While I think bitcoin might not go the distance, It's clear that crypto currencies have a place in the world. Looking back through history, practically every major technology has it's initial boom, catastrophic bust and gradual rise back to stability phase.
In the first half of the 20th century there were thousands of car manufacturers. Then came the shakedown which reduced that number to a fraction, then slowly, bit by bit, stability and diversity returned to the auto making industry.
Most people on HN probably remember the dot com bubble, and the sentiment that came with the burst; That the internet was a non starter, that it had failed. But then came the step by step rebuilding process and look at where we are now.
I think the same is true of crypto currencies. We're learning the merits, the risks and the pitfalls. Bit coin may not survive (or maybe it will) but I think long term, crypto currencies are here to stay and we'll look back on this time and marvel at how badly we handled the whole thing.
Life is always dangerous for pioneers, and everyone in the bitcoin business right now is a pioneer. Pioneers serve an important role and while the rewards can be great, the price of failure is often deadly.
One thing I will add in Bitcoins defense: People need to start using the contracts feature that was built into bitcoin from he start. There's no need for people to hold bitcoins in escrow. Keep that stuff in the blockchain where it's safe.
Yep, I think you're spot on. I think the most likely scenario ends up with useful cryptocurrency being to a large extent co-opted by governments (much as the web has been). That might be a blow to libertarian dreams, but I think we'll still see radical changes as a result.
Why would it be? Bitcoin on it's own is just a good that can be traded, just like gold, silver, or bags of potatoes. If you setup an exchange for gold,but then instead of paying people who deposited gold with you ran away with all of it, would you call gold a "scam"?
This is really annoying. No - not even comparable to Tulip mania. That thing was based on artificially limited supply. If you want to start trading bitcoin or get your own miner, you can do it any time you want at a reasonable investment. Supply is always known in this case and demand is not ongoing (as in, bitcoins you keep don't disappear after a couple of days, unless you keep them with mtgox). Or do you want to explain why it's comparable?
Isn't BTC supply also artificially limited? I though that was the whole point so it wouldn't become 'inflationary'?
I can't stop being amazed by the persistent denial and non-sequitur arguments made by many BTC fans as to why none of the problems BTC has been suffering from are relevant and how BTC is nothing like a tulip bubble or a pyramid scheme, or a scam, or whatever, but the 'money' of the future. Huge price swings, theft, illicit trade, failing exchanges, problems withdrawing or converting BTC, yeah sounds like a great alternative to 'money controlled by central banks' :-S
It's just like gold, silver, and it's definitely much better than fiat, because... it's THE FUTURE, it's FREE, and it uses TECHNOLOGY!
It's limited in a known and consistent way. I'd say it was artificially limited if there was a person telling you you can't get more than 1BTC/mth while others could find a way to work around it.
Basically it's "world cannot produce more tulips" -vs- "I forbid you to start your tulip farm using law and crazy high prices". One of those will fall, the other will not. I'm not saying it's not a scam, that early adopters don't have leverage, that there are no problems, etc. Only that tulip mania does not apply here.
Because bitcoin has an artificially limited supply built into the system and the pricing has exhibited the kind of wild fluctuations more characteristic of penny stocks rather than a currency? Toss in the fact that the entire system is predicated on making early adopters rich and it's a basic econ lesson concealed behind some cool crypto code.
Any time hordes of people are rushing into a new investment with an unstable price in hopes of getting rich quick and assuring themselves that the math will protect their investment then it is exactly like Tulip Mania.
Not really - the ability to use Bitcoins to transfer useful amounts of money is very much dependant on their value and vice-versa. They probably don't need to be anywhere near the current price in order to support the current transaction volume, but I doubt $0.01/BTC would work.
True - I was reaching out for an extreme. When the price dropped to less than $3 from ~$35 I think it was close to losing its critical mass, but I think as long as the price is at least $10-20/BTC, the infrastructure backing it as a medium of transfer will still exist.
Well, now that you mention it, I think it is totally fair to take a critical view of the way we allocate the rewards for a successful enterprise. There's no natural law at play here. We live in a system that deliberately rewards founders and financiers over the other pieces of the puzzle.
The creator was one of the early miners and benefited from that, but whoever Satoshi was, he/she did NOT reserve a large number of bitcoins. (This HAS happened with certain other alt-coins.)
Well, he wouldn't have gotten more than any other early adopter. And nobody accuses them of being scammers - just taking a heck of a gamble and it paying off.
Edit: Apologies, I did more research after posting this comment. Apparently Satoshi did mine quite a lot in the early days, but the addresses he used are well-known (one of the advantages of a public ledger - go to blockchain.info and look at any block with an index less than 20,000), and if anyone tried to spend them, it would be in the news.
A successful digital currency has to be attractive to people who are free to choose among a variety of digital currencies. That implies it must have properties that are like gold, or perhaps even more compelling in the same ways. Or you have to find a different set of compelling properties.
I don't think you can get around the fact that free people have a set of motives that is at cross purposes with governments. If you degrade the ability of governments to seize or control the transfer property and information, the Leviathan starts to look like a 20th c. museum piece. Hobbesianism is at least as dogmatic, rigid, and brittle as big-L Libertarianism.
