That four-year-old submission has just two comments: one expressing doubt, one expressing optimism.
Interestingly, despite growing worldwide adoption of Bitcoin, comments about it on HN continue to be more or less evenly split between doubters and optimists. And I wouldn't be surprised if comments to this submission are evenly split between those same two camps.
No amount of evidence or reasoning seems to persuade either camp to change its views!
Selection bias. If you lack strong opinions you are unlikely to comment. As with almost everything; small number of doubters and supporters on the ends, huge number of 'meh' in center of bell curve.
That's a good point, but I don't think the point is that its dividing the whole population into one group or the other.
Instead, I think the point is that the volume of doubters and supporters still seems to be about equal; whereas many technologies appear to shift proportion of support vs. doubt more significantly over time.
While it is quite clear that Bitcoin has "value" as long as people are willing to trade it (i.e., indefinitely), there is still no reason to assume that it will ever stop having these extreme fluctuations.
To the contrary, I'd say that, as time progresses, we observe Bitcoin having the same problems that the gold standard had, mixed with an additional proneness to speculation.
The fluctuations are a result of it's size. Currently the monetary base hasn't expanded enough to even cover the market cap of a single company the size of Tesla.
At scale, things gain stability. If a newborn loses a pound, that's 10% of their weight. If I do, it is .5% of mine.
I'm sure there are currencies with a similarly sized monetary base but which are far more stable. Bitcoin's track record as a currency is pretty laughable but just big enough to provide a nice bullet point for the Bitcoin investment vehicle/get rich quick scheme sales pitch.
Perhaps similar in size, but not in newness (the market needs to sort out fair value), untested exchanges, difficulty of moving money in and out. These are early adopter challenges, but they are also sources of volatility.
Bitcoin's volatility seems to be entirely a function of demand. People buy it because the price is going up. People sell it because they want to take profits or are scared the price is dropping.
You'd be crazy to use it right now for legal goods and services. The view of many Bitcoin critics (including myself) that it's horrible as a currency but a massive success as an investment vehicle seems stronger than ever.
The first two are covered under the word "legally". If your government doesn't allow something it's illegal. It might sound great to frame that as applying to things we all love like "speech" and "self-defense" but it applies equally to all things illegal like "laundering money" , "hiring an assassin", "buying heroin" or "acquiring a stockpile of illegal explosives to blow up an old folks home".
The last of your lines is just conspiracy theory catnip for monatery cranks. The mathematics of a given e-currency can be favorable or unfavorable for a global economy. As it turns out, the mathematics of Bitcoin are absolutely terrible for the way the world's economy is run.
First of all these kinds of transactions need a vehicle like bitcoin, because using cash introduces a lot of middle men that dramatically decrease the efficiency of illegal transactions.
Second of all there is no way to send money right now for legal transactions without also introducing a bunch of similar middle men. I think square cash is maybe free right now in a promotional sort of way but it will not continue to be free.
Third there is no good way to do micro transactions right now...also because of middle men.
This seems like a disruptive technology that will displace a lot of middle men....
As long as it doesn't get hacked it at least seems like a pretty great idea.
This post seems like you don't understand the Bitcoin protocol or the exchanges.
The current BTC trade goes as:
You --> some money handler --> exchange --> bitcoin --> a bunch of nodes which take a cut for processing a transaction (and 20 minutes to hit the network) --> exchange --> another money handler --> recipient.
What part of that seems like it has less middlemen? And oh yeah, very few of those parties are beholden to any kind of regulation or ability to seek remission if something is not as advertised.
The average credit card processing cost for a retail business where cards are swiped is roughly 1.95% - 2%. The average cost for card-not-present businesses, such as online shops, is roughly 2.30% - 2.50%.
However microtransactions cost even more than this and escalate as you have more small transactions.
Once you have bitcoins the transaction costs are now 0.
Getting USD to bitcoins is obviously hard right now because it is not really a currency yet, but somewhere between 0.2-0.5% is probably what it will end up being to convert USD to BTC, however once that has been done all subsequent transactions are now free forever.
I expect that bitcoins will be a lot like withdrawing cash from atms in the future except you will be able to do it from your computer or phone on your banking website.
Also if reputable dealers like amazon and steam were charging less for items bought via btc transactions I think a lot of people would switch over really fast.(This is of course after btc stabilizes once a bunch more money enters the market)
"The average credit card processing cost for a retail business where cards are swiped is roughly 1.95% - 2%."
Those are US numbers. In fact, credit card costs are plummeting across the world [1] and every year more and more shops force a debit swipe where available (spoilers: more and more people) so they pay a dime instead of 1-2%. In addition E-checks are basically free.
Further as sibling notes the argument that bitcoin is free from middlemen is not very convincing. Middlemen would have to exist in a bitcoin world both because of bitcoin's very nature of requiring them and because of the same reasons middlemen exist in the world today.
There are processing fees built into the system, so not it's not 0%. As mining rewards drop these may have to rise in compensation.
Most people can't mine, and would have to eat fees.
Further to that, BTC is a terrible step backwards for consumers as chargeback is not there. The cost for amazon to introduce consumer protections like this (that may be required by law in some places) is likely to dwarf credit card fees.
What consumer protections are you talking about? Issuing a refund? I'm pretty sure they could issue a refund if they wanted to.
The transaction fees you are talking about are so much smaller than credit card companies they are basically negligible. Also they keep dropping lower.
>there is still no reason to assume that it will ever stop having these extreme fluctuations.
Think of the difference in waves occurring in a big pool vs a little pool, when a person of the same weight dive in it. In a little pool, a person dives, the waves are proportionally very big. In a big pool, the person diving hardly affects the water in its totality.
The same applies to Bitcoin. The more each coin is worth, the less big buyers and sellers will impact the overall market.
So, if Bitcoin had a total market capitalisation of, say, 10 trilliion, then even big players would only affect a few Satoshi as they buy in and out of the market, therefore the fluctuations would decrease.
Of course, there's still be people who had held on to their coins from the very beginning, so their leverage on the total market would be big, still. But such people would be very few and far between, because everyone has a selling point. Also, it wouldn't be in their interest to rock the boat very much, just as it isn't in any central bank to buy too much gold in one go, because their movements affect the market price much more than people buying and selling at the margin.
there is still no reason to assume that it will ever stop having these extreme fluctuations.
Actually I was thinking about this yesterday, and I think if/when goods start to be priced in BTC (not just "fixed USD value converted to current BTC equivalent") that could help anchor the value of BTC.
Just like Zimbabwe in the good old days of 2008, "updating" prices constantly would have deleterious effects on purchasing by normal people.
When prices in some system have to be updated constantly to reflect another metric (say, USD), it may be more efficient to just use that other metric in the price. This is what happened in Zimbabwe.
Updating them constantly will be bad, yes. But prices don't need to remain perfectly fixed. Prices on Amazon, for example, fluctuate all the time. Most products stay at the same price, but plenty fluctuate a couple percent on a daily basis.
Except this isn't going to make sense unless my paycheck is in Bitcoin. I'll still have to do the currency conversion in my head because I get paid in USD.
...which is something to start considering. Maybe not your paycheck right away, but small amounts of money, you know, the type of "savings" that women in China pour into bitcoin these days. Coming from a culture with a very strong "savings" ethic, there is a certain "pull" exacted by bitcoin. It's also fascinating to study some deflationary models which until recently I was convinced (like everyone else) could never work, well, I am not so sure anymore whether they would not lead to an improved economic system:
Governments routinely force their citizens to use a currency under state control. One of the ways they do this is by insisting that taxes are paid in the national currency.
The point is that wherever you happen to live you can't use most currencies to pay your taxes. If I live in France, Dollars, Bitcoins, and Pounds are all the same in this respect.
This is likely the key to BTC value stability, but at present it's still over the horizon. The number of users continues to increase, the supply of BTC continues to increase. It's still being used as a speculative investment/commodity. Once the number of users becomes more stable (or the growth rate is less jumpy) and the speculation quiets down (to be more like a forex market?), then it'll be feasible for vendors to stick to a price with less risk of getting hosed or hosing their clients.
The value of a currency lies entirely in the perception of that value. I don't consider bitcoin different from a traditional currency, except that its rate of production is known in advance. It will keep having value because by now enough people think it does.
It's in a strange position right now, though. Its value is not based on anything that makes any sense. Public perception - yes - but public perception of what? Nothing is priced in bitcoin.
Once things begin to be priced in bitcoin, proponents hope its value will stabilize. This might happen. It did with fiat, but fiat had the advantage of a stable start and slow detachment from gold.
The real funny thing to me is, I believe the currency could do its job just as well no matter what the value per bitcoin. And I don't think volatility matters at all, because companies like BitPay assume the volatility risk for you (both the merchant and the consumer)
I don't know that bitcoin can be used as a store of value, especially for future adopters. But it is definitely a great method for real transactions of wealth.
> I don't know that bitcoin can be used as a store of value, especially for future adopters.
All else being equal, it seems to be designed to be a perfect store of value because it is deflationary by design. Obviously it is far more volatile and risky than something backed by major world governments at this stage, however it does come with certain guarantees that no central bank could credibly make (if the crypto holds). For people who have had their wealth stolen by governments this could prove a very attractive pull.
Bitcoin is different in that is the purest form of a fiat currency in the sense that it is backed by nothing and thus has no intrinsic value whatsoever. Traditional currencies, on the other hand, are at least fractionally backed by (usually) gold and government bonds which in itself are backed by a government's ability to tax its citizens.
There is also a second problem in that BTC is deflationary by design. Deflation leads to hoarding of currency units while reducing the velocity of money and suffocating the economy. Most people will agree that deflation is the worst thing that can happen to an economy which is why central banks will do everything in their power to avert it. It is hard to imagine how a stable Bitcoin economy could develop under these inherently flawed circumstances.
> Bitcoin is different in that is the purest form of a fiat currency in the sense that it is backed by nothing and thus has no intrinsic value whatsoever.
Well, no, its not; the purest form of fiat currency is a currency backed purely by government fiat (hence the name).
Bitcoin is one of the purest forms of speculative "currency".
>> Bitcoin is different in that is the purest form of a fiat currency in the sense that it is backed by nothing and thus has no intrinsic value whatsoever.
It's backed by the tremendous amount of electricity required to run the transaction processing network (ie. "mining"). Remember this is the world's largest distributed supercomputer.
BTC is a proxy for electricity, that's why mining equipment ended up at ASICs so quickly- in mining, less W = more $$. By a lot.
The USD is currently backed by absolutely nothing. There is no way we could print the $2000 trillion dollars[1] of derivatives now in existence. You couldn't cash out all of it or even too much of it.
The USD is "fake". And high finance is not ignorant to this fact, at all.
[1] Or more, no one actually knows. Goldman Sachs would have the best idea of this.
The costs of producing BTC or USD are not their backings. You can't exchange your BTC back into electricity.
The USD (and usually most other currencies) aims to be indirectly backed by the corresponding amount of goods they represent within the currency zone and their legal status.
BTC isn't even indirectly backed. It just exists. And that's okay for its purpose.
Re your comment about currency production costs: A spike in electricity costs would directly effect existing bitcoins' value. A spike in cloth paper prices would not cause a meaningful change in the value of already-printed dollars. And the price of the dollar would spike with electricity costs indirectly. They're not the same, it's an invalid comparison that neatly evades their inherent technological and conceptual differences.
"Store of exchange-value" != currency, and BTC is currently behaving best in that role. Admirably, really- see how it's spreading like hotcakes in China. That's as a store of exchange value, not a currency.
You can't turn your gold "back into" ore or your diamonds "back into" carbon. The cost of an airline ticket is mostly determined by the current price of fuel.
When BTC starts to be used as a currency in earnest we can revisit the issue. Although at that point, you will be able to exchange your BTC back into electricity or other commodities through speculation or arbitrage. Which you can actually do directly right now if you know the right people, anyway. Profitably.
For up to about two weeks, until it adjusts to the new, lower norm, and de/inflation continues at the same rate as before. But technically true over that period, yes.
Which really puts the lie to the idea of currency being "backed by" a scarce resource at all, which is the main premise of goldbugs. I'm totally okay saying that a currency is backed by the entire economy of goods being exchanged for it myself.
The meaning of a backed currency is that it's backed by the issuer with a specific commodity (or service). You can go to the issuer and exchange the money ("symbol of value") into the real thing ("value").
With BTC you can't go to some miner (=issuer) and exchange it back into the electricity that was used to produce it.
But I can't expect that I will be able to exchange the BTC for a fixed amount of electricity, which is the same as the fixed amount of electricity I originally exchanged for BTC. Hence BTC is not convertible, and not "backed"
I can buy gold with the US dollar, but it doesn't mean the US dollar is backed by gold.
The USD is backed by the material value of everything USA, at a minimum. It's practically impossible for the USD to go to absolute zero, there's still some gold in the reserves and oil and mining to be done at absolute worst.
Obviously our debts exceed this, but that's a different issue. Say everyone cashed in at once - they'd get a percentage of our debts, not zero, since there's still material value.
You can't "undo" Bitcoin's power -> money exchange, though. There's no gold sitting in vaults providing some real, physical insurance. If I lift this brick, I've done work (but nobody cares) but even that has intrinsic value as it can be "redeemed" by lowering it, powering something. Bitcoin is different.
US Debts do not exceed the value of everything in the US.
They barely exceed 1 year's economic productivity from the US (~15.58 trillion USD).
And since the US is not going to stop being a country any time soon (and such a thing would be a calamity which makes national debt completely irrelevant anyway) it has a very long-term ability to make repayments.
And this is ignoring the fact that each year the US basically reinvests heavily, since GDP grows while the debt does not (necessarily). For example, current GDP growth of 2.2% means the US GDP increases by ~$344 billion per year. Conversely the value of all US debt per year decreases due to inflation - currently about 1.2% meaning the US debt effectively decreases by about $188 billion USD per year.
This is all somewhat beside the point, but it pains me to see people proposing the US has debts exceeding its capital and productive value as an entire country.
One year's worth of productivity does not mean it's redeemable. I'm not sure what the immediate material assets of the USA are, but it's substantially less than the USA is worth, yes.
And anyway, I'm talking absolute worst value, not any sane measure.
If the U.S. government fell, any bodies of power that arose in the aftermath would be quite likely to repudiate the debts of the old government. So no, the dollar isn't quite backed by the material value of everything in the U.S.
It is backed by the stability of the U.S. government though.
True, though it won't fall in an instant, so there's some warning. And other governments seem likely to hold at least some power over any brand-new government, so it's still unlikely/impossible that they'll get nothing back from the debts.
There are also examples of post-fiat currencies. Immediately following the toppling of Saddam Hussein there was still economic activity denominated in the old Iraqi currency, most probably on the assumption that it would be convertible at some rate with whatever came next.
There's also a certain amount of inertia. If I stop taking your old Iraqi currency, you'll stop taking my old Iraqi currency, so it's worth a lot to me to maintain the fiction, to believe really hard that the old fiat currency is still meaningful.
>> There is no way we could print the $2000 trillion dollars[1] of derivatives now in existence.
This is a red herring. You also couldn't print the money to pay for all the patents now in existence. Or all the copyrights in existence. Or even all the software now in existence. These things still get bought and sold in USD on a regular basis.
>> The USD is currently backed by absolutely nothing.
At the base, USD are backed by the fact that one can only pay taxes to the US in USD and US bonds are denominated in USD.
I like your first point, but your second point makes no sense. Products are not currency, and talking about inflation/deflation in products does not make sense, unless people buy them as a long-term value-store in which case "assets" might be more appropriate. Except they're still not fungible so they can appreciate or depreciate, but that's not inflation or deflation.
To explain: The fear that often is associated with deflationary currency (like bitcoin) is that no one will spend it, because waiting always gets you a slightly better deal.
And if that happens the economy will grind to a halt with everyone waiting to spend. The point of my second statement is that we have examples of cases where even though every month your money buys more, people still do buy things.
There may be specific examples (HDTV) where waiting means your money buys more, but overall the more you wait the less your money is worth in the economy due to inflation. Technology making products cheaper is not an example of deflation. Inflation and deflation pertain only to currency not products.
If however you hold your currency and everyday its worth more, besides the bare essentials there is barely an incentive to spend it. Also there is no guarantee that the HDTV will become cheaper, however it is guaranteed that a deflationary currency will gain value the more you hold on to it.
Inflation and deflation pertain only to currency not products.
Inflation is when your currency buys you less stuff tomorrow than today. Deflation is when it buys you more. Falling prices due to efficiency gains caused some deflation during the industrial revolution, and technology making products cheaper is definitely a kind of deflation. From Wikipedia:
Growth deflation: an enduring decrease in the real cost of
goods and services as the result of technological progress,
accompanied by competitive price cuts, resulting in an
increase in aggregate demand. A structural deflation existed
from 1870s until the cycle upswing that started in 1895. The
deflation was caused by the decrease in the production and
distribution costs of goods. It resulted in competitive price
cuts when markets were oversupplied. The mild inflation after
1895 was attributed to the increase in gold supply that had
been occurring for decades.
Ah I see, that makes more sense. Yes, I think fears of deflationary currency are probably quite a bit less rational than fears of environmental cataclysm as long as society doesn't come to term with the fact that there are in fact physical limits to growth on some time scale.
That's a pretty irrational fear... If my money grows all the time, why wouldn't I buy stuff? I'm buying most of my Humble Bundles with Bitcoin and it's great - every time you pay less and less and by the time the next Humble Bundle is available my money has recovered itself to more than what I had before... I may have had doubts to buy some of them with another currency, but with Bitcoin it's just a no-brainer. You'll get it all back and more.
In the frame of a single transaction, and the point I'm making, it doesn't matter which side of the purchase equation causes the deflationary more-for-your money effect.
The point is that the more-for-your-money effect does not stop even discretionary purchases like TV's from happening.
With regards to the deflation, it would be interesting to see some graphs comparing exchange volume with actual trade conducted with bitcoins. I'd be willing to bet we'd see actual trade drop off with the recent surge in exchange rates. Not sure how possible this would be, however - the charts on blockchain.info don't seem to be granular enough to pick up on such a trend, and it's hard to determine what is "trade" vs. bitcoins changing hands because of a sale on an exchange.
The deflation risk can be solved, I think, if the core developers and core decision-makers (key movers and shakers in the community, like miners and vendors) all agree to a "split" event moment where every 1 previous BTC transmutes into say 1000 subsequent BTC (or whatever, picking numbers out of thin air). Making it easier to get BTC because old values which were too close to the smallest fraction floor now become splittable and more easily transferrable again. The core folks driving Bitcoin at the moment are already well aware of this risk scenario and what the set of decent mitigation actions can be. This mitigation/evolution is not unlike when key folks in the Internet community realized that IPv4 would run out one day and thus something with a much bigger pool of addresses would be needed: IPv6. A similar hack is possible with Bitcoin too, or with any other e-currency or cryptocurrency. It's all just software. We can make it do anything we want, revise it, migrate to something else. Everything's based on trust and honor system anyway, even the notion of physical property ownership in RL: a home is only "yours" as long as your neighbors/community/government continues to honor that notion, or until/unless people with guns come and forcibly take it from you under threat of violence.
The lack-of-guaranteed-taxability risk is a larger one, imo. But I know it's possible to build a kind of wrapping/middleman service on top of Bitcoin, to give one example, if a government wanted to, and legally require citizens to use it in order to ensure their income/sales are tracked and automatically taxed (with fees taken out automatically to act as tax inflows to that gov). It's physically possible, anyway, without requiring any physical change to the protocol or blockchain. Just the Ages Old solution governments everywhere have used: the threat of violent force for non-compliance.
2. they can be split further, if ever needed. which is what I just said. if enough people agree to it and enough people migrate forward, via cooperation and "this-will-only-hurt-briefly" actions
Splitting currency down like that is not a good answer to the monetary deflation issue, which is why he said he didn't think you understood.
It's not simply the quantity of available currency that is the problem with deflation, it's the appreciating value of currency compared to goods and labour.
Splitting does not resolve the issue of deflation that is that a given unit of value (1 btc, 1000 micro-btc post-split, whatever) increases over time. It doesn't matter what you do to it or how you measure the quantity of value - if that same value is worth more tomorrow than it is today, there is a prevailing negative pressure on spending it and the result is that people will prefer to hold on to the currency rather than exchange it.
This is where the bitcoin boosters start to seem a little looney to me. 99% of my experience with currency has been with USD, which have been relatively stable from month to month.
It is a difficult situation because it appears that when people take the time to learn about it, they become big fans of bitcoin but also start worrying about the total collapse of the fed and the USD. I am trying to understand the argument, but I remain skeptical.
It is very interesting to watch and play with though.
If you actually think there is any possibility that my unsupported assertion that people committed to therapies like homeopathy or reiki are generally a bit less enthused with medical testing and conventional medicine than the general population is incorrect, please feel free to make that argument...
Just because every other currency has been devalued doesn't mean that the USD will. The argument typically goes that the USD must collapse because it isn't backed by anything meaningful. Except that the USD is backed by the largest and most powerful stockpile of weapons ever amassed in the history of the world.
On a more serious note, the silver denarius actually holds up pretty well today. It has about $2-5 worth of silver in it, and originally had a nominal value of $20-50 (depending on how you calculate it, not debasement). If you're collecting them today, you can get some of the cheaper coins for $20 or so.
I'm no historian, but I'd wager the denarius never collapsed the way - say - the Confederate dollar did. It probably just became rarer and rarer in circulation as old coins were melted down to mint new ones, and then one day it was worth more as a store of historicity than value
In all seriousness, if you really believe this, I suggest you pick up a copy of that book. History doesn't repeat itself, but it does rhyme, and you'd be surprised just how similar this time is.
I do not think usd will collapse but it is loosing it value every day. Year on year the Money supply is increasing and that the value of usd is decreasing. The increase in Money the last 12 months is around 8%
If somebody sues me, and I offer to pay my debt in bitcoins, the court may refuse to recognise this payment. But if I pay in the national currency, the court is required to recognise this payment.
This is part of the legal system in every country. It's one of the mechanisms governments use to force citizens to use the national currency.
He is definitely Hellbanned. He made a poor-taste attempt at humor on a mental health post (https://news.ycombinator.com/item?id=407576) which was voted to oblivion, and every post since then is [dead]. Looks like it took him a few months to find it (I had to go back like 10 "more" clicks to get to his non-dead posts).
So HN can be more like every other internet forum since Usenet in 1985 and angry repressed basement dwellers can unleash their fury anonymously to make up for the fact that they can barely look other human beings in the face?
Plenty of places to do that on the internet, I'm happy for one place enforce a higher standard.
What about the middle? I think bitcoin has a myriad of great uses, but is also addled by inherent problems that prevent it from being a standard currency.
Religious in outlook; faith based. If we must have faith based psuedo-discussion its more fun to talk about evolution.
One interesting observation about the two comments, is both authors are still occasionally posting to HN, if you click thru. Its a long lived community.
I love the comments by illumin8 in that first one.
It describes the seemingly only legitimate threat at the moment for the future of BitCoin (long term).
I'm suspect that governments are now probably more interested in the 'monitoring' of the system rather than governing.
In the case of Silk Road, feds seem to have done their homework when it comes to tracking down the money. But they cracked down SR, and BitCoin dipped slightly, and the crackdown actually seemed to boost confidence in the currency.
There are points to be made I think that governing entities would want to keep a system like BC alive (for a while), solely because it would be used as probable platform for money laundering. However if indeed, they are not confident that they can track down on money, or will be able to in the future, they would surely want to shut down BTC as soon as possible.
In the age of the war on terrorism, organized crime syndicates and drug cartels. One could think of many reasons to give when opting for that solution.
I might be considered a conspiracy nut: But "decentralized, anonymous, crypto" + "currency" sounds like a contradictio in terminis to me. Especially the "anonymous" part.
[2]: "During 2009 my exchange rate was calculated by dividing $1.00 by the average amount of electricity required to run a computer with high CPU for a year, 1331.5 kWh, multiplied by the the average residential cost of electricity in the United States for the previous year, $0.1136, divided by 12 months divided by the number of bitcoins generated by my computer over the past 30 days."
This was posted in May 2009. On October 5th, 2009, $1 = 1,309.03 BTC [1], so you'd have bought about 1.3 million bitcoin. Which means you'd have over $500M dollars in Bitcoin. I bet that spending $1000 back then would have considerably changed the exchange rate though, and selling $500M now would definitely aversely affect the economy.
There weren't even 1.3 million bitcoin in circulation at that point [1]. If you bought every bitcoin, you could have accumulated about 1.1 million BTC for $850.
I see claims like this all the time but it's important to realize that the price you can buy a small amount of something is generally the lowest price any seller will take, not a price all sellers will take.
Weird, and people are now paying close to that 850usd just for 1 coin.
However, if someone had bought coints for even 100usd back in 2010 that would have been weird too and affected the network perhaps a little too negatively.
Block 24400 (http://blockchain.info/block-height/24400) was created on October 5th, 2009. It created the 1,220,000th Bitcoin. So not only would you have a hard time finding people to sell you Bitcoin, there wouldn't even be enough in existence to buy $1000 worth at that price.
People were giving Bitcoins away at that point, as a way to spread the idea of the currency (people still do, just in smaller divisions of coins). But, no one was giving away, or selling, all of their coins because it would have destroyed the economy before it started. At that stage, the goal was to grow, spread awareness, and test the concept...not get rich.
No Bitcoin exchange was running on May 8, 2009. But there is this one famous trade of the guy who bought 5000 bitcoins with $26.06 in "2009" and then bought an apartment in 2013 [1]. This puts the value of one bitcoin at $0.0053. With $1000 you could have bought 189,000, which would be worth $113 million today at $600 per bitcoin.
But there is no doubt that buying that many bitcoins at that time would have been difficult. The few sellers you would have been able to find would have probably raised their price when seeing your interest.
Except if you tried to unload 189,000 bitcoin you would crash the value back down significantly. The BTC's low volume is th reason why the price rises and falls so quickly.
You are mistaken. In the last 30 days, on the top 3 exchanges (btcchina, mtgox, bitstamp), there has been more than 3 million bitcoins sold [1], and yet we saw the exchange rate increase over the last month. So it would be relatively easy to sell 189,000 bitcoins, spreading the trades over 30 days, even on only 1 of these exchanges, without causing a big crash.
I'm still kicking myself because when I first heard about Bitcoin (in 2010) I was working on a research project that required three GPU clusters (each costing between $15k and $20k). The contract for the project was delayed and I seriously thought about "benchmarking" the hardware by Bitcoin mining until work on the project could continue. I never actually did any mining and the hardware sat idle in our lab for a couple of months. I don't have the stomach to calculate what the Bitcoins that hardware was capable of generating would be worth today.
Actually the first person known to GPU-mine (supposedly an Apple OS engineer, friend of "BitcoinEXpress" on bitcointalk.org) claims he did it in May 2010, wrote his own miner, running on 3 x AMD Radeon HD 4850 graphics cards. The claim sounds plausible. There was a small bump in the global hashrate in May that seems to correspond to the power of this setup.
The earliest price I can find for BTC is $0.074 USD/BTC from about a year later, but if you bought $1000 then, you'd be sitting on about $9.7MM worth of Bitcoin today.
At the current coinbase exchange rate, your BTC holdings would be worth about $576,000,000. It would have been tough to buy $1000 worth back then, though.
I'm curious what the legal/tax consequences would have been, assuming someone had the luck or foresight to be aware of the money they could have made. There's no way someone could have just gotten away with making hundreds of millions of dollars on this, right?
Yeah, I think the lesson I've learned from not embracing Bitcoin sooner, is that I should spend more time analyzing a novel idea, and not be dismissive of one that might seem crazy initially. However, with all the information flow these days, it's kinda hard, but sure worth the effort.
"Why did you buy a bitcoin?" "Because I don't want to enter too late!"
The absolute problem with bitcoin is, is that it cannot be used as a currency. If one bitcoin can buy you one "x" today, two "x" tomorrow and in a week only half an "x", what is the point of spending it? Its value fluctuates way too much and that's why so many people are getting on board. They want to be in the elevation towards another all time high.
I am not saying that Bitcoin does not have a future, but key in this future is that all those investors and startups on the get-rich-quick-with-a-very-high-potential-to-loose-a-lot-scheme have to abandon ship. The value of Bitcoin has to stabilize because at this point it is not a viable currency. Currently it is just an asset so many people are interested in, which drives the price only further up.
As soon as it stabilizes or drops we will see what it will d o with Bitcoin its popularity and acceptance for other goods and services.
> If one bitcoin can buy you one "x" today, two "x" tomorrow and in a week only half an "x", what is the point of spending it?
Well let me blow your mind a little bit:
I own some Bitcoin, and I've been spending bitcoins every month for the last four or five months to pay my rent and other living expenses.
And I'm not "cashing out" because I think there's a bubble that will burst. I'm as bullish on Bitcoin as anyone. I fully expect it to hit $10,000 within the next 10 years. I think there's a good chance it'll one day be 10% of the Gross World Product, which would mean they'll be $500k each.
So why am I selling Bitcoins to pay rent? Because I have enough that I can hold onto some of them, enough to be a worthwhile investment, and at the same time sell some off in order to allow me to work on my passion project. That's worth more to me than the abstract possibility of a large windfall in the future.
Hoarding doesn't make sense if you're a human being. If you're a human being, at some point you're like "Fuck it, I'm buying that JetSki!"
to be fair, that comparison isn't too valid. Look at the wild yearly fluctuations in bitcoin, compared to the steady rate(3 percent) of inflation of the dollar throughout history. On the other hand, OP is wrong because bitcoins will eventually slow down massively in production(almost to a halt) and stabilize at that point.
>OP is wrong because bitcoins will eventually slow down massively in production(almost to a halt) and stabilize at that point
Eh, quite the contrary. If this rate of growth continues and production becomes 0, it will not stabilize at all because demand increases yet supply stays constant. Which results in the existing supply getting worth even more. This will make it an hoarded asset even more still not able to function as a currency as fluctuation will still be too drastic.
I was also wondering if - at a future point where bitcoin adoption is more wide spread - could not the entire supply chain be "paid" in a matter of milliseconds? Allowing the prices to fluctuate quite naturally. Should not that be especially less of a problem when one bitcoin might be worth as much as, say, an entire city's internet infrastructure (and thus not even up for speculation anymore) and price fluctuations occur in the range of satoshis? The deflationary nature of the currency, turning private individuals into mini-banks, turning greed on to saving and thus optimizing investments and falling prices for economic value creation - aren't those attractive possibilities for a "bitcoin" dominated global economy?
There's hedge funds that systematically short biotech companies, since they estimate most of them will fail. Reasoning with them about the merits of the company doesn't work, they just admit it's a matter of statistics.
Assuming that "most of them would fail" has little to do with this investment strategy being good or bad. Venture capitalists also assume that most of the companies they fund would fail.
What the hedge funds you are talking about assume is that investors in biotech companies value them more than they are worth. It may sound similar to what you said, but really is a very different assumption.
Bitcoin could revolutionize the foundation of the world's economy with a piece of software some guy wrote in a few months. You'd figure that would be the kind of thing that hackers would get excited about, as opposed to social-sharing startups (which are just a replacement for reality TV)
I, for one, will be very sad if it does revolutionise the foundation of any economies, because deflation is bad and creating a new aristocracy from a few BTC hoarders is also not something I consider useful.
Some people getting rich of bitcoin doesn't make everyone else worse off. And a "new aristocracy" is a huge stretch. A few people will get rich off it but not like that.
And the value of bitcoin won't deflate forever. Eventually the price will stabilize.
When will the price stabilize? Serious question, I can't figure it out. What conditions would need to be present for the bitcoin economy to be stable so that prices of goods/services are consistent over extended periods of time? Do you mean that deflation will actually end or that the rate of deflation will be reduced from its current excessive rate (from a currency standpoint, as a commodity/investment it's great)?
If you view a change in currency as fundamentally pretty useless, then yes, giving massive amounts of financial control of resources and labour(which is what money represents) to people with BTC hoarded does indeed take away from others.
And if BTC were to become (for instance) a primary currency for a country, and that country were to experience economic growth, then deflation must necessarily continue.
>If you view a change in currency as fundamentally pretty useless, then yes, giving massive amounts of financial control of resources and labour(which is what money represents) to people with BTC hoarded does indeed take away from others.
People are voluntarily paying them for their coins because they, for whatever reason, value them. You can say that's silly but it's not like you are being forced to buy bitcoins or anything.
>And if BTC were to become (for instance) a primary currency for a country, and that country were to experience economic growth, then deflation must necessarily continue.
Isn't the same true for any other finite resource? Everything will deflate/increase in value relative to rest of the economy.
>> People are voluntarily paying them for their coins because they, for whatever reason, value them. You can say that's silly but it's not like you are being forced to buy bitcoins or anything.
I'm saying it would be a bad idea to adopt as a de-facto currency, that's all.
>> Isn't the same true for any other finite resource? Everything will deflate/increase in value relative to rest of the economy.
Currency isn't and shouldn't be a resource, it's a medium of exchange. If BTC is a resource then cool, but lets stop pushing it as a currency.
>Currency isn't and shouldn't be a resource, it's a medium of exchange.
Well why not? A medium of exchange is a resource. There are exchanges and markets for currencies, people speculate on them, etc. They are definitely a resource.
Resource in the sense that the item in question has some inherent value. If I can't exchange Bitcoin for anything, then Bitcoins have zero value. If I can't exchange rice for anything, that rice will still have some value to me.
It's important to realize that all currencies, including Bitcoin and the USD, are only as valuable as the stuff I can buy with them. There's no point in having a million dollars, if I can't buy anything with it. That makes currencies distinctly different from "resources".
In many cases impoverishing various governments, corrupt or otherwise, would be worse than useless. Many, many people rely on government for food, fuel and shelter.
Secondly there are many of us who consider a currency that can be centrally adjusted as part of economic stabilisation to be a very good thing.
Third, in an expanding economy, a deflating currency steals wealth from the productive and hands it to hoarders.
So yeah, it's pretty useless as far as I can tell.
I think it's just that most folks can't yet imagine that Bitcoin is really going to revolutionize anything. For now, it's interesting speculation. It's really hard to see, for example, getting paid in BTC, or buying gas in BTC.
The mere possibility of doing it is much more important than the lack of fees.
> And I can already transfer to other individuals for no charge.
Within your own country/a few other countries like it. Transferring money across borders, especially outside the west is quite a bit harder than you'd think.
Don't forget to include the fee's from an unstable method of exchange (bitcoin) depreciating or appreciating between the times you exchange it for USD.
Bitpay assumes the volatility risk for customers and merchants, and charges at most 1% for their cheapest platform, so none of this is really an issue - is it?
Bitpay is when the customer pays in bitcoin. But to get bitcoin you still need to exchange for USD somewhere. And that's where the cost of exchange risk comes in.
Can someone explain how the idea that every single transaction has to be stored in the ledger is scalable? Won't wider adoption mean that the ledger grows even quicker, to the point where it makes using btc harder and harder?
Technology evolves over time as does bitcoin's use. Hard drives are becoming cheaper and cheaper, for example. Bandwidth is also a non-issue, as the typical transaction size is less than a KB.
However, there's also the fact that a typical user doesn't have to download the whole blockchain in order to use bitcoins--they'll be connected to the nodes that do (that are dedicated for that purpose).
Hate when people use the tulips comparison. The basic protocol of bitcoin that allows people to send value anywhere in the world and solves the double spend problem must have some value unto itself. I don't know it's worth $0.10, $100, or $1000000 per bitcoin to use the protocol but to compare it to a plant seems kinda ridiculous.
But those attributes can be replicated by another crypto-currency right? So the distinct edge of both bitcoins and tulips are the maddened crowds. They have that in common.
This is actually a really good point that I don't feel has been adequately answered -- usually people say something like "well, bitcoin has momentum" or somesuch, which strikes me as being nonsense if you accept the idea of why bitcoins have value as being an intrinsic property related to their fungibility, scarcity, and non-consumability; in theory the same things that give all currencies their value.
The only explanation I've come up with that sounds plausible is that a new currency, even just Bitcoin with a different genesis block, should be as valuable as Bitcoins, but fails the test of scarcity -- it's too easy to counterfeit them by double-spend attacks because of the smaller power of the network.
I don't trust this idea, though -- it smacks of post-hoc reasoning. I guess by extension the value of a proof-of-work-backed currency in aggregate should be bounded by the expected cost of a 51% attack given rational actors; doing this math for the Bitcoin network would either give strong evidence that the current pricing is irrational or weak evidence that it is rational.
I wouldn't even make the claim that silver and gold functioned as money. In pretty much all circumstances that I'm aware of, the scarcity (in the slightly unconventional sense I'm using it) and fungibility of gold and silver money is not great -- debasing with cheaper, more common metals resulted in differing standards of purity.
Most often, when gold and silver were used as currencies, it was because some dude punched his profile on one side of the coin, and because doing that as a private citizen was difficult and/or punishable by gruesome torture, the value of the money was related to how powerful the head on the coin was because that related to the probability that the coin wouldn't turn green.
This doesn't really answer the question you posed. Now I'm totally in the realm of post-hoc reasoning, though, and I can't really think of a concrete way of falsifying this argument, but I'll go for it anyway. Gold and silver occur naturally near the surface in relatively pure forms; gold especially since it doesn't really allow with anything. As a result, these metals were present in antiquity, and as systems of money grew up, they were good candidates because people thought they understood the scarcity -- an understanding that turned out to be proven incorrect several times in the history of coinage, with reasonably disastrous impacts on savers in those metals. Of course, "being used in antiquity" was not one of the properties I defined above. Arguably fungibility is a factor if the metals were not easily identifiable or distinguishable from other metals.
The easiest way to refute the tulip argument is simply point out Bitcoins total money stock is fixed at 21 million units, wheras you can plant new tulips at will. (The skill/time required to do this is irrelevant to the point).
Actually, the interesting thing about tulips is that that's not true. I don't mean to single you out here, but this is a demonstration of how most people know jack shit about Tulipomania (even though many of them are perfectly willing to bloviate about it and compare Bitcoin to tulips).
One of the revolutionary things about tulips at that time was that the unique patterns caused by https://en.wikipedia.org/wiki/Tulip-breaking_virus were only partially inherited: after a few generations, the bulbs are too weakened to survive, and the particular pattern disappears permanently, no matter how lovely and beautiful it was.
If you read up on a book about Tulipomania, you'll notice there are no contemporary photos of tulips like Semper Augustus. Because Semper Augustus no longer exists.
So you can 'plant new tulips at will' the same way you can 'paint new Rembrandts at will' ie. slap some paint on a canvas and hope it looks vaguely similar and that's the best you can do, since you can never ever get another real Rembrandt or real Semper Augustus.
If you just want some correctives to the popular mythology of Tulipomania, you can start with _Famous First Bubbles_: quick read which demolishes a lot of the platitudes and simplifications, and covers the virus & other issues.
The point of the tulips argument is being missed. The point of the tulips argument is that everything looks great when the price is still increasing in a bubble. This is true whether you're talking about tulips in Nov 1636 or tech stocks in 1998 or Las Vegas real estate in 2005 or gold in 2012 or possibly Bitcoin today.
That's not the point of the tulip mania comparison. It's more about the extraordinarily quick rise in price, and the (ir)rational choices/decisions that can follow.
BTC aren't quite tulips, but the criticism is well founded that it isn't yet a good currency. A perfect currency would possess the following qualities:
Perfectly Fungible
Perfect Liquidity
Perfect Stability
Right now bitcoins are commodities. Any bitcoin is equally valuable as any other bitcoin; bitcoin's value derives from its purchasing power and from its exchange rate to other mediums of exchange. It has great liquidity and fungibility. However it has inherent stability problems as well as ambient ones:
Currently it experiences volatility by virtue of transactions not being demoninated in BTC, and of its exchange rate to other mediums of exchange. A large part of this is because it is consistently attracting large pools of people who wish to acquire it. The recent price spike appears to be a consequence of Chinese interest in acquiring bitcoin rapidly increasing. Eventually the number of people who want to possess bitcoins will grow as a function of the population on the planet, rather than as a function of new groups of people deciding it has become appealing. This will introduce some stability.
However, there's a fundamental flaw in that the pool of bitcoins is fixed, and that possessors know the finite size of the pool of bitcoins a priori. This exerts deflationary pressure on BTC, and as others have noted, discourages its spending. BTC is vastly more liquid than gold is, for example, but the stability of its value will always be an impediment to its usefulness as a currency.
This doesn't spell the doom of Bitcoin; it doesn't need to be a perfect currency, just a better currency than other currencies. It is already the most liquid commodity on the planet. It is at least as fungible as USD; attempts by coinvalidation to ruin this notwithstanding. Should the deflationary pressure of bitcoin compared to its circulation become sufficiently small, it will have inherent qualities to make it the best currency available, which can lead to it becoming more widespread.
A currency with lower transaction costs in time, and which has growth characteristics which trend toward following the value of productive output of the human race will certainly be better. USD are inherently worse.
Fluctuation is somehow "upwards". That's not a fluctuation, that's normal exponential growth of something with network properties. If people discover a pile of gold and start grabbing it and selling, its price would also increase exponentially until everyone has a piece of that gold. Than we can talk about stability.
Which brings us to an interesting question... how long does something have to go before we consider it a success even if it fails later? When something comes along to defeat Facebook, are we going to call Facebook a failure? Was Myspace a failure?[1] The fact that Bitcoin has ran this long, given some huge payouts and legit(albeit small) businesses accept it as payment, I'm almost ready to call bitcoin a success even if it fails 6 months from now.
And if/when it fails, Bitcoin can reasonably claim to have shown that distributed computer-based currencies are feasible and people will use them. Even if a successor comes along and solves Bitcoin's problems, you could justifiably say that it only succeeded because of Bitcoin.
Telegraph... colossal fail. But note that the first wire transfers in 1871 were done on western union's telegraph system. Yours is an interesting question. The tulip mania bubble people like to reference was less than a year long, so BTC is already beating that.
I think we would see fewer comments that technologies like Bitcoin (or cold fusion, or for that matter Google) would be successful if monetary bets depended on them. Or a lot more broke futurologists :)
That's like saying populations or startup stocks are broken. Do you think Facebook had a very smooth, progressive, and always upward growth? The stabilization comes at the end of the S curve.
And Bitcoin isn't just a currency, it's a lot of things. One of them is a store of wealth, like gold, and it's doing wonders in that role.
Ahh, someone on HN who understands stores of exchange-value. Refreshing.
Just one of the many, many ways bitcoin is better than gold as a store of exchange-value: embedded security. No armored trucks, no vaults.
And look at China. BTC's recent rise is partially attributable to the fact it's a so-far-legal method of moving ¥ out of the country. And their government looks to be in support. The reason it's illegal to exchange yuan for foreign currency is so it doesn't leave the system and lose value. With BTC, the yuan is received by the buyer as something of value, instead of something to be "disposed of," thereby not diluting its value.
Ie. BTC can move currencies without making them lose exchange-value. That's not a small deal.
What do you mean doesn't leave the system ? If I were to exchange yuan for USD at a currency exchange/bank, they would keep the yuan and give me USD. The yuan wouldn't get destroyed and lose value or leave the system. It would be either a) handed back to another guy who wants to buy yuans for USD or b) used for the profit/operations of the currency exchange.
BTC may for the time being move currencies without any perceptible loss in exchange value but the exchange value of BTC will go up per yuan with greater demand. The yuan will devalue against BTC but maybe this isn't a big problem because BTC isn't a major world currency .. yet ?
Yup you said it- it's not a major currency yet, so it's not "competition." ¥ -> BTC != ¥ -> $|€|£ etc. No manipulation of a central bank can effect BTC's value. Not only does yuan get "kept in the system" through govt-regulatable Chinese exchanges, it's not pegged to other nation's currencies, which China hates.
Remember Romney's line about "going after China for their illegal currency manipulations?" Heh.
Can you clarify your point of bitcoin as a method to move ¥ out of the country? I don't quite understand it. Either way the thing that got move out of China would be bitcoin or USD, the Yuan never actually got moved out of the country. How is it different that it's bitcoin, instead of USD that is sent out?
It just shows that many people are quick to be negative and for some reason unwilling to consider alternative possibilities.
Remember that negative and critical viewpoints are normally perceived to be from the the more intelligent person. Unfortunately people who are more accepting of new and novel ideas can at first seem like the less intelligent of the group. (Probably because they are not quick to dismiss and put down a thing, and thus have less to say at first glance)
The only solution is to think for yourselves and research the positions presented.
It just shows that many people think that if somebody won the lottery then his strategy is good, and the others are less clever. If you see what I mean.
(Should I give you a much-much longer list of posts where people expressed their doubt and eventually they were right?)
>Over the last two weeks especially, many in the upper echelons of international finance are moving into the bitcoin space in a mich bigger way than they had before.
Do you have a source for this? I haven't heard of any major hedge funds buying bitcoin. It's still considered quaint in the internet circles I frequent.
Well, yeah, but more like 97,89%, from what I gather. From time to time I fancy this idea of toying with some NLP package to calculate percentage of the HN comments that go like "Yes, but no", "Cool, but meh" or "Sure, but no way".
The ~97% of comments that are "nice idea but..." is probably not far off the percentage of nice ideas discussed on her whose implementations don't quite work out :)
Mark my words: The US regulators will do to Bitcoin what they have done to the Internet ecommerce, i.e. providing strong incentives like reduced taxes and simplified rules.
There are plenty of new bitcoin merchant and users every day and the USA won't stand while the rest of the world adopts THE next store of value/currency/commodity/new category.
Perhaps it was posted during wrong time of the day or was crowd power pointed to front page.
It is also possible that people here on HN do not have enough intuition about ideas, which could possibly change the world just like bitcoin is doing it right now. It's fun to read retrospective posts here on HN, but apparently innovation starts elsewhere..
Skepticism is different from hating, absolutely, but the user didn't say they were skeptical - they said there was "no way". That's hating and you have to ignore it - skepticism and critical feedback you value, treasure, and seek out.
Still doesn't make them a hater, at least not from the way I would use the term. A "doubter" maybe. By your definition all the Dragons Den are haters, because they say no way?
Regardless, i'm sure if you looked through anybody's comments in HN (including your own) then there is bound to be one that dismisses the next best thing as "no way this will work". Difference here, it's on a post with only 2 comments. If this had made it to the frontpage of HN then that comment would have been buried so deep no one would have batted an eye-lid.
No, it's a haters opinion. Being a hater doesn't make you a terrible person or mean you can't or shouldn't be allowed to have opinions, it just means you're a hater and your opinions should be ignored.
I am struggling to come up with a different definition for hating than just dismissal. What do you call it when you don't try to think about how something could change to work or be better, and instead just say thats dumb. Sounds like hating to me. How else can it be defined?
A person that simply cannot be happy for another person's success. So rather than be happy they make a point of exposing a flaw in that person.
Hating, the result of being a hater, is not exactly jealousy. The hater doesnt really want to be the person he or she hates, rather the hater wants to knock somelse down a notch.
I don't think his comments are really to do with not being happy about a persons success etc, it's nothing personal, he simply did not believe the idea would take off.
jdoliner's comment is interesting, because it's almost true. At the time, hardly anyone could find faith in the currency. But what he failed to understand that if "someone" could find faith in the currency, then others would follow.
It's an interesting property of markets that they can seemingly boostrap themselves, just so long as there is support during the initial growth stage. You don't have to believe in Bitcoins to trade in them, you just have to believe someone wants them. This might be why black markets and transaction privacy are so essential to making the currency work. Since there are a large number of people who need to make their payments private, the rest of the market believes that the currency has intrinsic value in its exclusivity in certain transactions.
What google-fu did you use to find the first post on bitcoin on HN?
I am asking, because I tried to find the first post on reddit.com (obviously before /r/bitcoin was created) and couldn't really retrieve anything useful.
I was searching by date ranges on site:reddit.com and was getting user profiles not posts.
How many people had the slightest clue that books would be replaced by Kindles, CDs by iPODs, tablets selling as much as laptops. The comments show that people underestimated the impact bitcoin would make.
I still believe its just the tip of the iceberg when it comes to Bitcoin.
But telegraphs are virtually gone in the western world, X.25 has very few installations. Tech doesn't ever fully die out, since just when it is about to a subculture grows around keeping it alive.
The printed page is centuries if not millennia away from becoming a niche subculture.
We are talking about people who have read at least one book in the last year.
40% - That's exclusively print books.
58% of them own an e-book reader, that's including the iPad.
The charts are a bit hard to read but..
Now, only about 5% bought only e-books. This of course doesn't include borrowed books, library books, etc. MUCH much more people haven't purchased either print or e-books than have purchased only e-books! I hate to generalize but some people, many in the HN crowd, seem to think libraries are "beneath" them or "outdated" but the data suggest otherwise. Paper books are not DRMed after all.
About 38% of people bought only print books. A mix between print and e-books wins out.
Here's the important stat. About 50% said they like print books and e-books. Only 10% said they like e-books only. A FULL 90% OF READERS STILL LIKE PRINT BOOKS!!!!
It's incredibly naive to say they have been replaced. Its beyond obvious anyway, just take a commercial flight and observe people around you reading print books.
I knew all of those things as soon as those devices came out.
Not kidding. And I don't see how others can't see them either.
But that is the nature of perception. You either perceive something or you don't and it's difficult to tell someone "there is a ship out there!" when their eyesight is too crappy to discern it. They end up having to trust you and trust is problematic.
Technically true, but we still have the governments to weigh in and try to crush this. Unless they can monetize from BitCoin, they will find a way to kill it - blaming it on funding organized crime and terrorism. "Real world" currency is just too important for them to loose control of it.
Yesterday's congressional hearing made me surer than ever that bitcoin is actually an FBI/ CIA/ NSA/ whoever -made honeypot.
Think about it. Bitcoin is robust enough that it could have only been developed with the resources offered by a government, the currency records all transaction histories, and we still have absolutely no idea of who this Satoshi Nakamoto guy is, assuming he's not some government taskforce. Didn't it strike anybody as odd that the same congress and government that normally takes an extreme luddite stance was so enthusiastic about Bitcoin? They can hardly wrap their heads around things like Google Glass and net neutrality, and yet they're absolutely pandering over Bitcoin.
I think it makes perfect sense if the government types think they can apply all the existing laws to Bitcoin transactions. Money laundering, tax evasion, fraud, theft, etc. are all still illegal, even if you use Bitcoin to carry them out.
I've actually changed from thinking "financial services law will destroy this" to "this will become like the War On Drugs: ubiquitous illegality, especially evasion of exchange controls, witholding taxes, and foreign income reporting requirements".
jdoliner just walked over to me and told me how he was laughing along with everyone else at this guy who posted on the first HN bitcoin post until he realized it was him.
Interestingly, despite growing worldwide adoption of Bitcoin, comments about it on HN continue to be more or less evenly split between doubters and optimists. And I wouldn't be surprised if comments to this submission are evenly split between those same two camps.
No amount of evidence or reasoning seems to persuade either camp to change its views!