- Bitcoin is not over yet. But the pseudo-currency is close enough to collapse to merit an early retrospective.
This was disappointing. Quark had a short article yesterday by Christopher Mims that addressed a weakness in bitcoin that discussed the nature of the protocol. I posted it. I am weary of these OpEds that are essentially: "People say Bitcoin is a currency. Bitcoin will fail because it is a bad currency." If the potential of the internet was encapsulated in CompuServe in 1989, then one might make a very misguided argument about how the internet will fail. The next day overstock.com started accepting it. The speculation is based on the hypothesis that this will change. That's the bet. I'm not sure where I stand on this issue, but reasonable people can disagree with this statement. Just because a viable alternative hasn't existed doesn't mean that it can't. Whether or not bitcoin is a viable alternative, it makes a compelling case that technology has enabled us to start exploring new alternatives. Admittedly, money is complicated. It is a social token as well as an economic tool. It is a store of value, but its own value shifts constantly. It is considered a safe and solid asset — “like money in the bank” — but banks cannot really promise always to make good on legitimate demands to liquidate accounts. I sympathize with anyone who does not want to try to understand how money works, but monetary ignorance can be dangerous. Many Bitcoin investors will find that out, to their personal cost. This is not a lesson from bitcoin. I have no idea why this was added to the count. Bitcoin is basically idle speculation, but it has inspired a great deal of skilled work. This small business – total value of a mere $100 million a year ago, now about $10 billion – has generated scores of websites and seemingly unlimited quantities of enthusiastic and evangelistic commentary. The original programmer, the producers of new Bitcoins and the creators of a remarkable number of sophisticated Bitcoin exchanges are all are very good. A society in which no project ever attracted this sort of attention, intelligence and ambition would be moribund. The Bitcoin mania shows that ours is still quite alive. But it is a bit discouraging to see so much of what is good in our economy directed to something so misguided. Again, this is not a lesson. In fact, there are no lessons from bitcoin here. I suppose the very first item might have been a lesson, but it was much less so the next day. It will be hilarious if the day comes that NYT starts accepting bitcoin for its paywall.Unsurprisingly, the only real business actually to rely on Bitcoin – not merely issue press releases about planning to accept the tokens – has been Silk Road, a now-closed electronic exchange for illegal drugs.
But if speculators were thinking clearly, they would stay away from any supposed money that banks don’t accept. After all, banks are involved in almost all exchanges in today’s economies.
People can be excused for thinking that governments, including central banks, have run the money system so poorly that nongovernmental money might be better, but that is the wrong answer. The only practical right answer is to improve the government-run monetary system.
Money Is Misunderstood
Too Much Entrepreneurial Energy Is Wasted
Case absolutely not made. I don't know that decentralized non-backed currencies are going to work out better or not, but to call improvement of politicians and central banks not only practical, but the only practical approach seems to me more of a stretch than an obvious point at first blush. Seems to ignore a lot of what is revolutionary and innovative with The Protocol while vaguely labeling the innovations as misguided. This is the bleeding edge. We don't know how this will unfold yet, but it is far, far too early to dismiss it with such confidence imo. Also, a little unclear if the author is referring to the market of speculators here (which has little to do with the value of BTC as an innovation or solution to anything), or the speculation of developers with their time. There are a lot of legitimate reasons to be skeptical of BTC, but I see so many articles that oddly fixate on who is using it for what, and dismissing the value based on that. Innefectiveness via guilt by association. Weak.governments, including central banks, have run the money system so poorly that nongovernmental money might be better, but that is the wrong answer. The only practical right answer is to improve the government-run monetary system.
Too Much Entrepreneurial Energy Is Wasted
Bitcoin is basically idle speculation, but it has inspired a great deal of skilled work.
Bitcoin is basically idle speculation,
Well that's what is driving the 'value' at this point. Even if you think that there is something worthy about a digital currency generally, it is impossible to use Bitcoin either as a currency, a store of wealth, or a viable exchange medium if its price is being inflated--and constantly changing--due to nothing other than heavy speculation. That is a huge part of the problem, and it is independent of the ideology underlying it.There are a lot of legitimate reasons to be skeptical of BTC, but I see so many articles that oddly fixate on who is using it for what, and dismissing the value based on that. Innefectiveness via guilt by association. Weak.