Schlichter: "Bitcoin Is Cryptographic Gold"

Tyler Durden's picture




 

Submitted by Detlev Schlichter via DetlevSchlichter.com,

The Bitcoin phenomenon has now reached the mainstream media where it met with a reception that ranged from sceptical to outright hostile. The recent volatility in the price of bitcoins and the issues surrounding Bitcoin-exchange Mt. Gox have led to additional negative publicity. In my view, Bitcoin as a monetary concept is potentially a work of genius, and even if Bitcoin were to fail in its present incarnation – a scenario that I cannot exclude but that I consider exceedingly unlikely – the concept itself is too powerful to be ignored or even suppressed in the long run. While scepticism towards anything so fundamentally new is maybe understandable, most of the tirades against Bitcoin as a form of money are ill-conceived, terribly confused, and frequently factually wrong. Central bankers of the world, be afraid, be very afraid!

Finding perspective

Any proper analysis has to distinguish clearly between the following layers of the Bitcoin phenomenon: 1) the concept itself, that is, the idea of a hard crypto-currency (digital currency) with no issuing authority behind it, 2) the core technology behind Bitcoin, in particular its specific algorithm and the ‘mining process’ by which bitcoins get created and by which the system is maintained, and 3) the support-infrastructure that makes up the wider Bitcoin economy. This includes the various service providers, such as organised exchanges of bitcoins and fiat currency (Mt. Gox, Bitstamp, Coinbase, and many others), bitcoin ‘wallet’ providers, payment services, etc, etc.

Before we look at recent events and recent newspaper attacks on Bitcoin, we should be clear about a few things upfront: If 1) does not hold, that is, if the underlying theoretical concept of an inelastic, nation-less, apolitical, and international medium of exchange is baseless, or, as some propose, structurally inferior to established state-fiat money, then the whole thing has no future. It would then not matter how clever the algorithm is or how smart the use of cryptographic technology. If you do not believe in 1) – and evidently many economists don’t (wrongly, in my view) – then you can forget about Bitcoin and ignore it.

If 2) does not hold, that is, if there is a terminal flaw in the specific Bitcoin algorithm, this would not by itself repudiate 1). It is then to be expected that a superior crypto-currency will sooner or later take Bitcoin’s place. That is all. The basic idea would survive.

If there are issues with 3), that is, if there are glitches and failures in the new and rapidly growing infra-structure around Bitcoin, then this does neither repudiate 1), the crypto-currency concept itself, nor 2), the core Bitcoin technology, but may simply be down to specific failures by some of the service providers, and may reflect to-be-expected growing pains of a new industry. As much as I feel for those losing money/bitcoin in the Mt Gox debacle (and I could have been one of them), it is probably to be expected that a new technology will be subject to setbacks. There will probably be more losses and bankruptcies along the way. This is capitalism at work, folks. But reading the commentary in the papers it appears that, all those Sunday speeches in praise of innovation and creativity notwithstanding, people can really deal only with ‘markets’ that have already been neatly regulated into stagnation or are carefully ‘managed’ by the central bank.

Those who are lamenting the new – and yet tiny – currency’s volatility and occasional hic-ups are either naïve or malicious. Do they expect a new currency to spring up fully formed, liquid, stable, with a fully developed infrastructure overnight?

Recent events surrounding Mt Gox and stories of raids by hackers would, in my opinion, only pose a meaningful long-term challenge for Bitcoin if it could be shown that they were linked to irreparable flaws in the core Bitcoin technology itself. There were indeed some allegations that this was the case but so far they do not sound very convincing. At present it still seems reasonable to me to assume that most of Bitcoin’s recent problems are problems in layer 3) – supporting infrastructure – and that none of this has so far undermined confidence in layer 2), the core Bitcoin technology. If that is indeed the case, it is also reasonable to assume that these issues can be overcome. In fact, the stronger the concept, layer 1), the more compelling the long-term advantages and benefits of a fully decentralized, no-authority, nationless global and inelastic digital currency are, the more likely it is that any weaknesses in the present infrastructure will quickly get ironed out. One does not have to be a cryptographer to believe this. One simply has to understand how human ingenuity, rational self-interest, and competition combine to make superior decentralized systems work. Everybody who understands the power of markets, human creativity, and voluntary cooperation should have confidence in the future of digital money.

None of what happened recently – the struggle at Mt. Gox, raids by hackers, market volatility – has undermined in the slightest layer 1), the core concept. However, it is precisely the concept itself that gets many fiat money advocates all exited and agitated. In their attempts to discredit the Bitcoin concept, some writers do not shy away from even the most ludicrous and factually absurd statements. One particular example is Mark T. Williams, a finance professor at Boston University’s School of Management who has recently attacked Bitcoin in the Financial Times and in this article on Business Insider.

Money and the state: Fact and fiction

Apart from all the scare-mongering in William’s article – such as his likening Bitcoin to an alien or zombie attack on our established financial system, stressing its volatility and instability – the author makes the truly bizarre claim that history shows the importance of a close link between currency and sovereignty. Good money, according to Williams, is state-controlled money. Here are some of his statements.

“Every sovereignty uses currency.”

 

“Trust and faith that a sovereign is firmly standing behind its currency is critical.”

 

“Sovereigns understand that without consistent economic growth and stability, the standard of living for its citizens will fall, and discontentment will grow. Nation-state treasuries print currency but the vital role of currency management– needed to spur economic growth — is reserved for central bankers.”

Williams reveals a striking lack of historical perspective here. Money-printing, central banking and any form of what Williams calls “currency management” are very recent phenomena, certainly on the scale that they are practiced today. Professor Williams seems to not have heard of Zimbabwe, or of any of the other, 30-odd hyperinflations that occurred over the past 100 years, all of which, of course, in state-managed fiat money systems.

Williams stresses what a long standing concept central banking is, citing the Swedish central bank that was founded in 1668, and the Bank of England, 1694. Yet, human society has made use of indirect exchange – of trading with the help of money – for more than 2,500 years. And through most of history – up to very recently – money was gold and silver, and the supply of money thus practically outside the control of the sovereign.

The early central banks were also very different animals from what their modern namesakes have become in recent years. Their degrees of freedom were strictly limited by a gold or silver standard. In fact, the idea that they would “manage” the currency to “spur” economic growth would have sounded positively ridiculous to most central bankers in history.

Additionally, by starting their own central banks, the sovereigns did not put “trust and faith” behind their currencies – after all, their currencies were nothing but units of gold and silver, and those enjoyed the public’s trust and faith on their own merit, thank you very much – the sovereigns rather had their own self-interest at heart, a possibility that does not even seem to cross William’s mind: The Bank of England was founded specifically to lend money to the Crown against the issuance of IOUs, meaning the Bank of England was founded to monetize state-debt. The Bank of England, from its earliest days, was repeatedly given the legal privilege – given, of course, by its sovereign – to ignore (default on) its promise to repay in gold and still remain a going concern, and this occurred precisely whenever the state needed extra money, usually to finance a war.

Bitcoin is cryptographic gold

“Gold is money and nothing else.” This is what John Pierpont Morgan said back in 1913. At the time, not only was he a powerful and influential banker, his home country, the United States of America, had become one of the richest and most dynamic countries in the world, yet it had no central bank. The history of the 19th century US – even if told by historians such as Milton Friedman and Anna Schwarz who were no gold-bugs but sympathetic to central banking – illustrates that monetary systems based on a hard monetary commodity (in this case gold), the supply of which is outside government control, is no hindrance to vibrant economic growth and rising prosperity. Furthermore, economic theory can show that hard and inelastic money is not only no hindrance to growth but that it is indeed the superior foundation of a market economy. This is precisely what I try to show with Paper Money Collapse. I do not think that this was even a very contentious notion through most of the history of economics. Good money is inelastic, outside of political control, international (“nationless”, as Williams puts it), and thus the perfect basis for international cooperation across borders.

Money was gold and that meant money was not a tool of politics but an essential constraint on the power of the state.

As Democritus said “Gold is the sovereign of all sovereigns”.

It is clear that on a conceptual level, Bitcoin has much more in common with a gold and silver as monetary assets than with state fiat money. The supply of gold, silver and Bitcoin, is not under the control of any issuing authority. It is money of no authority – and this is precisely why such assets were chosen as money for thousands of years. Gold, silver and Bitcoin do not require trust and faith in a powerful and privileged institution, such as a central bank bureaucracy  (here is the awestruck Williams not seeing a problem: “These financial stewards have immense power and responsibility.”) Under a gold standard you have to trust Mother Nature and the spontaneous market order that employs gold as money. Under Bitcoin you have to trust the algorithm and the spontaneous market order that employs bitcoins as money (if the public so chooses). Under the fiat money system you have to trust Ben Bernanke, Janet Yellen, and their hordes of economics PhDs and statisticians.

Hey, give me the algorithm any day!

Money of no authority

But Professor Williams does seem unable to even grasp the possibility of money without an issuing and controlling central authority: “Under the Bitcoin model, those who create the software protocol and mine virtual currencies would become the new central bankers, controlling a monetary base.” This is simply nonsense. It is factually incorrect. Bitcoin – just like a proper gold standard – does not allow for discretionary manipulation of the monetary base. There was no ‘monetary policy’ under a gold standard, and there is no ‘monetary policy’ in the Bitcoin economy. That is precisely the strength of these concepts, and this is why they will ultimately succeed, and replace fiat money.

Williams would, of course, be correct if he stated that sovereigns had always tried to control money and manipulate it for their own ends. And that history is a legacy of failure.

The first paper money systems date back to 11th century China. All of those ended in inflation and currency disaster. Only the Ming Dynasty survived an experiment with paper money – by voluntarily ending it and returning to hard commodity money.

The first experiments with full paper money systems in the West date back to the 17th century, and all of those failed, too. The outcome – through all of history – has always been the same: either the paper money system collapsed in hyperinflation, or, before that happened, the system was returned to hard commodity money. We presently live with the most ambitious experiment with unconstrained fiat money ever, as the entire world is now on a paper standard – or, as James Grant put it, a PhD-standard – and money production has been made entirely flexible everywhere. This, however does not reflect a “longstanding bond between sovereign and its currency”, as Williams believes, but is a very recent phenomenon, dating precisely to the 15th of August 1971, when President Nixon closed the gold window, ended Bretton Woods, and defaulted on the obligation to exchange dollars for gold at a fixed price.

The new system – or non-system – has brought us persistent inflation and budget deficits, ever more bizarre asset bubbles, bloated and unstable banking systems, rising mountains of debt that will never be repaid, stagnating real incomes and rising income disparities. This system is now in its endgame.

But maybe Williams is right with one thing: “If not controlled and tightly regulated, Bitcoin — a decentralized, untraceable, highly volatile and nationless currency — has the potential to undermine this longstanding bond between sovereign and its currency.”

Three cheers to that.

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Sun, 03/02/2014 - 20:25 | 4499129 medium giraffe
medium giraffe's picture

Aw god, you just know how this comments section is going to turn out.  I'm leaving before he shows up.

Sun, 03/02/2014 - 20:26 | 4499133 Dear Infinity
Sun, 03/02/2014 - 20:31 | 4499147 knukles
knukles's picture

Bitcoin is Schrodinger's gold

Sun, 03/02/2014 - 20:34 | 4499163 Unpopular Truth
Unpopular Truth's picture

10 mins I will never get back. (and I love bitcoin!)

Sun, 03/02/2014 - 20:41 | 4499184 Soul Glow
Soul Glow's picture

Japanese equity, bitcoin, the dollar....there really aren't too many solid investments out there right now.  But gold is looking good ;)

Sun, 03/02/2014 - 20:52 | 4499238 Alea Iactaest
Alea Iactaest's picture

I was ready to go all in on BTC but then I heard about LiteCoin and DogeCoin and... Seriously folks, I'm in if you can just tell me which one is "just like gold."

TIA

Sun, 03/02/2014 - 21:15 | 4499333 Pladizow
Pladizow's picture

BTC requires that instead of you placing your faith in a Gov controlled fiat, you place your faith in a Gov controled internet!

WTF is the difference?

Sun, 03/02/2014 - 21:30 | 4499404 HarryWanqer
HarryWanqer's picture

Is Tyler Durden actually Ben Bernanke then? It would be hilarious if you fools were played all along.

Sun, 03/02/2014 - 21:59 | 4499532 Bob
Bob's picture

I heard he was born in a mental institution. 

http://www.hark.com/clips/kjpqpclzyg-tyler-durden

Sun, 03/02/2014 - 22:31 | 4499671 fonestar
fonestar's picture

Sorry, fonestar was having his $500 jalopy towed off a hill.

fonestar is still with you (and also with you).

Sun, 03/02/2014 - 23:01 | 4499782 Bob
Bob's picture

.

fonestar is still with you (and also with you).

Now that was funny as hell!  +1 

You're certainly keeping your sense of humor! 

And I've got no special axe to grind against bitcoin, fwiw. 

In all fairness, I'm overwhelmingly inclined to give the entire operation a pass on good intentions. 

Sun, 03/02/2014 - 23:03 | 4499788 boogerbently
boogerbently's picture

All the Bitcoin owners with any media power will now start scratching for their survival.

Sun, 03/02/2014 - 23:08 | 4499811 fonestar
fonestar's picture

Bitcoin does not need to scratch for survival.  It's the honeybadger of money.

Mon, 03/03/2014 - 01:26 | 4500333 Troll Magnet
Troll Magnet's picture

If it's just like gold, why don't they just buy gold?

Fuckin' idiots..

Mon, 03/03/2014 - 01:57 | 4500388 fonestar
fonestar's picture

Because it's not exactly like gold.  Bitcoin is more fungible, faster to transact with and is a smugglers wet dream.

Mon, 03/03/2014 - 05:55 | 4500669 anu
anu's picture

Bitcoin's biggest advantage over Gold: Its purely virtual and can thus be sent over the net to anywhere in an instant.

Gold's biggest advantage over Bitcoin: You can hold it in your hands.

 

It completely escapes me why people in this forum behave as if Bitcoin makes gold less shiny. The opposite is the case.

Mon, 03/03/2014 - 13:31 | 4502209 centipede
centipede's picture

It completly escapes me why anybody would compare Bitcoin to gold. Cryptocurrency can be created out of thin air by just anybody. I can create Centipede_coin1 currency and then as many others cryptocurrencies as I wish more - Centipede_coin2, Centipede_coin3, Centipede_coin4, ... Centipede_coinN. How is it better than government fiat? It is actually much worse because theoreticslly everybody can create countless cryptocurrencies out of thin air.

Mon, 03/03/2014 - 18:59 | 4504007 TheHound73
TheHound73's picture

Would anybody buy Centipede_coins, would any economic activity take place on them? I wouldn't but I do buy bitcoins and participate in the bitcoin economy.

Sun, 03/02/2014 - 23:08 | 4499814 Bob
Bob's picture

Yup.  Who wouldn't?

Sun, 03/02/2014 - 23:16 | 4499846 TeMpTeK
Sun, 03/02/2014 - 23:03 | 4499789 fonestar
fonestar's picture

The internet is not "controlled" by government moron.  If it were, the blog you are posting on would not exist.

Sun, 03/02/2014 - 23:29 | 4499838 Bob
Bob's picture

Now you see our dilemma. 

--Tyler Durden

Or you at least sense it, methinks.   

Sun, 03/02/2014 - 23:37 | 4499937 knukles
knukles's picture

That, fonestar, is one of the shallowest comments I've ever read.
Bar none.
The whole purpose of the fucking thing from a PTB perspective is to keep control over you, which is predicated upon the participant's voicing of opinions without significant restraint operating under the assumption of impunity. 
Which cannot be done without extreme degrees of freedom for the participants.
Else the plants that cannot bloom by day must flower in the night.

You just shot any credibility.

Mon, 03/03/2014 - 00:20 | 4500159 fonestar
fonestar's picture

fonestar is one of the shallowest virtual characters you will meet on the internet.

Mon, 03/03/2014 - 00:01 | 4500065 rubiconsolutions
rubiconsolutions's picture

fonestar = the "Magic 8-Ball" of economics.

Mon, 03/03/2014 - 01:23 | 4500326 fonestar
fonestar's picture

Shut up and

BUY BITCOIN!!

Mon, 03/03/2014 - 04:33 | 4500604 flyingpigg
flyingpigg's picture

Gold is a long term store of value, nothing cryptic about it.

If bitcoin is cryptographic gold, Mt Gox is cryptographic Fort Knox.

Mon, 03/03/2014 - 05:41 | 4500658 fonestar
fonestar's picture

No, that does not make any sense.  But like Mount Knox, Fort Gox actually had something in it at one point...

Mon, 03/03/2014 - 08:27 | 4500791 tradewithdave
tradewithdave's picture

@pladizow

Your comment regarding a "government controlled internet" relative to cryptos is THE point. What is the difference?  There's plenty of difference.  One, there are plenty of governments that control currencies that will never control the internet and frontier economies using cell phone networks as forms of currency and exchange must be brought under control. Two, there are new tunnels being dug under the internet (i.e. openlibernet.org, netsukuku, dyne) and open mesh networks that threaten the telecoms control of infrastructure which is why Facebook is being propelled into a global position to control all messaging. This leads me to the question of just how much computing power will it take to crack PGP?

I know it is astronomical (hacking PGP), but with the stakes at the level they are and with blockchain 1.0 standing strong what does the "Wealth of Networks" look like in ten years, twenty, thirty?  The timing of private label rollouts such as "complementary" Ethereum and Silbert's Second Market while Edmund Edgar's RealityKeys.com and Chris Odom's Open Transaction/Monetas emerge from the corners of cryptoland set the stage for a showdown over network resources.  

The way I see it, it's a battle of centralized server power vs. decentralized mobile phone power with the telecom carriers as the new sovereigns in the post-central-bank era.  The inconvenience for the Diane Feinsteinians (a government of men rather than a government of laws) is that although centralized servers are controlled by centralized media, the voting booth is controlled by Iphone carrying voters (Diebold withstanding).  Samantha Sunstein (i.e. Cass Power) and the behavioral economists are going to need to eat their Wheaties for what's ahead.  

Ethereum's self-proclaimed metaphor as being the petrodollar to Bitcoin's gold should be telling in that just because you close the gold window doesn't mean that someone won't throw a brick through it and eventually even the Keyne's glass repairman starts experiencing diminishing returns.  The race to replace the central bank era with the decentralized democratization of money is on.  

www.tradewithdave.com 

Sun, 03/02/2014 - 21:16 | 4499344 Slave
Slave's picture

None of them are like gold. Gold has been money throughout human history. Bitcoin is a volatile, speculative experiment.

Sun, 03/02/2014 - 21:54 | 4499477 Bob
Bob's picture

Experiment indeed. 

Maybe even a proof of concept/study by the PTB of the response of people around the world to the introduction of a purely electronic currency. 

If you believe in a NWO, then surely you expect it to introduce electronic currency when TSHTF.  They can control it--and us--in so many more ways.  Prohibited activities, tax evasion . . . anything suggesting you buy shit you shouldn't buy with money you "shouldn't" have. And effortless revaluations, a la Orwell in 1984 

Bitcoin was a great test case.  They'll be talking about it in the history books long into the future. It will be attributed to the academic discipline of Consumer Psychology. 

Which is why, btw, I think the notion of holding gold for use of any monetary kind . . .  except during the first week or two after a worldwide economic implosion/zombie apocalypse . . . is incredibly naive.   

Soon after the coming Great Meltdown, precious metals offered as money will only be meaningful to a few people engaged in a deeply heartfelt circle jerk. 

Everything of consequence will be done in newly minted electronic currency. 

JMHO. 

Sun, 03/02/2014 - 22:49 | 4499735 Drifter
Drifter's picture

Computer geeks vs banking cabal.

I can guess how that'll turn out.

Sun, 03/02/2014 - 23:04 | 4499791 fonestar
fonestar's picture

So can fonestar, the hackers always win.

Tue, 03/04/2014 - 03:16 | 4505623 MeelionDollerBogus
MeelionDollerBogus's picture

We shall show our invincibility with new outfits!

Anyone object to red?

Mon, 03/03/2014 - 00:35 | 4500208 MeelionDollerBogus
MeelionDollerBogus's picture

-1.

Problem with your theory is that this collapse must be special instead of being just like all the other collapses of resources & civilizations battling for resources in the whole of human history.

So far all the signs look the same which means gold & silver would continue for thousands of years FROM THIS DAY to be money just like thousands of years before. NO change.

Mon, 03/03/2014 - 02:26 | 4500435 MEAN BUSINESS
MEAN BUSINESS's picture

All the signs? You know damn well all the signs are NOT the same and that this collapse is, so far, on a scale of the great dying. Gold and silver will continue for billions of years, BTC and homo sapiens, and 9X% of species, not...

Why all the pc when it comes to bitcoin not janus Bogus? The timeline is more like 200-500 yrs for us at this rate, not thousands.

Which one of us is confused? Again, you know damn well this collapse is special.

The Sixth Extinction: An Unnatural History by Elizabeth Kolbert 2014

Tue, 03/04/2014 - 03:14 | 4505619 MeelionDollerBogus
MeelionDollerBogus's picture

ALL the signs relative to money.

Nothing has changed.

If Fukushima wipes out the Northern Hemisphere bitcoin will go with it because the survivors in the Southern Hemisphere largely have no interest or use for it & won't be connected by the Internet grid that bitcoin MUST HAVE to exist.

Local intranets can't cut it: the network must be global & synchronized or there is no bitcoin.

I understand this far, far better than you do.

If you fracture the network to fracture the currency it loses all value because no one will know how to trade them with each other. They will have competing blockchains & that means they will try to invalidate each other, not add to each other as additional currency units, and if they did act as additional currency units that also breaks the 21 million limit which ruins bitcoin again, and even then all those bad scenarios are "good" scenarios if the grid you need survives but it will not.

Bitcoin iz fail.

Sun, 03/02/2014 - 22:33 | 4499681 fonestar
fonestar's picture

Who fucking cares if Bitcoin is "volatile"?  Did you change your depends this morning?

Sun, 03/02/2014 - 20:52 | 4499243 0b1knob
0b1knob's picture

Bitcoin was the next big thing but that was like a week ago.

Now its a joke and not a very funny one either.  Cryptographic gold?   More like virtual beanie babies.

Sun, 03/02/2014 - 21:19 | 4499292 XenoFrog
XenoFrog's picture

If bitcoins were so great, people wouldn't have to work so hard to constantly tell me that it's as good as gold.

Why not just buy gold and silver?

Sun, 03/02/2014 - 21:33 | 4499417 lickspitler
lickspitler's picture

The Fonestar of the bitcoin haters is back.... to pronounce another death of Bitcoin.  Wow silver looks good laying around like a beached whale

Sun, 03/02/2014 - 22:34 | 4499691 fonestar
fonestar's picture

and the fonestar of the fonestar is also back.

Sun, 03/02/2014 - 21:45 | 4499480 Unpopular Truth
Unpopular Truth's picture

To answer your question as to why people are working hard to explain why bitcoin is so good:

Because the hate comes from people who fail to comprehend that bitcoin is unlike ANYTHING seen before.

In their mind, no new things can exist. Bitcoin MUST be like something existing. So, bitcoin must be like something already existing. Beanie babies, tulips.

In time, they will be educated. Until then, they will make fools of themselves, and to your point there will be fools trying hard to educate them. Mind you all bitcoiners love PMs.

Sun, 03/02/2014 - 22:43 | 4499718 fonestar
fonestar's picture

All good points and yes, when it comes to Bitcoin there is nothing like it in human history to compare it to.

Mon, 03/03/2014 - 06:04 | 4500672 Acet
Acet's picture

So if I started a currency based on fossilised cow turds, it would be as good as Bitcoin since it also "is unlike ANYTHING seen before"?!

 

There is one big reason why, even though Gold is as inherently worthless as Bitcoin, the former is a worthy store of value why the later is just another Ponzi scheme:

- None of the assholes who mined and aquired Gold when it was easy are alive and trying to get suckers to jump in the bandwagon and give them real stuff for it.

Gold took millena of increasing difficulty to extract, while Bitcoin did it in less than a decade which is is reflected into how only 8 people hold a huge percentage of all bitcoins. Gold also took millenia to become a well established, widespread store of value and in its decade Bitcoin most certainly didn't achieve that (not even close)

As thing stands, Bitcoin is just a Ponzi-scheme for those who know enough technology to use it but not enough to make it. Time will tell if it ever makes the cut as currency: personally, given its susceptibility to brute force attacks with quantum computing and to large actors with control over a significant proportion of the internet tier 1 nodes, I doubt it will live long enough.

Mon, 03/03/2014 - 08:00 | 4500763 TheHound73
TheHound73's picture

After reading your comment I clicked on my Bitcoin wallet, dragged it over to my Recycle Bin, just about to drop in there when I thought, "nah", I'd rather see how this whole thing plays out.

Mon, 03/03/2014 - 09:02 | 4500874 webbie
webbie's picture

Dude stop spreading FUD.... You saying "personally, given its susceptibility to brute force attacks with quantum computing and to large actors with control over a significant proportion of the internet tier 1 nodes, I doubt it will live long enough." 

 

That is complete bull...like why don't you people actually do some research, at current network hash rates, there's no computer even remotely close to a 51% attack and the probability goes further down every hour!

 


Mon, 03/03/2014 - 14:09 | 4502375 centipede
centipede's picture

You are right. That is certainly not the reason why Bitcoin is just another Ponzi scheme. In fact large actors do not need supercomputers to attack any cryptocurrency. They just need to create a new one and many others. And you don't even need to be a large actor to do that. New cryptocurrencies (countless of them) can be created out of thin air by just anybody with the available technology. Is it not even much worse than government fiat?

Tue, 03/04/2014 - 00:18 | 4505224 TheHound73
TheHound73's picture

Why use future tense?  Already there are over 200 crypto currency networks running based on the Bitcoin code, a side effect of releasing the code into the public domain.  Doesn't seem to harm Bitcoin much, people aren't buying the copycats.  Combined they have less than 10% the market capitalization of Bitcoin.

Tue, 03/04/2014 - 04:03 | 4505674 goldsansstandard
goldsansstandard's picture

and the leader technically sucks.Anybody can make another operating system, but the network effect limits the choice largely to three players.

BC has a big network and ecosystem. It's a pretty good bet that this network advantage may persist.

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