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Author Topic: Why Bitcoin is ultimately doomed to fail (not today or tomorrow)  (Read 40788 times)
deisik
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November 29, 2013, 10:18:09 AM
Last edit: December 29, 2013, 08:09:45 PM by deisik
 #1

They say that right now there are about 12 million bitcoins in total, some part of which stashed away. Eventually the production of new coins will stop, so only around 21 million of them will be available, and no more... Now, what will happen next if it ever comes to that, and Bitcoin is finally accepted as a legal tender?

I think that nothing life-changing is actually going to happen. We have already been there. And by there I mean a time period in the 19th century, commonly referred to as a Free Banking Era, when banks could issue bank notes against specie (gold and silver coins). It was during those times when the term inflation began entering into widespread usage and emerging in literature, though not as a reference to price changes but as something pointing to disproportions between paper representing money and the amount of specie actually available in the bank

So, this time instead of gold, we will have Bitcoin (which will be hoarded as per Gresham's law), and all kinds of "paper" derivatives inevitably entering the circulation as a means of exchange. These "papers" allegedly backed up by Bitcoin will in fact leave behind them only inflation, even despite Bitcoin intrinsic deflationary nature...

And welcome back to fiat!

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November 29, 2013, 10:44:48 AM
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Can we converse in English please  Cheesy

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November 29, 2013, 10:46:04 AM
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Can we converse in English please  Cheesy

Don't ever ask me, or I start writing in my mother tongue!!! Grin

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November 29, 2013, 11:18:22 AM
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What took you so long to adopt (one of) my hypothesis.

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November 29, 2013, 11:58:03 AM
 #5

So, this time instead of gold we will have Bitcoin (which will be hoarded as per Gresham's law) and inevitably all kinds of "paper" derivatives actually entering the circulation as a means of exchange. These "papers" allegedly backed up by Bitcoin will in fact leave behind them only inflation, even despite Bitcoin intrinsic deflationary nature...

And welcome back to fiat!

It is the epic idiocy of a "scarce" currency. It incentivizes the SOS with FRB. Besides that and much sooner, there will always be alt-coins inflating the supply regardless.

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November 29, 2013, 12:31:48 PM
 #6

I gave you a much better reason:
Everything will fail sometime , even bitcoin , but it's not that time yet Smiley
Or how someone once said:

" Men of Rohan! Of Gondor! My brothers. I see in your eyes the same fear that would take the heart of me. A day may come, when the courage of men fails, when we forsake our friends, and break all bonds of fellowship. An hour of wolves, and shattered shields, when the Age of men comes crashing down. But it is not this day, this day, we fight!"- Aragorn


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November 29, 2013, 12:43:16 PM
 #7

Anyone who uses "paper" Bitcoins deserves to absorb the risk of loss that obviously implies.

Gold was a pretty crappy currency.  There was at least some argument to be made that paper was more convenient to use.  The same can't be said of Bitcoin.

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November 29, 2013, 12:48:27 PM
Last edit: December 29, 2013, 08:02:30 PM by deisik
 #8

What took you so long to adopt (one of) my hypothesis.

Please behave yourself. I'm not going to delete your posts (as you have been caught doing many times) or whatever, just bring this to your attention

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November 29, 2013, 12:54:41 PM
 #9

I gave you a much better reason:
Everything will fail sometime , even bitcoin , but it's not that time yet Smiley

This logic is infallible in itself and you can always turn to history for examples proving your position as a last resort. But the question is still there. Is it really worth doing the same mistakes all over again?

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November 29, 2013, 12:56:12 PM
 #10

I think that nothing life-changing is actually going to happen. We have already been there.

While what you say sounds logical can you point out where in your "been there logic" things were decentralized?
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November 29, 2013, 01:02:20 PM
 #11

I think that nothing life-changing is actually going to happen. We have already been there.

While what you say sounds logical can you point out where in your "been there logic" things were decentralized?

Actually, they were completely decentralized "there". When it all started back then, any bank could issue their own "money". Bills of exchange, bank notes, certificates, depositary receipts, etc ad nausea are all examples of "private" money. So you had many options open how to lose your gold to pick up from..

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November 29, 2013, 01:02:35 PM
 #12

They say that right now there are about 12 million bitcoins in circulation or having been stashed away, and eventually the production of new coins will stop, so only around 21 million of them will be available, and no more... Now, what will happen next if it ever comes to that, and Bitcoin is finally accepted as a legal tender?

I think that nothing life-changing is actually going to happen. We have already been there. And by there I mean a time period in the 19th century, commonly referred to as a Free Banking Era when banks could issue bank notes against specie (gold and silver coins). It is during these times when the term inflation began entering into widespread usage and emerging in literature, though not as a reference to price changes but as something pointing to disproportions between paper representing money and the amount of specie actually available in the bank

So, this time instead of gold we will have Bitcoin (which will be hoarded as per Gresham's law) and inevitably all kinds of "paper" derivatives actually entering the circulation as a means of exchange. These "papers" allegedly backed up by Bitcoin will in fact leave behind them only inflation, even despite Bitcoin intrinsic deflationary nature...

And welcome back to fiat!

The last bitcoin will be mined in 2140 or so, we won't live to see it happen and the world will be so different then I doubt we will even have a monetary system at all. At least not something that resembles anything we have now. Bitcoin will be long gone before that time, a currency's timespan is no longer than 40-50 years if you look at history. No reason to think it will be any different this time.

Bitcoin = Gold on steroids
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November 29, 2013, 01:06:14 PM
 #13

So, this time instead of gold we will have Bitcoin (which will be hoarded as per Gresham's law) and inevitably all kinds of "paper" derivatives actually entering the circulation as a means of exchange. These "papers" allegedly backed up by Bitcoin will in fact leave behind them only inflation, even despite Bitcoin intrinsic deflationary nature...

And welcome back to fiat!

It is the epic idiocy of a "scarce" currency. It incentivizes the SOS with FRB. Besides that and much sooner, there will always be alt-coins inflating the supply regardless.

But any fiat currency with a state behind them will a priori have a competitive edge before them. And they will have to compete with each other at that...

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November 29, 2013, 01:06:28 PM
 #14

The last bitcoin will be mined in 2140 or so, we won't live to see it happen
says you

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November 29, 2013, 01:13:14 PM
Last edit: November 29, 2013, 01:23:40 PM by deisik
 #15

The last bitcoin will be mined in 2140 or so, we won't live to see it happen and the world will be so different then I doubt we will even have a monetary system at all. At least not something that resembles anything we have now. Bitcoin will be long gone before that time, a currency's timespan is no longer than 40-50 years if you look at history. No reason to think it will be any different this time.

It may well be so as you picture it, but actually that was not my point... Some people here (and there) draw bright prospects for Bitcoin when and if it becomes a legal tender or a means of exchange. So I was trying to give some cogent reasons why this is not going to happen at all (as opposed to "just not any time soon")...

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November 29, 2013, 01:20:55 PM
 #16

Anyone who uses "paper" Bitcoins deserves to absorb the risk of loss that obviously implies.

Gold was a pretty crappy currency.  There was at least some argument to be made that paper was more convenient to use.  The same can't be said of Bitcoin.

Yes, that's why the right to issue money had been eventually monopolized by just one bank, usually referred to as Central Bank...

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November 29, 2013, 01:22:50 PM
 #17

Sorry but I don't see how you prove that Bitcoin is going to fail.

What do you mean by fail ?
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November 29, 2013, 01:33:09 PM
 #18

Anyone who uses "paper" Bitcoins deserves to absorb the risk of loss that obviously implies.

Gold was a pretty crappy currency.  There was at least some argument to be made that paper was more convenient to use.  The same can't be said of Bitcoin.

Yes, that's why the right to issue money had been eventually monopolized by just one bank, usually referred to as Central Bank...

Perhaps I should make my argument more clear.  The implied assumption is that the evolution will go:

Bitcoins -> paper Bitcoins -> central bank

I'm saying it's much more likely to be:

Bitcoins -> paper Bitcoins -> Bitcoins

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November 29, 2013, 01:33:38 PM
 #19

I think that nothing life-changing is actually going to happen. We have already been there.

While what you say sounds logical can you point out where in your "been there logic" things were decentralized?

Actually, they were completely decentralized "there". When it all started back then, any bank could issue their own "money".

So by decentrilization you mean different banks issuing money. I guess we are still in a decentralized economy then since different nations / organizations / banks are still issuing money. Guess what. No.
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November 29, 2013, 01:37:25 PM
 #20

Sorry but I don't see how you prove that Bitcoin is going to fail.

What do you mean by fail ?

That it won't take the place of fiat currencies or become an asset backing them up. This option is closed for Bitcoin, though it may actually turn open for gold if there's some global catastrophe that would throw us into anarchy...

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