With Euro Zone Problems, Bitcoin Experiencing Boost In Legitimacy 430
derekmead writes "Despite being used for drugs and beef jerky, Bitcoin is finding legitimate purposes. Bitcoin's decentralized convenience means international efficiency, in areas where local restrictions on money transfers to foreign companies make legal businesses cumbersome. 'I've been able to have cash in my bank account in a matter of hours using Bitcoin, rather than three days with traditional banking,' one British businessman in China told Reuters. In embattled Europe, Bitcoin offers some a viable alternative against central banks, said a Greek owner of an island bar and restaurant who accepts payment in Bitcoin. 'I don't put money in the banks. I trust the euro as a note, but I don't trust banks. I don't want them making money out of my earnings.' Indeed, Europe's financial woes are caused an unprecedented surge of interest in the alternative currency, as the continent loses economic credibility with each new bailout, according to a report by the Financial Post."
What?? (Score:2, Insightful)
Let me be first to say:
HAHAHAHAHAHAHAHAHAHAHA!!
You know what has more legitimacy than bitcoin? Zimbabwe Dollar!
Re:....someone get that link... (Score:4, Insightful)
And no one has ever robbed a bank of course.
Not sure what you mean by the latter part of your post.
Its not possible to exploit the system that way. Some of the websites or groups using Bitcoin perhaps, but not Bitcoin its self.
I don't want them making money out of my earnings (Score:3, Insightful)
I trust banks more than bitcoin and mattresses, coming from someone who has little credit, zero debt, and as the bank stated a "substantial" account (not that I am rich by any means I just dont go racking up debt ... mainly since I have never had much of any credit from 18 to 33)
life is not all peaches n cream like that either, its GREAT to be debt free ... when you have the crap you want, but more difficult when you sort of need it. Though times get rough its a comfort to know that there's a stash in the savings that may only be earning fractions of a percent a year for when the car blows up, or I break a leg versus HOPING bitcoin values are not tanked, if even still around.
Re:....someone get that link... (Score:5, Insightful)
When a bank is robbed, its customers don't lose money. When a bitcoin repository is robbed... ?
Re:I don't want them making money out of my earnin (Score:2, Insightful)
That 2.4% inflationary loss isn't a good long term investment.
Losing 80%, like many have in bitcoin, is fucking retarded.
Re:Governments can't inflate the currency (Score:5, Insightful)
Oh for god's sake....
This is also one of the main flaws in bitcoin. There are a set amount, therefore there must be deflation if it ever takes off. Deflation encourages hoarding because money is likely worth more tomorrow than today. Hoarding encourages further deflation, and we go round.
A small inflationary pressure encourages use, rather than hoarding, of money, and helps grow economic activity. Furthermore, having a central control on currency allows the adjustment of the amount of money to ensure there is enough of it to keep the economy rolling.
A bitcoin-based county-sized economy would be as much a failure as the old gold-based ones were. You, as a hoarder, may feel that inflation is theft. I, as a realist, see moderate inflation as essential.
Re:Governments can't inflate the currency (Score:5, Insightful)
Now the problem with barter is inefficiency, that you can't really pay me in chickens for software with effective granularity. So we really need a unit of exchange that can be broken down into small parts that are easily tradable. Say rice. Well the problem with rice if you have a bumper crop you have massive inflation in rice, and anyone who can grow rice will grow rice rather than something actually useful, since they think they're printing money. If crops fail there's not enough rice to supply both food and currency needs and everyone goes broke. So then we try gold. Gold has it's perks. It can be broken down a lot, it doesn't degrade, it has only limited commercial value which derives mostly from it's being money at all (jewelry). But then there's a constant tick of inflation in gold assuming production can keep up with inflation, and since china, south africa and australia produce a crap load of gold (and especially the latter two who out produce the US), you can end up with one country controlling the value of gold in the US or China or wherever, offering to supply gold cheap, or flooding the market with gold, preventing the US from buying goods abroad or the reverse, making things prohibitively expensive. Oh and since they have gold, they can pay for an army to defend themselves.
Since rice, and gold don't work. lets come up with a new system. The Bimetal, erm.. bigood system, which uses both as a currency, but their individual problems remain. So now lets add into the mix iron, silver, nickel, oil and a few other things, a giant aggregate basket of things to barter with. So to buy a video game from me you need to give me 1 chicken, 25g of silver, 10g of iron, and 250ml of oil. Or just one half of a barrel of oil, but since a barrel of oil is 158 litres, trying to carry around 79 litres of oil is kind of a pain, I'd rather the chicken and the metal, a barbecued chicken sounds good right now. .
So now we've done this for a while, and you get sick of carrying around a large jar of oil, and having to have armed guards for your 2 bricks of gold in your basement, and the equipment needed to shave off slices for payments for valuable things. We agree that we're going to just write down these transactions. But since I don't trust you, because you're a raving fucking loon, and you don't trust me, because I'm an asshole who makes software we need a 3rd party to do it. You and I agree that Okian Warrior is a sufficiently neutral party that any exchanges we make we'll file with him on paper, and it's up to him to decide how much value things have. We start by having everything considered as 'equivalent to gold' but since everything in our wagons full of things used as money fluctuates relative to gold and frankly, we don't want to think about this shit anymore, we have actual work to do, we leave it up to him. He decides that the best way to do this is to only have official notes that he issued and tracked, of course this takes time for him, so he takes a cut. But then, we don't have to pay for armed guards for our gold, so we're net ahead. In the course of this little experience I've had kids, and they're in the software business, and you've had kids and they're in the gold/rice/oil/iron business. And Okian now has to make sure they can get enough of his notes to account for the fact that they have increased the production of software and other goods. More people = more production. So he starts making more notes. The problem with this plan is that he's not really sure how productive my kid is. Lines of code is a terrible metric. So he decides it's better to err on the side of caution, and create a little bit more money than we need, rather than to little. Because if he creates too little you and I can't fulfill our contracts, and never will, but if he creates just a little bit too much we can still fulfill our contracts and we've only lost out a little bit. We still don't need to lug around jars of oil and bricks of gold, or have personal guards for our gold, and we just pay a lit
Re:Governments can't inflate the currency (Score:4, Insightful)
If the money supply is hoarded then more and more economic power goes to the hoarders, who are doing nothing but sitting on it.
If you wish to reward inactivity then be my guest. This is not a system I feel I can endorse.
Re:I don't want them making money out of my earnin (Score:4, Insightful)
A) The limits on withdrawals on your debit card are for your own protection. You don't want someone cleaning you out because they stole your card. If bitcoin were to catch on (big if), it would need something equivalent to a debit card, and such cards would have limits. There are likewise good reasons to be suspicious of people carrying hundreds of thousands of dollars in cash across national borders.
B) "Government reporting" is pretty vague. What exactly is the problem?
C) Bitcoin can collapse just like any other currency. I'm not sure what could lead you to think otherwise.
D) Inflation affects bitcoin just like everything else. You're right that the GP is silly for thinking that his "fractions of a percent a year" is at all meaningful, but that 2-3% loss each year is a constant, and it will hit you regardless of whether or not you're investing your money. So it's always a guaranteed loss. It should be treated as a sunk cost, and investing versus not investing should be looked at separately.
Re:I don't want them making money out of my earnin (Score:4, Insightful)
And there are people who made 1000% gains investing in real estate in the mid 2000s. That doesn't mean its a good investment, it just means that some people will always be the lucky ones.
It's the height of irony, by the way, that you would tout 1000% gains and end by mocking the "stupid speculative bets" of others.
You've taken the bait of the red herring (Score:1, Insightful)
The way bitcoin is set up the you can't have everyone as a winner - if someone makes a killing it is at the expense of a later participant in the pyramid scheme. It's a cynical ploy that relies on the expectation that currency is fiat and not a measure of useful production (sorry kids, the window dressing calculation in bitcoin is not useful production), so the scam relies on supposed invention of another fiat currency.
To sum up, this forced comparison is just designed to make people think that their little non-bank scheme is not bad simply by pointing at a bad bank and pretending to look more respectable than a badly run bank.
As for C), possibility of collapse, with a ponzi scheme that can be replaced by certainty of collapse. I'm sure many of the early adopters of bitcoin that get out in time will do well financially, but I don't think they necessarily deserve even the respect that a convicted embezzling banker or other financial criminal gets. That may sound harsh but wake up - it's an incredibly fucking obvious scam kids and a million miles away from the cool stuff you read about in "Cryptonomicon" that it pretends to be.
Re:Governments can't inflate the currency (Score:4, Insightful)
Surely this only applies is wealth is fixed. But wealth is created. My understanding of this is that by turning a much of bits of metal and oil into a refrigerator, we create "wealth", since a fridge is worth a lot more than its raw materials.
But the economics of this require someone owes someone something at some point. Given that a borrower pays back the loan with interest, and the savers get a share of that interest, debt rewards savers and debtors.
Re:What?? (Score:3, Insightful)
As long as you dont have some heavily armed marines knocking at your front door FORCING you to read BC/RPi articles, or any article for that matter, I believe you have the freedom to ignore it. I dont disagree with you that some issues get more attention than others, and that that might be unfair, but hey... leave it in peace man!
Re:What?? (Score:5, Insightful)
A beowulf cluster being held by Natalie Portman covered in grits.
Re:I don't want them making money out of my earnin (Score:4, Insightful)
A government controlled currency is still "made up"
As has been stated before, it's a question of backing. Government-issued currencies are backed up by a promise from the government that they will accept them in payment for taxes and, often, by a legal requirement for merchants to accept them within the relevant country's borders. This guarantees that you will be able to exchange them for goods or services in the future, for as long as the government survives, although it does not guarantee that they will retain the same value. BitCoin is backed by nothing. It depends entirely on the willingness of other users to accept it.
The simplest form of money is an IOU: you do something for me, and I give you a promise to do something of equal value in return. This is then backed by me, my promise, and the fact (or, at least, belief) that I am capable of doing something of value in the future. A typical currency is a form of group IOU, which says that you have done some work for someone in a group and that someone in the same group will do some work for you in the future. As long as there are people in the group willing and able to redeem the IOU, then it holds some value, and if an entire country requires these IOUs for taxes and is legally required to accept them in payment for goods or services then there is a very high chance that you will be able to redeem your IOU. With BitCoin, anyone can create new IOUs without doing any useful work, but no one is required to accept them.
Re:You've taken the bait of the red herring (Score:4, Insightful)
Re:Governments can't inflate the currency (Score:4, Insightful)
"And if they only use a little bit at a time, their relative economic power is relatively minimal."
Not if those little bits keep growing, as they must if the bitcoin economy is going to grow. No, anyone who can acquire a few BTC now can grab them and then become a burden on productive society for the rest of their lives, if it's going to take off.
We're already nearly at the halfway point of BTC generation. Everyone likes to laugh at the greek economy at the moment, but lets look at what happens if the BTC economy rises to the size of that one - all of a sudden the value of 1BTC has to increase by a factor of around 4000 (based on greek GDP of around 200 billion, current BTC market cap of around 50 million). Major incentive to hoard and then leech, if you think BTC has any chance at all of getting there.
The effect? A whole bunch of people get rich off the labour of others because of the way BTC is structured. This is not a feature of a currency I'm interested in participating in.
Who's worrying? I'm not participating in a currency that has this as a real possibility, especially when one guy ('Satoshi') may hold around 8% of the currency supply.
Re:You've taken the bait of the red herring (Score:4, Insightful)
It's no more a "currency" than scientology is a religeon. Just because the item used in the scam deliberately has "coin" in it's name doesn't make it a currency, just like swapped computer parts are not a currency.
Re:What?? (Score:4, Insightful)
Wouldn't any increase in legitimacy be a boost? I mean, when you have zero legitimacy to begin with, having even the smallest of rounding errors that usually falls into the noise defined by calculus's Theory of Limits would be a "boost."