Bitcoin Is a High-Tech Dinosaur Soon to Be Extinct

&quot;In fact, if you strip away its technological trappings -- the encryption, the peer-to-peer networks -- and Bitcoin closely resembles these earlier private efforts.&quot;<p>In other words if you strip away everything that makes BitCoin different and unique from its predecessors, BitCoin looks the same as its predecessors.

Here&#x27;s a tip I&#x27;ve picked up from the stock market. If everyone is talking doom and gloom, buy in. If everybody is talking about how bitcoin is the <i>greatest thing ever</i> and people are starting bitcoin investing clubs and &quot;the price is going to keep skyrocketing!!!!1&quot;...it&#x27;s time to sell.<p>So, it&#x27;s going to be slightly more regulated. Big deal. People say it has no value, but it does. A bitcoin, at this very moment, is worth ~732USD. That sounds like value to me. On top of the value people give it, it has value in that nobody owns the network, nobody can regulate transactions used with it, and anybody with access to a computer can trade it for goods or &quot;real&quot; currency.<p>I think people who don&#x27;t like it a) are uninterested and sick of hearing about it b) lost all their money by buying on peaks (or just never bought in when it was $0.20 and are pissy about it) or c) don&#x27;t have a <i>clue</i> what they&#x27;re talking about.<p>At this point, it has to be treated like a volatile stock. Does it have value? As much value as someone is willing to buy it off of you for. Will the price go up or down? Impossible to tell. Is it going anywhere? Doubt it.<p>I predict that as more people adopt it and as it becomes more mainstream, the value will increase logarithmically and stabilize.

Everybody who wants to comment on this story should be aware that there is a mismatch between title and content.<p>The content - the interesting part that should be taken seriously - is about whether basing our economy on Bitcoin is a good idea or not. That is a serious <i>economic</i> question that has nothing to do whatsoever with the <i>technology</i> of Bitcoin.<p>The content concludes that Bitcoin is a bad idea economically and, unfortunately, the title then highlights the (possibly erroneous) conclusion that this means Bitcoin is necessarily doomed.<p>It is unfortunate that these different questions surrounding Bitcoin tend to be conflated. Let&#x27;s try to avoid that here.

Private currencies were local to small areas and national currencies were created to consolidate control and distribution to citizens -- making transactions easier between states, controlling inflation, etc. Why not look at bitcoin as the next step: a means to globalize currency and facilitate international economic growth.

The author has managed to miss the point of bitcoins with impressive thoroughness. Crypto-currencies are both new and structured fundamentally differently, so don&#x27;t tell me about 18th century shopkeepers.<p>* I&#x27;ve &lt;5 USD in bitcoins, so not heavily biased.

The G4 (USD,EUR,JPY,GBP) may last for somewhat longer than the other fiat currencies, but that does not detract from the fact that currency crises in the smaller fiat currencies are very common (think Argentina).<p>People who live in a G4 country are apparently incapable of imagining that the situation elsewhere is seriously different than in their own country.<p>There are lots of Mickey Mouse fiat currencies around issued by the banana republics that keep debasing them until they collapse. Even the Russian ruble is a joke that became entirely worthless, three times, in the span of two decades.<p>Instead of dollarizing during a monetary crisis, as these smaller&#x2F;weaker fiat currency areas used to do in the past, they may elect to bitcoinize.<p>If that happens, you could end up with an entire country using bitcoin. As soon as this happens, nobody will ever manage to eliminate bitcoin in that country.<p>History does not repeat itself. Collapsing currencies now face a prospect of hysteresis. Reintroducing fiat currency will not work if people have already moved over to bitcoin.<p>With smaller fiat currencies collapsing one by one -- as they always do -- bitcoin will keep growing stronger and stronger.

The main failing of this and other articles - and bear in mind that I am not a bitcoin fanboi, own none, and question whether I should - is that many, many people fail to recognize that cryptography has in recent decades resulted in several <i>sui generis</i> inventions, that is, <i>things in themselves</i>, things entirely new that cannot be reasoned about with analogy to past things, for there are neither analogies nor homologies.<p>Witness the digital signature: When properly done, bound to the signer and the data being signed and entirely unique. A brand new thing that could never have been done before, not even slowly with other tech.<p>Thousands will criticize bitcoin, etc., for how they are like past things, few will grasp how the world is fundamentally different for their introduction.<p>How?<p>How the heck should I know? I&#x27;m not that visionary, nor that smart. None of us will really know for a few years yet, perhaps longer.

The article is advocating an incomplete picture. If we see this as a cyclical struggle between state-backed and private currencies, then what will actually happen is a competition between the two.<p>The state will prefer using force to squash bitcoin, because that&#x27;s what it&#x27;s good at, but we already have the recent history of digital media piracy to inform us of how difficult it can be; the only thing that has substantially slowed piracy has been to make the legal market increasingly cheap and convenient.<p>So regardless of who &quot;wins,&quot; the existence of bitcoin acts to motivate a restructuring of top-level policies; employment of the traditional warmongering will drive it underground but not out of sight, since there isn&#x27;t a &quot;head&quot; or &quot;ringleader&quot; to attack.

Governments will likely try to legislate Bitcoin out of the market, but I doubt they&#x27;ll succeed. In a democracy, it&#x27;s easy to make something that&#x27;s used by a small number of people illegal, but if plenty of people are already using it, they&#x27;ll vote you out of office.<p>If someone tries to make Bitcoin illegal in America, why wouldn&#x27;t large Bitcoin holders try to distribute bitcoins as widely as possible in an attempt to win over the people and retain as much of the value of their Bitcoin holdings as possible?<p>Here&#x27;s a short story that resulted from that thought experiment: <a href="http://niran.org/bitcoin-fiction/the-blockchain-letter.html" rel="nofollow">http:&#x2F;&#x2F;niran.org&#x2F;bitcoin-fiction&#x2F;the-blockchain-letter.html</a>

I don&#x27;t see Bitcoin as an alternative currency. I see it more as a bank account held in a foreign currency. These exist today.

This guy&#x27;s argument just boils down to &quot;they failed in the past, so these guys will fail now, any other outcome is preposterous.&quot; This is not an argument which can sand without consideration of factors of new technology, virtuality, and globalism, never mind any social and political factors which are different now from then.<p>Weak opinion article, with no actual coherent reasons to believe him. &quot;It happened before, it must happen again&quot; is not an argument.<p>BTW I am not entirely bullish on Bitcoin, but it&#x27;s not because of this guy&#x27;s (non-)argument.

It would be nice to know if all of the people hyping up and talking down Bitcoin own any Bitcoin.

You know what really is a high-tech dinosaur soon to be extinct? Bloomberg terminals. Seriously why does anyone still use these?

I think that all evidence points to states having far far more power to respond to technologies than anyone here can imagine. Frankly, in light of all the public disclosures this year I can&#x27;t help but wonder where all the bitcoin optimism comes from.