(Disclaimer: my ownership of bitcoins constitutes a financial conflict of interest with respect to everything I write on the topic.)
I think Jason Calacanis has it right, and Avery Pennarun has it wrong. Bitcoin is likely to succeed.
.1. The gold standard was a bad idea.
True, but has no bearing on whether Bitcoin will succeed or fail. Even if Bitcoin causes economic instability in the same way that the gold standard did, individual users of Bitcoin have no reason to care.
.2. Even if it was a good idea, governments will squash it.
Possible, but I don’t think it’s very likely, because its decentralization makes squashing it hard. It’s not like they can raid some company’s offices and disable the network. The dollar-to-coin exchanges could be targeted, but they’re independent, expendable, and located in many different jurisdictions.
.3. The whole technological basis (cryptosystem) is flawed.
False, and Avery makes this claim from a position of admitted ignorance which makes it irresponsible. There are a lot of eyes on Bitcoin and the primitives it’s constructed from; if it were flawed, the flaws would very likely have been discovered by now.
.4. It doesn’t work offline.
True, but irrelevant. PayPal and bank wire transfers don’t work offline either. And wireless internet access is quickly becoming a worldwide universal anyways.
I don’t know a whole lot about bitcoins, so maybe you can help me. You argued that decentralization makes the bitcoin system difficult to shut down. I’m assuming that before the US government would want to shut bitcoins down, bitcoins would have to significantly grow in prominence, and be accepted by a number of large businesses (Amazon, eBay, Barnes & Noble, Target, JC Penny’s, etc) with websites. Because bitcoins would then be available for a wider variety of purchases, they would get a lot of new users. Assuming that the government then decided to shut it down, couldn’t they just make it illegal for businesses to accept bitcoins? Bitcoins might still be available for person-to-person transactions, and maybe some small businesses, but if a business is present in the real world, and has to pay taxes, and so can be audited, that would put them pretty much at the mercy of the government.
Is what I’m talking about possible, or is there something in the bitcoin system that would prevent this?
If there’s an safe and relatively quick way to change your bitcoins into USD or Euros or any other currency, then it would be easy to spend them on Amazon anyway—as an end-user, you might even semi-automate* the conversion when shopping at such sites.
*Presumably you would want to at least sign off on the current exchange rate first.
Possible, but I don’t think it’s very likely, because its decentralization makes squashing it hard. It’s not like they can raid some company’s offices and disable the network.
Tax evasion, money laundering and counterfeiting are likewise decentralized, but government has been able to drastically reduce the rates of those things.
(Disclaimer: my ownership of bitcoins constitutes a financial conflict of interest with respect to everything I write on the topic.)
I think Jason Calacanis has it right, and Avery Pennarun has it wrong. Bitcoin is likely to succeed.
True, but has no bearing on whether Bitcoin will succeed or fail. Even if Bitcoin causes economic instability in the same way that the gold standard did, individual users of Bitcoin have no reason to care.
Possible, but I don’t think it’s very likely, because its decentralization makes squashing it hard. It’s not like they can raid some company’s offices and disable the network. The dollar-to-coin exchanges could be targeted, but they’re independent, expendable, and located in many different jurisdictions.
False, and Avery makes this claim from a position of admitted ignorance which makes it irresponsible. There are a lot of eyes on Bitcoin and the primitives it’s constructed from; if it were flawed, the flaws would very likely have been discovered by now.
True, but irrelevant. PayPal and bank wire transfers don’t work offline either. And wireless internet access is quickly becoming a worldwide universal anyways.
I don’t know a whole lot about bitcoins, so maybe you can help me. You argued that decentralization makes the bitcoin system difficult to shut down. I’m assuming that before the US government would want to shut bitcoins down, bitcoins would have to significantly grow in prominence, and be accepted by a number of large businesses (Amazon, eBay, Barnes & Noble, Target, JC Penny’s, etc) with websites. Because bitcoins would then be available for a wider variety of purchases, they would get a lot of new users. Assuming that the government then decided to shut it down, couldn’t they just make it illegal for businesses to accept bitcoins? Bitcoins might still be available for person-to-person transactions, and maybe some small businesses, but if a business is present in the real world, and has to pay taxes, and so can be audited, that would put them pretty much at the mercy of the government.
Is what I’m talking about possible, or is there something in the bitcoin system that would prevent this?
If there’s an safe and relatively quick way to change your bitcoins into USD or Euros or any other currency, then it would be easy to spend them on Amazon anyway—as an end-user, you might even semi-automate* the conversion when shopping at such sites.
*Presumably you would want to at least sign off on the current exchange rate first.
Tax evasion, money laundering and counterfeiting are likewise decentralized, but government has been able to drastically reduce the rates of those things.