Topic: Why Bitcoin changed the world... and its price will crash - page 2. (Read 6876 times)

You haven't address my prior post.


Not if anonymity is 99.9% and we are moving to an economy where we download and 3D print thus every merchant transaction can be anonymous.

No more physical stores. No more physical merchandise other than the low valued components of raw materials, which will be in abundant oversupply as the global economy implodes after 2016 from the $150 trillion debt bubble (and $1000 trillion derivatives and $1000 trillion unfunded promises from governments).

We are moving to a radically different world. The industrial age is done.

Now we enter a massive global implosion with 50% unemployment and chaos.

Anonymity will reign. Those without cunning and balls, just get out the way.

The only way a bank backed e-currency will work is if it is mainly in one country and it gives up the whole borderless international concept that us cryptocurrency fans embrace.

It is hard to imagine the cryptocurrency supporters ever accepting these backed currencies, or that this would take over with so much of the anti-banking sentiment in the US.  It might somehow be the solution for micropayments in the US, since it would be pegged to the dollar.  It definitely won't overtake cryptocoins.  Just too much baggage there and too many smart people pushing for cryptocoins.

You're not stupid, you just find an analogy that sorta fits but is really nothing more than a single data point in history.  Then we had the neurobiology stuff.  It is all just a tad silly.  Analogies are good for helping people understand things.  They are not good for winning arguments.  We can come up with analogies all day for either side, but so many have zero value and end up pulling the discussion into weird tangents.

Agreed, and this is why it is important to engage thoughtful intelligent people like yourself in polite debate.  


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?

My conclusion is that there are only two end-games (which end-game is chosen depends on the details above): something free and global like bitcoin, or something very similar to what we already have.  

I think we all agree that the bitcoin experiment could collapse (and that is why its value is $800 rather than $100,000+), but I see it as a better monetary system for us or for our children.  For this reason, I support it.  

Exactly.  This means there has to be a central place you trust with your gold.

Lets just assume we can trust this entity and it is a private organization for another argument of why this is bad.

The only way the e-currency/gold angle has value is if you can actually redeem your currency.  What would keep people from doing this?  Only if the exchange price was greater than the gold price.  If it isn't, then people exchange it out for their gold and what does teh entity do?  What is the business model of this "gold backed e-currency based entity" ? 

It makes little sense, except possibly to remove volatility out of the market by pegging the price to gold.  However, how does the backer of the coins make their money?  They have to keep a well guarded warehouse hosting millions of dollars in gold.  I just can't see this working out.

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.

This is the main point I'm in disagreement with most people over.

Because the argument isn't that a centralized coin will be awesome and amazing and will replace Bitcoin because of that. It's that a centralized coin, even though it's worse than Bitcoin in many ways, will gain widespread adoption quicker than Bitcoin, and over-take it very fast. Or at least that it has the potential to do so, depending on how its issuer plays its cards.

You're absolutely right that it will be inflated, destroyed, and taking advantage of. But that will take a very long time. The Fed was founded 100 years ago in 1913, and the Bretton Woods system has been around since 1944. Almost as soon as those systems were established, you had people opposing them on very similar grounds. That the government shouldn't have that kind of control, that it will be inflated, that it's economically irresponsible, that people will suffer in the long run, etc.

And guess what? Those people were right. And yet the USD is widely adopted. It has many "users" throughout the world. And the people who control it have great power.

So I have no doubt that if Bitcoin demonstrates demand for a crypto-currency out there, and TPTB create their own crypto-coin, that they can get widespread adoption over Bitcoin in no time.

The reactions to my opening post illustrate how easy it is for otherwise intelligent people to start sounding like an echo chamber once they have financial or ideological reasons to promote a certain worldview.

Many of the definitions that people are using are normative rather than descriptive. It is begging the question to say "cryptocurrency can't be issued by a central institution" or "cryptocurrency can't be backed by tangible assets." Obviously, most people posting here are libertarians who strongly favor decentralization. Nobody expects a centrally issued cryptocurrency to appeal to you. But it seems like some of you can't even wrap your mind around the business model.

The point is that right now: (1) all transactions performed using distributed block-chains are done in cryptocurrencies; and (2) existing cryptocurrencies are not issued like fiat currencies. But neither of those two things has to remain the same. Distributed network authentication is a new technological paradigm, just like paper money was. The fact that paper currency became the dominant means of exchange did not mean that the first form of paper money prevailed over all the later ones.

The high price of bitcoins is a giant disincentive for the network to prevail, because it raises the cost of using the network to confirm transactions. (i.e., miners are being paid huge amounts of money, because BTC are so valuable) The major financial institutions will want an opportunity to mine a large percentage of whatever cryptocurrency will take off as the dominant paradigm. Imagine how easily banks like Wells Fargo could create financial incentives for merchants to take their bank-backed crypto-currencies instead of BTC.

When people say that these currencies will be less "free" than Bitcoin, because they can be controlled and manipulated by governments, they simply make the case for why these are the currencies that will prevail in the end. Within their sovereign territory, governments can easily prevent merchants from publicly accepting certain forms of currency, like BTC. Governments use their control over the money supply as one of their primary means of retaining power, and they will not give it up without strong resistance. They will find a way to make public cryptocoin logs their newest tool of panoptic surveillance, by using the legal system to force the adoption of their favored coins. This will be easy to do under the guise of preventing money laundering, combating terrorism, etc.

Crude historical analogies are not helpful, because you can always pick an example whose facts suit your argument. I could claim that BTC is like MySpace and we haven't seen Facebook yet, but that doesn't mean that is a valid take on the facts. What matters is the technical and economic nuances.

Here, the Bitcoin protocol can and has been cloned to allow for alternative coins. It way well continue to be the dominant model for how coins should be tracked. But that doesn't mean that the original denomination will remain relevant. The barriers to entry for alternative coins are just too low. So far, those coins have mostly been weak imitations. But the launch of a GoogleCoin or BOACoin could instantly change that and create a crisis of confidence in BTC.

See, I respect the shit out of the people in this community, I really do, but comments like these just simply don't help.

You're basically saying I'm wrong because I'm stupid.

And I'm a big boy, I can handle being called stupid, but you gotta tell me why. Or else it honestly just looks like you're reading the first line of my posts and commenting just on that out of context. I can't explain it any other way. You're coming up with objections to things I've never said. The only way you could believe I said those things, is if you read just one line out of the entire post and took it out of context.

A backed coin will never gain the global economies-of-scale for at least two reasons:

1. Why would I pay a price higher than the value of the backing? Thus it can't scale globally as an asset.

2. Backing requires a centralized authority, and there is no such global authority at this time which can subjugate all authorities in all jurisdictions.


The OP is correct that there is a reverse networking effect, because as I pointed in the Problem With Altcoin thread, to pay using an altcoin is simple as having a Bitpay which does real-time market price conversion. There is no great barrier to entry, as there is with TCP/IP where one would have to change every server on the internet. This hasn't been done yet, because the market cap of Litecoin was too small. But as the market caps of all grow, someone will create this.

And the OP is correct that there will be a CPU-only (botnet resistant) altcoin with stronger anonymity that will challenge Bitcoin effectively.

all analogies are flawed, they are analogies ... but bitcoin is closer to Chuck Berry than it is to TCP/IP? lol, good try, but you get another post to your tally for your efforts i spose ... at least you understand somewhat about the network effect and adoption curves, it isn't necessarily who's tech is best but who's is first to market ...

The essential of bitcoin is a consensus that never inflate the money supply of a unique type of money, thus that money can be used to register value long term wise. Anything that inflate the money supply (alt-coins for example) will directly against this promise and will be discarded when people eventually reach this consensus

Funny, because that's exactly what i thought when you started comparing Bitcoin to TCP/IP, and the OP didn't compare Chuck Berry to TCP/IP, you have.  Your analogy to TCP/IP is flawed as its too technically specific a protocol, Bitcoin is a broader concept built upon components.  A better comparison would be with the Ethernet standard which too builds upon a range of protocols and other standards.  That once had competitors and alternatives, it won through.   There analogies should end, because you cannot use the adoption (or otherwise) of technology 30-40 years ago to predict what will happen with a technology today.  What i see here is some trying to attack a perfectly sensible point with distractions and sniping.  The premise that cryptocurrencies might be picked up by institutions would signal mainstream acceptance and adoption of the technology, i dont see why it creates this fear.

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?

Did you already read the prior posts about needing to have a technical understanding about networking protocols before making informed commentary? (I'm supposing not)

You guys are just speculating and throwing around ridiculous analogies that have ZERO applicability in this field. Please stop making yourselves look like complete idiots, as much fun as it for the rest of us.

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.  

Inventing Rock & Roll (arguable, but he was definitely the "firstest with the mostest") did not get him to the all-time record for most number-one Rock & Roll albums and greatest number of Rock & Roll fans.  Those honors went to Elvis Presley and the Beatles (at least so far... ).  Largely because they had slicker promotion and weren't working against long-established racism.  

We need to remember that slicker promotion is *OWNED* by major commercial enterprises like banks and search giants, and that commercially speaking prejudices against the anarchic, decentralized, and anonymous are just as strong as prejudices in the US in the late 50s against racism.

You have much to learn, I just hope it does not come at the expense of your financial well-being ... on the other hand, hmmmm?, maybe?, nah, I wouldn't wish that on anybody.

Exactly.

Bitcoin is successful not because it uses cryptography nor because it's more convenient than a bank wire.

Bitcoin is successful because it lacks prior restraint, remote confiscation, and arbitrary inflation.

It doesn't matter what banks or governments try to do to compete with Bitcoin. Those are three features they will always in their currencies no matter what technology they build upon.

Look, here's new ChaseCoin!

It's just like Bitcoin ... only it can be confiscated from you.

Reading the OP and the thoughtful comments greatly reduced my concern that a bank, government, or tech company could create a crypto-currency that is a credible threat to bitcoin.  If JPMorgan, China, or Google tried, they must either build a (1) centralized coin, or a (2) decentralized coin.  Here are the outcomes as I see them:

CENTRALIZED COIN:
=============

- The coin supply *will* be inflated beyond what was originally promised.  History has shown that *all* humans with the ability to inflate the money supply eventually take advantage of this power.  If there is a "backing," it will eventually become meaningless, as history has also shown.  

- Transactions will be reversible and balances will be confiscatable.  Even if the protocol starts out as "digital cash" the political pressure to "do something" when something "bad" happens will be unstoppable.  This will set a precedent and eventually we'll end up with the same rules for reversible transactions as the present banking system has (and the expensive AML/KYC regulations to go along with it).  

- It will *not* be possible to send coins to certain countries and regions.  Again, even if this is not the case initially, after the first false-flag terrorist funding escapade, we'll soon return to the same capital controls / international sanctions we presently have.  


What I realized is that even if a company *genuinely wants* to create a centralized-version of Bitcoin's electronic cash, they won't be able to.  The reason is simply that any centralized organization would eventually succumb to the pressure to "do something."

My conclusion is that the end game for any centralized coin is something very similar to the banking system we already have.  


DECENTRALIZED COIN:
===============

- Then it's just another bitcoin-wannabee alt-coin and it has to compete on its own merit and lack of a head start.  They may as well co-opt bitcoin.  

 

Gold has a comparable market share to USD's M1, but people hold it for very different reasons than they hold USD.  If USG suddenly figured out a way to cheaply create new gold, but could keep the technique secret, and promised not to create "too much", would gold remain valuable?