Come for the politics, stay for the snark.

There are some who say that there are too many strawmen arguments on this blog.

The arc of history bends toward the same old fuckery.

Cancel the cowardly WaPo and set up an equivalent monthly donation to ProPublica.

He wakes up lying, and he lies all day.

Come on, media. you have one job. start doing it.

I see no possible difficulties whatsoever with this fool-proof plan.

This isn’t Democrats spending madly. This is government catching up.

You cannot love your country only when you win.

The current Supreme Court is a dangerous, rogue court.

Some judge needs to shut this circus down soon.

“I was told there would be no fact checking.”

We cannot abandon the truth and remain a free nation.

Second rate reporter says what?

The party of Reagan has become the party of Putin.

This country desperately needs a functioning fourth estate.

The fight for our country is always worth it. ~Kamala Harris

Consistently wrong since 2002

Yeah, with this crowd one never knows.

You are so fucked. Still, I wish you the best of luck.

Fear or fury? The choice is ours.

New McCarthy, same old McCarthyism.

“Jesus paying for the sins of everyone is an insult to those who paid for their own sins.”

“The defense has a certain level of trust in defendant that the government does not.”

He imagines himself as The Big Bad, Who Is Universally Feared… instead of The Big Jagoff, Who Is Universally Mocked.

You are here: Home / Economics / C.R.E.A.M. / Open Thread: The 2017 Bitcoin Adventure

Open Thread: The 2017 Bitcoin Adventure

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(Drew Sheneman via GoComics.com)
.

Bitcoin prices climbed back above the $15,000 mark Saturday following a steep decline Friday when the cryptocurrency shed about a third of its value.

Bitcoin, which is known to be extremely volatile, sank below $11,000 at one point Friday, according to data from CoinDesk.com.

Prices had approached $20,000 as recently as a week ago….

I’ll concede that Bitcoin is as “rational” as any other highly speculative investment, but dear trickster god the stories…

Problem is, even if cryptocurrency is the most rational method of storing value, it’s being developed / used by human beings, who (per all historical records) may not be…


Isn’t Vampire Squid LLC always a leading bubble indicator?…

Reader Interactions

110Comments

  2. 2.

    Mnemosyne

    For the bitcoin defenders: we didn’t have a financial meltdown over mortgages because mortgages are a bad idea — we had a financial meltdown because people who didn’t understand them decided they could make huge profits and flooded the market.

  3. 3.

    dmsilev

    Presumably the people making the money aren’t, by and large, the speculators but rather the folks selling the middleman services and infrastructure. And power companies. I’m sure Chinese electrical utilities appreciate all of the new business.

  4. 4.

    Rusty

    Crypto-currencies are most enthusiastically embraced by those that don’t want any tracking.  Like criminals.  Their big “benefit’ is that they supposedly can’t be inflated.  So you are working with criminals, and while any one crypto-currency can’t be inflated, there is zero limit to how many new currencies can created, there can be millions or more. They are backed by nothing.  Even the crappiest national currency is backed by some government, they have some incentives to  not have the currency crash and you can always at least pay your government debts in the currency.  So bet your life savings on a made up fantasy controlled by potential criminals?  What could go wrong?

  5. 5.

    zzyzx

    I suspect in the next year or two, many people will come to the conclusion of, “Oh! That’s why these regulations exist!” Sure the diehard libertarians will never give in, but it’ll click for many.

  6. 6.

    MattF

    What we have here is an illustration of ‘Stein’s Law’: ‘If something cannot go on forever, it will end.’

  7. 7.

    dmsilev

    @Mnemosyne: With mortgages, there’s at least a fighting chance of putting a value on the assets underlying the whole rickety edifice of financial instruments built on top. Bitcoin, however…

  8. 8.

    Roger Moore

    Problem is, even if cryptocurrency is the most rational method of storing value

    They’re a terrible way of storing value. Ordinary commodities are a good way of storing value because they actually have value. Things like steel, pork bellies, and real estate are useful for something, so people are likely to be willing to exchange other things of value for them. Bitcoins have no intrinsic use; they’re only useful as a medium of exchange as long as people remain convinced of their value. That means they could just turn into a pile of worthless sludge any moment.

  9. 9.

    dmsilev

    @Rusty: Bitcoin was designed to be deflationary, which is a really really stupid thing to want your currency to be. It was also set up to max out at about four transactions per second, worldwide. That’s going to be a fun limit when there’s a serious crash and everyone is panic selling.

  12. 12.

    Mike J

    We never signed a peace agreement with North Korea. It’s one of the reasons they feel they need to protect themselves from invasion. The next Korean war will be the same war.

  13. 13.

    David ??Merry Christmas?? Koch

    Marty Baron (editor of WaPo) says NYT has been calling him up and screaming that Speilberg did a movie on “The Post” and not on NYT. He keeps telling them he’s not Speilberg’s agent.

    Fucking petty, vain, losers.

    Sad!

  17. 17.

    Fair Economist

    @dmsilev: Also, about 3/4 of Bitcoin transactions have already happened. They’ve generated 3/4 of the coins and once there are no more coins to generate there can be no more transactions. It might happen sooner, as I’m guessing (I haven’t studied the math) that the last few coins will be especially difficult to generate. You can already hear the footsteps of approaching Bitcoin doom.

    One of the linked articles mentioned Bitcoin Cash, a spinoff intended to allow more transactions and thus have at least a hypothetical real-world use, was suspended for insider trading. Shocking!

  19. 19.

    Roger Moore

    @Major Major Major Major:
    I think the financial crisis was the result of a whole bunch of things going wrong. Big crises like that almost always happen that way, which is why they’re rare events. My gut feeling is that there were several underlying causes:

    1) Too much money chasing too few investments. This was the root cause of the bubble and of the financial instruments built on top of it.
    2) Deregulation, and the development of new financial institutions that avoided what regulation that did exist, that let people engage in more risk than was healthy.
    3) Financial models that gave people a false sense of security in the financial instruments they were investing in.

  22. 22.

    David ??Merry Christmas?? Koch

    Walter Shaub ✔ @waltshaub

    The wannabe autocrat just retweeted an image depicting CNN’s blood on the sole of his shoe. These colicky tweets reveal he’s hurting this weekend. They make him (and our country) look weak.

    5:29 AM – Dec 24, 2017

    Nothing says Christmas like publicly fantasizing of mass murder.

  23. 23.

    RepubAnon

    @Rusty: I disagree – cryptocurrencies can be inflated and deflated. Inflation/deflation is a measure of what you can buy with your currency. Look at how the price has been bouncing round – when the price of a bitcoin drops, is that not inflation? When it rises, is that not deflation?

  25. 25.

    trollhattan

    We get mail.

    Before 2017 ends, I want to say thank you.

    We knew this year would be a difficult one. But it was also full of fierce passion and hope — from the millions of people who took to the streets on behalf of the values we share to the activists, newcomers and veterans alike, who lead us to victories in Virginia, Alabama, and across the country. We really have seen that we are stronger together (sorry, couldn’t resist).

    My wish for you is that you’re able to take a break this holiday season and spend some time with the people you love. Bill and I will be celebrating the best way we know how: by sharing our favorite traditions with the youngest members of our family.

    2018 will be a big year for this team. I hope you enjoy your holidays — and come back refreshed and ready to win. I know I will.

    Onward!

    Hillary

    I’d give anything for half her resilience.

  28. 28.

    clay

    @Fair Economist: I’m confused. I know that bitcoins have an upper limit on how many can be produced. But once that limit is reached, why couldn’t they still be exchanged for goods and services?

  29. 29.

    germy

    @David ??Merry Christmas?? Koch:

    Marty Baron (editor of WaPo) says NYT has been calling him up and screaming that Speilberg did a movie on “The Post” and not on NYT.

    Maybe someday someone will make a heroic movie about the NYT’s role in the selling of W’s war. Can Ms. Streep play Judith Miller, or should the role go to Sally Field?

  30. 30.

    Fair Economist

    @RepubAnon: There are two definitions of “inflation” here. The everyday use is in terms of prices and in that sense Bitcoin can inflate or deflate. However, hard-money types (and some economists, the Monetarists) define “inflation” as the increase in the amount of a currency. There is, obviously, some, albeit imperfect, correlation between the two definitions. But the hard money types really worship theirs and they believe that a non-inflatable currency (by their definition) is perfect in every way and will bring about miraculous improvements in the economy once established. See “goldbugs” for one famed type of hard-money advocate most people are aware of (and, properly, mock).

    Cryptocurrencies are basically goldbug fodder dressed up in sexy math and modern computers.

  31. 31.

    Ruckus

    @Rusty:
    The other day on the way to lunch I had to explain how money actually works to a couple of guys. They couldn’t see the difference between dollars and bitcoin. Neither are backed by precious metals so what’s the diff?
    I explained that there is nothing backing bitcoin, it is pure speculation, the only thing driving the price is greed. I guess better bitcoin driving greed than the dollar or mortgage loans. The government backs dollars and as long as people pay taxes and governing actually happens the dollar is solvent. If we had to depend on having enough gold to back the dollar, we would have had to mine and melt more than exists in the world and wouldn’t have any for all the industrial purposes that we need, let alone anything else. Also the dollar is solvent as long as our government is reasonably run, mostly in a manner that a complete republican government has never been able to do.

  32. 32.

    Mnemosyne

    @trollhattan:

    Bloodied, but not defeated.

    Now I’m wondering what the Venn diagram is of people who hate Hillary and people who hated a particular revealed ability of Leia’s in The Last Jedi. I bet there’s a pretty big overlap. ?

  33. 33.

    dmsilev

    @Fair Economist: Not quite correct. Once all of the (fixed number) of bitcoins have been ‘mined’, the massive amounts of computation used as part of the system will be paid for by transaction fees. That’s already happening; I was reading an article the other day which noted that the average transaction fee for Bitcoin was now north of $20. It’s essentially an auction process for getting one of a fixed number slots in each ‘block’ of transactions that the network processes, so if you want your transaction to clear anytime soon, be prepared to pay for the privilege…

  35. 35.

    Fair Economist

    @clay:

    I’m confused. I know that bitcoins have an upper limit on how many can be produced. But once that limit is reached, why couldn’t they still be exchanged for goods and services?

    Because the registry for their exchange is recorded in the process for making new bitcoins, and according to the rules if the transaction isn’t in that registry, it didn’t happen.

    Edit: I see dmsilev is correcting me

  40. 40.

    Ruckus

    @Roger Moore:
    Are you trying to say that the FTFNYT wants to make a movie about their brilliant reporting, they should maybe actually have some brilliant reporting first?

  41. 41.

    ThresherK

    @Starfish: Back in 1999 Krugman was the first guy I remember saying “If Bush gets what he wants for a tax cut it’ll be a disaster. Conservatives don’t care about the deficit.” and our Beltway Inbred class popped their fucking monocles.

    I consider Rosen to be Trump’s Krugman.

  42. 42.

    Jim, Foolish Literalist

    I assume this passed by some editor two or three rungs below Marty Barron, but he should still apologize for this, as someone on twitter said, maybe the dumbest and most useless of all the dumb and useless Behold These Totally Non Racist Noble Savages stories.

    Jenna Johnson‏Verified account @ wpjenna
    Earlier this month, I traveled down to Linden, Tennessee — home to barely 1,000 people, many of whom voted for President Trump, and at least 10 Christian churches. Locals say they never stopped saying “Merry Christmas.”

  45. 45.

    Fair Economist

    @dmsilev: No, I think my original claim was correct. Transaction fees go to bitcoin miners. There’s no way for non-miners to record. When mining becomes impossible, recording must stop.

  47. 47.

    Major Major Major Major

    @Fair Economist: ‘mining’ is actually just verifying bitcoin transactions. If your verification happens to also generate a hash with a certain amount of leading zeroes, a new tranche of bitcoins is created and you win some. If there are no more bitcoins, then nothing happens when you generate that hash.

  48. 48.

    Fair Economist

    @Major Major Major Major:

    the motivation for freely verifying transactions is that you have a chance of generating a new block and winning coins, so yes, once that’s gone the motivation will have to come from elsewhere.

    But it’s not just motivation. You need a methodology, and Bitcoin doesn’t provide a method for recording transactions outside the mining stream. If they did, it would already be in wide using given the insane transaction fees.

    This isn’t a problem with cryptocurrencies in general – not necessarily – but it is with Bitcoin, and I’ll wager most of the rest. It would be substantially more complex to have two separate recording streams.

  49. 49.

    Roger Moore

    @Fair Economist:

    Also, about 3/4 of Bitcoin transactions have already happened. They’ve generated 3/4 of the coins and once there are no more coins to generate there can be no more transactions. It might happen sooner, as I’m guessing (I haven’t studied the math) that the last few coins will be especially difficult to generate. You can already hear the footsteps of approaching Bitcoin doom.

    This isn’t really true. For one thing, the rate of bitcoin generation is designed to slow down very gradually, so it will be possible to continue mining them for quite a long time. There’s also a way of rewarding the miners that’s separate from the actual mining process. People who want their transactions to happen sooner can include a reward for the miner who successfully processes their transaction. That at least theoretically provides a mechanism to keep people validating transactions even when there are no coins left to mine.

    As far as the difficulty mining coins goes, that changes over time in a fairly controlled way. There’s a scheme where the miners regularly look at the average time between blocks being validated and adjust the effort so the average time between blocks being validates remains about 10 minutes. That means it will automatically get harder as more computing power is brought to bear and easier as less is, so there shouldn’t be a problem with the last coins being impossible to mine.

  51. 51.

    Bill Arnold

    @dmsilev:

    Bitcoin was designed to be deflationary, which is a really really stupid thing to want your currency to be.

    Not just deflationary, hyper-deflationary
    One early transaction involving bitcoins is said to be 10000 bitcoins for two Papa Johns pizzas. delivered. That’s now very roughly (depending on day) $140,000,000.
    https://steemit.com/bitcoin/@bitcoinflood/what-fuels-bitcoins-growth-a-history-lesson-on-bitcoin
    Anyway, reasonably sure a crypto currency could be devised that doesn’t have this regrettable virtual gold-buggery bias.
    Does anyone know of such a cryptocurrency, that isn’t designed for hoarding, but rather for stability?

  56. 56.

    schrodingers_cat

    Has anyone noticed how the administration has now graduated from railing against undocumented immigrants to castigating naturalized citizens, as beneficiaries of chain migration? Fox News is on board too.

  59. 59.

    Roger Moore

    @Ruckus:
    The big thing about dollars (and Euros, Yen, etc.) is that there’s a mandatory use for them. I’m required to pay my taxes in dollars, which means I can’t escape from the dollar economy as long as I am still required to pay taxes. Because enough other people have to pay taxes in dollars, they wind up being a viable medium of exchange that’s tied to the power of the US government and the vitality of the US economy. Nobody has to use Bitcoin for anything, so it can lose all its value if people decide they want to use some other currency instead.

  60. 60.

    dmsilev

    @Fair Economist: No, it still works. Right now, the miner or pool of miners that wins the race to validate a particular block gets two rewards: a dozen or so new bitcoins which come from that finite pool of 21million, plus some smaller number in transaction fees. Over time, the new-coin reward dwindles away, and transaction fees would presumably increase to cover the discrepancy. Eventually, validation/mining would be entirely funded by transaction fees.

    That’s the theory. There are …numerous practical problems.

  61. 61.

    Chip Daniels

    @Ruckus:
    From what I can see, this misconception about money- that “its all imaginary, so whats the diff?” – drives a lot of the Bitcoin enthusiasts.
    The way I’ve explained it to them is that if it wanted, the US government could simply demand tax payments be made in physical goods like wheat, oil, or machinery, and then redeem every dollar in circulation with those same tangible goods.

    Wildly impractical, but then that’s what money was made to solve.

    Or to put it yet another way, a dollar actually represents a tax lien, a claim of some portion of all the physical tangible wealth produced by the economy that can be collected by the government. Its not uncommon that buildings, boats, or warehouses of merchandise are surrendered in lieu of back taxes.

    Cryptocurrency is literally just an imaginary unit of nothing.

  63. 63.

    Cacti

    @?BillinGlendaleCA:

    There’s a good percentage of the “Conservative Movement” that don’t like any immigration at all, or their spawn either. I’d call them racist, but I’m an asshole.

    Their venom over illegal immigration just makes handy cover for their real problem:

    They don’t like brown skinned people and don’t want them in this country.

  64. 64.

    Villago Delenda Est

    @schrodingers_cat: It’s all about racism, at the heart. These fucking people don’t believe in the ideals of this county (“Out of many, one”). They should all be forcibly deported to Mother Russia, the “white homeland” they so desperately want to be in.

  66. 66.

    Roger Moore

    @Ruckus:

    Are you trying to say that the FTFNYT wants to make a movie about their brilliant reporting, they should maybe actually have some brilliant reporting first?

    I know it’s a really radical concept, but it might just work.

  68. 68.

    Roger Moore

    @Fair Economist:

    Right, but isn’t Satori’s math designed so there are only (about) 21 million possible solutions?

    That’s not how it works. The way it works is that the set of transactions up for validation right now creates a new problem. The first person to solve the problem receives a reward, but the size of the reward shrinks over time so that the sum of all the rewards will add up to 21 million Bitcoins. After there are 21 million Bitcoins, there is no more extra reward, but the miner who solves the problem can still win the extra fees people add to their transactions to get them registered sooner.

  69. 69.

    Mnemosyne

    @?BillinGlendaleCA:

    This was years ago, but I remember a conservative troll at Washington Monthly going off on me because I referred to him as an “immigrant” because, well, he was someone who had been born in another country and then come to the US and became a citizen.

    That’s when I realized that “immigrant” was a stand-in word for, er, something else.

  75. 75.

    Baud

    Bitcoin prices climbed back above the $15,000 mark Saturday following a steep decline Friday when the cryptocurrency shed about a third of its value

    How much is that in tulips?

  77. 77.

    Mike in NC

    @schrodingers_cat: Trump and his minions are very much in favor of only allowing immigrants to come from a select number of countries whose populations are overwhelmingly Caucasian and Christian.

  78. 78.

    Mnemosyne

    @Major Major Major Major:

    Which is …not even wrong, and you know that.

    It’s simplified down to a single sentence, but it’s not wrong. Financiers decided that a “mortgage” was always an inherently stable investment because there were a lot of protections set up to make sure that the majority of people who got one were able to pay it, and those financiers ignored the fact that, by making it easier and easier to get a mortgage, they were ensuring that “mortgages” as a concept were no longer stable.

    I know you’re really invested in the idea of Bitcoin, but it’s a bubble right now. Investing in it right now is like getting a balloon mortgage and thinking you’re making a stable investment.

  79. 79.

    Major Major Major Major

    I know you’re really invested in the idea of Bitcoin

    This couldn’t be farther from the truth, but you’re obviously so intent on defending your original statement that you’re descending to ad hominem, so I’m done.

  80. 80.

    Fair Economist

    @Baud: Very roughly, a bitcoin is half the price of the peak price of a Viceroy bulb in the tulip mania, according to Wikipedia (2500 florins, at 11.51 Euros per florin).

  81. 81.

    Thoughtful David

    @Chip Daniels: One of the things about bitcoin and say, dollars, is that there is someone, in fact a whole lot of someones and even an entire legal system, who is interested in the value of the dollar, and no one interested in the value of bitcoin. If the dollar starts surging, those someones will say “this is bad,” and make efforts to reduce its value. Likewise, if the dollar starts to plummet, they’ll say “this is bad” and make efforts to shore up the value. There’s no one to do this for bitcoin. Which means it will always be highly volatile. And no long-term or non-stupid investor, I mean NONE, wants to invest in that kind of system.
    So bitcoin is just a glibertarian distraction. It’s fun to watch them lose their shirts.

  85. 85.

    Villago Delenda Est

    @Mnemosyne: In fact, these assholes went out of their way to make a mortgage a less stable financial entity, by undermining all those various safeguards built into it. Destroying the title process to make a few extra bucks helped enormously.

  86. 86.

    Ruckus

    @Bill Arnold:

    Does anyone know of such a cryptocurrency, that isn’t designed for hoarding, but rather for stability?

    What would be the point of such a thing? We already have currencies such as the dollar that do that. The entire point of these schemes is greed. Like the gold rush or tulips.

  90. 90.

    Villago Delenda Est

    @Ruckus: They’re all basically grifting schemes. You hope to get in on it early, cash out near peak, and watch as others hold worthless “assets”.

  91. 91.

    Fair Economist

    @Thoughtful David:

    If the dollar starts surging, those someones will say “this is bad,” and make efforts to reduce its value. Likewise, if the dollar starts to plummet, they’ll say “this is bad” and make efforts to shore up the value.

    And not just by large amounts – a penny or two in value swings can bring attention. Bitcoin doubles and then halves in a week and it’s an “efficient market”.

    I asked on the previous thread if there was a cryptocurrency designed for value stability (i.e. to be a currency) and somebody else asked on this thread and – bupkis? So there isn’t one?

  92. 92.

    Ruckus

    @Villago Delenda Est:
    Yep. The people I mentioned would like to be rich, BTW who wouldn’t, but they, like me are worker bees. But as our country/world is currently situated, the idea of working all your life and retiring to a life of meager existence in some back water shithole because the greediest fuckers stole everything to see if it makes their socks go up and down, which it doesn’t, isn’t all that appealing. They have a hard time seeing that the difference is how they vote, because those greediest fuckers have already stolen so much. And as those greediest fuckers are such good people it must be someone else’s fault.

  93. 93.

    raptusregaliter

    A hypothetical: If I wanted to buy some tennis shoes on Amazon using Bitcoin (don’t know if they even accept it), does that mean I would have to pay some kind of Bitcoin transaction fee that could amount to around $20? Who the hell but deluded glibertarians would think this makes any kind of economic sense?
    And does a Bitcoin transaction fee rise based on the amount of the purchase, or is it a fixed fee?

  94. 94.

    Ruckus

    @Fair Economist:
    I’ll repeat from above.

    What would be the point of such a thing? We already have currencies such as the dollar that do that. The entire point of these schemes is greed. Like the gold rush or tulips.

    A currency designed as stable won’t make greedy fuckers a lot of money unless they have enough money already to invest in the currency and thereby add enough of a level of uncertainty to take advantage of. And there are controlling agencies (in our case the Fed) to attempt to keep that from happening. All country currencies do this as well as the Euro, unless they have no idea that the stability is a nice feature. Some small country dictatorships have not been about any kind of governing, only power and they don’t control the currency. It always burns them in the end. But this is also why the PTB in the republican party hates the Fed. It’s why they have invested hundreds of millions over the years, so that they can control the economy and steal the rest of it.

  95. 95.

    Ruckus

    @raptusregaliter:
    The fee changes depending on how much bitcoin you want to purchase and who is setting the market at any instant. That is their stability control, the fee. After all you are only investing in greed, the more you have to pay for it the less likely you will be to invest. And that is the point of this, have enough people to “invest” that this entire scheme doesn’t attract any governmental action because someone tried to purchase the entire 21 million “coins”. The thing to look at is, are there any extremely wealthy bitcoin investors, who have any noticeable market share? These fuckers may be greedy assholes but they are not real stupid.

  96. 96.

    Peale

    @Villago Delenda Est: yep. When it no longer become me clear who owned title. undermined, what, 300 years of effort. Because they needed more speed and the title involved an actual piece of paper.

  98. 98.

    Chet Murthy

    @raptusregaliter: My understanding is that no merchant actually accepts bitcoin directly. Think about it: if they accepted your bitcoin, how would they convert it into dollars so they could actually fund their operations (pay the manufacturer for those sneakers in bulk)? They’d have to hold onto those BTC, and that would involve tremendous “currency risk” (in quotes b/c BTC ain’t a currency, ha!) So instead, I understand that they all go to these “exchanges” (like Coinbase) and convert to dollars immediately. So really, you’re just converting to dollars and paying with dollars.

    Now, this means that Coinbase itself is doing the same thing. They’re a “market maker” in the parlance of stock markets: they match buyers and selles of BTC, hoping that they won’t have to (too often) have to go and buy/sell BTC on the open market. And they take a slice off the trans (the spread between the rate at which they’ll buy BTC, and sell BTC). Of course Coinbase is putting their capital at risk, in doing this, just like any currency dealer does: they’re hoping that BTC won’t shift too much in price and leave them hanging. So Coinbase assumes the currency risk, in return for that spread in conversion rates.

    None of this is intrinsic to bitcoin: it would be equally true if AMZN allowed you to pay with Euros (and somehow, Euros were incredibly volatile, and it was really hard to trade in them, taking an hour to confirm a trade).

  99. 99.

    Chet Murthy

    @Bill Arnold:

    Does anyone know of such a cryptocurrency, that isn’t designed for hoarding, but rather for stability?

    Sure, they’re called “fiat currencies backed by central banks”. [half j/k]

    (1) a cryptocurrency is just a fiat currency, that uses some sort of interesting crytography-related math, in its implementation. That’s all that makes it a “crypto”currency.

    (2) What you’re asking for, I claim is a fiat currency, that expands and contracts its supply in some manner related to the demand for it — so that the value of the currency in terms of some basket of goods and services, stays stable. Right? [I’m reminded of Adam Smith’s “what is the value of money?” section, where he says that the value of money is in the amount of labor & goods that it will purchase, and only that.]

    (3) Any such mechanism would involve humans (until there’s a general AI, sure). B/c humans would have to decide on what that basket contained, which goods, which brands, where purchased, etc. Humans would have to decide whether prices had moved enough that intervention were warranted.

    (4) and that’s what central banks[*] do.

    Any “mechanistic” (== “can be implemented purely by an algorithm”) method for controlling the supply of a currency, almost definitionally will fail to ensure stability, b/c that algorithm cannot correspond to the real economy, right?

    [*]: for sure, central banks can fail at this task. But at the least, they have the -ability- to do the task correctly, where there’s no possibility of a mere algorithm (with no human control) being able to do it.

  101. 101.

    Bill Arnold

    Sure, they’re called “fiat currencies backed by central banks”.

    Sure, and I don’t argue with any of your points, which are (well, seem to be to me on minimal thought) correct. Though a central government could back a cryptocurrency including tweeks to the money supply. This paper/article seems to lay out the arguments, though they don’t strongly defend third party anonymity, e.g. against the government. (One can argue, and many do, that freedom can’t exist without third party anonymity, even though it enables a vast collection of problems, e.g. tax evasion.)
    Central bank cryptocurrencies September 2017

  102. 102.

    J R in WV

    @Cacti:

    They don’t like brown skinned people and don’t want them in this country.

    Well, actually, they love brown skinned people, if they can make them work for free in the fields and shops, step into the gutter to pass the white folks on a sidewalk, provide free sex on demand, and do funny dances on Friday nights. And sing the blues, don’t forget that!

    If they have to treat them the same as white folks, they hate that a lot.

  103. 103.

    Enhanced Voting Techniques

    @Bill Arnold:

    Anyway, reasonably sure a crypto currency could be devised that doesn’t have this regrettable virtual gold-buggery bias.

    Isn’t deflation the entire idea of Libertarism; so the people who earned their money the old fashion way by being born to the correct social class can keep it by sitting around and not doing anything?

  104. 104.

    Chet Murthy

    @Bill Arnold: There are a lotta idiots in the blockchain world, and in the blockchain-wannabe world. *sigh* This issue of third-party anonymity — it’s a red herring. Or more exactly, it’s bullshit from libertarians. Want for your defrauded mom to be able to get her life savings back? Then you aren’t supporting third-party anonymity, yes?

    This is telling: (from that paper):

    Kahn et al (2005) and McAndrews (2017) emphasise legitimate reasons for
    counterparty anonymity in transactions. Payees and payers may want to reduce the
    risk of identity theft, the possibility that the counterparty might follow them home
    and rob them

    I remember Marc Andreesen’s Why Bitcoin Matters screed with the following drivel

    Finally, I’d like to address the claim made by some critics that Bitcoin is a haven for bad behavior, for criminals and terrorists to transfer money anonymously with impunity. This is a myth, fostered mostly by sensationalistic press coverage and an incomplete understanding of the technology. Much like email, which is quite traceable, Bitcoin is pseudonymous, not anonymous. Further, every transaction in the Bitcoin network is tracked and logged forever in the Bitcoin blockchain, or permanent record, available for all to see. As a result, Bitcoin is considerably easier for law enforcement to trace than cash, gold or diamonds.

    Actively misleading propaganda. Even when he wrote it, BTC was heavily used for ransomware, and it’s only gotten worse. And his comparison with *cash* is just hilarious — does he *know* how big a million dollars (in 100s) would be? 10kg, ffs. It’s not easy to steal a lotta cash; whereas, the Parity Wallet theft alone was $30m (that’s 300 kg, or… 660 lb, sheeeesh).

  105. 105.

    Don K

    @Roger Moore:

    There’s also the belief that real-estate prices could only go up, never down. If you believe it’s impossible to lose money on a foreclosure, then it doesn’t matter how many customers can’t repay. Remember, credit losses are equal to probability(default) times loss per default, so if loss per default is assumed to be 0 then all of those crappy tranches are golden.

  106. 106.

    Bill Arnold

    @Chet Murthy:
    Mostly I agree. Thanks for the reply.

    This issue of third-party anonymity — it’s a red herring. Or more exactly, it’s bullshit from libertarians. Want for your defrauded mom to be able to get her life savings back? Then you aren’t supporting third-party anonymity, yes?

    A couple of pushbacks against that; (1) third party anonymity does not imply strict counterparty anonymity, e.g. with paper cash transactions the counterparties are (usually) known to each other, and (2) governments (country level, or more local) often cannot be trusted, particularly if one is politically involved and they are authoritarian (or totalitarian), or headed that way. The last matters because transaction histories collected by a government (or cooperative corporations) will be (if not already are) forever.
    (IMO short term we collectively need to decide whether we want to live in techno-panopticons, where even motes of dust are potential agents of the state, else it will be decided for us in the affirmative. We in the West have about 5 years, max, IMO.)

  107. 107.

    chopper

    OK people are walking around with pocket computers connected to all the world’s knowledge and they’re catching fire in their pockets because hackers have hijacked them to solve cryptographic puzzles in order to generate imaginary currency.

    neal stephenson couldn’t come up with a goofier techno-story.

  108. 108.

    Chet Murthy

    @Bill Arnold: Bill, everything you write is true. Setting aside the finer points of anonymity, and focusing on your bigger picture: yes, the Panopticon is terrifying, isn’t it? And ti seems like we have no choice: on one side, we have a libertarian world, where private actors amass enormous stores of data about us, and on the other end, we have a world where governments do that. It seems like there’s no place in the middle. I can’t say I have good answers, but I firmly believe that weakening governments just empowers private (and hence, entirely unregulated) actors. And that’s never good for little people.

    I fantasize about a world where everybody above a certain level of wealth must agree to be chipped/recorded 24×7, as a condition of having that wealth (they can always give it up). And that recording is available to everyone else on earth, 24×7. So they can have their bodyguards and personal offices and such, but we get to see and know everything they do. B/c let’s face it: they can and do know everything they want, about all of us, anytime they want.

    Jokingly, I used to say that I’d be OK with the PATRIOT Act, if and only if I could get to see the tape of when Dubya choked on that pretzel. You just *know* they have the tapes. And it warn’t no pretzel, Jake.

  109. 109.

    fuckwit

    This place has been shitting all over bitcoin from a great height, since 2013.

    If you-all nay-saying assholes had just bought into some BTC instead of bitching about it, gradually over the years, and held on to it, there’d be plenty of money available now for campaign contributions towards a Democratic wave election.

    $100 worth of BTC when it was on the way up or down from the 2013 bubble would be worth a grand or two now. Act Blue would have loved to have some of that, I’m sure.

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