Topic: 2013-04-03 Felix Salmon - The Bitcoin Bubble and the Future of Currency (Read 2147 times)
April 05, 2013, 04:59:04 PM
He has all things backwards. It's about the same as arguing that there isnt enough gold to drive today's world economy. You should really just ignore well_writing but not_understanding people and continue with the main plan.
April 05, 2013, 04:31:22 PM
Interesting article, but this part twisted my brain around:
Should he be arguing that we're at the top, or at the bottom of a bubble, here?
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Even now, at the top of a huge bubble, the total value of all the bitcoins in existence is the equivalent of about 2,000 standard gold bars -- not remotely enough to revolutionize the global payments and currency systems as we know them.
Should he be arguing that we're at the top, or at the bottom of a bubble, here?
April 04, 2013, 05:46:44 PM
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And, most importantly, it would work with, rather than against, today’s established monetary institutions. Yes, it would be disruptive, and could cost them quite a lot of money in terms of lost interchange fees from plastic cards and ATMs. But it wouldn’t aspire to delegitimize them – quite the opposite. Because it turns out that financial-services companies are a very important part of any democracy.
It’s because we place so much trust in banks, after all, that they are forced to take on a great deal of responsibility. Banks and central banks are given an important job to do, are regulated and scrutinized, and can be held responsible for their actions. The population of the entire country, as represented by the government, stands behind bank deposits and promises to honor them even if the bank goes bust. Money, in other words, is a key ingredient in the glue which keeps the social compact together. (What we’re seeing in Cyprus is in large part a demonstration of what happens when that compact starts becoming unglued.)
Bitcoin, in that sense, is anti democratic. It’s based on mistrust rather than trust, it refuses to take any responsibility onto itself – indeed, it doesn’t even have a self to take responsibility onto. It’s nihilistic, and an attractive alternative only to things which are downright bad.
It’s because we place so much trust in banks, after all, that they are forced to take on a great deal of responsibility. Banks and central banks are given an important job to do, are regulated and scrutinized, and can be held responsible for their actions. The population of the entire country, as represented by the government, stands behind bank deposits and promises to honor them even if the bank goes bust. Money, in other words, is a key ingredient in the glue which keeps the social compact together. (What we’re seeing in Cyprus is in large part a demonstration of what happens when that compact starts becoming unglued.)
Bitcoin, in that sense, is anti democratic. It’s based on mistrust rather than trust, it refuses to take any responsibility onto itself – indeed, it doesn’t even have a self to take responsibility onto. It’s nihilistic, and an attractive alternative only to things which are downright bad.
I refrain from quoting his fallacy on deflation. I won't comment further other than that one could not possibly be more disingenuous in failing to correctly address the core reason of society's current breakdown; exactly the trust in broken fiat money that's evaporating in spades. Putting this forward as a reason against Bitcoin shows that this guy is ready to grow old.
Irrelevant.
April 04, 2013, 05:27:33 PM
This article by Felix Salmon has to be one of the strangest I have read on Bitcoin so far.
On the one hand, the guy shows a deep level of understanding Bitcoin, much more than most other journalists. He sees how people in countries without a stable currency could use it, how it could be used for online purchases and how international trade would flourish if people were able to send wealth instantly across the globe for little or no fee.
Yet somehow, he still doesn't get it. He cites a number of concerns with Bitcoin, most of which can be described as growing pains: the currency is too volatile (this will change once all bitcoins together are worth more than $100 billion), botnets are being used to mine (will be solved by Asics) and it being generally hard to use and easy to steal (will become better once Bitcoin becomes more established. Just look at the difference between Blockchain.info's wallet and the earliest online wallets).
His main concern with Bitcoin seems to be the deflationary argument however. This is only a problem for Bitcoin as a payment system and then only when Bitcoin becomes really big, eclipsing currencies which are popular at the moment. How can he then say that bitcoins will become worthless one day? That's like saying "Bitcoin's will be worth so much that people don't want them so instead they're going to be worthless overnight". Has this guy ever heard of a concept called equilibrium? His arguments simply do not make sense.
On the one hand, the guy shows a deep level of understanding Bitcoin, much more than most other journalists. He sees how people in countries without a stable currency could use it, how it could be used for online purchases and how international trade would flourish if people were able to send wealth instantly across the globe for little or no fee.
Yet somehow, he still doesn't get it. He cites a number of concerns with Bitcoin, most of which can be described as growing pains: the currency is too volatile (this will change once all bitcoins together are worth more than $100 billion), botnets are being used to mine (will be solved by Asics) and it being generally hard to use and easy to steal (will become better once Bitcoin becomes more established. Just look at the difference between Blockchain.info's wallet and the earliest online wallets).
His main concern with Bitcoin seems to be the deflationary argument however. This is only a problem for Bitcoin as a payment system and then only when Bitcoin becomes really big, eclipsing currencies which are popular at the moment. How can he then say that bitcoins will become worthless one day? That's like saying "Bitcoin's will be worth so much that people don't want them so instead they're going to be worthless overnight". Has this guy ever heard of a concept called equilibrium? His arguments simply do not make sense.
April 03, 2013, 09:16:29 PM
If bitcoin starts eating the world, it is people like Felix that will demand that the government stops it.
April 03, 2013, 07:37:58 PM
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In order to have economic growth, you need monetary growth as well
That statement alone, disqualifies him completely.
Right, these "professional" economists never seem to get it. In a free (currency) market, monetary growth, if required at all, will be provided by a complementary diversity of currencies and exchange systems (see ripple).
April 03, 2013, 07:26:31 PM
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Even now, at the top of a huge bubble, the total value of all the bitcoins in existence is the equivalent of about 2,000 standard gold bars -- not remotely enough to revolutionize the global payments and currency systems as we know them.
The problem is slippage for large payments.
Just about 24 months ago there was a flurry of suggestions for the person wanting to buy $100K of bitcoins and be able to do so without losing a ton to slippage. Today slippage for that amount is just a fraction of a percent maybe if it gets spread out over a few hours.
So is bitcoin ready for multiple $10M transfers? Not today. But extrapolating the trend and that day that it could is not really all that far out there.
April 03, 2013, 04:12:12 PM
Don't you hate it when something is so valuable that it's actually worthless? 
I mean... He's got some good points, but the conclusion doesn't make any sense.
I mean... He's got some good points, but the conclusion doesn't make any sense.
April 03, 2013, 02:42:23 PM
Well written, but lots of wrong and debunked fallacies, not just about Bitcoin, but about economics in general, for instance:
That statement alone, disqualifies him completely. But there's lots of other silly [malicious] FUD in the article, hidden by occasional praise. Bitcoin as an evil motivator for botnets? Really? Ever heard of ASICs?
The whole article reeks of an attempt to protect the establishment and status quo. I will add him to my mental blacklist.
Quote
In order to have economic growth, you need monetary growth as well
That statement alone, disqualifies him completely. But there's lots of other silly [malicious] FUD in the article, hidden by occasional praise. Bitcoin as an evil motivator for botnets? Really? Ever heard of ASICs?
The whole article reeks of an attempt to protect the establishment and status quo. I will add him to my mental blacklist.
April 03, 2013, 12:38:41 PM
https://medium.com/money-banking/2b5ef79482cb
Felix Salmon is the finance blogger at Reuters - he is extremely influential in the finance world.
Edit: I'm half way through, this one is a keeper, well worth the time.
Edit2: fixed date.
Felix Salmon is the finance blogger at Reuters - he is extremely influential in the finance world.
Edit: I'm half way through, this one is a keeper, well worth the time.
Edit2: fixed date.
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