia is a step toward dystopia...the deciding factor will be global cultural values

[lunarboy]

Ironically if you really believe in a bitcoin future, now is the time to run up massive fiat debts, as logically they will be inflated away to mean nothing against any bitcoin holdings.

I do feel the problem of the technology illiterate old folk, with their life savings and pensions in the bank needs to be thought about some more. If things play out as predicted they will be left with nothing. (unless banks and pension fund managers, manage to stay ahead of the curve and divest so of thier portfolios into gold/bitcoin that is)

food for thought.  

[Adrian-x]

the Dystopian Future, is ironically not in Bitcoins future, the image projected by the OP is an extreme example of the Fiat world we live in.

On the topic of shorting Fiat and going long Bitcoin in anticipation of inflation, the jury is still out.
There is a lot of talk about removing cash, and having electronic currencies with negative interest rates and deflation. In this scenario a Central Bank can still manage the herd and drive it away from Bitcoin.

Don't think you will be paid to have loan in fiat, you wont, that privilege is for the elites in Fiats Dystopian Future.  

[Cruxer]

Very interesting read - but to be trusthful, while I might agree with you, there is no point in predicting the future and then try and avoid the future you've imagined!

You have no idea what everyone else is planning for the same future!

Agree, but its good for future of things when diffirent people think of many possible outcomes.

[thejaytiesto]

Bitcoin is not really economically different from gold.

The big difference between gold and Bitcoin is that you can send bitcoin over the Internet.
But your analogy still holds.

Bitcoin is hugely different to Gold and defeats it on every single aspect, except the psychological one since gold is still king of wealth, luxury and all that crap which is deeply ingrained into peoples minds from birth. But eventually the objectively superior pragmatic reasons to use BTC over Gold will dethrone it as the to-go safe haven.

[jubalix]

the Dystopian Future, is ironically not in Bitcoins future, the image projected by the OP is an extreme example of the Fiat world we live in.

On the topic of shorting Fiat and going long Bitcoin in anticipation of inflation, the jury is still out.
There is a lot of talk about removing cash, and having electronic currencies with negative interest rates and deflation. In this scenario a Central Bank can still manage the herd and drive it away from Bitcoin.

Don't think you will be paid to have loan in fiat, you wont, that privilege is for the elites in Fiats Dystopian Future.  

IF they do remove cash....and I can see them trying, It will make something like BTC defacto cash worldwide which would be a huge boost to BTC as that would be quite large.

[QuestionAuthority]

I don't think the OP of this topic even comes here anymore. I see him in the mastercoin/omni discussions on reddit occasionally. Two years ago he talks about a future for Bitcoin that I don't see materializing. I see governments that have proven to be quite effective at controlling Bitcoin with current legislation. Government fiat that isn't struggling or failing as expected. Tor which, in his example, could be used for awful things like child slavery is being penetrated and the Ross Ulbrichts of the world are being caught and prosecuted. But the most interesting thing that's happened is in the opposite direction of a dystopian future. Main stream business is taking to Bitcoin like a moth to a flame and the price seems to be stabilizing.

[ashfaq]

Bitcoin is fringe stream as we all know it and dont neglect that no matter how powerful the fringe stream gets but it cannot overcome or beat the mainstream ..there is a reason why mainstream is 'MAIN' and as we speak of the difficulty of accepting bitcoin  for the public then we should look at the real literacy rates right now ,people who are not even educated to a level of high school how can they even use bitcoin or even if they,how do u expect them to not get hacked/scammed???.. and plus not everybody is an Anarchist ,most people are just surviving not even 'living' they dont care even if they are ruled by anyone they just let the governments do the power violation thing and just live their way.

[MindShadow]

I just started crypto Jan 2018 this year because of the hype on Dec 2017 where bitcoin reached all time time 10,000. I have asked myself what are the thoughts of those who started early in crypto/blockchain what ever you may want to call it. Then I came across an article and another article that led me here. Wow this dates back 2013. 5 Years ago! I imagine you guys already made your profits and just enjoying life.

For the topic starter hats down to you for your prediction. It really gave me a heads up of what will happen in the future. A noob like me who is not thinking properly starts to brag" hey im starting on crypto so should you, You can be my follower for airdrops/referral/bounties etc. " but I never came across to think what you did! Again Thank you for your precaution. Its better to be anonymous. rather than pull your friend to explore on crypto which is like digging your own grave because they will know what you have accomplished when you suddenly become rich. I just can't thank you enough for your thoughts. Maybe people should be more aware of this.

From:
2018 Crypto Enthusiast Noob

[decano]

We are still very poor at predicting complex systems future states. Definitely worth thinking these things, and anticipating what we can, but we don't know how this will play out - just face the fact. Probably somewhere between utopian and dystopian - like always.

[hurriebra49]

I think bitcoin have a great future if you watch and observe the vaule and demand of bitcoin and especiallly the price of bitcoin when you set your mind that bitcoin is the best and fit to invest rather than any other on investment,

[s100]

Bitcoin's Dystopian Future

 
 yes If you were to peak into my bedroom at night (please don’t), there’s a good chance you would see my wife sleeping soundly while I stare at the ceiling, running thought experiments about where Bitcoin is going. Like many other people, I have come to the conclusion that distributed currencies like Bitcoin are going to eventually be recognized as the most important technological innovation of the decade, if not the century. It seems clear to me that the rise of distributed currencies presents the biggest (and riskiest) investment opportunity I am likely to see in my lifetime; perhaps in a thousand lifetimes. It is critically important to understand where Bitcoin is going, and I am determined to do so.

My hundreds of hours of thought experiments have been productive. I published a whitepaper about the future of Bitcoin, and because of that paper I’ll have the great privilege of sitting on the “Bitcoin in the Future” panel at the 2013 Bitcoin Conference in San Jose. Through these years of deliberation I have satisfied myself that the answer to the “Trillion Dollar Question” of whether any form of distributed currency can ever achieve a stable price, is “yes”. (There are three ways this will happen, as I have written elsewhere).


To many people, this sounds like an implausibly rosy future, and for early adopters that is true — it feels like winning the lottery every day. However, for most other people, the epascendancy of distributed currency systems will feel like a disaster. If you are epascendancy of distributed currency systems will feel like a disaster. If you areinvolved in Bitcoin now, you should prepare to be almost universally hated someday. and Anarchists and hardcore libertarians love Bitcoin, but most people outside those circles are not in favor of completely doing away with their government. If you aren’t part of a fringe political movement, chances are there is something the government does that you like, whether it’s handing out entitlement money, killing enemies, putting people in prison, building dams and roads, funding research, or any number of other things. and I need to read it more thoroughly later, but I just wanted to quickly observe that Bitcoin is not untaxable. There are proposals for building income/sales tax systems that can apply to cryptocurrencies and it's a topic I intend to write more about in future. I have been predicting for years that the world’s first trillionaire by USD valuation will be an early investor in distributed currency — quite possibly Satoshi Nakamoto, whoever he/she/it/they may be. I own a few bitcoins, and I intend to keep them until I find a more attractive investment (that is, I want to invest in whatever replaces bitcoin or builds on top of it).

[napi]

yes you are right bitcoin to give a good future and your words can be made into articles and references for new players who are still confused with bitcoin and what the advantages of having bitcoin.

[Wilfred Wright]

I need to read it more thoroughly later, but I just wanted to quickly observe that Bitcoin is not untaxable. There are proposals for building income/sales tax systems that can apply to cryptocurrencies and it's a topic I intend to write more about in future.

[mdripon]

A government is a company like any other company. Its business model might be challenged by crypto currencies just like Western Union's business model will be challenged but it will have to adapt.

If a government is a company, what is its core service? Security!

In an anarcho capitalistic world (no govenments), there would still exist a demand for security as you point out. This demand will be filled by some entity and the best way to provide security is to control a geographical area, like in a gate community - and what, if any, are the fundamental differences between a gated community and a government? None! We are already living in a world of "privately" owned security companies competing with each other. We just happen to call these kind of companies "governments". We are living in an anarcho capitalistic world already. We who call ourselves libertarians are just not too happy with the quality and price that these companies provide.

Governments will not die since there is a huge demand for their service - security. Governments will adapt and figure out new ways to get a revenue either through property taxes or through head taxes but many people will be hurt in this process as you correctly point out.

Bitcoin is a coin. bitcoin's future is certainly good. bitcoin will unveil new roles for future generations. I never agree with your negative perspective of the future on bitcoin. but the government's role needs to be in this regard. because the government determines the tax.

[Geor]

I have seen the future of Bitcoin, and it is bleak.

The Promise of Bitcoin

If you were to peak into my bedroom at night (please don’t), there’s a good chance you would see my wife sleeping soundly while I stare at the ceiling, running thought experiments about where Bitcoin is going. Like many other people, I have come to the conclusion that distributed currencies like Bitcoin are going to eventually be recognized as the most important technological innovation of the decade, if not the century. It seems clear to me that the rise of distributed currencies presents the biggest (and riskiest) investment opportunity I am likely to see in my lifetime; perhaps in a thousand lifetimes. It is critically important to understand where Bitcoin is going, and I am determined to do so.

My hundreds of hours of thought experiments have been productive. I published a whitepaper about the future of Bitcoin, and because of that paper I’ll have the great privilege of sitting on the “Bitcoin in the Future” panel at the 2013 Bitcoin Conference in San Jose. Through these years of deliberation I have satisfied myself that the answer to the “Trillion Dollar Question” of whether any form of distributed currency can ever achieve a stable price, is “yes”. (There are three ways this will happen, as I have written elsewhere).

I have been predicting for years that the world’s first trillionaire by USD valuation will be an early investor in distributed currency — quite possibly Satoshi Nakamoto, whoever he/she/it/they may be. I own a few bitcoins, and I intend to keep them until I find a more attractive investment (that is, I want to invest in whatever replaces bitcoin or builds on top of it).

To many people, this sounds like an implausibly rosy future, and for early adopters that is true — it feels like winning the lottery every day. However, for most other people, the ascendancy of distributed currency systems will feel like a disaster. If you are involved in Bitcoin now, you should prepare to be almost universally hated someday.

In this article, we will examine a few simple thought experiments to show how the rise of distributed currencies such as bitcoin could create massive social upheaval due to governments’ rapidly degrading capability to fulfill their core functions of taxation and regulation of commerce. We’ll see how the end result could be extremely painful for common citizens due to previously unimaginable wealth disparities, hyperinflation of previously stable government-backed fiat currencies, and a greatly empowered criminal class.

The Bleak Future of Fiat Currencies

Anarchists and hardcore libertarians love Bitcoin, but most people outside those circles are not in favor of completely doing away with their government. If you aren’t part of a fringe political movement, chances are there is something the government does that you like, whether it’s handing out entitlement money, killing enemies, putting people in prison, building dams and roads, funding research, or any number of other things. The government can do these things because the government can collect taxes, which in turn they can do because the flows of money are highly regulated and tracked at every level. Whether you are collecting a paycheck, buying furniture, cashing out investments, or simply dying and leaving an inheritance, the government knows about it and takes a cut.

For our first thought experiment, let’s imagine a world where distributed currencies like bitcoin have become wildly successful due to technological advances which make them easy to use and completely stable. In this world government-issued money is as good as dead. It may take a few years for everyone to realize it, but there will come a point when the ever-increasing outflows of money from fiat money into untaxable, unseizable decentralized currency will reach a tipping point, and we’ll have a financial panic like the world has never seen. Frightened lawmakers and banks will try to stop people from cashing out, but that will just increase the panic. Those who don’t get out before the door closes will be in dire straits indeed. This is the ultimate bank run — the run on the world’s central banks, and who could possibly step in and restore order?

When people think of hyperinflation, they usually envision a Zimbabwean printing press running around the clock in the dark corner of a mud hut, putting ever more zeroes on cheap paper. Has it ever occurred to you that hyperinflation can happen while the printing presses are off? The value of the money in your pocket is not ultimately guaranteed by your government, but by simple supply and demand. The government controls the supply, and we control the demand. If demand falls precipitously, we have hyperinflation without ever needing to print another dollar or euro. If people start fleeing government currencies en masse, hyperinflation is the inevitable result.

The good news is that you don’t need to worry about current government debt in this scenario. If government currencies lose their value rapidly, debts which previously seemed overwhelming suddenly become much more manageable. Perhaps your debt-laden government will someday completely pay off it’s national debt by simply selling a few gold bars and a couple national parks.

The Bleak Future of Retirement

For our next thought experiment, let’s consider what will happen to Grandma. For her whole life, she has carefully saved her money, and now she is living in reasonable comfort. She gets money and health care from the government, and she has her own savings to fall back on. Grandma has done everything right, including taking her savings out of the stock market; most of her savings are now invested in the safest asset known to man: U.S. Treasury Bonds.

Rather suddenly, things start to go wrong. At the same time all her expenses start skyrocketing, the government has a liquidity crisis; they are having trouble collecting taxes and can no longer pay for her health care. Her savings are still “safe” in the sense that she will get U.S. Dollars out of them, but that is little comfort when those dollars which should have lasted years can barely pay her weekly grocery bill.

Grandma’s retirement has been sabotaged by the rise of a new kind of money that she can’t even begin to understand. All she knows is that she did everything right, and now she has nothing.

The Bleak Future Wealth Disparities

All the world’s wealth has essentially been stolen, but by whom? By you, dear reader.

We’ll be very lucky if we aren’t all rounded up and summarily executed. Thankfully, you’ll be able to use some of that money to purchase protection, but I’m not at all convinced that it will be enough. A wrathful government backed by an enraged population is a fearful enemy. Satoshi foresaw this long ago, and I doubt he/she/it/they will ever voluntarily come into the light.

If there are enough of us, and we are very careful and charming, we may be physically safe. However, the massive displacement of wealth will still have some awful consequences. People argue all the time about the societal benefits and drawbacks of wealth disparities, and the rise of distributed currencies will create disparities that previously did not seem possible. It seems clear that there will be a lot of jobs created by the new wealthy, but whether the average person is better off or not, one thing is sure to rise: resentment. What right do we have to take all the wealth of the world and put it in our pockets? Sure, a nifty new idea should pay off for early visionaries, but nobody ever expected a new idea to suck all the wealth out of the world like a financial black hole!

The Bleak Future of Law Enforcement

This is where things get really bleak. Currently distributed currencies facilitate money laundering, black market commerce (the Silk Road), and insider trading (TorBroker). These applications in their current form are just a snowflake on the tip of the iceberg. Not only will they get MUCH bigger, but we will see applications which are much less savory. Historically, the “Dark Net” accessible by Tor and private networks has been nothing more than a hidey-hole for illegal files and a hangout for paranoid schizophrenics, but it is quickly becoming the platform of choice for large-scale illegal commerce.

For this thought experiment, we will imagine that your child has been kidnapped and put up for sale on “TorSlaver”. Their business plan is to kidnap children and sell them to the highest bidder, whether parent or pedophile. The winning bidder is sent the location of the child, probably bound and gagged and dumped somewhere. As long as they don’t get caught doing the kidnapping, the kidnappers can do this again and again with complete impunity. Once someone proves it can be done, copycats will come out of the woodwork, and it won’t matter if the first mover gets caught.

As a parent of three small children, I cannot describe to you how awful this makes me feel. I have always been a very reluctant bitcoin investor, for this very reason. I don’t invest in bitcoin because I think it will bring about a happy utopian world. Quite the opposite. I invest in bitcoin because the rise of distributed currency is inevitable, and owning some bitcoins seems to be the best way to prepare for the chaos ahead. And just maybe, if I position myself correctly, I can make things a little less awful.

The Government Strikes Back

Does anyone really expect the government to sit back quietly and watch while their currency is debased, terrorism is funded, and children are kidnapped? The only question is when and how they will strike back against these forces. While the government does have a lot of options, ultimately those options only slow things down. At some point, we collectively with our governments face a difficult choice between trying to survive this deadly storm or attempting to destroy all decentralized computer networks (including the internet). The former seems unthinkable, the latter, impossible.

I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.

What Should We Do?

We need people thinking about this. I’ll admit that many of the things I wrote about may not happen at all, or may happen very differently than I imagine. However, there are lots of people touting the fantastic benefits that bitcoin and its children can give us, and I don’t see anybody talking about how bad things could potentially get.

We need solutions. When the government finally starts taking decentralized currency seriously, it will probably be doing so in a state of panic. We need to be advising governments now about how they can survive the storm and protect their populace. We need to think of ways the government can pay for its most critical operations, and what legislation makes sense to mitigate these new risks while preserving as much freedom as we can.

The Lifeboat Foundation is attempting to provide this thinking, advice, and solutions. They are already getting ready for a new advisory board, culled from computer scientists, economists, and bitcoin experts. If you make a fortune from your investments in decentralized currency, I urge you to consider how you can help all the people harmed by these rapid changes. Many bitcoin enthusiasts seem to think they will get to retire on a private island with a harem and a stable of Italian sports cars. This is wrong. Bitcoin investors need to someday become bitcoin philanthropists, and our giving needs to be targeted at helping all the people we have harmed. The Lifeboat Foundation is one option, but I’m sure there will be others.

I first published this article on the blog of the Lifeboat Foundation: http://lifeboat.com/blog/2013/04/bitcoins-dystopian-future
Reddit version is here: http://www.reddit.com/r/Bitcoin/comments/1cos8x/bitcoins_dystopian_future/

tl;dr: Wildly successful distributed currencies could hurt a lot of people.

Using the after effects of a massive credit bubble to argue that deflation is harmful is as rational as using the existence of hangovers to argue that one should never stop drinking.

[dacoinminster]

Using the after effects of a massive credit bubble to argue that deflation is harmful is as rational as using the existence of hangovers to argue that one should never stop drinking.

Actually, I LOVE deflation. It's hyperinflation of fiat (accelerated by a flight to crypto) that worries me.

This is a very old post, from back in 2013. I've done a lot since then (https://www.linkedin.com/in/jrwillett/) and a lot of things have changed, but I still stand by it completely.

[Dne work]

Nice write up, but i think the whole "if you can't beat em, join em" mentality will overtake the general population at the tipping point, and political associations to money will dissolve.
[/quote

I kind of agree with this mentality, but there is more involved than disagreeing with quality & price. As advances in technology and technology advances, old ways of doing things are useless and getting left behind. In our case, decentralized money keeps the government's money out of date. Now we can save money, without losing profits from a stable and non-liquid currency.
  Like many respondents here and I have greater confidence in human nature to give a good and correct response to what might happen. But if the European experiment we just saw revealed telling us anything, you can not have a single monetary system without a single government. I see the transition as a monumental challenge, and will require visionary leaders to take a counter-intuitive leap of faith in the future.

[paruru123]

  Okay then

[megamanexe002]

Most of OP's predictions will happen regardless, with or without Bitcoin. This just speeds up the process a little bit.

dystopia (greek word) bad place. A society which is undesirable or frightening. With this situation of the place,do you think bitcoin has a future?

[jrd2828]

Most of OP's predictions will happen regardless, with or without Bitcoin. This just speeds up the process a little bit.

dystopia (greek word) bad place. A society which is undesirable or frightening. With this situation of the place,do you think bitcoin has a future?

I've been following bitcoin a couple of years ago, I have witnessed its performance in the market. Im very satisfied and entertain by its movement last year but now it seems BTC stuggle to recover since it fell down in the market. This past few weeks BTC face a significant low value and still falling. In future, bitcoin seems be dystopian or frightening but I still hoping it could climb up again and make noise in the market.

[lili song]

The deflationary arguments are not warranted imo. I would actually spend more. knowing that I can buy more tomorrow without need to have as much in nominal terms.
We are so brainwashed into believing that a deflationary system cant work because we have been drilled with/by the current interests. The current system is on the brink of collapse. Our govts ARE at the level of Zimbabwe inflation but it's not in the units that you can hold in your hand.... Bailouts,  QE and the fact that govts are pretty much doing this in parity makes it a little less visible....
Deflation has been used as a scapegoat at every opportunity of the current failures. The inflationary system is only in place because it is necessitated by an independent central banking system as a business model. The inflationary systems have only been in place since the plans to create private central banks were thought up.

[HelenS]

I believe in the UTOPIAN future. There is nothing perfect in this world, but BTC is 

[bitvelk]

This is just one of the scenarios, unfortunately, or fortunately, no one will say exactly how the fate of the cryptocurrency will be. I prefer to be optimistic.

[Rakabel619]

hello, in my opinion, the whole crypto market will be in regression all prices will be shrinking, we will all remember the values of January 2018, it will remain a difficult peak.

[bishopcrypto]

Weird, many of the things in the OP can be blamed on many things not named bitcoin. Grandma's retirement, for example, was already in the toilet pre-crypto. She's been losing her ass for many years because of government policy and endless money printing. Just like all of us. You don't have to be a hardcore libertarian to see the deck has been stacked against us for generations. Will bitcoin exacerbate the problems? Perhaps. Or maybe bitcoin provides a better option. Especially if grandma's retirement fund is crypto friendly, and not just treasuries.

[yaghoniyu]

I have seen the future of Bitcoin, and it is bleak.

The Promise of Bitcoin

If you were to peak into my bedroom at night (please don’t), there’s a good chance you would see my wife sleeping soundly while I stare at the ceiling, running thought experiments about where Bitcoin is going. Like many other people, I have come to the conclusion that distributed currencies like Bitcoin are going to eventually be recognized as the most important technological innovation of the decade, if not the century. It seems clear to me that the rise of distributed currencies presents the biggest (and riskiest) investment opportunity I am likely to see in my lifetime; perhaps in a thousand lifetimes. It is critically important to understand where Bitcoin is going, and I am determined to do so.

My hundreds of hours of thought experiments have been productive. I published a whitepaper about the future of Bitcoin, and because of that paper I’ll have the great privilege of sitting on the “Bitcoin in the Future” panel at the 2013 Bitcoin Conference in San Jose. Through these years of deliberation I have satisfied myself that the answer to the “Trillion Dollar Question” of whether any form of distributed currency can ever achieve a stable price, is “yes”. (There are three ways this will happen, as I have written elsewhere).

I have been predicting for years that the world’s first trillionaire by USD valuation will be an early investor in distributed currency — quite possibly Satoshi Nakamoto, whoever he/she/it/they may be. I own a few bitcoins, and I intend to keep them until I find a more attractive investment (that is, I want to invest in whatever replaces bitcoin or builds on top of it).

To many people, this sounds like an implausibly rosy future, and for early adopters that is true — it feels like winning the lottery every day. However, for most other people, the ascendancy of distributed currency systems will feel like a disaster. If you are involved in Bitcoin now, you should prepare to be almost universally hated someday.

In this article, we will examine a few simple thought experiments to show how the rise of distributed currencies such as bitcoin could create massive social upheaval due to governments’ rapidly degrading capability to fulfill their core functions of taxation and regulation of commerce. We’ll see how the end result could be extremely painful for common citizens due to previously unimaginable wealth disparities, hyperinflation of previously stable government-backed fiat currencies, and a greatly empowered criminal class.

The Bleak Future of Fiat Currencies

Anarchists and hardcore libertarians love Bitcoin, but most people outside those circles are not in favor of completely doing away with their government. If you aren’t part of a fringe political movement, chances are there is something the government does that you like, whether it’s handing out entitlement money, killing enemies, putting people in prison, building dams and roads, funding research, or any number of other things. The government can do these things because the government can collect taxes, which in turn they can do because the flows of money are highly regulated and tracked at every level. Whether you are collecting a paycheck, buying furniture, cashing out investments, or simply dying and leaving an inheritance, the government knows about it and takes a cut.

For our first thought experiment, let’s imagine a world where distributed currencies like bitcoin have become wildly successful due to technological advances which make them easy to use and completely stable. In this world government-issued money is as good as dead. It may take a few years for everyone to realize it, but there will come a point when the ever-increasing outflows of money from fiat money into untaxable, unseizable decentralized currency will reach a tipping point, and we’ll have a financial panic like the world has never seen. Frightened lawmakers and banks will try to stop people from cashing out, but that will just increase the panic. Those who don’t get out before the door closes will be in dire straits indeed. This is the ultimate bank run — the run on the world’s central banks, and who could possibly step in and restore order?

When people think of hyperinflation, they usually envision a Zimbabwean printing press running around the clock in the dark corner of a mud hut, putting ever more zeroes on cheap paper. Has it ever occurred to you that hyperinflation can happen while the printing presses are off? The value of the money in your pocket is not ultimately guaranteed by your government, but by simple supply and demand. The government controls the supply, and we control the demand. If demand falls precipitously, we have hyperinflation without ever needing to print another dollar or euro. If people start fleeing government currencies en masse, hyperinflation is the inevitable result.

The good news is that you don’t need to worry about current government debt in this scenario. If government currencies lose their value rapidly, debts which previously seemed overwhelming suddenly become much more manageable. Perhaps your debt-laden government will someday completely pay off it’s national debt by simply selling a few gold bars and a couple national parks.

The Bleak Future of Retirement

For our next thought experiment, let’s consider what will happen to Grandma. For her whole life, she has carefully saved her money, and now she is living in reasonable comfort. She gets money and health care from the government, and she has her own savings to fall back on. Grandma has done everything right, including taking her savings out of the stock market; most of her savings are now invested in the safest asset known to man: U.S. Treasury Bonds.

Rather suddenly, things start to go wrong. At the same time all her expenses start skyrocketing, the government has a liquidity crisis; they are having trouble collecting taxes and can no longer pay for her health care. Her savings are still “safe” in the sense that she will get U.S. Dollars out of them, but that is little comfort when those dollars which should have lasted years can barely pay her weekly grocery bill.

Grandma’s retirement has been sabotaged by the rise of a new kind of money that she can’t even begin to understand. All she knows is that she did everything right, and now she has nothing.

The Bleak Future Wealth Disparities

All the world’s wealth has essentially been stolen, but by whom? By you, dear reader.

We’ll be very lucky if we aren’t all rounded up and summarily executed. Thankfully, you’ll be able to use some of that money to purchase protection, but I’m not at all convinced that it will be enough. A wrathful government backed by an enraged population is a fearful enemy. Satoshi foresaw this long ago, and I doubt he/she/it/they will ever voluntarily come into the light.

If there are enough of us, and we are very careful and charming, we may be physically safe. However, the massive displacement of wealth will still have some awful consequences. People argue all the time about the societal benefits and drawbacks of wealth disparities, and the rise of distributed currencies will create disparities that previously did not seem possible. It seems clear that there will be a lot of jobs created by the new wealthy, but whether the average person is better off or not, one thing is sure to rise: resentment. What right do we have to take all the wealth of the world and put it in our pockets? Sure, a nifty new idea should pay off for early visionaries, but nobody ever expected a new idea to suck all the wealth out of the world like a financial black hole!

The Bleak Future of Law Enforcement

This is where things get really bleak. Currently distributed currencies facilitate money laundering, black market commerce (the Silk Road), and insider trading (TorBroker). These applications in their current form are just a snowflake on the tip of the iceberg. Not only will they get MUCH bigger, but we will see applications which are much less savory. Historically, the “Dark Net” accessible by Tor and private networks has been nothing more than a hidey-hole for illegal files and a hangout for paranoid schizophrenics, but it is quickly becoming the platform of choice for large-scale illegal commerce.

For this thought experiment, we will imagine that your child has been kidnapped and put up for sale on “TorSlaver”. Their business plan is to kidnap children and sell them to the highest bidder, whether parent or pedophile. The winning bidder is sent the location of the child, probably bound and gagged and dumped somewhere. As long as they don’t get caught doing the kidnapping, the kidnappers can do this again and again with complete impunity. Once someone proves it can be done, copycats will come out of the woodwork, and it won’t matter if the first mover gets caught.

As a parent of three small children, I cannot describe to you how awful this makes me feel. I have always been a very reluctant bitcoin investor, for this very reason. I don’t invest in bitcoin because I think it will bring about a happy utopian world. Quite the opposite. I invest in bitcoin because the rise of distributed currency is inevitable, and owning some bitcoins seems to be the best way to prepare for the chaos ahead. And just maybe, if I position myself correctly, I can make things a little less awful.

The Government Strikes Back

Does anyone really expect the government to sit back quietly and watch while their currency is debased, terrorism is funded, and children are kidnapped? The only question is when and how they will strike back against these forces. While the government does have a lot of options, ultimately those options only slow things down. At some point, we collectively with our governments face a difficult choice between trying to survive this deadly storm or attempting to destroy all decentralized computer networks (including the internet). The former seems unthinkable, the latter, impossible.

I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.

What Should We Do?

We need people thinking about this. I’ll admit that many of the things I wrote about may not happen at all, or may happen very differently than I imagine. However, there are lots of people touting the fantastic benefits that bitcoin and its children can give us, and I don’t see anybody talking about how bad things could potentially get.

We need solutions. When the government finally starts taking decentralized currency seriously, it will probably be doing so in a state of panic. We need to be advising governments now about how they can survive the storm and protect their populace. We need to think of ways the government can pay for its most critical operations, and what legislation makes sense to mitigate these new risks while preserving as much freedom as we can.

The Lifeboat Foundation is attempting to provide this thinking, advice, and solutions. They are already getting ready for a new advisory board, culled from computer scientists, economists, and bitcoin experts. If you make a fortune from your investments in decentralized currency, I urge you to consider how you can help all the people harmed by these rapid changes. Many bitcoin enthusiasts seem to think they will get to retire on a private island with a harem and a stable of Italian sports cars. This is wrong. Bitcoin investors need to someday become bitcoin philanthropists, and our giving needs to be targeted at helping all the people we have harmed. The Lifeboat Foundation is one option, but I’m sure there will be others.

I first published this article on the blog of the Lifeboat Foundation: http://lifeboat.com/blog/2013/04/bitcoins-dystopian-future
Reddit version is here: http://www.reddit.com/r/Bitcoin/comments/1cos8x/bitcoins_dystopian_future/

tl;dr: Wildly successful distributed currencies could hurt a lot of people.

I think, Most of these scenarios only make sense if the national currency really disappears. Although many on this board predict this result. Conversely, the more likely outcome is Bitcoin and other cryptocurrencies will exist alongside the national currency in stable equilibrium, each used in a context where it works better than any other alternative. That's in my opinion.

[Tuyoqhh]

I think We will never solve the problems of money with money, even if it is a better money. Investigate a resource based economy.

[Kytanylu]

Using the after effects of a massive credit bubble to argue that deflation is harmful is as rational as using the existence of hangovers to argue that one should never stop drinking.

[phelanceter]

Bitcoin is not really economically different from gold. Face it, when was the last time ordinary people used gold or silver coins in their hands for daily transactions?  Well, Bitcoin is going to eventually occupy the same place that gold and silver do in our current economy; a place for investment capital to flee to, as a last-resort inflation hedge when the productive economy is administered by miss Helena Handbasket.  It will not likely be used by ordinary people.

[anhtuan845]

There are two types of investors. One type is the optimistic one and the other type is the pessimistic one. I personally consider myself within the first Category and I am sure bitcoin will have serious higher value in future. The price we are seeing now is just the tip of the iceberg and I will be happy to buy more at the current price. 

But not many people understands that every dip provides us an opportunity. Those who understand, will stay on the top within few years from now, rest will continue crying foul.

[leoasdnedc]

Like many technologies, Bitcoin can and will be used for good and bad. When fire was "discovered" it was used to cook and to burn down villages. That is lunacy to the extreme thus the rest of the dystopia is not based on any or even a small part of practical real reality.

[Saraki Goo]

 You absolutely need a centralized currency to move huge amounts of wealth from citizens and future citizens to the state in order to build an empire, otherwise no tax-payer would ever spring for such a goal.

[jdamayo28]

You absolutely need a centralized currency to move huge amounts of wealth from citizens and future citizens to the state in order to build an empire, otherwise no tax-payer would ever spring for such a goal.

All of crypto currency is unstable and unpredictable. Now, talking with BTC, I believe BTC got the brightest future ahead among all other cryptocurrencies, simply because of its performance showed the last few years that excite and entertain a lot of traders and investors.Some are afraid of holding BTC, because its been struggling this past few months and they think BTC will have an undesirable future. But for the bitcoin holders and traders, we believe to that BTC will have a great future ahead.

[Wekkel]

In fact, all currency is unstable. But to a varying decree. Once crypto has grown bigger than its current 1993-Internet-like state, a form of price stability can be expected that matches bigger fiat currencies. At much higher prices of course.

In fact, Bitcoin volatility right now can be regarded as less than some fiat currency brothers. Of course, these fiat brothers are the worst in town at the moment but it proofs that fiat currencies are not necessarily stable either. When looking at day to day fluctuations, Bitcoin often has more stable days than major currencies. It is all about scale.

I think Bitcoin has a big chance of becoming the premier ‘numeraire’: http://www.gata.org/node/8303

Who had thought that a few lines of code would compete with (the currencies of) the world’s empires?

I am enjoying every minute of the ride 

[Dico88]

Bitcoin as a capital flight to a level never before seen in history. The people to choose with their feet is much easier than before stepping. People will choose to live in places where security against physical and economic violence is the best. We must achieve a higher quality governance because places with very bad governance experience massive capital flight to make them poor and not very effective. This is a gift that is so little negative value.

[kimcuchospital]

Deflation arguments are not guaranteed. Know that I can buy more tomorrow without having to have many nominal terms. The current system is on the brink of collapse. Bailouts, QEs and the fact that govts are pretty much doing this in parity make it a little less visible ... The inflation system is only applied because the central bank system is an independent one. business model needed.

[BigSamson5]

We would love to brainwash believe that a deflation system can not work because we have been drilled with / by present benefits. Our Govts are in the level of Zimbabwe inflation but it's not in the units that you can hold in your hand .... Inflation has been used as a scapegoat at every opportunity of the looms. current failure. Inflation systems are only set up because the plan to create private central banks is devised. For example, her retirement is available in prefabricated homes. Like all of us. Maybe. Especially if her retirement fund is friendly, and not just treasury.

[Vaflia]

Everything has its positive and negative sides, but I think that bitcoin is still more good than bad.

[tanxpresisit514]

This is just one of the scenarios, unfortunately, or fortunately, no one will say exactly how the fate of the cryptocurrency will be. I prefer to be optimistic.

I believe that bitcoin will become a digital currency that is very influential in the future, because it has several advantages that fiat money does not have. Transactions with bitcoin eliminate regulations that have made transactions take a long time, eliminate the role of banks that make expensive transactions, and monitoring by the government that always suspects money owners when making transactions. All that is removed by bitcoin.

[goldSkylark]

Oh.. why the negative and pessimistic view about bitcoin? For sure it’s not perfect, but the benefits sure outweigh any downsides. Maybe you’re just afraid of change? Try to keep an open mind about it. There are lots of benefits to using a cryptocurrency in the future. This article might be helpful:
https://bitcoinexchangeguide.com/2018-cryptocurrency-optimism-outlook-8-future-potential-benefits-list/

[dovedove]

We strongly urge brainwashing to believe that a system of lowering inflation can not work because we see the benefits now. Our government is at the level of inflation like Zimbabwe but it's not in the units that you can hold in your hand .... Inflation has been used as a scapegoat at every opportunity of the current failure. Inflation systems are set only because the plan for creating private central banks is devised. There is nothing perfect in this world, but the BTC is perfect. I like to be more optimistic.

[mashort]

All these predictions are being written from western world perspective. please also consider the other world-developing and less developed world- people have been almost undergoing what you would call dystopian worlds in some parts of the world because of poor policies, greed, exploitation. these have caused suffering to people for a long time. and decentralised currency could be a spark of hope for them??
The world rarely turns out the way the imagine.
I guess AI people will have a much more dystonian outlook than Bitcoin.
i also guess in 1940s, people thought nuclear power would ultimate lead to world destruction in  afew decades. (it could still happen)

Also, just an observation- The Life foundation in the comics, ultimately ended up turning evil despite its noble mission'

[RadjorBlade]

Everything has its positive and negative sides, but I think that bitcoin is still more good than bad.

I see that bitcoin is bringing a better change, besides being a digital currency that reaches the whole world, bitcoin in the regional area also brings change. The changes seen are the implementation of blockchain that uses a decentralized system and peer to peer. Bitcoin indirectly shows how so far many systems are less efficient.

[Wodomi]

Bitcoin as a capital flight to a level never before seen in history. The people to choose with their feet is much easier than before stepping. People will choose to live in places where security against physical and economic violence is the best. We must achieve a higher quality governance because places with very bad governance experience massive capital flight to make them poor and not very effective. This is a gift that is so little negative value.

The phenomenon that happens is that bitcoin is a capital flight, because it will not can tracked by the state financial authorities where the bitcoin owner lives. This is because bitcoin is anonymous. So on the one hand anonymity is good for bitcoin users, but on the other hand anonymously is misused to hide illegal results.

[btc-room101]

All these predictions are being written from western world perspective. please also consider the other world-developing and less developed world- people have been almost undergoing what you would call dystopian worlds in some parts of the world because of poor policies, greed, exploitation. these have caused suffering to people for a long time. and decentralised currency could be a spark of hope for them??
The world rarely turns out the way the imagine.
I guess AI people will have a much more dystonian outlook than Bitcoin.
i also guess in 1940s, people thought nuclear power would ultimate lead to world destruction in  afew decades. (it could still happen)

Also, just an observation- The Life foundation in the comics, ultimately ended up turning evil despite its noble mission'

Yes, I agree a very western, and Libertarian perspective, if this author had only seen 2019, reminds me of the second 'back to future', where everybody had gone retarded.

LEO today is the enemy, BITCOIN is just a racket to fleece stupid people, the US Government is worst than 2013 but now they even spend more money trying to keep humpty-dumpty from falling off the wall.

Let's get real, Western yes, in ASIA nobody gives a hell about BITCOIN, as you can use your mobile phone anywhere in ASIA or AFRICA to buy cigarettes and top-up your mobile cash with real money as you wish at any shop. In ASIA we got fiber-optic internet everywhere, in USA its still 1800's copper wire. In ASIA we have MAG-LEV trains, in the WEST they're still running 1800's rail-roads, trains in Japan are faster than planes in USA, nobody thinks twice about this.

The USA(WEST) has fallen so far behind in the last 10+ years, and nobody in the west has a clue, and nobody in ASIA gives it a second thought, that not everywhere is "FUTURE-WORLD" like old Disneyland Tomorrow-Land.

What made me comment was your comment about the USA perspective, yes it was, but very 2010 or earlier, very early bitcoin libertarian rhetoric, and that shit was killed by the RNC and 'tea-party' that completely destroyed that movement. Now you just have DNC and their professional  liars that are trying to hold the ship together with band-aides so it don't sink. America has fallen so far since the article was written, its hardly applicable anymore. Ahh, I know you got the ORANGE-RETARD, but that's just proof that the USA public went full retard, they vote for what they deserve. The Orange Retarded, looked better than the old-witch, only given the choice of two evils.

In summary, nobody really gives a hell about the USA collapse, and everybody else is doing just fine.

I do say however that if your in the USA, do buy bitcoin, and get the fuck out, before the civil war begins and then return your bitcoin back to real money, and find a nice place to live outside the USA.

[marcus_of_augustus]

I guess it didn't happen yet ... wait another 6 years ... or another 6 years? Kind of like climate change doomsters ...

[dnprock]

Bitcoin is considered "hard" money. It's powerful and revolutionary. But when I think about other assets like gold or oil, Bitcoin is more like fun money. People bled to get gold. Governments send armies to fight for and protect oil wells. If we were all brainwashed into believing a future of only 21 million coins as money, I agree that would be a dystopia. But humans are not that stupid. I think the future will have a bunch of currencies ranging from centralized to decentralized. Each design has its own tradeoff. I made a diagram to illustrate the possibilities.



This future is pretty exciting for me. It'll be good for Bitcoin too.

[znation]

Bitcoin has a bright future ahead, experiencing many obstacles in the value of growth, Bitcoin always exists and promotes. Contrary comments will not change Bitcoin towards new heights of technology.

[Voland.V]

Bitcoin as a capital flight to a level never before seen in history. The people to choose with their feet is much easier than before stepping. People will choose to live in places where security against physical and economic violence is the best. We must achieve a higher quality governance because places with very bad governance experience massive capital flight to make them poor and not very effective. This is a gift that is so little negative value.

The phenomenon that happens is that bitcoin is a capital flight, because it will not can tracked by the state financial authorities where the bitcoin owner lives. This is because bitcoin is anonymous. So on the one hand anonymity is good for bitcoin users, but on the other hand anonymously is misused to hide illegal results.

--------------------------
Yes, on the one hand, complete anonymity. From the point of view that you yourself did not tell anyone that this is your Bitcoin, and that you bought for this Bitcoin.

I agree.

But what about your IP address?

There is no anonymity on the Internet. Even the users of the TOR browser and the VPN service have learned to track. Where is your anonymity here?

Moreover, in the blockchain chain, not only everything will be recorded that you have done, but there is also absolutely open access to this information.

It remains only to identify you with your wallet. This is not a problem.

[Voland.V]

Bitcoin as a capital flight to a level never before seen in history. The people to choose with their feet is much easier than before stepping. People will choose to live in places where security against physical and economic violence is the best. We must achieve a higher quality governance because places with very bad governance experience massive capital flight to make them poor and not very effective. This is a gift that is so little negative value.

The phenomenon that happens is that bitcoin is a capital flight, because it will not can tracked by the state financial authorities where the bitcoin owner lives. This is because bitcoin is anonymous. So on the one hand anonymity is good for bitcoin users, but on the other hand anonymously is misused to hide illegal results.

---------------------------
Maybe this is so, but maybe this is a mistake.
If they are watching you, then they will track your IP, your location, yourself.

Watch the news, find everyone they are looking for. Yes, it is a matter of time and effort, a matter of price, and nothing more. And as soon as the user’s IP is installed, your affairs in the blockchain are easily and openly tracked. No, this is imaginary anonymity. Real anonymity is cash on hand.

 People who are forced to observe anonymity, including the anonymity of their capital, generally try not to deal with digital technology. You don’t even see a smartphone near them, the most nonchalant only have push-button phones.
And Bitcoin has anonymity only for the owner, which no one needs.

[Voland.V]

Bitcoin has a bright future ahead, experiencing many obstacles in the value of growth, Bitcoin always exists and promotes. Contrary comments will not change Bitcoin towards new heights of technology.

----------------------
Bitcoin has exactly the same future as blockchain technology. Let's see what the results will be. There are 2 processes in parallel:

1) Bitcoin covers more and more supporters and capital, is used as a means of payment. This is good, but very slow. Why? Because most owners of Bitcoin use it only as a means of accumulating and storing capital. This is a big problem and it is growing!

2) technologies are developing that can break any cryptography using public and private keys. These technologies are developing very rapidly. The worst thing is that the pace of their development is not predictable. First of all, it is quantum computing, which is given to users, as a service, through the network. Just pay the money and use it. This is problem. This is negative for us.

If you compare the speed of these two processes, then in my opinion, give a short time, and everyone will see the faster pace of development of process No. 2).

And finally, encryption on elliptic curves is probably no longer reliable. But no one ever admits this to us. There are a lot of benefits to those who are silent.

Read carefully my post of December 04, the second on this date, there are only verifiable facts, here:
https://bitcointalk.org/index.php?topic=5204368.40

Perhaps you will be more careful in your views on the future.

[Voland.V]

Bitcoin is considered "hard" money. It's powerful and revolutionary. But when I think about other assets like gold or oil, Bitcoin is more like fun money. People bled to get gold. Governments send armies to fight for and protect oil wells. If we were all brainwashed into believing a future of only 21 million coins as money, I agree that would be a dystopia. But humans are not that stupid. I think the future will have a bunch of currencies ranging from centralized to decentralized. Each design has its own tradeoff. I made a diagram to illustrate the possibilities.



This future is pretty exciting for me. It'll be good for Bitcoin too.

-----------------------------
If you take Fiat in electronic form, the convenience and speed of operations with it, then Bitcoin is not capable of this.

Of particular concern is the fact that most owners of bitcoin do not use it as a means of payment for goods. This is inconvenient - if the product is inexpensive. The bulk of Bitcoin investors - they just keep it for speculative operations in the future.

It can bury this cryptocurrency in a race with other means of calculation.