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Author Topic: Greece, the EU, and Bitcoins  (Read 3816 times)
InterArmaEnimSil
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July 21, 2010, 09:23:03 PM
 #1

I'm sure everybody is fairly familiar with what is going on in Greece.  For those who don't know, a (very) simplified description is the following.

Greece, like the rest of the EU bloc, is under the Euro.  The Euro is a unified currency which spans over twenty nations.  Some of these nations are more economically prosperous than others.  Germany, for instance, can produce more value into the global economy than Greece.  In a multi-currency situation, this would lead to a devaluation of the Greek currency so that its goods could be purchased cheaply by the Germans and others with more economic power.  While the situation is not as good for the Greeks as if they were able to compete evenly, they can't compete evenly anyway, so at least this way they can sell something at some price.  However, the country is locked into the Euro.  Therefore, it is locked into a 1:1 exchange rate with all Euro countries (France, Germany, etc.)  Thus, it cannot offset its economic weakness with a devalued currency, so it must compete on even footing with other Euro countries, which it cannot do, as it is less economically and technologically developed.  Thus, we have a crash.

On the another stage, the US buys things from India because the RUP is devalued relative to the USD.  This works out well for both countries, as it enables the US to get cheap goods, and India to sell goods which couldn't compete with the goods of more prosperous and developed nations on even footing.  (Opportunity cost is at the root of this).  However, if the US and India were locked into an identical currency, the economic weakness of India today would look like a paradise relative to what we would see then.

The parallels between the Bitcoin and the Euro are obvious.    Say the BTC becomes a global currency.  How do we deal with the issue of necessary currency value differentials to accommodate the differing capabilities of disparate geographical locations?  Obviously, if we can't, then the BTC is worthless in all but the economic top-tier countries, because it cannot be used save on an equal footing with such countries.

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kiba
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July 21, 2010, 09:37:06 PM
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The parallels between the Bitcoin and the Euro are obvious.    Say the BTC becomes a global currency.  How do we deal with the issue of necessary currency value differentials to accommodate the differing capabilities of disparate geographical locations?  Obviously, if we can't, then the BTC is worthless in all but the economic top-tier countries, because it cannot be used save on an equal footing with such countries.

Use local currencies rather than just using bitcoins.

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July 21, 2010, 09:47:15 PM
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I don't need devalued sirius-dollars to compete with people who are more productive than I am. I ask a lower price. I don't see a problem here.

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InterArmaEnimSil
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July 22, 2010, 12:08:33 AM
 #4

How do we deal with the issue of necessary currency value differentials...?
The same way that New York and Oklahoma are both accommodated by the US dollar, i.e. by a variation in the cost of living.

The guy who mows lawns or makes pizzas in New York is going to want more bitcoins for his work than the guy doing the same job in Oklahoma.

Hmm.  You're quite correct...then is my (partial) explanation for the Euro situation in Greece wrong?  If so, then by what means?  I think that the "variation in cost of living" approach can only stretch so far, perhaps  Ie, there's FAR more difference in the COL between New York and the outskirts of Bangalore than New York and Oklahoma.  The COL approach works in the NY/OK case, but not with a cost of living variation as extreme as the first scenario.  Then again...I'm not exactly sure.

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July 22, 2010, 12:13:12 AM
 #5

How do we deal with the issue of necessary currency value differentials...?
The same way that New York and Oklahoma are both accommodated by the US dollar, i.e. by a variation in the cost of living.

The guy who mows lawns or makes pizzas in New York is going to want more bitcoins for his work than the guy doing the same job in Oklahoma.

Hmm.  You're quite correct...then is my (partial) explanation for the Euro situation in Greece wrong?  If so, then by what means?  I think that the "variation in cost of living" approach can only stretch so far, perhaps  Ie, there's FAR more difference in the COL between New York and the outskirts of Bangalore than New York and Oklahoma.  The COL approach works in the NY/OK case, but not with a cost of living variation as extreme as the first scenario.  Then again...I'm not exactly sure.

bitcoins need to be thought of more like gold than like dollars.  Gold may be worth more or less in Bangalore than NY, but the fact that it is a valuable thing with limited quantity that is traded in both places does not have an adverse effect on either economy.

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July 22, 2010, 01:02:03 AM
 #6

Greece has many problems in regards to its move to the Euro, and the value of the currency is really one of political control rather than one of the value of whatever it is that Greece produces.  In the past, the Greek government was able to avoid debt or bad fiscal management policies in terms of deficit spending on government programs simply by devaluing the currency (printing/releasing more of it) and to engage in trade policies that deliberately screwed over ordinary Greek citizens by devaluing their work in an attempt to get more people to buy their products.

The People's Republic of China has been doing this for decades as well, even with a strong economy to back up its currency.  They have deliberately undervalued their currency as a matter of national policy explicitly for the purpose of undercutting potential economic competitors and to pick up the currencies of other countries.

Hmm.  You're quite correct...then is my (partial) explanation for the Euro situation in Greece wrong?  If so, then by what means?  I think that the "variation in cost of living" approach can only stretch so far, perhaps  Ie, there's FAR more difference in the COL between New York and the outskirts of Bangalore than New York and Oklahoma.  The COL approach works in the NY/OK case, but not with a cost of living variation as extreme as the first scenario.  Then again...I'm not exactly sure.

I would say that the reason there is less of an extreme variation between people living in New York vs. Oklahoma is because of a stable currency that is common to the two areas rather than in spite of that.  A common currency has forced state governments from engaging in trade policies that devalues the work of their citizens and encourages those governments to actually have a balanced budget and take care of their citizens.  New York, compared to the rest of America, hasn't always been so strong in the past either and has had its ups and downs.  I certainly remember when some serious talk was being made about what it would mean if New York City declared bankruptcy.  Instead, that talk is now about California where that state government is having to deal with some significant fiscal issues.

Bangalore certainly has not had stable governments in the past nor access to a larger national economy like is found in America.  Still, I would call most people in Bangalore at least better off in most respects than the "Oakies" were in the 1930's & 1940's that pushed a massive migration from Oklahoma to California.  Living in America hasn't always been with streets paved of gold and as you currently see the economy.

BTW, the economy of California is larger than that of France and comparable to Germany, if you would deal with that state as an independent country.  How California gets out of their current mess is certainly interesting as a spectator sport, but it is real hell for those living there if they are paying attention to the issues.  Fiscally, they are almost as bad off as Greece and perhaps even worse.  California also doesn't even have a remote option like being able to opt out of the U.S. Dollar and then trying to get out of their debts through a devaluation of their currency.  All of California's debts will have to be paid off in U.S. Dollars.

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July 22, 2010, 01:12:39 AM
 #7

The bigger issue is that a poor farmer in India may not have the resources to even buy a computer .It is imperative that bitcoin can be used on cheap mobile phones so as to allow access to disadvantaged people,with sms and other systems.Rich countries will probably generate all the coins and bear the cost of supporting the bitcoin system.A person without a computer will be able to transact without paying exorbitant fees and taxes that parasitic bankers and governments extract.These overheads reduce costs of trade dramatically with the savings passed on to cheaper products.

Along those lines what if the bitcoin client had a charity button built in?.People could then donate bitcoins to charities such as the one laptop per child program http://laptop.org/en/ or the kiva microfinance program http://www.kiva.org/ which lets you micro loan to third world businesses .This would help poorer people access the bitcoin economy.

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July 22, 2010, 01:35:57 AM
 #8

The bigger issue is that a poor farmer in India may not have the resources to even buy a computer .It is imperative that bitcoin can be used on cheap mobile phones so as to allow access to disadvantaged people,with sms and other systems.Rich countries will probably generate all the coins and bear the cost of supporting the bitcoin system.A person without a computer will be able to transact without paying exorbitant fees and taxes that parasitic bankers and governments extract.These overheads reduce costs of trade dramatically with the savings passed on to cheaper products.

Along those lines what if the bitcoin client had a charity button built in?.People could then donate bitcoins to charities such as the one laptop per child program http://laptop.org/en/ or the kiva microfinance program http://www.kiva.org/ which lets you micro loan to third world businesses .This would help poorer people access the bitcoin economy.

I have some huge problems with the "one laptop per child" program, primarily because of the paternalistic attitude that its participants have and the fact that they have openly turned down funds from some sources and offers simply because of the nature of those funds.  It is starting to get off-topic here, but for me I think it is far and away much better to simply build a robust and cheap computer that anybody could buy, and if a few happen to land in Beverly Hills, Park Avenue, or Hyde Park along the way, so much the better for the rest of the world.

In spite of suggestions that Moore's law is going to somehow stop, I have yet to see an end in sight for continued miniaturization of computers and more computing power for ever cheaper devices.  I certainly think that a poor farmer in India is much more able to buy a computer now than they were back when I was just a little child.  Heck, back then only very large banks and major research universities were able to afford a computer, and usually it was just one or two computers for a major organization.  I remember taking a tour inside of the "school district's computer" back when I was in Kindergarten... and that was a huge deal back then.  That computer was also state-of-the-art and something the district was very proud of.

A small portable computing device capable of holding a Bitcoin wallet, displaying a current balance, and being able to connect temporarily to a network for engaging in monetary transfers could be built for under $10 USD right now.  If you want, I could even specify most of the parts and with a little help actually make such a device.  While $10 USD might be a month's wage in some parts of the world, it is still within the realm of possibility here and is certainly doable.  In the mean time, paper currencies of many kinds also exist, and we should be worrying about early adopters right now before having to stress over people that would likely be nearly the last people in the world to need Bitcoins.  Also, what does that have to do with Greece anyway?

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InterArmaEnimSil
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July 22, 2010, 03:04:18 AM
 #9

...or the kiva microfinance program http://www.kiva.org/ which lets you micro loan to third world businesses ....

Just want to voice my approval for any potential option of supporting Kiva.  I know that the idea was abstract, but that charity is phenomenal in my opinion.

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July 22, 2010, 11:44:04 AM
 #10

The main problem with the Euro is central planning - how can you centrally plan for many different needs simultaneously? I'd argue it is impossible and you will end up with winners and losers.

This leads to another problem with fractional reserve banking. Trying to centrally plan, while there is a wibbly, wobbly layer of state backed (by deposit guarantee) credit in between makes the task all the harder. Again, I would say this is impossible to do effectively.

Out of control government borrowing doesn't help either, but is encouraged by the above. It then puts the central planners in a tough dilemma - save the foolish and punish the prudent or risk currency instability and break up.

Remove the need for central planning and need for safe storage by banks and you resolve the main problems*. This is one reason why I love the mechanism of Bitcoins - there is no central planning or clearing and they can be stored safely on your PC (or phone, or in the cloud, with extra layers of encryption etc). This stops government meddling (ie. central planning) and keeps your money out of banks unless you are willing to risk it for profit/interest.

* Governments should also borrow less, but that is a case for the individual sovereigns too. Having denationalised money would present interesting dynamics here.
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July 22, 2010, 12:10:02 PM
 #11

The main problem with the Euro is central planning - how can you centrally plan for many different needs simultaneously? I'd argue it is impossible and you will end up with winners and losers.

Time to quote F. A. Hayek.

Quote from: F. A. Hayek
This is not a dispute about whether planning is to be done or not. It is a dispute as to whether planning is to be done centrally, by one authority for the whole economic system, or is to be divided among many individuals.

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July 29, 2010, 08:28:24 AM
 #12

the fact that they have openly turned down funds from some sources and offers simply because of the nature of those funds.
Well I would also turn down funds from a mafia-owned business. You might want to do the same, considering the consequences.

Quote
In spite of suggestions that Moore's law is going to somehow stop
It is physically impossible to build a transistor smaller than an atom. So yes, Moore's law is going to stop.
kiba
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July 29, 2010, 12:44:01 PM
 #13

Quote
In spite of suggestions that Moore's law is going to somehow stop
It is physically impossible to build a transistor smaller than an atom. So yes, Moore's law is going to stop.
[/quote]

For now, our understanding of physics said it would be impossible.

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December 16, 2013, 08:54:57 AM
 #14

Quote
In spite of suggestions that Moore's law is going to somehow stop
It is physically impossible to build a transistor smaller than an atom. So yes, Moore's law is going to stop.

For now, our understanding of physics said it would be impossible.
[/quote]
Ahh the Physics barrier in in 2013 just as the Flat earth theory pre Pythagoras is sure to crumble.
We are all vibrations in an infinitesimal string, all that can happen will happen and has happened Tongue
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December 16, 2013, 11:25:26 AM
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The greek problems began when the greek government went to goldman sachs bank and asked for a huge loan, witch Greece never could afford. Greece needed the capital to get the "ok" to join the European community. They deliberately hid that information from its people and also the European "watchdogs". Did the European watchdogs, regulation institutions and Euro ministers not know of this "back alley deal with goldman sachs? I do have my doubts but somewhere somebody should have known. My suspicion meter went waaaaay up when the media did its best to not hit that particular subject( that the EU knew of the back alley deal and didn't care anyway). SO i think somebody screwed the pooch somewhere.
It can also be a plot by the ruling elite to buy up huge pieces of lands very cheaply. They can sell them at a later date or, more likely, develop the land by building factories, apartments office buildings, etc. That way they will be portrayed as "the captains of industry that saved Greece" in the media. Just read some articles in financial papers and journals. I even came across an article in "der spiegel" where they interviewed a business tycoon that is buying up great pieces of land. So you can read between the lines Smiley
So transparency is the way to go for governments so people and journalists alike can examine the expenditures a bit better... but then you have creative accountants that are corrupt and employed by that same government...
I do not know how it is in you country but here in Belgium and in Brussels these " ministers" and "leaders" make soo many mistakes and bad decisions that it is just as bad as the worst soap opera on tv.
And all the time it is us, the people, that suffers because they willingly or not make bad decisions.
As for bitcoin, I think it will continue to bobble along its path with ups and downs. Reaching the 10 k mark like some people suggested will only occur when there are no more bitcoins generated.
thats my 2 cents for this discussion anyway Grin
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December 16, 2013, 10:35:48 PM
 #16

The greek problems began when the greek government went to goldman sachs bank and asked for a huge loan, witch Greece never could afford. Greece needed the capital to get the "ok" to join the European community. They deliberately hid that information from its people and also the European "watchdogs". Did the European watchdogs, regulation institutions and Euro ministers not know of this "back alley deal with goldman sachs? I do have my doubts but somewhere somebody should have known. My suspicion meter went waaaaay up when the media did its best to not hit that particular subject( that the EU knew of the back alley deal and didn't care anyway). SO i think somebody screwed the pooch somewhere.
It can also be a plot by the ruling elite to buy up huge pieces of lands very cheaply. They can sell them at a later date or, more likely, develop the land by building factories, apartments office buildings, etc. That way they will be portrayed as "the captains of industry that saved Greece" in the media. Just read some articles in financial papers and journals. I even came across an article in "der spiegel" where they interviewed a business tycoon that is buying up great pieces of land. So you can read between the lines Smiley
So transparency is the way to go for governments so people and journalists alike can examine the expenditures a bit better... but then you have creative accountants that are corrupt and employed by that same government...
I do not know how it is in you country but here in Belgium and in Brussels these " ministers" and "leaders" make soo many mistakes and bad decisions that it is just as bad as the worst soap opera on tv.
And all the time it is us, the people, that suffers because they willingly or not make bad decisions.
As for bitcoin, I think it will continue to bobble along its path with ups and downs. Reaching the 10 k mark like some people suggested will only occur when there are no more bitcoins generated.
thats my 2 cents for this discussion anyway Grin


lol you think it'd take 100 years to reach 10k?

it's more likely to take 100 days.

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December 17, 2013, 12:21:48 AM
 #17

It is physically impossible to build a transistor smaller than an atom. So yes, Moore's law is going to stop.

However it is possible to build a computer out of different parts than transistors. Before transistors we used tubes.

A harder limit is https://en.wikipedia.org/wiki/Landauer%27s_principle, and we have a long time to reach it yet.

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December 17, 2013, 12:00:07 PM
 #18

To zimmah I say this:
HAHAHAHAHAHA !!!!! I never said it would take 100 years dude! that is something you made from it. Go read some books on price/demand/ availability and other information about Bitcoin and its long term perspectives before making foolish statements  Grin
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December 17, 2013, 12:03:46 PM
 #19

I'ld say we'll start running out of generated Bitcoins by the 2020 mark....but I might be off by a bit of course, depending on how mining hardware evolves Smiley

the EURO has been a pretty crap decision for 85% of the countries involved in the EU.... So let's hope Bitcoin adoption will learn from those mistakes Smiley
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December 17, 2013, 02:38:45 PM
 #20

I'ld say we'll start running out of generated Bitcoins by the 2020 mark....but I might be off by a bit of course, depending on how mining hardware evolves Smiley

the EURO has been a pretty crap decision for 85% of the countries involved in the EU.... So let's hope Bitcoin adoption will learn from those mistakes Smiley

-_- you have no idea.

we'll run out of unmined bitcoins around 2140 and this date is fixed.

No matter if you mine with 1 iPhone or 1 billion ASICs, the amount of blocks generated per hour will not change.

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