Yes, that's why it highly irritates me when people repeat the Tulip bulb analogy. Bitcoin may be in a bubble, and it scares me. But it amazes me how little people think, before that kind of pattern matching.

I read the paper about 2 years back, after reading Nathaniel Popper's book 'Digital Gold...' which presents the history of cypherpunks, leading upto Satoshi's white paper. The book was enjoyable to read. And the paper's brilliance was stunning.

That said, when I think of it deeply, it does seem to me similar to pyramid schemes. The early adopters have a unfair advantage.

Also, its better that an alternative to proof-of-work is found. Although the argument is support of that, is that, it perhaps takes more energy to sustain the present financial system, the base of which Bitcoin intends to replace.

So I find myself in a curious position of being in the Blockchain camp, and unwillingly though. Which is because people who typically are in that camp, say the tech is good, but Bitcoin is not. But I believe Bitcoin by itself is a fantastic and disruptive thing. Without that app there is no platform (blockchain) evolution.

But of course Bitcoin has flaws, and we could be in a big bubble. But no half baked Tulip bulbs analogy please+.

Another flaw which I find with Bitcoin is the ownership is very fragile, compared to real world ownership. In these days of phone cameras, all it takes is an accidental photo of my secret 12 words, for my satoshis to get compromised. Or there is no alternative, if I lose my private key. Real world banks have ample ways of addressing the identity and tend to offer more robust possession safety.

+ - I have not seen that analogy on HN, thankfully, but its there every where. Yesterday, I saw a respected VC making it on LinkedIn.

Edit: minor

> The early adopters have a unfair advantage.

That's absolutely true but consider this: early adopters always have an advantage, in fact just being born earlier than someone else gives you an advantage. Family wealth, real estate ownership, rent seeking, tenure and so on are all linked because of this.

Furthermore, I've tried to pay lots of people in bitcoin over the last couple of years, and often the response is "fake money? no thanks, I want real money please".

Largely from the same people who complain most loudly about inequality. You can lead the horse to water, but you can't make it drink...

Always is a big word. So you are saying people living today have a disadvantage against people from 200 years ago? I mean I get where you are coming from... less competition and more room left to explore but there is also less knowledge to start from and less people to cooperate with. The advantage depends not on time but on how resources, in particular knowledge, is distributed in a society - bitcoin makes a design decision which undouly favors early over late adopters but it wouldn‘t necessarily need to.

> bitcoin makes a design decision which undouly favors early over late adopters but it wouldn‘t necessarily need to.

Explain please how it would be possible to create something like bitcoin which does not in some way or other favor early adopters over later ones, I really can't see it so this is a genuine question. Not 'pre-mining' is roughly equal to simply not adopting it at all. I see it analogous to a founder not believing in their product to the point that they will not use it. Of course 'Satoshi' could have not pre-mined as much but who is to say whether those coins are even accessible today?

And anybody that joined in later than that already lost that early adopters advantage compared to those that joined earlier.

Which probably means that (wild hyperbolic assumption following) if you haven't done anything with it so far you'd look at me and my miserly number of coins as an 'early adopter' whereas I was - and still am - pretty skeptical about bitcoins long term viability.

Sorry for the late reply, I am not a regular poster so I forgot about the comment :(

I didn‘t say that there wouldn‘t be any favoring towards early adopters... a „better system“ will by definition always favor early adopters at least through efficiency gains accrued through the usage of the system over users who have not yet adopted. BUT bitcoin is crazy in terms of „value“ increase that is not related to any real gains in practice. People buy tokens because people invest money to find tokens because people buy tokens. And because everyone seems to be „making money“ from that things just continue... It‘s like with the rat who can control its own cocain supply...

So what I meant to say is - this specific system design is madness!

DLT in general is very interesting and I am playing around with some ideas regarding currency pegged tokens that increase in value if empirically verifiable achievments/improvements have been made. The goal is to create common-interest communities that are rewarded for realizing real-life impacts. So even people not participating profit. People who join in profit a little more. The goal is to have sustainable growth and predictable prices.

Bingo. Love the theory. It should work. Let's see.

And your secret 12 words, even if never revealed to anyone, presents to you considerable frailty:

https://www.youtube.com/watch?v=foil0hzl4Pg

That's a talk about brainwallets, which is something else. Brainwallets are generally chosen by humans; you can't rigorously prove how much entropy they have, and in practice it's usually much less than people realize.

With a proper 12-word phrase, each is randomly chosen from a list of 2048 words for 11 bits of entropy per word. That's 132 bits of entropy, which is not crackable. (With a 24-word phrase you subtract 8 bits for a checksum; I'm not sure about the 12-word format, but 124 bits of entropy isn't crackable either.)

Ah, I did not realize that. Thanks for clarifying for me!

These are all important considerations that any investor in bitcoin needs to consider.

"That is the beauty of it. It is only eight pages long, but fundamentally changes the concept of money."

Not really; it only serves to validate the beliefs of people who already agreed with the basic premise that money is something that can exist without central authority. That view was already common long before the Bitcoin paper. Plenty of libertarians believe that money is an emergent phenomenon of free markets, something which arises on its own as the market converges on a common currency as its medium of exchange.

On the other hand, if you are aligned with the mainstream of economics, the entire premise of the paper is easily dismissed. In that view, money can never be separated from banks, the paper is basically nonsense.

Money is an emergent phenomenon of markets, and it has nothing to do with libertarians.

https://en.wikipedia.org/wiki/Coincidence_of_wants

How does that prove money is an emergent phenomenon of markets? In fact, that article suggests exactly what the historical evidence suggests: markets cannot really exist without money. Societies without money tend to only engage in trade with strangers, rather than having markets:

https://monoskop.org/images/3/36/Graeber_David_Toward_an_Ant...

For an example of money showing up in Barter systems look at diablo 2's use of stone of Jordon's as a proxy for money.

It can't prove it any better than than anything else can bridge the is-ought gap. I agree that markets can't exist without money, but I think historical evidence suggests that they will create money in order to exist. Almost every society in human history has developed a monetary system; either one based around a commodity as simple as camels, bullion or sea shells, or backed by fiat.

Well, the same author from the link I gave happens to have also written a book on that very topic that you might find interesting:

https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years

I'll check it out. Thank you.

> "Money is an emergent phenomenon of markets, and it has nothing to do with libertarians."

let me fix that for you: "Money is an emergent phenomenon of markets, markets are a fundamental feature of libertarianism, therefore money has everything to do with libertarianism."

Markets are ~10,000+ years older than libertarians. Some early examples had people swapping from banditry to trade depending on how well armed the people they encountered where. No outside forces nessisarily, but no rule of law either.

Sure markets may be older than libertarians, but even though libertarians didn't exist to enunciate libertarian theory back then, the fundamental libertarian phenomenon of non-aggression and voluntary exchange as you mention was indeed present.

But most non-libertarians believe in non-aggression and voluntary exchange too. They just argue that some taxes aren't aggression and some exchanges aren't really voluntary.

These where often rather agressive trades, even without violence actually occurring it's threat was still on the table.

Markets are a reflection of human action. Political science is concerned with quantifying and influencing human action, thus markets are a fundamental feature of all political schools of thought.

No need to be so dismissive. The abstract term "decentralized" hides a lot of the complexity in Bitcoin. It is also programmable money, irreversible money, geographically unbound money, fast money, and transparent money.

> On the other hand, if you are aligned with the mainstream of economics, the entire premise of the paper is easily dismissed. In that view, money can never be separated from banks, the paper is basically nonsense.

So, did banks invent gold? Or did gold give rise to banks?

How can banks even exist in the first place unless we already have a common medium of exchange (gold), which can deposited into said banks?

Actually, the first banks, along with the first money and the first markets, developed from the palace economies of early city states. Originally the proto-bank maintained records of what each person had deposited with the temple, what had been given to various people, and what was available to give. Those ledgers recorded each type of deposit (wheat, cloth, olives, etc.) with a different unit; the innovation that gave rise to money was the transition to a single unit of account.

That’s really interesting! Were these banks private enterprises? I assume people voluntarily deposited commodities in exchange for a common medium of exchange.

The problem arises when depositors can’t redeem their medium of exchange for the commodities they originally deposited, or something of equivalent value.

By the way, I’m convinced Bitcoin will not function without credit instruments, just like was the case with gold. I’d argue there’s a huge difference between redeemable and irredeemable credit instruments, though. The latter being an artifact of government regulation.

"Were these banks private enterprises?"

Sort of; at that time it the boundaries were less clearly defined between what was governmental and what was private. The basic economic structure was for a large temple to store the various goods people produced, and to give the goods out to people as necessary. For example, a farmer would deposit grain, and the grain would be redistributed throughout the city-state; the farmer would receive other things from the temple, like clothes and tools. The record-keeping served two purposes: to keep track of what was available for distribution, and to keep track of who was contributing what. This was the "palace economy:"

https://en.wikipedia.org/wiki/Palace_economy

The bible makes reference to such a system in the story of Joseph (which is ancient enough that palace economies still existed when the story was first written), who was the administrator of such a system in Egypt:

http://www.mechon-mamre.org/p/pt/pt0141.htm#47

"I assume people voluntarily deposited commodities in exchange for a common medium of exchange."

Not originally and not universally. It was more like a system of 100% taxation in some of the early palace economies, where everyone deposited everything they produced with the temple, and then received things as they were needed. You were basically not allowed to live in the city without contributing something (he who does not work shall not eat), though a person could always work for the temple itself e.g. as a sacred prostitute. Of course the specific laws and economic organization varied from city to city, and plenty of people lived far outside the cities and had their own ways to manage goods; the specific details varied with different places and periods of time.

What you received for your deposit was often just an update to the temple's ledgers clearing a debt you owed the temple (i.e. indicating you paid your taxes; often referred to as "offerings" in the biblical legal code) and possibly offset future taxes. If you were unable to make good on that obligation, your land could be seized and you could become a slave until the king declared a general amnesty (not uncommon in the ancient world; the biblical legal code requires slaves to be given amnesty after 7 years of service, and a similar amnesty provision is in the code of Hammurabi). The story of Joseph also indicates that this exact scenario had played out under Joseph's administration in Egypt: the farmers were forced to turn their lands over to the government during a famine (I am not suggesting that the bible is historical; rather, in ancient Israel at the time that story was written, people were familiar with the situation).

As the economies became better developed and the scale increased, money (i.e. a single unit of account that serves as a common medium of exchange) and markets (i.e. trade between inhabitants of the same city) began to replace the temple economy system, at which point private banking enterprises became more clearly defined. For example:

https://en.wikipedia.org/wiki/House_of_Egibi

https://en.wikipedia.org/wiki/Murashu_family

And yet, reality has seemed to prove these economics wrong.

You can use this "nonsense" money right now. And nothing that any economist says about it can stop you.

if I'd be willing to pay 6-20 bucks for a simple transaction with a volatile currency and wanted to live with the threat of having my account hacked and no insurance whatsoever, sure

Your money has been hacked. You just don't recognize it.

https://d3fy651gv2fhd3.cloudfront.net/charts/united-states-m...

PS. Every standard sized bitcoin transaction bar the past three days (and those will too), that people paid over 5c for has been committed to the blockchain.

Yeah, that rampant inflation sure destroyed my savings account.

Oh wait, no it didn't.

House prices look like they're continuing their 30-year boom in my area. Oh that's right, they took them out of inflation statistics in 1983.

How's education costing these days, anyway? Healthcare?

Can you buy the same things for the same prices as when you first started saving?

That's not my money because I do not own any US Dollars, and more importantly I don't really see why a graph showing me the money supply is supposed to convince me to buy Bitcoin

Don't. No one is forcing you to buy bitcoin. If you don't recognise its value proposition, don't invest in it.

You cannot use it to pay your mortgage, nor to pay your taxes. You cannot even use it to pay Steam...

I have a bitcoin debit card. I use it to pay all of these things. Your argument is akin to a person in the US saying that a person from Europe using their visa card, isn't using real money, because you don't control it.

> I have a bitcoin debit card. I use it to pay all of these things. Your argument is akin to a person in the US saying that a person from Europe using their visa card, isn't using real money, because you don't control it.

If the person from Europe comes to US, goes to McDonald's, buys a meal whose price is denominated in USD with his European credit card and tells me he made the purchase with Euro, I would consider that a false statement. To me, he made the purchase in USD, his credit card company just will make the FX conversion for him and accept EUR from him when he pays his credit card bill.

What is a Bitcoin debit card? What payment system does that card actually use?

Converting BTC to fiat currency on the spot is not really the same thing as using Bitcoin to pay your bills, any more than selling some shares of stock and using the money to buy a house is the same thing as buying a house using shares of stock.

It's a standard mag stripe card that draws from a Bitcoin account and can be used anywhere. They're quite common.

IOW you are not paying with BTC, you are selling BTC for some fiat currency and using the proceeds to make the payment.

If I take my US debit card to Europe and buy things there, essentially the same thing happens.

But you are not paying the European merchant with USD.

Neither are you paying with USD even if your debit card directly debits your USD account. It's a proxy for paying with USD, just like a bitcoin debit account is a proxy for paying with bitcoin. That the conversion and account adjust ment happen in one currency or another does not mean that currency is directly involved, it is merely a convenient stand-in for the number reflecting your balance, an attribute of it.

People think that banks hold their money: they don't. The bank simply owes you your money but they don't hold it for you. What you get in return for your money is a statement from the bank what debt they owe you and a device to convert that debt into goods whenever you feel like it. That device is not the same as the underlying money, it is merely a proxy for your debt.

Which you'd find out about in a hurry if your bank ever went under and your card stopped to work.

Are there standard mag stripe/chip cards that draw from a BTC account and exchange into fiat at the time of purchase of a good?

All the cards I've seen when I looked into it a bit ago converted into fiat at the time of charging the card with BTC (ie, you send BTC, that got converted into fiat immediately (at pretty mediocre rates), and then you could use that fiat to purchase stuff or withdraw cash (at pretty mediocre rates, again)).

If you buy a debit card with $1000 on it with an ounce of gold, do you now have a gold debit card?

Yes. I think GoldMoney issues those kind of cards.

Maybe I'm not clear on how a btc debit works but that seems foolish. Maybe a few years ago when it could actually function as a medium of exchange. Now the transaction fees are exorbitant.

> Now the transaction fees are exorbitant.

All the remarks about the skyrocketing fees can be cut short by pointing out that Bitcoin Cash (which is much closer to the Bitcoin described in the white paper than Bitcoin Segwit [BTC]) doesn't have this problem. Just like Satoshi Nakamoto said that the block size limit could be raised once blocks started to get full, the developers of the Bitcoin Cash software also say the current max. block size of 8 MB can be raised if the blocks get full.

If you want an alt coin with more capacity than bcash, more decentralised, and faster, use litecoin. It even has atomic swaps with bitcoin.

Look at the price. Going bananas.

No, I'm good. Besides, Litecoin's capacity isn't bigger.

Like i said...

> I'm not clear on how a btc debit works but that seems foolish.

Not sure there's any response possible for that one. "I don't know how it works, but I think it's dumb."

> Now the transaction fees are exorbitant.

Every standard sized bitcoin transaction bar the past three days (and those will too), that people paid over 5c for has been committed to the blockchain.

Either pay a ridiculous fee or wait a ridiculous amount of time for confirmation?

Replace by fee is a thing, as long as the tx is unconfirmed it could be replaced. You're effectively saying the wait time is now 3 days unless you want to pay a fee of several dollars. So that rules out most transactions.

How do you pay for anything given those restrictions?

By aggregating commits to the blockchain, and doing them in batches.

Sorry but non of this sounds very convenient or useable. It seems like you just really like btc so you're making concessions on usability.

> Sorry but non of this sounds very convenient or useable

Then you don't understand how bitcoin works, so it's probably best you refrain from commenting on bitcoin architecture.

https://www.youtube.com/watch?time_continue=6&v=4E3NiDC9i8E

You can't explain how your bitcoin debit is usable without paying a high fee or waiting a long time, so I don't know how bitcoin works? I hardly think that's fair. Your responses are practically non-sequiturs.

Lightning network hasn't been rolled out yet. It has nothing to do with our conversation.

What it did, was it made it possible to create a decentralized store of value without the need of a central authority. And that has definitely made people question their understanding of what money even is.

Not really. Anyone who is confident in the mainstream view of money, which requires the existence of a bank or government of some kind, would quickly dismiss Bitcoin. If I cannot pay my taxes or mortgage with it, why should I accept it?

(And of course, if I can pay my taxes and mortgage, how can anyone claim to have removed the central authority from money? Just like the gold standard, nothing would prevent a government from changing its mind about whether or not to accept Bitcoin for tax payments.)

Like I said, if you already believe that money can exist without a central authority, Bitcoin simply serves as validation. Otherwise it does not really change anything, because if you accept mainstream views of money, then the premise of Bitcoin makes no sense at all.

You think Bitcoin is a decentralized store of value? Tell that to all those people whining about the Mtgox bankruptcy proceeding, which is being resolved by paying for the lost BTC according to the price in Yen at the time Mtgox declared bankruptcy which is a tiny fraction of the current prices. When push comes to shove the "value" being stored is measured in fiat currency, with all its associated central authorities.

> You think Bitcoin is a decentralized store of value? Tell that to all those people whining about the Mtgox bankruptcy proceeding

That is a gross misrepresentation and a misunderstanding of the point of a decentralized store of value. "All those people whining about the Mtgox bankruptcy proceeding" were not using a decentralized store of value. They were using a centralized broker that handled things for them. If they kept their own private keys and managed their coins directly, in a decentralized way, they would be still whole today.

> Tell that to all those people whining about the Mtgox bankruptcy proceeding

Not sure what your point is, dollars(cash) can be stolen as well.

The context: MtGox is currently going through a bankruptcy proceeding in Japan. The complaint right now is that the creditors i.e. people who had accounts with positive BTC balances when MtGox declared bankruptcy will be repaid in JPY, according to the price of their BTC balance when MtGox declared bankruptcy in 2014. Since then, the value of BTC has obviously increased quite a lot, so much so that MtGox can actually use its remaining BTC assets to repay those creditors, leaving plenty of BTC to pay the shareholders.

In other words, even if you think Bitcoin acts as a "store of value," that still does not make it "money" according to the law. You can have 1BTC or 100BTC, but the law is only concerned with the monetary (i.e. fiat currency) value at some particular time (not necessarily right now).

Ergo : Don't trust banks.

...the same would apply if I had promised to pay you in BTC and then failed to make that payment. This is not really about trusting banks.

Actually it is.

> Anyone who is confident in the mainstream view of money

That belief structure is being challenged as we speak.

> Tell that to all those people whining about the Mtgox bankruptcy proceeding

The only thing that proved, is that you can't trust a bank.

Gold and silver were a decentralized store of value from about 600BC till 1935AD, so ~2500 years. FDR and Congress made owning gold illegal in 1934 and then the dollar went off the gold standard in 1971. Previous fiat currencies have usually not lasted more that a few generations before they blow up. Now is about the right time for that to happen.

Reading history is fun and can help one understand the present. I'd highly recommend it. "Debt: The first 5000 years" is a great book and a good start at trying to understand what money is/has been.

> it made it possible to create a decentralized store of value without the need of a central authority

In itself, that always existed: it's called gold and gems. It's the most primitive store of value ever- modern economies were born when we went past it.

Gold and gems can't be instantaneously and safely transacted over the internet.

Name-calling cryptocurrencies "primitive" when they're clearly not doesn't lend a lot of weight to your argument.

Yes, bitcoin is better than gold in that it's virtual and can be transferred over the internet. But that doesn't change the fact that it's a store of value like gold is, and not a currency.

> Name-calling cryptocurrencies "primitive"

I called gold primitive as a currency. And made an argument for bitcoin (specifically) being similar to gold.

Edit: btw, gold 500 years ago had the same exact property of bitcoin today: it was immediately transferable to anybody you were in contact with and could buy goods from. That didn't make it better.

BTC cannot be instantaneously transacted at all, over the internet or otherwise.

It's closer to a commodity than a currency: fixed supply. In fact, the IRS is treating BTC as a commodity, to be valued, for tax purposes.

You should probably at some point recognize that everyone doesn't live in America

Oh sure, US was just demonstrative: I think commodity is the right mindset, both as a user and as a community. Banning it's not going to happen, taxing it will be tricky, and it may be premature to rework anybody's tax system just for BTC.

Pretty sure paper says it is a p2p cash system. The goal wasn't a store of value that was a natural side effect of the limited supply and the utility of the network effect from being a means of transacting.

please read.

not necessarily related to this thread.

for you own good. this is straight from satoshi. I know you hate him. I don't care.

https://fr.scribd.com/document/359522859/Bitcoin-Network-Top...

> fundamentally changes the concept of money.

If there is something Satoshi Nakamoto didn't seem to understand, is money. He designed a system that, being capped to a max amount of units, is intrinsically deflationary, and thus cannot serve as money. You don't transact with something that was worth x last year and 2x this year (not to mention 10k last week and 17k this week), it's just dumb.

> intrinsically deflationary, and thus cannot serve as money.

It is hard getting out of the inflationary currency mind-set, I recognize that.

> it's just dumb.

It's great. The money put on my debit card card a few months ago means that the beers I buy today are 1/3 of the price of what they were relative to the time the money was put on the card. And you know what's better than beer? Good beer on special.

You do know that trend isn’t sustainable, right? Bitcoin evangelists in 2017 seem to love talking about the rate of increase in price as if increasing in value by 300% every couple of months is a built-in feature.

I expect bitcoin to stabilize at an ever appreciating value in line with existing inflation. And not government CPI, with their hedonic quality adjustments either, actual inflation. But I don't see getting to that point for a long long time.

Why would you expect bitcoin to stabilize? I see no mechanism that would do that. Gold has had thousands of years of use as money-like instrument, and only periods of relative (nominal) stability during the last century or so have been when there have been organizations (central banks) to keep that stable.

http://www.macrotrends.net/1333/historical-gold-prices-100-y...

(be sure to play around with the "inflation adjusted" checkbox)

Yes, cryptocurrency prices will stabilize when they displace all fiat currencies ;) Because, until they do, they'll be too damn attractive for speculative investors to resist. That was part of the original plan, as I recall from discussion in various cryptoanarchist forums.

I think you shouldn't buy those beers: in a few more months they'll be a 1/9th of the price. And maybe then you should wait again...

In that case I assume you never brought a computer from 2000-2010, when you could wait a year or so to get twice the computation for the same price?

For that matter, would you even buy beer now, when you could instead invest the money risk-free in US govt. bonds so you could buy more beer in future?

I did, but during the years I certainly delayed the purchase of many technological goods because I assumed that waiting for their price to decrease or their performances to improve was a wise thing to do. Didn't you? Imagine how companies loved that, and imagine extending it to just everything, from food to housing.

However, with technological items there was always another side: the new ones were so much better than our current ones, ours were actually getting old faster, and we were driven to buy. The same won't happen with the other goods on the market.

The interest of gov bonds or of any other financial instrument afaik represents (and is proportional to) a risk of not getting repaid.

>I did, but during the years I certainly delayed the purchase of many technological goods because I assumed that waiting for their price to decrease or their performances to improve was a wise thing to do. Didn't you?

But you still purchased it eventually. In that sense a deflationary currency might change the balance of consumer spending vs saving in favour of more saving, but that doesn't mean a continuous downwards spiral in spending, it could just be a new equilibrium.

>Imagine how companies loved that, and imagine extending it to just everything, from food to housing.

Personally I'd absolutely love if house prices halved every year, as at the rate they're currently increasing it'll be a long time before I could afford even a tiny apartment anywhere near where I work.

>However, with technological items there was always another side: the new ones were so much better than our current ones, ours were actually getting old faster, and we were driven to buy. The same won't happen with the other goods on the market.

Would it be bad thing if it did happen to other goods on the market? If e.g. a 2005 car was better than a 2000 car to the same degree that a 2005 computer was better than a 2000 computer.

>The interest of gov bonds or of any other financial instrument afaik represents (and is proportional to) a risk of not getting repaid.

I was referring to https://en.wikipedia.org/wiki/Risk-free_interest_rate : "In practice, to infer the risk-free interest rate in a particular situation, a risk-free bond is usually chosen—that is, one issued by a government or agency whose risks of default are so low as to be negligible."

> But you still purchased it eventually

For the reasons I explained, and that apply only to a small subset of goods.

> Would it be bad thing if it did happen to other goods on the market?

That is definitely not decided by the currency.

> risks of default are so low as to be negligible

Those have also negligible interest rates, that is, ones that only repay you of the inconvenience of not spending your money now. You know, there's also a non negligible risk that you'll die before you get your money back.

He (and all the rest of them) dont understand the modern economy. It's like banging your head against a wall.

You explain the importance of monetary policy, why the gold standard is problematic, why this means Bitcoin will not replace modern currencies, yet they don't really hear. They just don't like "The System" and want to subvert it.

Bitcoin is great, but it will not change 'the system'. It is a novel and ingenious asset, nothing more.

This has been said many, many times, but I will say it again: the criticism of Bitcoin being deflationary would be valid only if Bitcoin was to replace the entire financial system. But it's perfectly fine for it to be deflationary if it's replacing only parts of the system.

Could you explain briefly why? I don't see how it can be deflationary and used as a currency, period, be it the whole system or part of it.

Can you give any other data-point that shows the dangers of deflation that didn't happen during during a world war and wasn't actually caused by fractional reserve banking and government interference?

Gold has existed for thousands of years, surely this commonly accepted idea is based on more than one or two heavily flawed data-points.

Or perhaps it is you that is wrong, and all the illusions you cling to amount to nothing more than the indignant declarations from seventeenth century clergy of the intolerable social consequences if it were to be widely accepted that god may not exist.

Things do not endure merely because some social engineer has a tortured explanation for them he trots out at every opportunity to justify the construct.

One thing we can be certain of, is that 'the system' will change.

I’m not sure why you are being down voted. What you are illustrating is the time value of money, a real economic concept. A deflationary currency like bitcoin encourages non productive hoarding at the expense of investment and commerce. It makes a great store of value, but a terrible medium of exchange. And when we say “currency” we are usually talking about the medium of exchange purpose of money...

That is the effect of our current financial system, where the use of debt to bid up the price of fixed assets has been labeled 'commerce' and 'investment'. The only effect of which has been the punishment of savers.

Bitcoin is that systems reckoning.

It also disincentivises investment, resulting in an economy less productive than it could be, and with built-in bias and stratifying wealth transfer, not unlike the system of bankers it seeks to replace.

That's assuming the return on investment is _always_ lower than the rate of deflation. Which is, nonsense.

The return on investment only needs to be lower some of the times for deflation to start hurting the economy

Do we have data on this or is it still just a theory?

It's the basis of mainstream economics, and the reason for the 1-2% inflation target that most central banks use.

I know this, but this doesn't answer my question

Edit: do we know if economies really behave like this under these conditions? Are we really using a scientific approach on this? Or are we holding these models as divine truth?

It’s a bit like asking if the Church-Turing thesis is true or not, and if we’re really using a scientific approach to answering that question. On the one hand.. I’m writing this on a computer, dude! There is a pragmatic sense in which the Church-Turing thesis is “scientifically true” in the amount of progress that has been made in the domain of computer science which it invented, which does follow a scientific process. It allows us to make accurate predictions and test them. But it is embarrassing to say the thesis itself is just that, an axiomatic assumption. (There are some pretender proofs out there, but not consensus that they are correct.)

The relationship between productivity plus inflation (both measurable) and economic growth is similar. It’s the bedrock of modern macroeconomic theory, which has largely been successful in both explaining and predicting the effect macro policy has on economic growth. The history of North American and Western European economies after going off the gold standard, and asian and Eastern Europe economies more recently all show these same correlations. Outside of external influence, economies which stray outside of the ideal parameters end up either stagnating (lack of investment) or experience dramatic boom-bust cycles (excessive poor investments). I’m on mobile but there’s a fair number of reports by Fed and other central banks justifying their choice of interest rate based on historical examples, and with the purpose of achieving certain productivity (capital investment) and price inflation (money supply). You could also pick up just about any macroeconomics textbook and chase the footnotes and references or spend some time on Google scholar.

> The history of North American and Western European economies after going off the gold standard, and asian and Eastern Europe economies more recently all show these same correlations.

So what you're saying is that it's all based on one data point, the second world-war. Gold existed for thousands of years, why is this incredibly bizarre period of history used as a proof of anything about the gold-standard?

Even worse, the gold standard wouldn't have collapsed if it weren't for the widespread use of fractional reserves banking, along with many government policies at the time that significantly worsened the situation.

The 40's, 50's and 60's were a period of unprecedented growth for the US, which was on the gold standard during that whole period, but no one tries to claim that the gold standard was responsible for that.

But I like beer. So that's why I buy them.

Don't buy them now, and you'll eventually get more. Damn, you can buy a villa and fill the swimming pool with beer, if only you can wait long enough.

But.... beer is delicious. In fact, I kind of feel like one right now.

What debit card do you use that keeps your balance in BTC and concerts on purchase? All the ones iv seen convert from BTC to USD when you load them.

Just FYI, you wrote "debit" and "card" twice.

Oops. I did it on my phone. Sometimes that happens. Thanks.