Hearn: The resolution of the Bitcoin experiment [LWN.net]

Hearn: The resolution of the Bitcoin experiment

Posted Jan 18, 2016 10:01 UTC (Mon) by Cyberax (✭ supporter ✭, #52523)
In reply to: Hearn: The resolution of the Bitcoin experiment by accumulator
Parent article: Hearn: The resolution of the Bitcoin experiment

> I did. From ordering takeaway food, repaying friends I loaned money from and paying in bars and restaurants. Same goes for my bitcoin using friends.
Congratulations. You're an exception.

> It's actually baked into the algorithm, which is defined by consensus. Besides, ever since banking went to fractional reserve banking the amount of money in circulation was getting less restricted, and after we left the gold-standard even more so.
Yes, and that's a good feature. It allows to scale the amount of currency to the needs of the economy.

> It was then that the boom-bust cycles appeared, with devastating effects.
Actually, the first boom-bust cycles happened before even the official gold standard. Even before the US itself had been established.

> Of these 3 'problems' you describe, 2 are not really problems. And w.r.t. criminal use, I guess you hate physical cash as much as bitcoin?
Correct.

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Hearn: The resolution of the Bitcoin experiment

Posted Jan 18, 2016 11:58 UTC (Mon) by accumulator (guest, #95885) [Link] (12 responses)

> Congratulations. You're an exception.

Thousands of legitimate businesses disagree with you.

> Yes, and that's a good feature.

In theory. But in practice governments can't help themselves letting this get out of hand, every. single. time.

> Actually, the first boom-bust cycles happened before even the official gold standard

Yes, like I said, after the start of fractional reserve banking.

>> I guess you hate physical cash as much as bitcoin?
> Correct.

I admire your confidence in having a government with so much power.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 18, 2016 12:06 UTC (Mon) by Cyberax (✭ supporter ✭, #52523) [Link] (11 responses)

> Thousands of legitimate businesses disagree with you.
And hundreds of thousands of illegitimate businesses cheer with me! By a some estimates, the illicit businesses are responsible for more than 90% transactions.

> In theory. But in practice governments can't help themselves letting this get out of hand, every. single. time.
So why hasn't dollar hyperinflated? Or maybe yen or renminbi?

In reality, governments are now pretty good with managing inflation.

> Yes, like I said, after the start of fractional reserve banking.
So... Since some time in the Republic of Rome?

> I admire your confidence in having a government with so much power.
And I admire your naïviete. If government wanted to take your money, bitcoins wouldn't save you. And the correct approach is not to try and stockpile gold and canned food, but change the government.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 18, 2016 14:38 UTC (Mon) by accumulator (guest, #95885) [Link] (8 responses)

> illicit businesses are responsible for more than 90% transactions.

You can throw around statistics, but where's the proof? I highly doubt this number.

> So why hasn't dollar hyperinflated? Or maybe yen or renminbi?

It has, according to the austrian definition of inflation. But I'm sure you will counter with the Keynesian definition.
For a number of recent examples, just look at Argentina.

> And I admire your naïviete. If government wanted to take your money, bitcoins wouldn't save you. And the correct approach is not to try and stockpile gold and canned food, but change the government.

I'm not talking about bitcoin here (nor stockpiling stuff), but about physical cash. If you can't see the negative effects that abolishing physical cash could have, you're the naïve one.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 18, 2016 18:41 UTC (Mon) by Cyberax (✭ supporter ✭, #52523) [Link] (7 responses)

> You can throw around statistics, but where's the proof? I highly doubt this number.
It's a bit dated, from the middle of 2014. I'm searching for the report. Basically, it looked at the value of seized wallets and their transactions and compared it to the total value of transactions through legitimate payment processors.

> It has, according to the austrian definition of inflation. But I'm sure you will counter with the Keynesian definition.
Ah, yes. Austrian inflation is usually a GOOD thing.

I absolutely detest how Austrians latch on a scary term and redefine it completely. While still pretending that it still is scary even though it's redefined.

It's like calling "bitcoin" a "form of cancer". Why do you support cancer?

> For a number of recent examples, just look at Argentina.
Why not Zimbabwe? Or maybe the emperor Diocletian?

> I'm not talking about bitcoin here (nor stockpiling stuff), but about physical cash. If you can't see the negative effects that abolishing physical cash could have, you're the naïve one.
Cash serves little purpose other than for small transactions between individuals and small businesses. There's no real value in large cash transactions.

Denmark and Sweden are pretty much cashless these days, and I don't see death squads roaming the streets there.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 18, 2016 18:57 UTC (Mon) by Wol (subscriber, #4433) [Link] (6 responses)

> > It has, according to the austrian definition of inflation. But I'm sure you will counter with the Keynesian
> >definition.

> Ah, yes. Austrian inflation is usually a GOOD thing.

What about UK inflation - as officially measured, it does not include house prices, so given that a typical house where I am (about 10 miles from the city centre) rents for £1100pm or so ($1500, per month, for a *small* three bed semi), inflation does not include the single biggest expenditure in a young person's profile. And if you move into the centre itself that probably wouldn't even get you a one-bed flat.

Surely it can't be good that we have an *un*regulated rental market, and the average house costs about TEN times the average salary ...

Cheers,
Wol

Hearn: The resolution of the Bitcoin experiment

Posted Jan 18, 2016 19:31 UTC (Mon) by Cyberax (✭ supporter ✭, #52523) [Link] (3 responses)

> What about UK inflation - as officially measured, it does not include house prices, so given that a typical house where I am (about 10 miles from the city centre) rents for £1100pm or so ($1500, per month, for a *small* three bed semi), inflation does not include the single biggest expenditure in a young person's profile. And if you move into the centre itself that probably wouldn't even get you a one-bed flat.
Inflation includes the average price over the whole country, but it misses the localized effects.

Oh, and Austrian inflation also doesn't take localized effects into account. You can very much have skyrocketing local prices even with generalized deflation.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 18, 2016 19:52 UTC (Mon) by clump (subscriber, #27801) [Link] (2 responses)

To your point, in the States, housing prices in San Francisco are very high. Inflation measurements in the States do include housing, and despite that inflation is still virtually non-existent.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 19, 2016 11:03 UTC (Tue) by Wol (subscriber, #4433) [Link] (1 responses)

How easy is it for you to reduce your housing costs, by moving further away and commuting? Actually, I gather commuting in the States isn't that easy ...

The thing is, it depends how "lumpy" house prices are. Here, we may have political initiatives to address it, but the fact is that most people under 40 simply can't afford to buy their own home, ANYWHERE. Okay, it's taken maybe 30 years to do it, but, relative to income!, house prices have trebled or more even in my own adult lifetime - my original starter home is probably now way out of reach for someone in the same position I was.

Cheers,
Wol

Hearn: The resolution of the Bitcoin experiment

Posted Jan 19, 2016 16:18 UTC (Tue) by raven667 (subscriber, #5198) [Link]

> How easy is it for you to reduce your housing costs, by moving further away and commuting? Actually, I gather commuting in the States isn't that easy ...

People complain about commuting but cities in the US have built out massive road networks for commuters. Using Chicago vs. London as an example, suburbs like Joliet or Schaumburg are at least as far away as the M25 around London and there are neighborhoods going out even further, as far as Milton Keynes and Bletchley is from London, Mundelein or Libertyville are still primarily commuter homes for the greater Chicago area.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 18, 2016 19:57 UTC (Mon) by rgmoore (✭ supporter ✭, #75) [Link]

What about UK inflation

The "Austrian" inflation he was talking about was as defined by the Austrian school of economics, not inflation in Austria. The Austrian school defines inflation in terms of increase in the monetary supply*, not as price inflation. It's a good, real-world example of what Thomas Kuhn was talking about when he said that people following different paradigms can't communicate with each other because they use the same term to mean different things.

*Strictly speaking, increase in the ratio of the broad monetary supply to the demand for money, so that there is no inflation if the monetary supply increases with the economy as a whole.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 19, 2016 18:58 UTC (Tue) by markhb (guest, #1003) [Link]

Heh... I'm in a small city in the US (which many of the people in the country would consider "a small town in the boondocks"), which happens to be trendy at the moment. Our newspaper recently did a series and found that 2 BR w/ utilities rentals in the city were averaging nearly $1600/month. Note that that includes heat, which is important where I am. Large cities like Boston and Philadelphia are worse, and forget about the nexuses of insanity that are Manhattan and the San Francisco peninsula.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 18, 2016 15:23 UTC (Mon) by spaetz (guest, #32870) [Link] (1 responses)

> And hundreds of thousands of illegitimate businesses cheer with me! By a some estimates, the illicit businesses are responsible for more than 90% transactions.

I know that the tourism industry is somewhat fishy, but calling expedia (http://techcrunch.com/2014/06/11/expedia-now-accepts-bitc...) and thousands of travel agencies (https://blog.bitpay.com/partnering-with-ypsilon/) illicit businesses is somewhat strong ;-P.

Let me trump yours: Here is my estimate: 92% of all cash transactions are funneled through illicit businesses.
There you go: By some estimates, the illicite bussines are responsible for more than 91% of all cash transactions. Beat that :)

That having said, I bought bitcoins when they were at $0.03 and got cold feet when they were at $1, I have no horse in this race. They won't go away, but they will never replace the greenback. I find it interesting though that many people are not really aware how they work and what the drawbacks will be. E.g. they are not necessarily free (http://bitcoinfees.com/ explains it well) and can beat credit card fees at times.

Hearn: The resolution of the Bitcoin experiment

Posted Jan 18, 2016 18:12 UTC (Mon) by Cyberax (✭ supporter ✭, #52523) [Link]

Do you have problems with logic? The fact that there are SOME legitimate businesses does not mean that most of the transactions are legal.

The state of Bitcoin is summed up here: http://www.coindesk.com/5-facts-from-the-q3-2015-state-of...

> Let me trump yours: Here is my estimate: 92% of all cash transactions are funneled through illicit businesses. There you go: By some estimates, the illicite bussines are responsible for more than 91% of all cash transactions. Beat that :)
Let's eliminate cash, then.