By Stephen Mihm
For all the regulatory crackdowns on Bitcoin in recent weeks, the cryptocurrency’s advocates remain unfailingly optimistic. Bitcoin is the future, they tell us; it heralds a future where private, stateless currencies will dethrone the dollar and other monetary dinosaurs.
Sorry, but Bitcoin isn’t the future. If anything, it’s a throwback to an earlier era, when private currencies circulated alongside government-sponsored money. In fact, if you strip away its technological trappings -- the encryption, the peer-to-peer networks -- and Bitcoin closely resembles these earlier private efforts.
This isn't a comforting historical parallel. The alternative currencies of the past are long gone, thanks to a decades-long campaign by governments aimed at monopolizing the money supply. The lesson of their rise and fall is one that Bitcoin’s boosters would be foolish not to heed.
Read the rest here.
For those of you wishing to sell your bitcoins as a result of this thoroughly-researched and authoritative article, please sell them to me as I am happy to take them off your hands and save you from the financial ruin that is sure to come your way if continue to hold on to them. You can find me in any city through sites like LocalBitcoins.com.
ReplyDelete"In fact, if you strip away its technological trappings -- the encryption, the peer-to-peer networks -- and Bitcoin closely resembles these earlier private efforts."
ReplyDeleteIn other words, if we ignore everything about Bitcoin that makes it different from the private currencies of the past, it is no different from the private currencies of the past. Seriously Wenzel, you don't see *anything* screwy about this argument?
The "trappings"come in the form of "energy used to create" bitcoins and the algorithms that must be solved. Absolute witch doctor stuff that has nothing to do with the essence of e-currencies.
Delete@Robert WenzelJanuary 1, 2014 at 7:50 PM
DeleteThe purpose of the mining and algorithms are to secure the network (from a certain type of attack) and maintain the distributed ledger (transaction history). This IS the essence of bitcoin and what makes it the best e-currency at the moment.
"It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance."
DeleteWhat Murray Rothbard said about economics also applies to cryptography, distributed systems, distributed consensus, peer-to-peer networking, and computer security. Do you believe that anything you don't understand in these areas must be "witch doctor stuff?" If I asked you to tell me everything you know about Bitcoin mining, would it take you more than twenty seconds to do so?
I'm continually shocked--but not surprised--by the complete ineptitude of Bitcoin's detractors. I'm starting to think that we need a variation of Roddis's Law for Bitcoin.
Robert Wenzel doesn't care about the details of how Bitcoin works; he cannot understand them, or the words you use when you explain it to him. All he cares about is the knowledge he already has a firm grip upon. He is deeply wedded to what he already knows, and does not have the capacity to learn about Bitcoin. This is not surprising, and it does not mean that the other things he writes about are incorrect; he simply has a blind spot when it comes to anything to do with computers.
DeleteWhat is interesting however, is that he posts a video where a man claims that the NSA can "hack" into someone's WiFi from eight miles away, and does not make any comment about this. How does he know that this is possible or impossible? Why does he believe one claim about what technlogy (in this case, software) can do, but not another? It is clear that he has no way to confirm or falsify any claim made by any third party when it comes to technology, So it strikes me as odd that he makes these sorts of posts on things that he clearly has no means of verifying.
This is not the behaviour of an honest intellectual; it is more like tabloid journalism than intellectual discourse. Murray Rothbard's quote is a perfect fit to Wenzel's approach to Bitcoin and all things digital, and this particular criticism must sting terribly
I'll trade you all your gold for shitcoins. Honey Badger will be like Nero, fiddling away as his precious shitcoins drop to zero and turn to ash.
ReplyDelete@Chris B January 1, 2014 at 5:51 PM
DeleteSorry, someone already beat you to it. I dumped my gold at $1,900/oz and bought bitcoin. Turned out to the be the trade of the decade. Now I can buy back that gold for about 3% of the bitcoins I bought.
@ Honey Badger
DeleteAs they say, prior performance is no guarantee of future results. Gold hit near $1,900 only for a day or two in September 2011. Bitcoin sat around $5 from then until about Jan 2013. Dumping gold at $1,900 for bitcoin at $5 truly would be the trade of a lifetime. But all that is irrelevant to the current discussion, which involves trying to predict bitcoin's future price. Even though you hit gold's top, you have already missed bitcoin's latest top. Have you lost your edge? Do you have any mental stops under bitcoin or will you ride it all the way back down if that happens? I'm not saying it will, but how far would it have to fall before you take your profits? In any event, its clear you don't value bitcoin as a medium of exchange or you would reducing your holdings down to only what you would hold as your demand for your average future exchange needs.