Skeptical of the skeptics...

[Rassah]

Skepticism is a healthy attribute. And to be brutally honest, of course Bitcoin is likely to fail - all new things are likely to fail. We're all engaged in a wildly speculative and risky venture, here. Even conservative ventures usually fail, and this is anything but conservative.

I wish people would stop comparing Bitcoin to a venture/business. It's not an organization, it's a set of protocols that other ventures are built on top of. I think it would be more correct to compare ventures MtGox and BitEscrow to things like Juno e-mail service or Geocities. Sure, those may fail, but the underlying protocol, like e-mail's POP3/SMTP, or web's HTTP, remain intact. The underlying protocol of Bitcoin will likely remain in tact as well, with just upgrades and bug fixes along the way.

[makomk]

Interesting.  I never really realized how an inflationary system is required for predatory (profitable) lending.  

It shouldn't be required for predatory lending - if you're extorting the desperate and foolish for lots of interest payments, you can in theory still make money even if there's some deflation. What deflation does put up a barrier to is sensible lending to (for example) businesses that are looking to expand and expect to make their money back via increased profits, because it puts up the cost of lending significantly. In theory it causes similar problems if you're a business looking to raise money via issuing shares too.

[asdf]

Hey, good argument! My turn...

The USD is finished; nobody wants to hold a hot potato. Controlled inflation is a bad thing, not a good thing.

I puzzles me how so many people can make baseless assertions, while being so derogatory and self righteous.

The difference is that my "baseless" assertions actually match reality.  You and your "OMG the USD is dooooomed!!!" brethren are just spreading FUD based on wishful thinking and a fundamental misunderstanding of basic economics.  And probably more than a little greed, as I'm guessing many of you bought gold at absurdly high prices in anticipation of a collapse that's never coming.

Once again, no argument: "your wrong, just because."

You just keep holding on to those $.

[Giraffe.BC]

The difference is that my "baseless" assertions actually match reality.  You and your "OMG the USD is dooooomed!!!" brethren are just spreading FUD based on wishful thinking and a fundamental misunderstanding of basic economics.  And probably more than a little greed, as I'm guessing many of you bought gold at absurdly high prices in anticipation of a collapse that's never coming.

Once again, no argument: "your wrong, just because."

You just keep holding on to those $.

LOL, you want me to somehow prove to you that the USD is not going to crash?  Want me to prove that an asteroid won't hit Earth next Tuesday while I'm at it?

The burden of proof rests with those making outrageous claims, not with those who are skeptical.

[error]

The difference is that my "baseless" assertions actually match reality.  You and your "OMG the USD is dooooomed!!!" brethren are just spreading FUD based on wishful thinking and a fundamental misunderstanding of basic economics.  And probably more than a little greed, as I'm guessing many of you bought gold at absurdly high prices in anticipation of a collapse that's never coming.

Once again, no argument: "your wrong, just because."

You just keep holding on to those $.

LOL, you want me to somehow prove to you that the USD is not going to crash?  Want me to prove that an asteroid won't hit Earth next Tuesday while I'm at it?

The burden of proof rests with those making outrageous claims, not with those who are skeptical.

OK, so when are you going to prove your outrageous claim that the USD isn't going to collapse?

[Oldminer]

I'm skeptical of this thread

[Bit_Happy]

Exactly. What the skeptics miss is that the fundamental problem has been solved: decentralized digital money. All of the other problems (hard to use, pseudonymity instead of real anonymity, etc.) are not fundamental; they are opportunities in disguise.

Great reminder, thanks. 

[evoorhees]

LOL, you want me to somehow prove to you that the USD is not going to crash?  Want me to prove that an asteroid won't hit Earth next Tuesday while I'm at it?

The burden of proof rests with those making outrageous claims, not with those who are skeptical.

I think history will show that printing trillions of dollars out of thin air and accumulating trillions of dollars in debt tends to be bad news for a currency. And school children years from now will look back with astonishment, giggling among themselves at the stupidity of the former generation.

Rome is burning, but the Romans are drunk on bread and circuses.

[EhVedadoOAnonimato]

I think history will show that printing trillions of dollars out of thin air and accumulating trillions of dollars in debt tends to be bad news for a currency. And school children years from now will look back with astonishment, giggling among themselves at the stupidity of the former generation.

Rome is burning, but the Romans are drunk on bread and circuses.

Interesting you say that and mention Rome in the end, because the Roman empire did pretty much the same thing, by decreasing the amount or precious metal in coins and bars instead of printing money. That brought inflation, to which they reacted with price controls, which, as always, brought scarcity and poverty. That kept going on until people started leaving the cities to live in self-sufficient rural villas, what left the cities unprotected, and the rest we all know.

But school children, more than 1.500 years after, don't learn that. And politicians keep following the same destructive steps almost all over the world, just using fancier and more complicated financial tools.

[Rassah]

LOL, you want me to somehow prove to you that the USD is not going to crash?  Want me to prove that an asteroid won't hit Earth next Tuesday while I'm at it?

The burden of proof rests with those making outrageous claims, not with those who are skeptical.

I think history will show that printing trillions of dollars out of thin air and accumulating trillions of dollars in debt tends to be bad news for a currency. And school children years from now will look back with astonishment, giggling among themselves at the stupidity of the former generation.

Rome is burning, but the Romans are drunk on bread and circuses.

So, what you're saying is that in 500 years, America will become the country with the best pizza and ice cream?

[realnowhereman]

I'm pretty skeptical of Bitcoin's chances at this point.  Not because the underlying technology isn't sound, but because it's been completely co-opted by speculators and "the USD is just, like, paper man!"

I think it helps not to distinguish between trading bitcoins for USD and trading bitcoins for bread.

The sum total of the bitcoin economy is all that is for sale, including USD.  From the point of view of an owner of bitcoins, they are all just products being offered for sale.

At present the bitcoin economy is heavily weighted towards sale of paper with presidents on.  It makes no difference; the economy is flowing, and as long as that sustains, bitcoin will survive.

[makomk]

The sum total of the bitcoin economy is all that is for sale, including USD.  From the point of view of an owner of bitcoins, they are all just products being offered for sale.

At present the bitcoin economy is heavily weighted towards sale of paper with presidents on.  It makes no difference; the economy is flowing, and as long as that sustains, bitcoin will survive.

I don't think that's a terribly useful measure of the size of the economy. In any case, the problem isn't just that most of the Bitcoin "economy" involves buying bits of paper with presidents on, it's that people are getting Bitcoins by selling bits of paper with presidents on in the hope of buying more bits of paper with presidents on with them shortly after, and that's just not sustainable.

[Vandroiy]

I'm skeptical of this thread

++

It really helps to have a statement at hand one is skeptical about. I can provide one if you want; even though I like Bitcoin I'm a skeptic of sorts.

There is just soooo much wrong with the confirmation system. Why is the confirmation timescale so coarse? Why are we using a difficulty changing function that might oscillate? Was it necessary to make the minting cuts so extremely harsh? Why is the system lacking any mechanism to create a reasonable difficulty equilibrium after minting? Why is there no formal plan to use Web of Trust features to augment security without wasting power? Has anyone proven there will be enough incentive to store the block chain in the future? What block size limit can a user expect in the future?

I'm fairly convinced by now that the answer is simple: Bitcoin is a quick-and-dirty design. It is a horrible mess. This is an issue. Should the programmers just walk away, most likely it won't be just the price that drops. The system itself could cease to function. Difficulty too low? Attacker can DoS it. Block chain too large? Nodes become enormous. Block size limit too low? Transaction fees become absurd.

It's not finished. The protocol is incomplete; we all rely on it being somehow worked out in the future. And, seriously: it's 2011. Bitcoin transactions are SLOW.



Everyone's talking as if skeptics must be dollar-lovers or something. I totally want a p2p credit system! I always wanted one. But face the facts, Bitcoin isn't perfect. Instead of solving the issues, everybody is discussing the price chart. That makes me value it lower, because I care for the long-term development -- and most of the current mania is not helping with that.

[anu]

Why is there no formal plan to use Web of Trust features to augment security without wasting power?

Why should there? Any reputation system is orthogonal to Bitcoin.

Has anyone proven there will be enough incentive to store the block chain in the future? What block size limit can a user expect in the future? ..... Block size limit too low? Transaction fees become absurd.

Block size limit is an arbitrary constant in the source. Do you expect raising it to create any dissent that prevents adoption of a new release?

Should the programmers just walk away, most likely it won't be just the price that drops.

That depends on their reason. Should they walk away because they feel like cashing out and retire, others will move in and carry on.

Block chain too large? Nodes become enormous.

That's in fact a nightmare: Bitcoin is wildly successful, but The Bitcoin Network(TM) collapses into a single, enormous data center run by a single corporation when Block size exceeds GBytes. Everyone else runs lightweight clients.

[evoorhees]

It's not finished. The protocol is incomplete; we all rely on it being somehow worked out in the future. And, seriously: it's 2011. Bitcoin transactions are SLOW.

LOL what are you talking about?? In certain circumstances the confirmations can be slow, but you don't need 99.999999999% certaintly for most transactions (and indeed you don't have that now with credit card swipes either, do you?)

Try this and then tell me transactions are slow:
1) Open page at instawallet.org (bookmark that URL, because it's now your unique wallet)
2) Send a btc there from a client that is caught up on the block chain or from a site like MyBitcoin.com

Watch the screen on instawallet.com... the transaction comes through FAST. Very fast, actually.

And what you will see, as the BTC economy matures, is that most wallets will be held in online service providers (like Instawallet etc). Transfers from these trusted sites will be instantaneous when paying others. You will find that BTC transfers become as fast or faster than standard financial transactions, because there are fewer checkpoints/middlemen needed to confirm the trade.

Do you think Diner's Club cards when they were launched in the 1950's were this fast? =)

[evoorhees]

I wish people would stop comparing Bitcoin to a venture/business. It's not an organization, it's a set of protocols that other ventures are built on top of. I think it would be more correct to compare ventures MtGox and BitEscrow to things like Juno e-mail service or Geocities. Sure, those may fail, but the underlying protocol, like e-mail's POP3/SMTP, or web's HTTP, remain intact. The underlying protocol of Bitcoin will likely remain in tact as well, with just upgrades and bug fixes along the way.

That's actually a very appropriate way to look at it - as a protocol.

[billyjoeallen]

Interesting.  I never really realized how an inflationary system is required for predatory (profitable) lending.  

It shouldn't be required for predatory lending - if you're extorting the desperate and foolish for lots of interest payments, you can in theory still make money even if there's some deflation. What deflation does put up a barrier to is sensible lending to (for example) businesses that are looking to expand and expect to make their money back via increased profits, because it puts up the cost of lending significantly. In theory it causes similar problems if you're a business looking to raise money via issuing shares too.

Deflation encourages hoarding, which means savings, which means capital formation. The economiy is ultimately better off when we wait to build something until there are actually enough materials, tools and labor to do it.   Inflation encourages spending which depletes capital formation and therefor production and therefor wealth.

Even in a severe deflationary environment, people still spend. They have to buy food. and money is no good in the first place if you don't spend it.  Computers get cheaper every year and yet somehow people still buy them rather than waiting until next year when they are an even bigger bargain. 

Any amount of money is the right amount. Prices adjust.