[Homunculiheaded]

The more people get excited about faster ways to hoard bitcoins and eventually make a nice profit (presumably in USD in the end) the dramatically more cynical I become about its future. When the bitcoin discussion was mainly around its use as a currency for things like silkroad, VPNs etc I actually thought it seemed to have a promising future. I really hope I'm wrong, but I have a feeling in 2023 the bitcoin discussion will be relegated to nostalgic jokes about how crazy we used to be.

[caf]

This is working out exactly as planned - the security of the system against double-spending is predicated on honest nodes controlling the majority of the hashing power in the bitcoin network, so the fact that people are working very hard to add hashing power to honest nodes is desirable for the system as a whole.

[nvarsj]

Indeed, it is pretty crazy. I know someone with an Avalon ASIC who claims Satoshi is a genius. I think he's biased by the fact he has a small device that plugs into the wall and makes him more money than his day job.

[pdog]

Is there any doubt that Satoshi is a genius? Look at what he's accomplished.

[skriticos2]

Mining = securing network from double transactions. This is about security of transactions, not about saving. Please stay on the topic.

[jpdoctor]

> The more people get excited about faster ways to hoard bitcoins

People seem to be oblivious to the fact that a currency must be available in order to be useful. There is a reason that Gresham's Law has achieved "Law" status.

Oddly, the right thing to do for currency acceptance would be to shutdown all of the ASICs.

[pseudonym]

I think people are more oblivious to the fact that a "deflationary currency" is inherently flawed because it by definition results in hoarding, which is not what you want people to do with your currency. Why would you bother loaning or investing it if you can make more money just sitting on it?

[fleitz]

If USD was limited to currency in circulation then it would not be nearly as inflationary as it is.

Once an established lending system based on bitcoins is established it will have the same problems as our current currencies. It wasn't printing money that caused the real estate bubble, it was the way to banking system has the power to expand credit and the systemic risk that expansion of credit causes.

Once there are fractional reserve bitcoin banks it will no longer be a deflationary currency.

[wintersFright]

Will people want to borrow in defalationary biased currency though? Better to borrow in Bernanke Bucks where there is an unstoppable torrent being emitted monthly.

IMHO the Real estate bubble was from the Fed bailing the prior tech bubble by suppressing interest rates - which encourages borrowing. When loans are paid back, the currency created by taking the loan is extinguished but they have been juicing the system by continually suppressing rates via QE/bond purchases and not letting the real market decide the risk (ie: price of bonds). Now that interest rates have hit the floor - the next bubble to pop is the USD itself.

[fleitz]

If the USD pops then BTC may be less deflationary. The bubble did not pop because mortgages were paid back.

Loans are generally repaid in currency, paying back a loan creates even more currency as the additional currency created by the interest becomes an asset against which loans can be issued.

[XorNot]

The idea the USD is going to collapse is farcical. It would be a global catastrophe of a scale not yet seen, but also not threatened.

Meanwhile, BTC gains and loses 50 - 80% of its value in a single day. I wonder which is more stable.

[wintersFright]

I see your point - the principal is repaid but the interest stays in circulation.

Agree mortgages didn't pop due to being paid back.

[zurn]

Deflation is not desireable in itself, but it is not a crippling disadvantage. Eg Japan has had a very long deflation spiral and it didn't affect the usability of their currency. And the west has been living in a world of negative real interest rates since the 2008 crisis.

As long as we don't have a big bitcoin credit market and we don't want to regulate the bitcoin "printing press" to adjust for market cycles, it won't even be a disadvantage. = As long as it's only a secondary currency to most users.

[fleitz]

Why does the method of mining mean that a currency should not be accepted?

Gold serves as a currency yet the methods of mining have changed drastically in the last 1,000 years.

[anigbrowl]

Gold fell out of widespread use as a currency after the mining became industrialized. Nobody wants to play in a rigged game.

[fleitz]

Tell me more about how gold fell out of use as currency because mining became industrialized.

http://en.wikipedia.org/wiki/Bretton_Woods_system http://en.wikipedia.org/wiki/Executive_Order_6102

I'm not a gold bug and I see many problems with using gold as a currency, namely that the amount of currency in circulation should depend on how much stuff we can dig out of the ground. (In the case of BTC something about how many times a SHA-256 hash can be calculated.)

The idea that gold fell out of use as currency because of industrialization is either a completely new discovery in economics, or completely wrong. I'm pretty sure it's the latter.

[anigbrowl]

I don't think the Bretton woods system counts. That's between countries, I'm talking about everyday preference for gold by individuals. I suppose I should have said specie instead.

[dualogy]

> Gold serves as a currency

Not for the last 80 years it hasn't..

[wintersFright]

Actually 39 years. The USD was a token for gold until Nixon shock.

[dualogy]

Yeah but that I define as "monetary metal for Central Bank settlements" gold, not "day-to-day normal-people transactional currency". Was it still "money" / monetary after 33? Certainly, until '71 (42 years ago, not 39). But "currency" (circulating to facilitate/lubricate individual micro rather than macro exchange&trade)? Hardly ;) Also not "legal tender" -- as in, for courts enforcing contract liabilities or tax payments.

TL;DR: only outside the US, only to Central Banks.

[wintersFright]

Interesting point. Wouldn't an individual Frenchman see a USD as a token for metal until the shock? And until the shock, national currencies circulated at a fixed exchange with the USD - thereby his own currency was effectively gold backed?

At a national level, yes the Central Banks settled in gold, but that was after the micro transactions bubbled up to be settled from the commercial banks and then eventually cleared at the Central Bank level (Talking on the edges of my understanding here - just trying to see if the reality for an individual level was the currency was gold backed until 71).

[zwily]

The same number of coins will be mined, no matter how many ASICs are online.