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Bitcoin The Almighty Buck

A Rebuttal To Charles Stross About Bitcoin 396

Posted by Soulskill
from the opinions-are-like-cryptocurrencies dept.
New submitter buddha379 writes "Over the holidays we discussed a story from SF author Charles Stross called 'Why I Want Bitcoin to Die in a Fire,' just as Bitcoin's price collapsed on news of the Chinese government's cautious approach to the fledgling internet currency. Well known economist Paul Krugman quoted the piece in a NY Times blog post called 'Bitcoin is Evil'. Now, with U.S. regulators reaffirming their hands off approach, U.S. companies embracing it and prices surging again, Bitcoin Magazine returns with a rebuttal called 'Why Charles Stross Doesn't Know a Thing about Bitcoin.' The article notes that like many other popular pieces, Stross' story seems to 'completely miss the point on why Bitcoin is a revolutionary concept.'"
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A Rebuttal To Charles Stross About Bitcoin

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  • by viperidaenz (2515578) on Wednesday January 08, 2014 @06:49PM (#45902231)

    As we've seen, all a government needs to do is make a statement about support/regulation and the price drops in half.

    • by DiSKiLLeR (17651) on Wednesday January 08, 2014 @06:53PM (#45902261) Homepage Journal

      So what? Why does the price of bitcoin even matter? Bitcoins strength lies in its ability to be used as a payment processing network - and at a fraction of the cost of traditional payment networks (visa, mastercard, paypal, SWIFT, etc).

      Everyone is obsessed with the price of bitcoin (and therefore comparing it to a ponzi scheme because of its price) and treating it as a speculative investment scheme or get rich quick scheme. This is actually very detrimental to bitcoin.

      But no. Bitcoins power lies in using it as a payment processing network not its price. It does need some more price stability, however, so this crazy speculation needs to stop.

      • by Anonymous Coward on Wednesday January 08, 2014 @06:59PM (#45902311)

        You're partially right, but the vast majority of bitcoin users are speculators, gamblers and hoarders. It is not primarily used for transactions. Until this changes, which it probably won't, it is an electricity-wasting ponzi scheme.

      • by viperidaenz (2515578) on Wednesday January 08, 2014 @07:01PM (#45902333)

        But it's not a good payment network if the value of the payment are not stable.

        The network exists to 'mine' coins and process transactions. It's cheap because there is a payout for participating in the network split two ways, you get to mine coins, which are worth something and you can charge transaction fees. If there is little worth in the coins, the network will either be tiny and easier to take over and control (if you control the majority of the processing power, you control the entire network) or the transaction fees will increase.

        You are right though, New Zealand is the place to be.

        • by bob_super (3391281) on Wednesday January 08, 2014 @07:24PM (#45902505)

          I know how bitcoin works, but I'm missing a couple elements:

          Once the last coins are mined, what happens?
          How do you convince people who sold theirs to keep giving away computing power in exchange for nothing? I know that fees can be added, but in a distributed semi-ananymous network, how do you set fee levels such that people will validate little transactions as well as big ones?

          And even before all the coins are mined, has anyone calculated yet what is the ceiling for BTC? That'd be the value over which some country's national labs or universities turn on their supercomputers and mine almost everything (publications might bring revenue, but mining apparently does), preventing individuals from getting any return from their hardware, thus discouraging them from participating?

          • by TheRealMindChild (743925) on Wednesday January 08, 2014 @07:31PM (#45902577) Homepage Journal
            They mine for transaction fees
          • by Agent ME (1411269) <agentme49@noSPaM.gmail.com> on Wednesday January 08, 2014 @08:26PM (#45903115)

            The transaction fees already exist. It's not like the designers never thought about what will happen after all bitcoins are minted.

            And even before all the coins are mined, has anyone calculated yet what is the ceiling for BTC? That'd be the value over which some country's national labs or universities turn on their supercomputers and mine almost everything (publications might bring revenue, but mining apparently does), preventing individuals from getting any return from their hardware, thus discouraging them from participating?

            A) The maximum number of bitcoins was publicly predetermined from the start. It's 21 million.

            B) Bitcoin mining requires specialized hardware to be profitable to mine, so this isn't something that anyone with a supercomputer can just decide to mine effectively on a whim any more.

            C) Why would it be bad that most individuals couldn't mine? Bitcoin mining isn't supposed to be an egalitarian "everyone gets free money" system. It's a reward for using your computational power to help secure the system. If a hundred groups with supercomputers / mining machines can mine more than 100,000 people using desktop machines, then the former group pushing out the latter from the market is the way things should be. (However there is a problem if any group colluding gets more than 50% of mining power together.)

          • by DanielRavenNest (107550) on Wednesday January 08, 2014 @08:30PM (#45903129)

            > Once the last coins are mined, what happens?

            Miners also get transaction fees included in the block, so they still have incentive to search for block hashes.

            > how do you set fee levels such that people will validate little transactions as well as big ones?

            Fees are *user defined*. If you are in a hurry, slap a big fee on it. If you can wait, put a small fee on it. The bitcoin software allows zero-fee transactions if you meet some conditions, and some miners will include zero fee transactions in a block if there is room. In the long run, many small transactions will move "off chain". For example, Coinbase processes bitcoin transactions for merchants, accepting BTC payments on their behalf and depositing local currency to their bank account. Conversely they sell BTC to individuals and pull money from bank accounts to pay for it. When a Coinbase user uses their online wallet to pay a Coinbase merchant, that can be all internal to Coinbase, and never reach the Block Chain. Eventually such processors will arrange to settle with each other in bulk transactions, gathering up many little ones and posting it as one big transaction on the block chain. That both avoids bloating the block chain, and makes small transactions easier to process.

            > the value over which some country's national labs or universities turn on their supercomputers and mine almost everything

            Custom chips (ASICs) that do nothing but the particular calculation for bitcoin mining are 100 times more efficient than GPU's, and 1000's of times more efficient than general CPUs. Supercomputers are useless for bitcoin mining. The world's top 500 supercomputers combined process 250 million GFLOPS ( http://www.top500.org/statistics/perfdevel/ [top500.org] ). The Bitcoin Network at the moment is running at 78 billion GFLOPs, which is over 300 times faster. Custom hardware and monetary incentive wins big time. The downside is the ASICs are absolutely useless for any other calculation, because it is hardwired into the chip.

            • by iserlohn (49556) on Wednesday January 08, 2014 @09:44PM (#45903611) Homepage

              In the situation you're describing, all you're getting rid of is SWIFT. Banks processing Bitcoin payments in your situation can still create Bitcoin money through fractional reserve banking. Basically same as the gold system, but Bit-gold. There is nothing really innovative if you use Bitcoin that way.

              If retail transactions are actually done on the Bitcoin network however, things get a bit more interesting, but the Bitcoin network will never scale to those transaction volumes.

            • by Cyberax (705495)
              You can't get transactions "off the chain" because then I can double-spent a bitcoin. And you'll have to add a "change of ownership" transaction in the global chain eventually.
          • by pla (258480)
            That'd be the value over which some country's national labs or universities turn on their supercomputers and mine almost everything

            The current Bitcoin mining network operates at twenty times the aggregate processing power of the entire TOP500 supercomputer list.

            For comparison, today's most powerful commercially available ASIC-based Bitcoin mining rig, the KNC Neptune, pushes 3000GH/s. Using the semi-official conversion of 12,697 Flop/Hash (somewhat fuzzy given that BTC mining involves no actual floati
        • by ShanghaiBill (739463) on Wednesday January 08, 2014 @08:00PM (#45902875)

          But it's not a good payment network if the value of the payment are not stable.

          The price fluctuates widely because it is thinly traded. As it becomes more popular, the price will stabilize.

          • Re: (Score:3, Insightful)

            by geekoid (135745)

            There is no reason to think that. It has no floor, no control, no way to slow wild swings. Without those 'brakes' BitCoin, any currency really, can swing wildly on pure emotional mood of the day.

        • "But it's not a good payment network if the value of the payment are not stable."

          You're making the same mistake most people make (and the market is making) in regard to the economics of Bitcoin.

          In economics, VALUE and PRICE are two different things! The "price" is what it sells for on the market. The "value" is, in general terms, approximately the cost of production and distribution. Since the cost of distribution for Bitcoin is very low, near zero, then the VALUE is approximately equal to the cost of production.

          This has nothing to do with the swings in the PRICE of Bitcoin on Wal

          • by jcr (53032) <jcr@NOsPAM.mac.com> on Thursday January 09, 2014 @12:47AM (#45904379) Journal

            The "value" is, in general terms, approximately the cost of production and distribution.

            That sounds suspiciously close to Marx's brain-dead "labor theory of value".

            The value of anything is determined by its buyers and sellers. You can spend all you want on producing statues of Alexander Hamilton made out of compressed manure, but that doesn't mean they're worth the shit you put into them.

            -jcr

            • "That sounds suspiciously close to Marx's brain-dead "labor theory of value"."

              No, it's fucking Econ 101.

              "The value of anything is determined by its buyers and sellers. "

              No, the PRICE is determined by buyers and sellers.

              Look, guy, let me put it a different way. Here's an example: you go in to Wal-Mart and buy an apple for, say $0.25. Then you go across the street to the Piggly-Wiggly and buy an identical apple for $0.35.

              Does one of those two apples have more VALUE to you than the other? No. It is only the PRICE that is different.

        • by pla (258480)
          The network exists to 'mine' coins and process transactions.

          First, in the interest of full disclosure, I've mined a few hundred BTC (and "sold" 95% of of them at under $100, and over 70% at under $10).

          And I still use BTC, even though I don't have a dedicated ASIC mining rig and can no longer actually mine them. Put bluntly, Bitcoin makes national borders and government-sponsored currencies a moot point. Whether it trades at $600 or $1200 today, a pair of trading partners in different countries can sav
          • by tftp (111690) on Wednesday January 08, 2014 @10:26PM (#45903829) Homepage

            Whether it trades at $600 or $1200 today, a pair of trading partners in different countries can save a fucking fortune (in bank fees, not taxes) by buying BTC, denominating the trade in BTC, and converting back to the local currency.

            According to Mt. Gox fee schedule [mtgox.com], each conversion will cost you 0.60% (under 100 BTC.) Then two conversions (say, USD to BTC to USD) will cost you 1.20%. A wire transfer through a US bank costs $40 (a fixed fee) and you can transfer as much as you need. Let's say 1 BTC = USD 1000, and you want to send 100 BTC. Then the bank fees will be 40/100000 = 0.04%. The Bitcoin method is 30 times as expensive!

            If you transfer less money, at some point BTC method and the bank method will be equally expensive. (Obviously, 40/x = 1.2%, and then x=40/0.012 = USD 3333.) Below that sum you will be better off using BTC; above that you will want to use your bank.

            • by gordo3000 (785698)

              have you ever tried to transfer 100k USD? Ever heard of anti-money laundering regs? I got caught in those moving savings between banks. You can find your money lost to you for weeks as the bank tries to figure out if you are doing anything with drugs/terrorism/whatever.

              • by tftp (111690) on Thursday January 09, 2014 @02:55AM (#45904725) Homepage

                have you ever tried to transfer 100k USD?

                Yes. Many businesses do that daily. Many private investors do that all the time. People gather up money for houses or expensive cars. (How did you pay for your house, with cash? I used a wire transfer, IIRC.) Nothing stops you from transferring money. The transactions will be reported, but as long as the money is sufficiently traced you will never hear a peep from anyone.

                I got caught in those moving savings between banks

                Sorry to hear. But in my experience it's smooth sailing. Banks are not in business of interfering with your money. The government might be, but the banks do their best to keep the government out of your pants. People with money are subtle and quick to anger.

          • Paypal also makes national borders a moot point too.
            So do credit cards.

        • by iserlohn (49556) on Wednesday January 08, 2014 @09:49PM (#45903629) Homepage

          But is Bitcoin payment processing really that cheap?

          Disclaimer: I started mining Bitcoins using the official client with CPUs. However, I don't really buy all of this blue-sky "to the moon" Bitcoin hype. For me it's more of a cool concept to test and mess around with.

          Although the Bitcoin concept is revolutionary - if you use it as a payment network - as you can get rid of banking and payment processing industries, with such a peer-to-peer architecture, you have scalability issues that limit the amount of transactions that can be processed. Aside from the elephant-in-the-room technical limits (with the current 1MB blocksize, Bitcoin can process 10tx/s max. The VISA network can process a max of 25000tx/s) , you also have the question of why using Bitcoins is any better than current methods for the customer or merchant.

          Fully decentralized peer-to-peer filesharing was hot back in the day because there was no digital content available on the net. It was also very slow on the completely decentralized systems. Now that the content industries have caught on, most people prefer to use those offerings (Youtube, Netflix, Spotify, etc.), due to the convenience and speed of those services.

          With Bitcoin, it is the other way around. We have a very well developed retail financial services sector. You can pay people and businesses easily through many different means. The payment processors charges a comparatively small fee for commercial transactions - usually around 3%, and gets lower as volumes increase. Customer don't see this at all as credit card fees are paid by the merchant. From a customers point of view, why would I pay in Bitcoins, if I can much more protection by paying with a credit card? If you don't have any bitcoins, you will have to do a fiat-bitcoin conversion and then the merchant does a bitcoin-fiat conversion back for stabilty? That kills the values proposition of low rates. The spread for the two conversion will already be close to or over the 3% you pay your current payment processor. Not to mention the hassle. You can introduce a processor like Coinbase to optimize the process (and also increase transaction performance by keeping local transactions off-net), but then you've just introduced a middleman that will also charge you fees.

          Wiring money overseas will cost customers a bigger fee, but this fee is usually fixed, so batch transfers are usually done. Furthermore, for people with frequent Forex needs, you can open an account with a dedicated Forex company that will give you much better rates and you can probably save on some fees with them as well as they have many local bank accounts in different countries accepting and sending money.

          So all-in-all no, I don't think it's all smooth sailing for Bitcoin and once people wake up to the limitation of this particular and novel implementation or decentralized digital currency, it will be better for everybody involved. We will start asking the right questions (eg. is if possible at all to create a decentralized crypto-currency network with similar performance to commercial payment processing networks) and maybe incorporate some of the better ideas from Bitcoins to more practical applications.

      • by Anonymous Coward on Wednesday January 08, 2014 @07:13PM (#45902405)

        No. The power that Bitcoin may or may not have is not at all related to using it as a payment processing network.

        People obsess over Bitcoin's price (in dollars, yuan, whatever) because a Bitcoin only has value if people agree it's worth an exchange for goods and/or services, and can reasonably expect to exchange a received Bitcoin for other goods and services.

        Right now if I get 100 dollars, or 100 euro, or 100 yuan, or 100 yen, in payment for some services I render or product I sell, I can reasonably expect to go down the street and exchange that currency for hookers (services) and/or blow (goods), within a reasonable timeframe (say 1-5 years in the future.) Right now if I get 100 Bitcoin, I might be able to buy Michael Jordan's $16 million mansion in Chicago in 1-5 years - but it's equally likely that I won't be able to exchange them for anything in 1-5 years.

        Most government-backed currencies (with the recent notable exception of the Zimbabwe dollar and several other currencies over the last 50 years) pass this test. Bitcoin, as of yet, does not. Many people would have to choose to use Bitcoin over a government-backed currency (think 60-80% of the population in your local country - in the US, that would be around 200-230 million.) In order to get that many people to switch, there would have to be a significant compelling reason for them to hold their wealth in Bitcoin instead of the government-backed currency. I have yet to see a compelling reason to switch. Not only that, there are high barriers to overcome yet: security, convenience of exchange, and relative durability all spring to mind as specific examples.

        Given the above, coupled with the fact that the Bitcoin exchange rate is being manipulated by speculators, and the number of knock-off alternative currencies floating around, why would any rational person think about holding their wealth in Bitcoin at any given moment?

        • I have yet to see a compelling reason to switch.

          How about no more taxes? Or at least making it easier to avoid some of the taxation.

          • by HuguesT (84078)

            As usual, only the wealthy will be able to evade some of the taxation. The little people will still be taxed no matter what. If not on transactions, then on possessions.

            • by pepty (1976012)

              As usual, only the wealthy will be able to evade some of the taxation. The little people will still be taxed no matter what. If not on transactions, then on possessions.

              Yep it would provide a way to launder capital so as to avoid taxes. For the non super rich, cryptocurrencies offers small online businesses the same opportunity to avoid taxes that is currently exploited by small brick and mortar businesses that handle a lot of cash. If you know three owners of stores with cash registers you probably know at least two tax cheats.

      • by PopeRatzo (965947) on Wednesday January 08, 2014 @07:24PM (#45902503) Homepage Journal

        Bitcoins strength lies in its ability to be used as a payment processing network

        Wrong. Bitcoins' strength lies in the starbursts in the eyes of it's biggest proponents, who will gladly and patiently explain to you how they'll reform the monetary system, end poverty and make them fabulously wealthy.

        Nothing is stronger than a True Believer, especially when they are neo-libertarians on a mission from Ayn.

        • by Bing Tsher E (943915) on Wednesday January 08, 2014 @07:45PM (#45902701) Journal

          Are Bitcoins minted in Rearden Metal?

        • by wbr1 (2538558) on Wednesday January 08, 2014 @07:54PM (#45902815)

          Bitcoins strength lies in its ability to be used as a payment processing network

          Wrong. Bitcoins' strength lies in the starbursts in the eyes of it's biggest proponents, who will gladly and patiently explain to you how they'll reform the monetary system, end poverty and make them fabulously wealthy.

          Nothing is stronger than a True Believer, especially when they are neo-libertarians on a mission from Ayn.

          Of course, because nicely formulated ad hominem is an excellent logical rebuttal.

      • It matters because you cannot use currency whose value fluctuates greatly -- you'll never have the piece of mind necessary to keep it. If you have what is today $10,000 in bitcoins, and you know that tomorrow that could be $15,000 or $3,000, you can't rely on that thing. You can't plan on buying a house or car or even a laptop with bitcoins in 3 months because by then their value could be anything. You can of course use it for speculation and just look to sell it and get rid of it when it's at what you thin

    • Re: (Score:2, Insightful)

      by ackthpt (218170)

      As we've seen, all a government needs to do is make a statement about support/regulation and the price drops in half.

      Every other currency is also vulnerable to govt manipulation - What exactly is it you don't understand about this Federal Reserve printing money to buy assets with, which convinces you the fiat currency call The US Dollar isn't being manipulated like a hand puppet?

      People continue to accept the dollar has worth, because to come to the sudden realization that it's only worth something because someone else who accepts it also subscribes to the believe it has value is a stressful eye opener. Bitcoin is no bett

      • by DogDude (805747)
        If by "manipulated" you mean "kept relatively stable", I tend to agree.

        Bitcoin isn't "manipulated" at all, hence it's uselessness as a currency.
      • by dave562 (969951)

        People continue to accept the dollar because it can be traded for commodities. Access to those commodities is to some extent governed by the force of the United States armed forces. That is the value of the dollar. People will continue to want dollars because it allows them to obtain what America has access to.

    • ...and then gets back to where it started in under a month. Sure the swings are bigger in an unregulated market, but the underlying stability seems to be there.

      • Re: (Score:2, Funny)

        by fredprado (2569351)
        You are right about that, and, adding to your point, do you know what makes swings bigger? Lack of speculation. What bitcoin market needs to soft these swings is more people speculating, contrary to popular belief.
    • Or all they have to do is reduce the value of the current dollar is an illusory tactic that we all call a "stimulus package". Regardless, if the government doesn't have total control over the $money that it's population uses, then it's not money.
    • by lgw (121541) on Wednesday January 08, 2014 @07:01PM (#45902327) Journal

      TFA doesn't really counter Stross's arguments much (besides arguing about carbon footprint, but really BTC is small potatoes even if you care about such things). The authors instead focus on why his objections just aren't important, and I tend to agree with that.

      In terms of actual economics, Stross is much in favor of state control of things, especially economic things (read his blog to get the best insight on his views), and BTC is the opposite of that. TFA primary argument, and one I'm quite sympathetic to is "well, who knows!" Economists argue over everything, and there's certainly no uniform agreement over what makes a good currency.

      As Feynman would say "one experiment is worth 1000 expert opinions". BTC is quite worthwhile IMO as an experiment. Personally, I think it's misguided and solves only unimportant problems, but hey, lets run the experiment and find out who's right. If bitcoin really becomes mainstream then it is a good currency, because the best currency is the one people want to use. And if instead it's crap, then it will never realy matter outside of eternal /. stories, and so no significant harm done.

      • Re: (Score:2, Informative)

        by purpledinoz (573045)
        From Charles Stross' arguments:

        You think our wonderful investment bankers aren't paying their fair share of taxes? Bitcoin is pretty much designed for tax evasion.

        This really pisses me off. Our wonderful investment bankers are defrauding us, our government, and are paying a smaller share of taxes thanks to lower taxes for investment income and dividends, helping terrorists and drug cartels move money, etc.... the list is long. Which world does he live in? The fact that Bitcoin is hard to control is the whole idea. When a few people have so much power, it pretty much automatically corrupts. Look what's happening in the US. The Fed print

    • Re: (Score:3, Interesting)

      by toQDuj (806112)

      All the government needs to do to make it worthless is to ask the NSA to mine with their resources for a while. That would quickly make the government the richest in terms of Bitcoin, and therefore gain even more power!

      • by cusco (717999)

        The FBI is already one of the largest holders of Bitcoin, since they confiscated the assets of Silk Road.

    • by ClintJCL (264898)
      By that logic, stocks are vulnerable to journalistic manipulation, therefore stocks are bad.
      • by Miseph (979059)

        Stocks are terrible at being currency, which is why they are virtually never used as such.

        You can't correctly follow the logic if the very first thing you do is ignore it.

        • by ClintJCL (264898)
          It was a metaphor, not a model. My point was that something being able to be overcome by events is not necessarily bad. The point works for all somethings, currency or not.
        • by ClintJCL (264898)
          Let's try this again. I keep forgetting Slashdot has no edit button: It was a metaphor, not a model. My point was that something being able to be affected by external events isn't the same as being "vulnerable to manipulation", nor is it necessarily bad. The points work for most somethings, currency or not.

          I probably muddied the point by making 2 points at once.

    • by mi (197448)

      As we've seen, all a government needs to do is make a statement about support/regulation and the price drops in half.

      The halving of the price followed the first time a government mentioned BitCoin... As such mentions become more frequent, the effects will gradually stop being as dramatic.

      Personally, I still prefer gold — because it is useful by itself: as a non-corroding metal with high conductivity and easy to work. And most people find gold beautiful, whereas it takes a peculiar mind to appreciate

    • Exactly. The moment they shut down the silk road site, the entire Bitcoin money supply plus five bucks will get you a cup of coffee at Starbucks.

      • by EETech1 (1179269)

        Just imagine if the shit hits the fan, and there are large areas without power, and / or internet access. Your Bitcoin will be worth exactly zero, as you'll have no way to cash them in.

  • by ElementOfDestruction (2024308) on Wednesday January 08, 2014 @06:52PM (#45902249)
    http://slashdot.org/index2.pl?fhfilter=bitcoin [slashdot.org]

    Over the last few months, we've been averaging a little more than 1 Bitcoin story every 2 days. Please - please, stop accepting every submission that has the word Bitcoin in it. At this point, I'd almost like them to start covering the 2016 Presidential Election. Enough.
    • by DiSKiLLeR (17651) on Wednesday January 08, 2014 @06:56PM (#45902279) Homepage Journal

      I don't understand the bitcoin hate.

      Bitcoin is the most amazing thing happening in the world today. It is the internet revolution now taking on the finance industry after conquering the media industry.

      • by Anonymous Coward

        I don't understand the bitcoin hate.

        Bitcoin is the most amazing thing happening in the world today. It is the internet revolution now taking on the finance industry after conquering the media industry.

        Your wording really makes you look like a BitCoiner. Which is why you don't understand the Bitcoin "hate".

        1. Bitcoin is hardly the most amazing thing happening today nor is it any sort of revolution that has to do with the internet.
        2. Bitcoin is trying to solve a problem in the way that a person tries to solve a problem when they've taken in too much alcohol. It's a supposed way to provide seemless transfer of money at a low cost. The problem with that is that, it's highly in-efficient. The amount of energy

      • by CitizenCain (1209428) on Wednesday January 08, 2014 @07:43PM (#45902681)

        I don't understand the bitcoin hate.

        Really?

        It's not that hard to understand... then again, I'm a bitcoin hater, so maybe that's why I see it as easy to understand... let me try to fill you in.

        1) Enough already. I hear so much hype about it, it's almost as bad as the never-ending election coverage I have to suffer through for 18 months before the elections. I know about it, am not interested, and would rather not see reminders about it every-fucking time I blink.

        2) It over-promises and under-delivers (at least as reported on in every story I read, and implemented in the real world). A world changing innovation that will revolutionize currency and break our dependence on evil national governments and usher in a new era.... except that it won't because it's so fundamentally broken on so many levels.

        3) I would love to see a viable cryptocurrency take off and break or loosen the hold that evil leviathan government has over the world today. The reality of Bitcoin, however, is that it is a bubble/ponzi scheme/lottery that enriches the lucky few early adopters at the expense of public trust in cryptocurrency, and once the Bitcoin bubble has come and gone, the odds of a fair, viable cryptocurrency being widely accepted by the public go way down. The fact that such a badly broken system is what's going to be equated with all cryptocurrency by the public and the media shatters any hopes I have of actually seeing a meaningful adoption of purely digital, non-government backed currency transactions for the foreseeable future.

        We are literally on the verge of an era where the technology exists to break governments of their iron grasp on currency (and therefore the world's economies), but instead of seeing that happen, I get to read a bunch of stories about this technologically brilliant ponzi scheme that's going to poison public opinion against that happening.

        And all so some lucky fucks (who aren't me) can get rich on the Bitcoin bubble. What's not to hate?

        • by pla (258480)
          1) Enough already.

          Agreed. Less press coverage means less volatility, which virtually every legitimate user of BTC would appreciate.


          2) It over-promises and under-delivers

          Then you haven't actually used it. Honestly, if you don't trade small amounts of money/goods/services with people in other countries - You have no use for Bitcoin. IF, however, you have any reason to transact with people in another country, you would instantly and unquestionably recognize the value of Bitcoin.


          3) The reality o
        • > And all so some lucky fucks (who aren't me) can get rich on the Bitcoin bubble. What's not to hate?

          Don't hate me because I paid attention to the first story I read on Slashdot about bitcoin, 2.5 years ago. I was paying attention, and you weren't. I didn't pay attention when one of my co-workers told me about this software company that was going public - Microsoft. Well, I have learned since then. I made money on some dotcom boom stocks, I lost on some others, but on the whole came out ahead. The c

      • by AdamHaun (43173)

        Bitcoin is the most amazing thing happening in the world today.

        This is only true if you believe that central banking is inherently harmful/evil, and things like a gold standard are a great idea. Despite the article's claim that economists constantly argue over everything and thus know nothing (which is incredible ignorance on its own), the case for fiat currency is pretty good [typepad.com]. But the discussion here is being driven by Libertarians, who A) love abstract reasoning and hypothetical examples, and B) are obsessed with the fantasy that people everywhere are conspiring to s

    • by TheCarp (96830)

      I, for one, like bitcoin more than I like the office of the president or its elections.

    • by ackthpt (218170)

      http://slashdot.org/index2.pl?fhfilter=bitcoin [slashdot.org]

      Over the last few months, we've been averaging a little more than 1 Bitcoin story every 2 days. Please - please, stop accepting every submission that has the word Bitcoin in it. At this point, I'd almost like them to start covering the 2016 Presidential Election. Enough.

      Bitcoin Story is a new virtual currency on /.

      • Virtual Currencies are supposed to be harder to mine as more people take interest, right? Slashdot is doing it wrong. The supply vs. demand curve is fucked.
    • Well, if any of the candidates decide to accept campaign donations in bitcoin, you'll get your wish.

    • by Jeff Flanagan (2981883) on Wednesday January 08, 2014 @09:24PM (#45903493)
      Wired has created a Bitcoin gap with their constant Bitcoin articles, and Slashdot is just trying to catch up.
    • This site advertises "bitcoin mining" gear. We'll keep getting crap about this ponzi scheme baited for geek for as long as those advertisements sit on this site.

      I suspect that all of the "miners" will migrate to distributed malware doing the "mining" at some point so we may get some rest from the articles then.
    • by Artifex (18308)

      http://slashdot.org/index2.pl?fhfilter=bitcoin [slashdot.org]

      Over the last few months, we've been averaging a little more than 1 Bitcoin story every 2 days. Please - please, stop accepting every submission that has the word Bitcoin in it. At this point, I'd almost like them to start covering the 2016 Presidential Election. Enough.

      Agreed. There should be an algorithm to make it progressively more difficult to create each Bitcoin story, with reviewers getting paid a small amount of karma for each submission they proc-- aarrgggh, doing it again!

  • by Anonymous Coward
    There is no need for Bitcoin to die in a fire. It is already dying since people are using it mostly as an investment mechanism (they are either brilliant or idiots depending on who you talk to). Real currencies aren't used (to this extent) as an investment. Savings? Sure. But not held and traded like securities or even say baseball cards. Wake the rest of us up when we can easily and transparently (with no fees) use Bitcoins for real life (grocery store, restaurants, Home Depot, etc.).
    • by al0ha (1262684)
      You have that right but for the wrong reason. Bitcoin is irrelevant because the underlying software is OpenSource - get it people? Anyone can quickly and easily created their own Bit-whatever currency- as we've seen people doing. What is happening now with Bitcoin itself is the same old pump and dump that happens with penny stocks and the old unregulated wall st of the early 20th century. Remember the Winkle-who-the-f-cares twins are promoting their investment as are others; it's all in the name of makin
    • by tompaulco (629533)
      That's because other currencies are deflationary. Holding them is idiocy. You might as well spend whatever you have now because if you spend it next year it won't buy you as much. The only point to holding a currency is if you expect it to rise against some other currency.
      • by cusco (717999)

        The only point to holding a currency is if you expect it to rise against some other currency.

        I take it you've never heard of the concept of saving money in order to purchase things or for 'rainy day' expenses? It's a really nice feeling to know I could pay cash for a new car today if I wanted to, or could pay to put a new roof on my house tomorrow if it were necessary. Not everyone lives off credit cards or believes in making monthly payments to the bank for the rest of their lives.

        If you're holding curr

        • by amorsen (7485)

          Practically no one except criminals hold significant amounts of currency to purchase things. Instead the currency is invested, at least in a bank account.

          BitCoin is different in that it is entirely practical to keep extremely large amounts of it entirely outside the economy. You just cannot do that with cash, except if you are Scrooge McDuck.

      • by anagama (611277)

        I'm no economist, but isn't that backwards? Most currencies are inflationary, meaning that it takes more of them every year to buy the same junk as last. People thus want to spend their money on real stuff more quickly so they can get full value out of their money. In a deflationary cycle, it takes less money over time to buy the same amount of stuff -- this is the same as saying that the currency's value rises over time and in essence, it makes everything cheaper the longer you wait. This is considered

  • by Kris_J (10111) * on Wednesday January 08, 2014 @06:58PM (#45902299) Journal
    Anyone wanting to rebut the carbon footprint of cryptocurrency should invite the other party to stand behind a running armoured car that's being used to deliver cash to an ATM.
  • Don't see the article as actually refuting much of anything Stross had to say.

    The nicest thing you can say about bitcoin is that it is disruptive and the disruptions have the possibility of not being exceptionally painful. If you think about the primary advantage of bitcoin, making anonymous electronic transactions that are much harder to trace, you have to think it's not going to be good. Then you look and see the first killer app for bitcoin was the silkroad ? It really isn't going to surprise that this t

  • by gmuslera (3436) on Wednesday January 08, 2014 @07:16PM (#45902441) Homepage Journal
    It is being used as plain money, becoming just a speculative bubble, but its potential is far more than that. The technology is good enough for other uses, like Twister [slashdot.org], there is where its value resides.
  • Deflation (Score:5, Insightful)

    by American AC in Paris (230456) on Wednesday January 08, 2014 @07:17PM (#45902451) Homepage

    From TFA:

    Bitcoin is more of a hybrid system than a true deflationary system. The gold standard is considered deflationary and Bitcoin is often seen as the digital equivalent of gold. Gold has a limited supply, so it is scarce, just like a digital currency. But real gold can only be subdivided so far. It can only be chopped up so far before it’s nothing but dust. Bitcoin has no such limitations. Theoretically, it can be subdivided into fractions of a coin almost indefinitely, growing as needed with people’s demands. Its current limitation is eight decimal places. Even with only 21 million Bitcoins, that’s still 2000 trillion of the smallest unit. The protocol is designed to be upgradeable, so if we ever need to divide it further we can.

    The problem with a deflationary system is not one of divisibility. The problem with a deflationary system is that the value of a given amount of currency is basically guaranteed to increase over time, as the total amount of possible currency has a hard limit--by design, in Bitcoin's case. Unless human civilization starts becoming less valuable as a whole (which is BAD), this is basically inevitable.

    That you can chop your Bitcoins up into Nanobitcoins doesn't change the fact that the currency will simply continue to increase in real value. That's like saying you can make a ten-ton boulder less heavy by crushing it into pebbles.

    That this is advanced as a serious counterargument to deflation should tell you everything you need to know about the author(s) of this piece.

    • by Sycraft-fu (314770) on Thursday January 09, 2014 @01:21AM (#45904473)

      If you read posts from many Bitcoin supporters, you will discover that they actually believe that deflation is a good thing. They think that deflation will make the money in their piggy bank worth more, and thus they like it. They have a poor understanding of the overall economic impact so they believe it would be positive. They also tend to conflate the ideas of saving and hoarding so while Bitcoin encourages the latter, they believe that's the same thing as the former.

      What's even funnier to me, is that these are often the same people that get mad about "the 1%". What they fail to realize is that deflation is something that would benefit the rich and the very most and harm the poor the very most. The more money you have, and the less debt you have, the better deflation would be for you. If you've got a massive bank account, more than you need for the rest of your life, deflation is great. You keep all your money in cash, spend it only as you need, and the remaining money gets worth more. You don't need to invest it or take any risk, just keeping cash increases your value.

      On the other side, if you owe money, deflation is a big problem. A loan becomes increasingly difficult to pay back as your nominal payment stays the same, but the real value that you are having to pay out increases. It works to keep you poor and to make it more difficult for you to ever become financially self-sufficient.

      Really what it comes down to is many Bitcoin supporters just have a very poor understanding of economics. They don't understand the downsides of Bitcoin, because they actually believe many of them to the upsides. Really, Bitcoin is a dream for the rich robber barons. They would love something outside of any government regulation, something that works to make the rich richer, something where there's no recourse if they take money from you, no chargeback that kind of thing. It really isn't something that the rest of us should be that interested in seeing.

      The idea of a crypto currency is an interesting one, but Bitcoin is very poorly implemented from an economic standpoint, if nothing else.

  • by Anonymous Coward

    From the article:
    "Nobody has the final say on what economic system is the best. Economists can’t even agree on basic assumptions, which is why they argue endlessly."

    That's not a rebuttal. That's a refusal to engage a serious point.

  • But the thing is... "revolutionary" doesn't necessarily mean "entirely good". I agree that Bitcoin is revolutionary. I also agree that Bitcoin is damaging to society in many ways. Maybe not as doom and gloom as what Stross is claiming, but it's certainly not the ideal that Bitcoin's proponents are claiming.
  • Bitcoin has fundamental utility, just like Internet companies did in 2000 before the crash, except its price includes manic speculation. I don't want bitcoin to die, nor did I want those Internet companies to die. They all had utility, but manic speculation killed them. Speculation didn't kill them, or even rampant speculation. Manic speculation killed them, speculation without any justification except emotion, herd mentality, or what have you.

    In my opinion, Bitcoin will be worth, after a number of years, a

  • by dbIII (701233) on Wednesday January 08, 2014 @11:14PM (#45904049)
    Stross was involved in e-commerce in the early days and his novel "Neptune's Brood" is based on digital currency concepts that had to be investigated in detail before writing if they were to seem in any way believable.

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