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Re:Bitcoin Miners Signal Revolt Amid Sluggish Blockchain by Lazare on Monday March 13, 2017 @07:39PM (#13863624)
Money is, in a very real sense, a confidence trick. USD, bitcoins, a gold doubloon: You're willing to exchange goods and services for it not because you want it, but because you hope that someone else will exchange goods and services you actually want later. So ultimately, all money is back 100% on faith. The only advantage fiat money gets is that you can pay taxes in it, and you're assuming that at some point in the future you can pay your taxes in it, or trade it to someone who wants it to pay their taxes. Which isn't a bad thing to have faith in, but it's hardly a guarantee.

> Any odds an aficionado might be around to enlighten the uninitiated?

In principle, the big advantage of fiat money is that it's deeply enmeshed in a social and legal system, and you have a lot of protections with regard to loss, refunds, consumer guarantees, bank deposit protections, etc. If you deposit your USD into a US bank account, and the bank goes under, you'll be protected. It's all just numbers in the central bank, and as a society, we'll change those numbers to ensure a fair and equitable outcome (...in theory; actual results may vary). If that means zeroing out the account of someone we think shouldn't have some money, or just incrementing the account of someone who think should have it, creating currency out of thin air, then so be it.

In principle, the big advantage of crypto currency is that it's not enmeshed in those systems. There are no protections, there's no refunds. Nobody controls the system; nobody can decide that the numbers are unfair and change them. The downside is that, if your bitcoins are stolen, nobody can step in and return them. The upside is that, unless they're stolen, nobody can step in and take them. Even the concept of "theft" is kind of fuzzy. Instead of laws, we have code; if the code allows currency to be transferred between accounts, then that's what the code allows.

If you think it's great that credit card companies can reverse payments, you'll probably like the idea of fiat currencies. If you think it's horrible, you'll like the idea of crypto currencies.

As a practical matter, however, actual crypto currencies still exist in the real world. If I buy a coffee using bitcoin, and I get food poisoning, I can still ask you for a refund, and if you refuse I can sue you. The fact that a credit card company can't just reverse the transaction and move the money back into my account is merely an inconvenience; if a court rules you owe me a refund, you can protest all you like about the irreversibility of the blockchain, but you'll still end up jailed for contempt of court if you don't cough up the cash.

Plus, the people who actually run cryptocurrencies keep stepping in and retroactively changing the rules to prevent "bad" outcomes. When a bug in Ethereum allowed a huge amount of crypto currency to be "stolen" (scare quotes because, again, what does that even mean in the context of Ethereum?), the entire system was rolled back and forked to undo that result. Again, that's a lot less convenient than how a fiat currency would deal with it, but it's not a difference in kind.

TL;DR: In principle, crypto currencies are fascinating, amazing artifacts of a world of pure logic and reason. In practice they don't really work very well, because we live in a world of fuzzy laws and emotions.

Re:Bitcoin Miners Signal Revolt Amid Sluggish Blockchain by ddebernardy on Monday March 13, 2017 @09:45PM (#13864300)
> So ultimately, all money is back 100% on faith.

Interesting reply overall but per my other replies, it seems to me that a .gov's ability to tax and confiscate wealth - not to mention enforce capital controls - to support a currency trumps pure faith.

If the USD goes to hell I can count on the US .gov and taxpayer to ensure my USD are worth something. If Bitcoin does, I've still no idea who the payer of last resort is.

Fiat money, at its pinciple, is debt first and foremost. Admittedly, some have given creditors a giant finger in the past. But still, crypto currency is, well... a financial UFO? :-)

Re:Bitcoin Miners Signal Revolt Amid Sluggish Blockchain by Lazare on Monday March 13, 2017 @10:54PM (#13864577)
> it seems to me that a .gov's ability to tax and confiscate wealth - not to mention enforce capital controls - to support a currency trumps pure faith.

You misunderstand my point: That's still faith; you have faith that they will support it and not, say, devalue it, change currencies, just decide that a bunch of money is no longer valid[0], etc. That power to confiscate wealth - which you're quite right, they could use to defend the currency - could also be used to destroy it.

> If the USD goes to hell I can count on the US .gov and taxpayer to ensure my USD are worth something.

You are very likely correct, but it's not a guarantee. History is littered with examples of currency which is no longer worth anything to anyone except collectors, and maybe not even then.

Which doesn't mean it's not a safe bet; I think it's clearly true that the USD is more likely to be a stable store of value than any crypto currency, and at least most fiat currencies. But if you think it's 100% safe, you're engaging in faith based thinking. :)

[0]: https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetis...