A hard currency standard is the key to world peace

[zarus tathra]

Also, Bitcoin and gold can't be hyperinflated. That's why people like them. The solidity of a currency is based on both the amount of faith in it and the lack of ambiguity in its supply. The USD is popular but highly ambiguous, while the btc is unpopular but unambiguous in its supply.

[AllPurposeAtheist]

Gold at $3-4000 per ounce could be seen as hyperinflated. I remember when it was about $34 an ounce.

[zarus tathra]

No, that means gold is hyperdeflated and that the USD is set for hyperinflation.

[Hakurei Reimu]

Every time a wallet-holding "service" is compromised, everyone's Bitcoins are gone with no possibility for redress. It also disproportionately profits early adopters. Both are hallmarks of scams.

On the other hand, if a bank fails you also lose all your money.

A wallet-holding company is in no way comparable to a bank. When I say that the wallet-holding company, I mean it holds your wallet — the coins that are supposed to be owned by you directly (which with a normal currency would be in your pocket) are actually held by the company. A pickpocket could pick my wallet, but that only nets how much money I'm carrying at the time, which is not all that much, so the damage is contained. When a Bitcoin wallet holder is broken into, a lot of people lose their money with no way to recover it, and it's very profitable for the thief. Also, with a bank, there will still be records of how much your account is worth before the bank failed (because they keep records of all your transactions), and as such you are still entitled to the FDIC insurance in case liquidation of the bank's assets cannot cover you.

Bitcoin is designed ass-backwards for a real electronic currency. In a real e-currency, security should be objective #1 — in the ideal case, no matter how opaque the process is, it should still be me and only me who is able to initiate a transfer of my money, even if a thief has all the data that is available online. This is actually something we can afford since computers are doing all the drudge work. However, it seems with Bitcoin, the only thing you need to hold a Bitcoin is the Bitcoin data values and to fool the P2P network that a transaction had taken place between a victim and yourself, which seems to be easy to do since the system is designed to be opaque. There have been a number of Bitcoin thefts amounting in the hundreds of thousands of dollars already. (It is also because of this opacity that the criminal underworld likes to use it.)

And regular currency also disproportionately profits early adopters.

True, but not this much. Bitcoin went from less than a cent to somewhere around $750 in four years. You don't get that kind of skew in value for a regular currency unless the other currency is being phased out.

Also, Bitcoin and gold can't be hyperinflated. That's why people like them. The solidity of a currency is based on both the amount of faith in it and the lack of ambiguity in its supply. The USD is popular but highly ambiguous, while the btc is unpopular but unambiguous in its supply.

Well, until someone decides that another algorithm mine is opened and becomes a valid source for Bitcoins. Even if there is only 23 million someodd bitcoins available from the original mine, there are literally an infinite number of algorithms from the same family to mine. So the notion that Bitcoin can't be hyperinflated is incorrect; it can't be hyperinflated, so long as everyone maintains discipline and no other mines are opened. Good luck with that. If governments can occasionally lapse in that kind of discipline, what makes you think that Bitcoin will have that kind of discipline in perpetuity, especially if the need for Bitcoins grossly outstrips supply.

Also, if Bitcoin takes over, you're going to be dealing with satoshis, not bitcoins, because there isn't enough bitcoins to satisfy the entire world economy's currency needs unless there are subdivided into an ungodly number of satoshis. Thus, the amount of satoshis that are around is going to be flexible, even if the bitcoins they're based on are not. Otherwise, you're going to have economic stagnation in places, which nobody is going to stand for.

In truth, ordinary levels of inflation really don't matter unless you're in it for the long haul, on the order of decades, because only then does the change in price become appreciable. An uninflatable currency will not solve price fluctuations and increasing scarcity in original production, the kind of economical trouble on the horizon in the real world.

[zarus tathra]

I welcome the influx of new digital currencies. And I don't think BTC will be the last.

[Hakurei Reimu]

Of course, BTC won't be the last, because it probably won't last. It's too insecure, unregulated, and too small to be a world currency. The BTC community flatly avoids regulating itself, even with its glaring problems.

The future successor to BTC will have to be secure, with transactions flat out impossible without the legitimate owner's active participation. It will have to be regulated, because any currency that is used chiefly for the black market is one that is out of control — a certain amount of transparency is necessary to verify legit transactions, with transactions leaving a paper trail back to its original mining. It will also need sufficient quantity to keep it within realistic value. $750 is much too much money to use currency for — I would want there to be a paper trail for a purchase this large, to prove that yeah, I indeed own this thing and shame on you for stealing it, and a personal check or credit card is much more suited to that task than a Bitcoin.

And in a way, that system already exists. It's called the credit system, and while it's far from perfect, it's world's better than Bitcoin could hope to be.

[zarus tathra]

It's too insecure, unregulated, and too small to be a world currency.

Right, I understand the "insecure" part, I mean how do you make a protocol that "leaks" money?

That said, I'm sure people are fine with it being "unregulated." As long as the other guy gets the money you thought you sent, nobody who matters cares.

And "small" doesn't really matter, each btc can become 100 million satoshis, that's like 2.1 quadrilion pieces. That's plenty of divisibility, but if that's not enough there's always ltc, which is even more divisible.

[Hakurei Reimu]

It's too insecure, unregulated, and too small to be a world currency.

Right, I understand the "insecure" part, I mean how do you make a protocol that "leaks" money?

You don't seem to realize what these bitcoin heists consist of, do you? I'm NOT talking about bitcoins disappearing altogether. I'm talking about about thieves taking other peoples' bitcoins in transactions that the legitimate owners have not authorized. To the legitimate owners, the bitcoins are simply gone without any sort of compensation in exchange, into the possession of the thieves. It's a classical theft — no money is destroyed, but passes illegitimately into the hands of thieves. Hence, it is insecure. By design, it appears.

That said, I'm sure people are fine with it being "unregulated." As long as the other guy gets the money you thought you sent, nobody who matters cares.

"Preventing being used for illicit purposes" and "preventing getting robbed blind" I think anyone could get behind.

And "small" doesn't really matter, each btc can become 100 million satoshis, that's like 2.1 quadrilion pieces. That's plenty of divisibility, but if that's not enough there's always ltc, which is even more divisible.

That's not the problem. The problem is that all Bitcoins carry the entire history of their transactions to be legitimate, so a single bitcoin grows without limit as it is circulating. There are going to be many satoshis split and then recombined, turning block chains into an insestuous morass of side-links that is going to hog much memory and bandwidth. The whole of global commerce is furious and intricate, which means that the Bitcoin database will quickly grow into an unmanagible mess.

In order to avoid that, bitcoins can't be split very often (they'll still grow without limit, but at a much more managable linear growth), which means that bitcoins need to be small enough to be usable as entire coins for ordinary currency purchases.

[zarus tathra]

Yeah I agree we need something more efficient and more secure than btc.

[Hakurei Reimu]

Yeah I agree we need something more efficient and more secure than btc.

Exactly, and we already have it. It's called "credit."

[zarus tathra]

I like the idea of an untraceable currency, one that must follow internal controls on its expansion. If you can't accept that, then there's no point in talking.

[Hakurei Reimu]

I'm having a problem with your position because you seem to think that any currency could be either. Sure, Bitcoin may be "uninflatable" in its current iteration, but who knows what the future holds. If another bitcoin mine is opened, all bets for Bitcoin's uninflatability are off. This goes for any other electronic currency. As with fiat currency, the only thing standing in the way of rampant inflation is the discipline of the currency makers. Relative worth cannot be internally controlled because it is an externally imposed value originating from humans, and no manner of basing will change that.

As for being untraceable, sorry, no such luck there either. See, there is this thing called traffic analysis, where, just by looking at the patterns of how bitcoins are moving through the economy, you can identify who is doing the spending, even if you cannot decode the identifiers directly. The government has been doing it for years in its espionage programs.

[zarus tathra]

If all your concerns are technical in nature, then I don't feel a need to dispute things. We'll cross that bridge when we get to it.