Yeah it is really uncool that people flag stuff they disagree with. I had to create a new account because of it. All new posts on my original account have been rendered useless and there's nothing I can do about it. I tried contacting pg/moderators and posting some threads about it to solve the issue but people basically just told me to shut up.
Personally I think it's a good thing to flag when the post is really bad; there's limited space in the front page and limited time in a day to rebutt every single piece of blogosphere "wisdom". And this post is really bad. For starters:
> First of all, I admit, I don't totally understand the bitcoin algorithms and systems. I don't really need to.
Uh, ok then. Also, of the main claims in bold these are the only ones that are reasonable:
> The ability of governments to print (and destroy) money is a key tool in economic management.
> FAIL #2: Even if it was a good idea, governments would squash it.
He then goes on to explain why a detailed understanding of the algorithm is besides the point, so it doesn't matter if he knows the ins and outs of the algorithm selected to protect bitcoin.
I agree that seriously flawed articles that spread misinformation are reasonable targets for flagging, but this is not one of those articles. Dude clearly has a strong opinion about bitcoin, but he makes a substantive case for why he believes his pov without resorting to shenanigans or incredibly stilted framing.
Again, if you disagree with him, this is the sort of post that can be rebutted.
I am personally not interested in seeing a front page with a rebuttal of every tech-related rant that someone posts on their blog. I am interested in seeing articles written by someone with relevant expertise talking about something in a rational way. This is not it. Half of what he says is nonsense (the gold standard is bad because gold is harder to carry around than paper?) and the other half is trivial (governments won't like Bitcoin -- got it.)
But part about the powers-that-be wanting to remain the powers-that-be is certainly true, and that's probably enough.
Very true, and sadly the vast majority of people just accept/believe that the powers-that-be are inherently powerful and that there's nothing they can do to change that. The world is everyones, not just a handful of power mongers. With the help of the world wide web, positive thinking, and some determination, I think we'll see a shift in the mindsets of the general population, as it's already happening with a subset of the population.
I'd say the tech part boils down to "it's untested crypto so it may be hacked". A successful currency is worth at least tens of billions of dollars - do you really want to base it on untested cryptography? And the transaction part looks much shakier than the bitcoin generation part.
Just because something is open doesn't mean anyone is actually looking at it... or more importantly, REALLY verifying it.
Linux is Open Source, Apache is Open Source, both have had lots of major security exploits lurking in them for many years prior to being found and they almost certainly have many, many more still in there.
Having something be Open Source is great for a lot of reasons but it is nowhere near a replacement for a dedicated rigorous peer review process based on mathematical proof of the algorithms.
No, the tech part boils down to "If the crypto is hacked, the whole system goes down in flames." Offline currencies can tolerate a bit of forgery or fraud, but the moment a bitcoin is successfully forged, all bitcoins instantly become useless.
Ah, there's our resident naysayer. So not only IPv6 will fail, but bitcoin too?
Some ideas are just too crazy but they do work out. History is full of these. You could argue those are the ideas with potential to change the world. Anyway, only time will tell.
Well, to start off he accuses anyone who disagrees with him of being an idiot. Not a very good start.
Much of it reads like "Having a dictatorship is good! What are you stupid? Democracy is nothing but a crazy popularity contest"
1. It's not fractional-reserve based
Yes, so what? Isn't that kinda the point?
He actually says it as "it's just like the gold standard"
Well, much better than having a powerful group of people print money on their own whims.
Though unlike gold and other metals, bitcoins are generated at a controlled rate.
Though I admit I don't know how to respond to his theory about why the "great depression" happened. Suffice it to say, overall I can't take anything he says in his rant too seriously.
2. Governments will squash it.
True. We'll have to see how that goes. Though, this doesn't make it a bad idea. In fact all it does is prove how important it is.
3. Cryptography stuff.
He admits upfront that he doesn't know what he's talking about.
I myself don't know about this stuff either, so I'll just shut up.
4. Doesn't work offline.
OK, this could be a serious flaw.
But, all it means is it will never completely replace other currencies; but that's ok.
If it can be used in online trading, and then used to buy "real life" things, like food and housing, then that's all that matters.
I could imagine "credit card" like objects: portable devices that know your private keys and can be used to buy things at a store in a secure and convenient way. For instance: an iPhone, or an Android phone.
This requires the internet to be everywhere, but the same is already true for electricity: it has to be everywhere, otherwise many things will stop functioning properly: street lights, traffic signals, offices, factories, banks, grocery stores, and just about everything else.
"Asking why I think bitcoin won't work is like asking why the sky isn't red. I mean, wait, you think it _is_ red? You actually took that seriously? Oh boy. Where do I even start?"
Yeah, I strongly suspect that anyone with a solid understanding of finance has the same "where I begin?" reaction to something like bitcoin.
I mean, a lot of effort goes into managing real currencies and they blow up far too often. Sure, yes, a lot of corrupt manipulations also go into real currencies but that's because these currencies are controlled by human beings and can be life makers-or-breakers for people.
I guarantee you that if a truly substantial amount of dollars were sunk into bitcoins, a whole lot of dubious things would happen, some of which I might be able to think of and others of which neither you nor I would think of.
Here's just a sampling of specifics: Gold is nearly perfect as a physical currency and store of value. Yet gold has booms and busts. But if bitcoin has a bust, why would it ever rise again rather than some other "cybercurrency"? And if bitcoin could crash that way, the thought of this tends to be a self-fulfilling prophecy and there you are, it's doomed to collapse.
And that's just one point - "...where do I begin?"
Believing in the gold standard is disbelieving in capitalism
This betrays a deep ignorance of capitalism. It's not about "making money", but rather about exchange. The two parties in an exchange both expect (and usually gain) greater value afterwards.
Capitalism means "private ownership of the means of production", where the "means of production" are the capital goods. Money or "financial capital" is just one possible facet of capital.
Strictly speaking, there is no money creation out of economic activity, outside either: gold mining (when you have a gold standard) or monetary expansion via the fractional reserve mechanism. What is made is: goods, services and capital for future investment. People eventually want goods & services rather than money itself. And even those who seek money as an end in itself are in fact trading valuable services for pieces of paper (or whatever form money has in that instance).
Now, as for the argument that bitcoins are "pointless busywork that produces nothing of real value" the value comes from having a robust and forgery-secure digital token. Whether it's good enough to be used as money remains to be seen.
Bitcoin is still more or less a proof-of-concept. Even if the underlying foundations, like SHA256 are found flawed, it remains a valid scheme for p2p crypto-tokens, with different crypto primitives.
Wow. Okay, rebuttal time. Most quotes are from bold sentences.
>In order to create currency, you have to do a bunch of pointless busywork.
Massively incorrect. The reason the system works as it does is because that "pointless busywork" guards against attackers in the wholly-distributed system. Yes, it makes you coins, but it'll degrade, and the economy would eventually switch over to transaction fees. Its primary purpose is to secure the entire system, not to make money - it's just an incentive to help secure things. The system could easily work (with minor modifications to allow increased divisibility) with a single Bitcoin created at the network's beginning.
>Gold is a stupid inconvenient currency that's worse than paper.
Inconsequential. This is in there only because they mentioned Bitcoin being similar to the gold standard. Why is this a bolded argument point?
>Believing in the gold standard is disbelieving in capitalism.
Um... what? This was clearly incorrect before the US dollar became a fiat currency, and every other currency in the world that's pinned to some resource in a capitalist society. If they're not "believing in capitalism", what are they doing?
>If the gold standard worked, the 1930s depression wouldn't have happened, and we couldn't have recovered, period, from the recent banking crisis.
Under some theories. IANAEconomist, but I'm sure there are others who are with which they could debate this point to no end.
>The ability of governments to print (and destroy) money is a key tool in economic management.
See above.
>... if nobody is controlling the economy, then the economy will act like any uncontrolled complex system: it'll go crazy.
and
>Bitcoin removes government control over the economy, which means there is [NO] control over the economy. (had asterisks for emphasis)
Clearly, this person has never used the internet. Or any other non-government-controlled standard. Though it's a bit more decentralized than that; by that argument, why hasn't Bittorrent failed? Or open source projects? Hell, Github is the ultimate instrument of chaotic doom if this is true.
>FAIL #2: Even if it was a good idea, governments would squash it.
See any discussion on Bittorrent for debates here.
>FAIL #3: The whole technological basis is flawed.
Followed shortly after by: "First of all, I admit, I don't totally understand the bitcoin algorithms and systems. I don't really need to."
Oh boy. Where to start there. I guess I'll start with "yes, you do, to claim that". It's an eye-opening, not-yet-penetrated, very-ingenious system. It's simple and extraordinarily solid, if you accept the current premises of an enormous amount of our security systems which have stood for many years against many attacks.
>FAIL #4: It doesn't work offline.
Neither do credit cards. They're clearly failing because of this. If it were to take over, your phone could easily handle everything. They already are handling some transaction systems.
>a single failure of the cryptosystem could result in an utter collapse of the entire financial network. Unlimited inflation. Fake transactions. People not getting paid when they thought they were getting paid. And the perpetrators of the attack would make so much money, so fast, that they could apply their fraud at Internet Scale on Internet Time.
Depends on the single point of failure, actually. And such a failure would also doom an enormous amount of our security systems, it'd be catastrophic in other ways as well to say the least.
More pointedly: a break in the entire system would mean a loss of trust in the entire system. How, precisely, would this leave the perps with scads of money? It's not like it would go un-noticed.
>The current financial system is slow, and tedious, and old, and in many ways actually broken or flawed. But one thing we know is that it's [RESILIENT]. One single ma...
>FAIL #2: Even if it was a good idea, governments would squash it.
Anyone could destroy (read: fake transactions, etc) it given enough computational power. I also remember reading that the main developer was invited to talk to the CIA.
Given nearly impossible computational power. Quantum computers pose a risk, but that would just mean it would have to switch to some different public key system (there are plenty to choose from on http://pqcrypto.org/ ).
If any one attacker gets, say, 9/10ths of the world's computer power, the best they can do is get 9/10ths of the generated coins, and slow down the system by not including transactions. Falsifying transactions is far, far harder to do, on an astronomical scale.
I'm not an economist either, however i am familiar enough with Central Reserve Banking, and the statements of Fed Chairmen, reporters and economists who state that changes to interest rates is the tool by which economies are managed.
Even keynesians like Paul Krugman agree that changing interest rates has an effect on the economy. They just don't think it's a good tool to manage economies.
The fed is filled with Keynesians and nobody disagre that the fed manage the economy by changing interest rates.
What the critics say is that it doesn't work (and considering how many bubble there has been I am inclined to agree with them) and that it would work better without it.
I think an interesting data point is that the bitcoin faucet guy had to implement an out-of-band authentication system because people were anonymously double-dipping with new, trivially easy to generate id's. You can prove you paid a transaction, but you can't prove who it actually went to.
Much of the legal issues would be taken care of if it was coupled with a government-accessable authentication system linking bitcoin accounts to tax id's. I know that sounds bad to a lot of bitcoin fans but it would eliminate the money-laundering issue that the existing system has.
That would leave bitcoin as a more predictable/more convenient gold standard and it would no longer compete with US currency.
Although, now that I think about it, the problem is that the fact that you have to pay US taxes in USD is really what gives the Greenback it's strength/weakness. The government could still affect the conversion rate which would give it economic controls. This could be mitigated if it was an internationally accepted currency.
>You can prove you paid a transaction, but you can't prove who it actually went to.
You can prove which account it went to, and a person can prove they control an account. (edit: well, you can send to an IP address, but that's dangerous - it can be intercepted - and almost totally pointless - accounts don't identify their owner)
As to the tax setup, I've given that some thought. If your employers gave the government the public key of the accounts they payed out to, and the people associated with them, the government would have perfectly accurate income reports. The same way they have now. Switch to an entirely income-based taxation (can also add property taxes, etc, but not really sales tax) and their calculations would be drop-dead easy.
Getting people to pay is another issue, but that's no different than it is now. If someone withdraws their money and runs, they have to be caught before they can be forced to pay.
> The ability of governments to print (and destroy) money is a key tool in economic management.
I tend to agree with that. But, as far as I know, it's a tool they don't have: most money is created by private banks (through loans). I understand elected officials may be poor at managing money creation and destruction, but aren't un-elected officials worse?
He confuses making money with printing money, as well as capitalism to trick people to beleive they get richer by inflation.
The only good point he made was regarding securing the system. Sha256 is just one piece of the chain. How can we secure the bitcoins on our computer ? Some bitcoins might get lost by computer crash or stolen. Is there a way to prove ownership of a bitcoin ? I didn't check the working principle in details yet. Is there a way to prove ownership of a bitcoin ?
There are good lessons to learn from Brazil, how they got out of their financial cryzis.
One critic I would add is that some flexibilty should be made possible in the currency value to adjust to ressource grow. Some people might buy bitcoin today for cheap. But the more people will use it, the more the population will grow, the imbalance will grow with it. The value of current bitcoin will grow very fast and some people who bought them early in masse are very rich. This is because the price of ressources will have to adjust to match payement capabilities of people. So there is still a strong ineqity in the system (compared to people able to print money), there is just an unperceptible shift.
If you want to get rich and bet wich better odds than in las vegas, buy bitcoins as much as you can now.
I have no idea whether BitCoin will do well, and after reading all that I still don't. I do know that equating BitCoin with the Gold Standard is an analogy that doesn't support the points being made.
Meta: I have noticed that I've yet to read an article titled "Why (assertion)" that isn't garbage. Anyone else notice that? Bloggers: if you want to make a point, don't presume to explain an existing fact. Introduce your assertion in the title then back it up.
First of all, I've wanted to write a post like the OP's blog post for a while, but haven't gotten to it. Mine was going to include more math about deflationary spirals.
It seems that most commenters here are nitpicking the OP's individual points mostly due to their snarky/inflammatory wording and due to imperfect analogies like the comparison to the gold standard.
No, bitcoin isn't exactly like the gold standard. However, does it peg the value of the currency to an invisible standard (the money supply curve [mining])? Yes. Yes it does. Does this remove any and all flexibility from the currency? Yes. It is, in fact, bitcoin's decentralization that is its core weakness. It makes it impossible to expand the economy without devaluing the currency (see wikipedia for deflationary spiral). Transaction fees don't count, since they don't expand the money supply: they simply help the mining metaphor continue when the injection curve has been exhausted (by redistributing, not creating).
Lots of people are focusing on this quote: "First of all, I admit, I don't totally understand the bitcoin algorithms and systems. I don't really need to." And saying it somehow invalidates his theories.
I disagree.
I don't need to be an expert in a field to know that experts aren't correct 100% of the time. Even in Mathematics, which is a pretty logical place that depends on proofs, Mathematicians are sometimes wrong about things. So it makes sense, in a "meta" view, to talk about "what if they're wrong".
The op's point (in that part of the article) is that if there's a problem with the algorithms, and there are almost always problems, then we'd be worse off because of the digital nature.
You can be as annoyed as you like that the op is basically saying "I don't understand what you're doing, but you probably made a mistake somewhere", but that happens to be true.
37 comments
[ 2.6 ms ] story [ 71.9 ms ] threadDon't flag stuff you simply disagree with.
If you disagree with a link, rebut it.
Personally I think it's a good thing to flag when the post is really bad; there's limited space in the front page and limited time in a day to rebutt every single piece of blogosphere "wisdom". And this post is really bad. For starters:
> First of all, I admit, I don't totally understand the bitcoin algorithms and systems. I don't really need to.
Uh, ok then. Also, of the main claims in bold these are the only ones that are reasonable:
> The ability of governments to print (and destroy) money is a key tool in economic management.
> FAIL #2: Even if it was a good idea, governments would squash it.
I agree that seriously flawed articles that spread misinformation are reasonable targets for flagging, but this is not one of those articles. Dude clearly has a strong opinion about bitcoin, but he makes a substantive case for why he believes his pov without resorting to shenanigans or incredibly stilted framing.
Again, if you disagree with him, this is the sort of post that can be rebutted.
But part about the powers-that-be wanting to remain the powers-that-be is certainly true, and that's probably enough.
Very true, and sadly the vast majority of people just accept/believe that the powers-that-be are inherently powerful and that there's nothing they can do to change that. The world is everyones, not just a handful of power mongers. With the help of the world wide web, positive thinking, and some determination, I think we'll see a shift in the mindsets of the general population, as it's already happening with a subset of the population.
https://github.com/bitcoin/bitcoin
It has about 100 forks (contributers).
Linux is Open Source, Apache is Open Source, both have had lots of major security exploits lurking in them for many years prior to being found and they almost certainly have many, many more still in there.
Having something be Open Source is great for a lot of reasons but it is nowhere near a replacement for a dedicated rigorous peer review process based on mathematical proof of the algorithms.
Some ideas are just too crazy but they do work out. History is full of these. You could argue those are the ideas with potential to change the world. Anyway, only time will tell.
Much of it reads like "Having a dictatorship is good! What are you stupid? Democracy is nothing but a crazy popularity contest"
1. It's not fractional-reserve based
Yes, so what? Isn't that kinda the point?
He actually says it as "it's just like the gold standard"
Well, much better than having a powerful group of people print money on their own whims.
Though unlike gold and other metals, bitcoins are generated at a controlled rate.
Though I admit I don't know how to respond to his theory about why the "great depression" happened. Suffice it to say, overall I can't take anything he says in his rant too seriously.
2. Governments will squash it.
True. We'll have to see how that goes. Though, this doesn't make it a bad idea. In fact all it does is prove how important it is.
3. Cryptography stuff.
He admits upfront that he doesn't know what he's talking about.
I myself don't know about this stuff either, so I'll just shut up.
4. Doesn't work offline.
OK, this could be a serious flaw.
But, all it means is it will never completely replace other currencies; but that's ok.
If it can be used in online trading, and then used to buy "real life" things, like food and housing, then that's all that matters.
I could imagine "credit card" like objects: portable devices that know your private keys and can be used to buy things at a store in a secure and convenient way. For instance: an iPhone, or an Android phone.
This requires the internet to be everywhere, but the same is already true for electricity: it has to be everywhere, otherwise many things will stop functioning properly: street lights, traffic signals, offices, factories, banks, grocery stores, and just about everything else.
Yeah, I strongly suspect that anyone with a solid understanding of finance has the same "where I begin?" reaction to something like bitcoin.
I mean, a lot of effort goes into managing real currencies and they blow up far too often. Sure, yes, a lot of corrupt manipulations also go into real currencies but that's because these currencies are controlled by human beings and can be life makers-or-breakers for people.
I guarantee you that if a truly substantial amount of dollars were sunk into bitcoins, a whole lot of dubious things would happen, some of which I might be able to think of and others of which neither you nor I would think of.
Here's just a sampling of specifics: Gold is nearly perfect as a physical currency and store of value. Yet gold has booms and busts. But if bitcoin has a bust, why would it ever rise again rather than some other "cybercurrency"? And if bitcoin could crash that way, the thought of this tends to be a self-fulfilling prophecy and there you are, it's doomed to collapse.
And that's just one point - "...where do I begin?"
This betrays a deep ignorance of capitalism. It's not about "making money", but rather about exchange. The two parties in an exchange both expect (and usually gain) greater value afterwards.
Capitalism means "private ownership of the means of production", where the "means of production" are the capital goods. Money or "financial capital" is just one possible facet of capital.
Strictly speaking, there is no money creation out of economic activity, outside either: gold mining (when you have a gold standard) or monetary expansion via the fractional reserve mechanism. What is made is: goods, services and capital for future investment. People eventually want goods & services rather than money itself. And even those who seek money as an end in itself are in fact trading valuable services for pieces of paper (or whatever form money has in that instance).
Now, as for the argument that bitcoins are "pointless busywork that produces nothing of real value" the value comes from having a robust and forgery-secure digital token. Whether it's good enough to be used as money remains to be seen.
Bitcoin is still more or less a proof-of-concept. Even if the underlying foundations, like SHA256 are found flawed, it remains a valid scheme for p2p crypto-tokens, with different crypto primitives.
>In order to create currency, you have to do a bunch of pointless busywork.
Massively incorrect. The reason the system works as it does is because that "pointless busywork" guards against attackers in the wholly-distributed system. Yes, it makes you coins, but it'll degrade, and the economy would eventually switch over to transaction fees. Its primary purpose is to secure the entire system, not to make money - it's just an incentive to help secure things. The system could easily work (with minor modifications to allow increased divisibility) with a single Bitcoin created at the network's beginning.
>Gold is a stupid inconvenient currency that's worse than paper.
Inconsequential. This is in there only because they mentioned Bitcoin being similar to the gold standard. Why is this a bolded argument point?
>Believing in the gold standard is disbelieving in capitalism.
Um... what? This was clearly incorrect before the US dollar became a fiat currency, and every other currency in the world that's pinned to some resource in a capitalist society. If they're not "believing in capitalism", what are they doing?
>If the gold standard worked, the 1930s depression wouldn't have happened, and we couldn't have recovered, period, from the recent banking crisis.
Under some theories. IANAEconomist, but I'm sure there are others who are with which they could debate this point to no end.
>The ability of governments to print (and destroy) money is a key tool in economic management.
See above.
>... if nobody is controlling the economy, then the economy will act like any uncontrolled complex system: it'll go crazy.
and
>Bitcoin removes government control over the economy, which means there is [NO] control over the economy. (had asterisks for emphasis)
Clearly, this person has never used the internet. Or any other non-government-controlled standard. Though it's a bit more decentralized than that; by that argument, why hasn't Bittorrent failed? Or open source projects? Hell, Github is the ultimate instrument of chaotic doom if this is true.
>FAIL #2: Even if it was a good idea, governments would squash it.
See any discussion on Bittorrent for debates here.
>FAIL #3: The whole technological basis is flawed.
Followed shortly after by: "First of all, I admit, I don't totally understand the bitcoin algorithms and systems. I don't really need to."
Oh boy. Where to start there. I guess I'll start with "yes, you do, to claim that". It's an eye-opening, not-yet-penetrated, very-ingenious system. It's simple and extraordinarily solid, if you accept the current premises of an enormous amount of our security systems which have stood for many years against many attacks.
>FAIL #4: It doesn't work offline.
Neither do credit cards. They're clearly failing because of this. If it were to take over, your phone could easily handle everything. They already are handling some transaction systems.
>a single failure of the cryptosystem could result in an utter collapse of the entire financial network. Unlimited inflation. Fake transactions. People not getting paid when they thought they were getting paid. And the perpetrators of the attack would make so much money, so fast, that they could apply their fraud at Internet Scale on Internet Time.
Depends on the single point of failure, actually. And such a failure would also doom an enormous amount of our security systems, it'd be catastrophic in other ways as well to say the least.
More pointedly: a break in the entire system would mean a loss of trust in the entire system. How, precisely, would this leave the perps with scads of money? It's not like it would go un-noticed.
>The current financial system is slow, and tedious, and old, and in many ways actually broken or flawed. But one thing we know is that it's [RESILIENT]. One single ma...
Anyone could destroy (read: fake transactions, etc) it given enough computational power. I also remember reading that the main developer was invited to talk to the CIA.
If any one attacker gets, say, 9/10ths of the world's computer power, the best they can do is get 9/10ths of the generated coins, and slow down the system by not including transactions. Falsifying transactions is far, far harder to do, on an astronomical scale.
See: https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_... (the rest of the page has a decent breakdown of attacks)
I would start by brute forcing their private keys, and go from there.
Even keynesians like Paul Krugman agree that changing interest rates has an effect on the economy. They just don't think it's a good tool to manage economies.
What the critics say is that it doesn't work (and considering how many bubble there has been I am inclined to agree with them) and that it would work better without it.
Much of the legal issues would be taken care of if it was coupled with a government-accessable authentication system linking bitcoin accounts to tax id's. I know that sounds bad to a lot of bitcoin fans but it would eliminate the money-laundering issue that the existing system has.
That would leave bitcoin as a more predictable/more convenient gold standard and it would no longer compete with US currency.
Although, now that I think about it, the problem is that the fact that you have to pay US taxes in USD is really what gives the Greenback it's strength/weakness. The government could still affect the conversion rate which would give it economic controls. This could be mitigated if it was an internationally accepted currency.
You can prove which account it went to, and a person can prove they control an account. (edit: well, you can send to an IP address, but that's dangerous - it can be intercepted - and almost totally pointless - accounts don't identify their owner)
As to the tax setup, I've given that some thought. If your employers gave the government the public key of the accounts they payed out to, and the people associated with them, the government would have perfectly accurate income reports. The same way they have now. Switch to an entirely income-based taxation (can also add property taxes, etc, but not really sales tax) and their calculations would be drop-dead easy.
Getting people to pay is another issue, but that's no different than it is now. If someone withdraws their money and runs, they have to be caught before they can be forced to pay.
It's not pointless you're doing proof-of-work on previous transactions which creates a chain of work to verify and secure transactions.
I tend to agree with that. But, as far as I know, it's a tool they don't have: most money is created by private banks (through loans). I understand elected officials may be poor at managing money creation and destruction, but aren't un-elected officials worse?
The only good point he made was regarding securing the system. Sha256 is just one piece of the chain. How can we secure the bitcoins on our computer ? Some bitcoins might get lost by computer crash or stolen. Is there a way to prove ownership of a bitcoin ? I didn't check the working principle in details yet. Is there a way to prove ownership of a bitcoin ?
There are good lessons to learn from Brazil, how they got out of their financial cryzis.
One critic I would add is that some flexibilty should be made possible in the currency value to adjust to ressource grow. Some people might buy bitcoin today for cheap. But the more people will use it, the more the population will grow, the imbalance will grow with it. The value of current bitcoin will grow very fast and some people who bought them early in masse are very rich. This is because the price of ressources will have to adjust to match payement capabilities of people. So there is still a strong ineqity in the system (compared to people able to print money), there is just an unperceptible shift.
If you want to get rich and bet wich better odds than in las vegas, buy bitcoins as much as you can now.
Meta: I have noticed that I've yet to read an article titled "Why (assertion)" that isn't garbage. Anyone else notice that? Bloggers: if you want to make a point, don't presume to explain an existing fact. Introduce your assertion in the title then back it up.
It seems that most commenters here are nitpicking the OP's individual points mostly due to their snarky/inflammatory wording and due to imperfect analogies like the comparison to the gold standard.
No, bitcoin isn't exactly like the gold standard. However, does it peg the value of the currency to an invisible standard (the money supply curve [mining])? Yes. Yes it does. Does this remove any and all flexibility from the currency? Yes. It is, in fact, bitcoin's decentralization that is its core weakness. It makes it impossible to expand the economy without devaluing the currency (see wikipedia for deflationary spiral). Transaction fees don't count, since they don't expand the money supply: they simply help the mining metaphor continue when the injection curve has been exhausted (by redistributing, not creating).
I disagree.
I don't need to be an expert in a field to know that experts aren't correct 100% of the time. Even in Mathematics, which is a pretty logical place that depends on proofs, Mathematicians are sometimes wrong about things. So it makes sense, in a "meta" view, to talk about "what if they're wrong".
The op's point (in that part of the article) is that if there's a problem with the algorithms, and there are almost always problems, then we'd be worse off because of the digital nature.
You can be as annoyed as you like that the op is basically saying "I don't understand what you're doing, but you probably made a mistake somewhere", but that happens to be true.