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Author Topic: Bitcoin Slammed Again - NYU Professor featured in Australian media  (Read 1405 times)
OleOle (OP)
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Are you like these guys?


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September 02, 2014, 10:46:31 PM
 #1


Worth a read, if only to find out how the detractors are putting their points across. Plus, it always helps to take a contrarian view sometimes, it stops our ideas becoming unchallenged ideologies:


3 September 2014, 5.56am AEST

In Conversation with Bitcoin expert and NYU Professor David Yermack

Professor David Yermack of the Stern School of Business at New York University is used to being heckled when he gives talks about Bitcoin. After all, most of his work has involved pointing out all of the things Bitcoin enthusiasts don’t want to hear.


http://theconversation.com/in-conversation-with-bitcoin-expert-and-nyu-professor-david-yermack-31048?utm_medium=email&utm_campaign=Latest+from+The+Conversation+for+3+September+2014+-+1891&utm_content=Latest+from+The+Conversation+for+3+September+2014+-+1891+CID_42903ca6728864a567ba0e91d35566ae&utm_source=campaign_monitor&utm_term=In%20Conversation%20with%20Bitcoin%20expert%20and%20NYU%20Professor%20David%20Yermack


I had to laugh at the point raised about "0.00301 bitcoins", it's pretty accurate.

Enjoy.

 Smiley





 

inBitweTrust
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September 02, 2014, 11:22:44 PM
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There is some surprising good news he cites in his study... a third of all business accepting bitcoin don't convert it to Fiat....  Shocked

wow... that is fantastic news.

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September 03, 2014, 12:18:18 AM
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Professor David Yermack of the Stern School of Business at New York University is used to being heckled when he gives talks about Bitcoin. After all, most of his work has involved pointing out all of the things Bitcoin enthusiasts don’t want to hear.

The problem is that none of the points he makes are sound.

Quote
In looking at the way Bitcoin is used (or not) as a medium of exchange, he points out the number of daily transactions of Bitcoins has fundamentally not changed in the past year.

Whatever. Has the number of transactions in dollars gone up in the last year? I bet there are years when the number of dollar transactions has gone down. Does this mean that the dollar fails as a unit of exchange?

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As a means of payment, the fact that you have to calculate prices of purchases with amounts such as 0.00301 Bitcoin or “3.01 Bitcoin times 10 to the minus 2” effectively means it is never likely to become a unit of account.

The dollar used to be worth 20 times what it is now. People didn't have problems back then with it being a unit of account.

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Professor Yermack’s research on Bitcoin volatility found it displayed an average 10% price change per day with an overall volatility of 142% over the course of a year.

Yes, it is very volatile and that causes problems. As adoption grows, it will become less volatile. Does he have no ability to look ahead?

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As a final taunt to the Bitcoin faithful, Professor Yermack suggests the entire Bitcoin mining effort could be subverted by a person or government ... In all likelihood this would be possible, but more research is required to convince the Bitcoin community of the validity of the argument.

It is called a 51% attack, and everyone is aware of it.

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September 03, 2014, 12:29:32 AM
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i don't find anything he said in that article to be too outrageous.. he seems fairly reasonable. only problem is his "in 6 months" prediction, which drew the ire of many bitcoin evangelists.
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September 03, 2014, 02:00:49 AM
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i don't find anything he said in that article to be too outrageous.. he seems fairly reasonable. only problem is his "in 6 months" prediction, which drew the ire of many bitcoin evangelists.
I would consider that to be outrageous. What gets to me are his conclusions that he makes with his "pile" of facts. Everything he says is more or less accurate, but the conclusion is off.
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September 03, 2014, 04:03:03 AM
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As a final taunt to the Bitcoin faithful, Professor Yermack suggests the entire Bitcoin mining effort could be subverted by a person or government - such as Vladimir Putin - taking control of the peer-to-peer network that essentially validates every transaction.
The difficulty is so high that it will need a lot of resources to grab 51% of mining hashing power. I think it is difficult for any individual body to impose such attack to nearly destroy the network. It will waste a lot of resources and is not worth.
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September 03, 2014, 04:53:05 AM
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For reference, here are other bitcoin related statements from Yermack:

Starting a bitcoin class (the proposed syllabus and the course is announced for fall 2014):
... the professors expect to address the risk and insurance implications of virtual currency activity, since investors currently can’t insure themselves against theft or hacking on bitcoin marketplaces the same way they can at a traditional FDIC-backed bank. Some companies are trying to build such insurance products, and governments must decide whether to provide security for a currency that, in some ways, competes with their own.

Yermack expects to pack the 50-seat room currently reserved for his class, but he knows the currency’s popularity might be fleeting and, if its value crashes to just $5 or $10 between now and August, interest in the course could evaporate.

“The trajectory of bitcoin is going to be crucial” to whether the class actually happens, he says.

Starting to assess bitcoin from an academic angle while the currency is still in its infancy allows Yermack and Miller to set the agenda for future study of the subject. “You can help shape the field by stipulating what you think the important topics are,” Yermack says. “For an academic, that’s fun.”

With Bitcoin, all you really have is hope:
I would not invest in Bitcoin if you're looking for a rate of return. I don't think you could consider it a good investment, especially for a poor household in a developing country that may not have much savings. Bitcoin is incredibly risky and there is no intrinsic value behind it. If you invest in a stock, there is a company paying dividends that supports the value of a stock. If you invest in a government bond, you have the government's promise to pay interest; with Bitcoin, all you really have is hope.

Cyber currency success requires government support:
David Yermack, finance and business transformation professor at New York University’s Stern School of Business, notes that critical to the survival of a cyber-currency is government support. “I am skeptical that any form of money will be successful if it is not backed by a sovereign government. Without this sort of foundation, a currency really cannot be a form of property because it cannot be pledged as collateral, foreclosed upon, reassigned in bankruptcy and so forth,” he says. “This will make it unattractive in a wide range of commercial settings.”

“Governments can try to ban [Bitcoin], but unless they literally control every communication over the Internet, it seems impossible to prevent transactions.” –Ali Shourideh

In a recent working paper, Yermack wrote that Bitcoin does not behave like a currency according to criteria used by economists. Money should be a medium of exchange, a unit of account and a store of value. Bitcoin meets the first criterion because more merchants are accepting it as payment. But as a unit of account, it performs poorly because it requires businesses to quote prices to the fourth or fifth decimal place led by zeroes, which is impractical. Bitcoins also are quite volatile, with different exchanges quoting different prices without giving investors the ability to arbitrage. Finally, Bitcoin is a poor way to store value because it faces “rampant” hacking attacks and thefts, he points out. It also has virtually zero correlation to major currencies, so its value is “completely untethered” to them, making its risks “nearly impossible to hedge for businesses and customers and [rendering] it more or less useless as a tool for risk management,” according to Yermack.

On the silk road auction:
“Either this was a very clever piece of disinformation or a very careless error by the government. It’s a little hard to know which from a distance,” David L. Yermack, a professor at New York University’s Stern School of Business, said of the leak. “You want to create the illusion that there’s immense demand for this if you’re the government because you want people to bid as much as they’re willing to.”

Experts are divided on what information about Mr. Draper’s bid, if any, can be gleaned from the price increase. Losing bidders may be driving up the price because they know there is significant demand for the coins at a higher price. The increase could also be the result of interest in the auction itself, said David L. Yermack, a professor at New York University’s Stern School of Business.

“Just the fact that there was such broad demand would tend to push up the value of Bitcoin,” he said.

Is bitcoin a real currency? An economic appraisal - http://online.wsj.com/public/resources/documents/NBER.pdf

So who/what made him an expert on Bitcoin? So far I rate his opinion only slightly higher than fallling.
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September 03, 2014, 07:11:17 AM
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So who/what made him an expert on Bitcoin? So far I rate his opinion only slightly higher than fallling.

I don't think he claims to be an expert on Bitcoin, as you suggest.  The journalist decided to call him one in a title to an article.

Perhaps he sees himself as an expert in say Business Economics, which his PhD from Harvard suggests he actually is, or perhaps his MBA helps him understand a little bit about business.

By lecturing about Bitcoin he brings awareness to Bitcoin which is a positive for the Bitcoin community.





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September 03, 2014, 07:29:23 AM
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Wasn't there some announcement fromn the Australian gov recently that they stated bitcoin could possibly actually become legal tender over there? I think that announcement vastly outweighs this rubbish.

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September 03, 2014, 10:25:10 AM
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Opinions are like arseholes, everybody has one
I quite like folks like him who push back to the cheerleding bandwagon, helps keep the community on its toes

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September 03, 2014, 11:44:51 PM
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I would listen to him when it comes to the Bitcoin economics. Even if he is wrong on that I would probably still learn something. But I'd be aware that his understanding of the technology is possibly limited and would not take any statement he makes that involves the technology (hackable, 51% attacks?) for granted.

That said, getting some exposure at PhD level is nice. He seems to take a genuine interest in Bitcoin. Having another bright mind on board won't hurt  Grin
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September 03, 2014, 11:52:30 PM
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"Professor Yermack argues Bitcoin should not be considered money, for a number of reasons"

I agree with him on that. Bitcoin is the exchange of bits of math data. And the concept of ownership does not apply on the blockchain, there is only control.

It should therefore be considered SPEECH rather than money. It follows then that BitLicense is null and void, and all charges against Charlie Shrem should be dropped as unconstitutional impingement of his free speech.

Remember Aaron Swartz, a 26 year old computer scientist who died defending the free flow of information.
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September 04, 2014, 12:02:04 AM
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I saw him talk at UWA last week. In regards to his presentation, aspects of his presentation were woefully and inadequately researched and alot of the facts presented were just plain wrong. His understanding of bitcoin related tech is worse than my mothers... and that is saying something!

great in terms of entertainment value though Smiley http://freebeer.com.au/2014/08/31/establishment-vs-bitcoin/ This guy blogged about his presentation but didn't realise that the transaction volume has doubled in the last year...
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September 05, 2014, 03:21:18 AM
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As a means of payment, the fact that you have to calculate prices of purchases with amounts such as 0.00301 Bitcoin or “3.01 Bitcoin times 10 to the minus 2” effectively means it is never likely to become a unit of account.

...which is why we call this 3.01 milli-bitcoins. duh. Unit of account example canard is invalid.

I really wanted to take him to task on his arithmetic - that's not 10E-2, it's 10E-3. But after watching the vid, that was merely an invention of the journalist.

Still stupid reasoning.

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September 05, 2014, 03:29:02 AM
 #15

Another professor bitcorn? Is he a Certified Bitcoin Professional?  Wink

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