Why couldn't they?
I explained why they couldn't in post 19 in this thread.
Topic: Why Bitcoin changed the world... and its price will crash (Read 6874 times)
I explained why they couldn't in post 19 in this thread.
OP fails pretty badly in understanding network effects 
Welcome, newbie
We've seen this before: https://en.wikipedia.org/wiki/Eternal_September Welcome, newbie
OP fails pretty badly in understanding network effects
Welcome, newbie
Welcome, newbie
That's the thing that's keeping me hopeful that a Bank or a Government won't be able to compete with Bitcoin.
I'm hoping that people have been burned enough that if some big bank decides to make its own cryptocurrency, people would shy away from it just because it's a bank.
I'm hoping that people have been burned enough that if some big bank decides to make its own cryptocurrency, people would shy away from it just because it's a bank.
Why couldn't they?
Because they have already done that and it failed. The USD was pegged to gold up until 1971, at which time the Nixon administration arbitrarily decided to cease USD convertibility into gold. The USD has lost 83% of its value since that time. This is the entire problem bitcoin solves.
That doesn't make any sense. You're saying the USD was pegged to gold until 1971. That's true. So that means that they can in fact peg it to gold. Just that it will fail eventually. I wasn't saying it won't fail, it will, but it will take decades to fail. Maybe even 100+ years just like how the USD is still around.
So again, why can't they?
Well yes, technically they could, but there is no point in trying something that has already failed when you have a far superior system.
Oh yeah, and I totally agree. But would the general public agree?
I think BigJohn has many valid points: there is precedent for a gold-backed currency (original fiat currencies) and eGold actually was fairly successful for a time ($2 billion per year in velocity, $20 million monetary base).
But I think HeliKopterBen and BitTrivia have the right idea: "We've solved a real-world problem that's never been solved before and that changes how things will unfold in the future."
Indeed, the pendulum of public perception has swung. We now distrusts powerful banks, government bureaucracy, and centralized organization. The future of money is a decentralized cryptocurrency like bitcoin.
Why couldn't they?
Because they have already done that and it failed. The USD was pegged to gold up until 1971, at which time the Nixon administration arbitrarily decided to cease USD convertibility into gold. The USD has lost 83% of its value since that time. This is the entire problem bitcoin solves.
That doesn't make any sense. You're saying the USD was pegged to gold until 1971. That's true. So that means that they can in fact peg it to gold. Just that it will fail eventually. I wasn't saying it won't fail, it will, but it will take decades to fail. Maybe even 100+ years just like how the USD is still around.
So again, why can't they?
Well yes, technically they could, but there is no point in trying something that has already failed when you have a far superior system.
Oh yeah, and I totally agree. But would the general public agree?
We will let the markets decide and so far so good for bitcoin.
Why couldn't they?
Because they have already done that and it failed. The USD was pegged to gold up until 1971, at which time the Nixon administration arbitrarily decided to cease USD convertibility into gold. The USD has lost 83% of its value since that time. This is the entire problem bitcoin solves.
That doesn't make any sense. You're saying the USD was pegged to gold until 1971. That's true. So that means that they can in fact peg it to gold. Just that it will fail eventually. I wasn't saying it won't fail, it will, but it will take decades to fail. Maybe even 100+ years just like how the USD is still around.
So again, why can't they?
Well yes, technically they could, but there is no point in trying something that has already failed when you have a far superior system.
Oh yeah, and I totally agree. But would the general public agree?
Why couldn't they?
Because they have already done that and it failed. The USD was pegged to gold up until 1971, at which time the Nixon administration arbitrarily decided to cease USD convertibility into gold. The USD has lost 83% of its value since that time. This is the entire problem bitcoin solves.
That doesn't make any sense. You're saying the USD was pegged to gold until 1971. That's true. So that means that they can in fact peg it to gold. Just that it will fail eventually. I wasn't saying it won't fail, it will, but it will take decades to fail. Maybe even 100+ years just like how the USD is still around.
So again, why can't they?
Well yes, technically they could, but there is no point in trying something that has already failed when you have a far superior system.
Sure they can create a centralized one. But for the first time in history they now have to compete with trustless cryptocurrencies. We've solved a real-world problem that's never been solved before and that changes how things will unfold in the future.
Why couldn't they?
Because they have already done that and it failed. The USD was pegged to gold up until 1971, at which time the Nixon administration arbitrarily decided to cease USD convertibility into gold. The USD has lost 83% of its value since that time. This is the entire problem bitcoin solves.
That doesn't make any sense. You're saying the USD was pegged to gold until 1971. That's true. So that means that they can in fact peg it to gold. Just that it will fail eventually. I wasn't saying it won't fail, it will, but it will take decades to fail. Maybe even 100+ years just like how the USD is still around.
So again, why can't they?
I'd like to stress that it's not "my" coin. I'd be dead-set against such a thing, as I'm a huge fan of Bitcoin and its open nature. But I just recognize an opening for some entity to create a less than ideal coin, namely a bank, government, or a major corporation.
But what I imagine could be as simple as them buying up a certain amount of gold, and simply say that 1coin=1oz of gold. Then say they have 50,000 ounces, they'd simply set the upper limit to 50,000 (this is Bitcoin's 21million number), premine the whole thing from the get-go, and then sell it to people for fiat. In reality they could raise that 50,000 number in any way they please. They could say that 1coin is half an ounce, a quarter an ounce, or whatever. They could even run it as a fractional reserve scheme, where they only have physical gold to back-up 10% of the coins. There wouldn't be a need for decentralized mining. They could just mine it all themselves.
Suppose the Bank of China did this. And say you did some work for a company that paid you in these coins. You could walk into one of their branches and exchange it for gold. Or if it becomes widespread, as I believe it would, like how we always say Bitcoin will become one day, you could simply use your coins to buy whatever you wanted.
Yeah, this sounds real similar to eGold. But keep in mind that I'm just using gold as an example. It could literally be anything, or even nothing. In fact if Bitcoin gets much more successful, I'd bet they'd copy Bitcoin in that sense and not even bother backing it up with anything (other than their name). To the average person a cryptopcurrency backed by the "good name" of a government is superior to Bitcoin which is backed by nothing. And also about eGold, keep in mind that the project actually did quite well. It ended up dying because of legal issues. They even threw the Patriot Act on them. It had lots of problems with hacking and whatnot. But Bitcoin suffers from those just the same. Even worse with Bitcoin, because people need to keep their own wallets safe, and that's constantly proving to be a problem.
I hate the thought that this would happen. But I think we're fooling ourselves if we think it won't. To the average person the biggest advantages of Bitcoin, like instant transfers across the world, are easily replicated by such a thing. And some of Bitcoin's downsides, like transaction fees, could even be removed.
But what I imagine could be as simple as them buying up a certain amount of gold, and simply say that 1coin=1oz of gold. Then say they have 50,000 ounces, they'd simply set the upper limit to 50,000 (this is Bitcoin's 21million number), premine the whole thing from the get-go, and then sell it to people for fiat. In reality they could raise that 50,000 number in any way they please. They could say that 1coin is half an ounce, a quarter an ounce, or whatever. They could even run it as a fractional reserve scheme, where they only have physical gold to back-up 10% of the coins. There wouldn't be a need for decentralized mining. They could just mine it all themselves.
Suppose the Bank of China did this. And say you did some work for a company that paid you in these coins. You could walk into one of their branches and exchange it for gold. Or if it becomes widespread, as I believe it would, like how we always say Bitcoin will become one day, you could simply use your coins to buy whatever you wanted.
Yeah, this sounds real similar to eGold. But keep in mind that I'm just using gold as an example. It could literally be anything, or even nothing. In fact if Bitcoin gets much more successful, I'd bet they'd copy Bitcoin in that sense and not even bother backing it up with anything (other than their name). To the average person a cryptopcurrency backed by the "good name" of a government is superior to Bitcoin which is backed by nothing. And also about eGold, keep in mind that the project actually did quite well. It ended up dying because of legal issues. They even threw the Patriot Act on them. It had lots of problems with hacking and whatnot. But Bitcoin suffers from those just the same. Even worse with Bitcoin, because people need to keep their own wallets safe, and that's constantly proving to be a problem.
I hate the thought that this would happen. But I think we're fooling ourselves if we think it won't. To the average person the biggest advantages of Bitcoin, like instant transfers across the world, are easily replicated by such a thing. And some of Bitcoin's downsides, like transaction fees, could even be removed.
Egold did not die because of legal issues. It died because there was a central point of failure. Again, Bitcoin solves this problem.
Why couldn't they?
Because they have already done that and it failed. The USD was pegged to gold up until 1971, at which time the Nixon administration arbitrarily decided to cease USD convertibility into gold. The USD has lost 83% of its value since that time. This is the entire problem bitcoin solves.
I'd like to stress that it's not "my" coin. I'd be dead-set against such a thing, as I'm a huge fan of Bitcoin and its open nature. But I just recognize an opening for some entity to create a less than ideal coin, namely a bank, government, or a major corporation.
But what I imagine could be as simple as them buying up a certain amount of gold, and simply say that 1coin=1oz of gold. Then say they have 50,000 ounces, they'd simply set the upper limit to 50,000 (this is Bitcoin's 21million number), premine the whole thing from the get-go, and then sell it to people for fiat. In reality they could raise that 50,000 number in any way they please. They could say that 1coin is half an ounce, a quarter an ounce, or whatever. They could even run it as a fractional reserve scheme, where they only have physical gold to back-up 10% of the coins. There wouldn't be a need for decentralized mining. They could just mine it all themselves.
Suppose the Bank of China did this. And say you did some work for a company that paid you in these coins. You could walk into one of their branches and exchange it for gold. Or if it becomes widespread, as I believe it would, like how we always say Bitcoin will become one day, you could simply use your coins to buy whatever you wanted.
Yeah, this sounds real similar to eGold. But keep in mind that I'm just using gold as an example. It could literally be anything, or even nothing. In fact if Bitcoin gets much more successful, I'd bet they'd copy Bitcoin in that sense and not even bother backing it up with anything (other than their name). To the average person a cryptopcurrency backed by the "good name" of a government is superior to Bitcoin which is backed by nothing. And also about eGold, keep in mind that the project actually did quite well. It ended up dying because of legal issues. They even threw the Patriot Act on them. It had lots of problems with hacking and whatnot. But Bitcoin suffers from those just the same. Even worse with Bitcoin, because people need to keep their own wallets safe, and that's constantly proving to be a problem.
I hate the thought that this would happen. But I think we're fooling ourselves if we think it won't. To the average person the biggest advantages of Bitcoin, like instant transfers across the world, are easily replicated by such a thing. And some of Bitcoin's downsides, like transaction fees, could even be removed.
But what I imagine could be as simple as them buying up a certain amount of gold, and simply say that 1coin=1oz of gold. Then say they have 50,000 ounces, they'd simply set the upper limit to 50,000 (this is Bitcoin's 21million number), premine the whole thing from the get-go, and then sell it to people for fiat. In reality they could raise that 50,000 number in any way they please. They could say that 1coin is half an ounce, a quarter an ounce, or whatever. They could even run it as a fractional reserve scheme, where they only have physical gold to back-up 10% of the coins. There wouldn't be a need for decentralized mining. They could just mine it all themselves.
Suppose the Bank of China did this. And say you did some work for a company that paid you in these coins. You could walk into one of their branches and exchange it for gold. Or if it becomes widespread, as I believe it would, like how we always say Bitcoin will become one day, you could simply use your coins to buy whatever you wanted.
Yeah, this sounds real similar to eGold. But keep in mind that I'm just using gold as an example. It could literally be anything, or even nothing. In fact if Bitcoin gets much more successful, I'd bet they'd copy Bitcoin in that sense and not even bother backing it up with anything (other than their name). To the average person a cryptopcurrency backed by the "good name" of a government is superior to Bitcoin which is backed by nothing. And also about eGold, keep in mind that the project actually did quite well. It ended up dying because of legal issues. They even threw the Patriot Act on them. It had lots of problems with hacking and whatnot. But Bitcoin suffers from those just the same. Even worse with Bitcoin, because people need to keep their own wallets safe, and that's constantly proving to be a problem.
I hate the thought that this would happen. But I think we're fooling ourselves if we think it won't. To the average person the biggest advantages of Bitcoin, like instant transfers across the world, are easily replicated by such a thing. And some of Bitcoin's downsides, like transaction fees, could even be removed.
OK, but the devil is in the details. Can you explain what such a coin would look like? Does it involve mining? Is there a block reward? Is it centralized or decentralized? Is it "backed" by something like dollars or gold? Can you send it internationally? Are transactions reversible? Are transactions/accounts anonymous, pseudonymous, or linked to a real person? Are balances confiscatable? What authority decides? Can that authority inflate the money supply? Does it follow the same AML/KYC procedures as our current system? Are there multiple such systems in each country/region, or is there one main system for the entire world?
Well, there are significant problems with Bitcoin at the moment. Those problems could be alleviated in the future, but in the meantime it leaves the door wide open for a centralized coin.
It would solve the problem of price volatility. Say a big bank issues a cryptocurrency, they'd have a much easier time keeping its initial price stable. Keep in mind that they can toss out the 21million number, or the halving block rewards, on a whim. They could peg it to some commodity, or even a basket of currencies, and get something that's pretty stable right off the bat.
It would also solve the problem of wallets. People have to jump through all sorts of hoops to keep their Bitcoins. This is already a bank. They're already in the business of keeping people's money safe. So it would make sense to have them keep your online wallet. And with that comes things like FDIC insurance. Increased security relative to making an offline wallet.
And it would keep all the benefits of a cryptocurrency. You'd still have instant transactions. You can still send money across the glove in seconds. All that good stuff.
Now personally I think something like that would be horrible. I'd never want to use it. I'd probably stick to cash. But there's no doubt in my mind that if they pull a stunt like this off, they'd get much wider adoption, at a much higher rate, than any of the current cryptocurrencies including Bitcoin.
Thanks for the response BigJohn.
I said the "devil is in the details" because I wanted someone like yourself to explain *how* such a centralized coin could be pegged to, for instance, gold. Does your coin still involve mining that people all over the world can participate in? If so, where do you get the gold to back the newly minted coins? Can I walk into your bank and exchange my coins for gold at the pegged rate, or do you not allow this? If mining is not involved, would you just have a big centralized server and process all the transactions yourself? I guess you could acquire gold on the open market each time you sell a new coin, and then never have too much capital at risk. But if this is your plan, it sounds a lot like eGold 2.0 and we know how the first version turned out. In fact, I believe the original owner of eGold is trying to re-kindle his old flame, so we may get to see this experiment play out in real time....
Why couldn't they?
They could peg it to some commodity, or even a basket of currencies, and get something that's pretty stable right off the bat.
No. OK, but the devil is in the details. Can you explain what such a coin would look like? Does it involve mining? Is there a block reward? Is it centralized or decentralized? Is it "backed" by something like dollars or gold? Can you send it internationally? Are transactions reversible? Are transactions/accounts anonymous, pseudonymous, or linked to a real person? Are balances confiscatable? What authority decides? Can that authority inflate the money supply? Does it follow the same AML/KYC procedures as our current system? Are there multiple such systems in each country/region, or is there one main system for the entire world?
Well, there are significant problems with Bitcoin at the moment. Those problems could be alleviated in the future, but in the meantime it leaves the door wide open for a centralized coin.
It would solve the problem of price volatility. Say a big bank issues a cryptocurrency, they'd have a much easier time keeping its initial price stable. Keep in mind that they can toss out the 21million number, or the halving block rewards, on a whim. They could peg it to some commodity, or even a basket of currencies, and get something that's pretty stable right off the bat.
It would also solve the problem of wallets. People have to jump through all sorts of hoops to keep their Bitcoins. This is already a bank. They're already in the business of keeping people's money safe. So it would make sense to have them keep your online wallet. And with that comes things like FDIC insurance. Increased security relative to making an offline wallet.
And it would keep all the benefits of a cryptocurrency. You'd still have instant transactions. You can still send money across the glove in seconds. All that good stuff.
Now personally I think something like that would be horrible. I'd never want to use it. I'd probably stick to cash. But there's no doubt in my mind that if they pull a stunt like this off, they'd get much wider adoption, at a much higher rate, than any of the current cryptocurrencies including Bitcoin.
I stopped reading about a quarter way in, the original post is retarded. It's like saying diamond will crash in price because you have many other quartz that look similar.
Either the entire cryptocurrency concept crash and burn or it survives and flourish - in which case bitcoin will be far and large remain as the gold in that sector. Second most popular litecoin still has years to go before it can reach what silver is to gold. It's not a diss on litecoin or any other, just a fact.
The real danger of bitcoin death i see is after all the coins are mined (or close to it) around 2141, the idea is the transaction fees should be significant enough to support the miners keeping their hardware running. However if this doesnt happen (and you really need many order of magnitude transactions compare to today to keep the mining hardware running solely on transaction fees as profit alone). If the transactions dont reach that level, then people will shutdown their miners hence weakening the network eventually to the point of no return, it's a snowball effect - as the network shrinks, transactions will become less and less as people give up on bitcoin which in turn causes more hardware getting shut etc.. That's the doomsday situation, to prevent that bitcoin needs to be as popular(similar volume) as credit card transactions by then. But i wont be around to see what happens, unfortunately.
Either the entire cryptocurrency concept crash and burn or it survives and flourish - in which case bitcoin will be far and large remain as the gold in that sector. Second most popular litecoin still has years to go before it can reach what silver is to gold. It's not a diss on litecoin or any other, just a fact.
The real danger of bitcoin death i see is after all the coins are mined (or close to it) around 2141, the idea is the transaction fees should be significant enough to support the miners keeping their hardware running. However if this doesnt happen (and you really need many order of magnitude transactions compare to today to keep the mining hardware running solely on transaction fees as profit alone). If the transactions dont reach that level, then people will shutdown their miners hence weakening the network eventually to the point of no return, it's a snowball effect - as the network shrinks, transactions will become less and less as people give up on bitcoin which in turn causes more hardware getting shut etc.. That's the doomsday situation, to prevent that bitcoin needs to be as popular(similar volume) as credit card transactions by then. But i wont be around to see what happens, unfortunately.
this is the greatest pyramid scheme of all time, everyone who adopts makes money, and the end game will be the end of the current monetary and banking system, perfect
For those who are saying "no newer and different cryptocoin could replace Bitcoin, cos Bitcoin was first!!!11"
I'm noticing that a lot of Rock & Roll artists sold a hell of a lot more records than Chuck Berry.
You have just argued that Chuck Berry is analogous to TCP/IP in that it was the first to market .... therefore TCP/IP should have been superseded by now by infinitely better protocols? wtf?I'm noticing that a lot of Rock & Roll artists sold a hell of a lot more records than Chuck Berry.
My point is that Chuck Berry *ISN'T* analogous to TCP/IP, and neither is Bitcoin. You don't have to be chuck berry to play rock & roll, and you don't have to be Bitcoin to use a cryptocurrency protocol.
Bitcoin exists at the application layer, not the network layer. You can have a different application use the same network and even the same protocol, and you don't need to touch infrastructure to make the change.
There is absolutely nothing that locks out new coins from competing with Bitcoin.
When Elvis became more popular than Chuck Berry, did the entire music industry have to change to accommodate Elvis? The entire infrastructure of the internet would have to change for another protocol to replace TCP/IP.
In fact, IPv6 is a far superior version of IP than IPv4, but the world has yet to even modestly move to IPv6 because existing hardware and infrastructure would have to change to accomodate this, and IPv6 has been around for nearly 15 years now. Its not just a settings change. Newer hardware supports both IPv4 and IPv6 and are backward-compatible with legacy hardware that only supports IPv4. The problem is, legacy hardware will only communicate with current hardware through IPv4. Also, entire network configurations would have to be changed to move to IPv6, requiring a lot of skilled labor and working through many problems. Eventually, IPv6 may become the dominant protocol, but it will take time.
Bitcoin is similar in the fact that the infrastructure and hardware being built around bitcoin may not be forward-compatible with a completely new protocol, not to mention the fact that the new protocol would have to be far superior to bitcoin much like IPv6 is far superior to IPv4, and I have yet to see anything of that sort.
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